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Cablevision sues Viacom for “illegal, anti-consumer and wrong” bundling practices

US cable operator Cablevision has opened a massive can of worms by filing an antitrust lawsuit against mass media company Viacom for allegedly forcing it to carry and pay for 14 lesser-watched channels in order to obtain the rights to must-have ones such as MTV, Nickelodeon and Comedy Central.

The lawsuit, which promises to shine a much-needed spotlight on the dubious practice of channel bundling both in the US and abroad, describes the manner in which Viacom sells its programming as being “illegal, anti-consumer and wrong”, and alleges that the company is breaking federal antitrust laws in doing so.

“Viacom effectively forces Cablevision’s customers to pay for and receive little-watched channels in order to get the channels they actually want,” said Cablevision in a prepared statement.

“Viacom’s abuse of its market power is not only illegal, but also prevents Cablevision from delivering the programming that its customers want and that competes with Viacom’s less popular channels.”

Cablevision’s suit alleges that during negotiations over a new carriage agreement for Viacom’s channels late last year, Cablevision was forced to carry 14 “ancillary” channels that its customers “do not want”, including Palladia, MTV Hits and VH1 Classic.

The cable operator, which serves 3.5mn customers with TV services in the wider New York area, is now petitioning for the December 2012 carriage agreement to be declared void.

It is also seeking a permanent injunction to be issued barring Viacom from conditioning carriage of its core channels on the booking of its less-popular ones, a new agreement to be issued that gives Cablevision access to Viacom channels on new terms, and a sum amounting to treble that of estimated damages and legal fees.

Editor’s view: This lawsuit has the potential to revolutionise the way in which pay-TV operators negotiate carriage for channels, and thus the way in which subscribers can access them: if the lawsuit is successful and sets a legal precedent, it looks certain that other operators will swiftly follow.

It may also pave the way for the dream of access to TV Everywhere on an à la carte basis, as discussed in our recent live Twitter Q&A with Robert Delamar, CEO of Latin American online video service Totalmovie – available here.

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