Cablevision Picks at the Ties That Bind

Cablevision has sued Viacom over alleged antitrust violations ups the ante in the continuing battle over the rising cost of TV content.

Pay-TV providers say they can't pass along the escalating prices being charged by media networks to customers already paying more than $70 a month for video alone. At the same time, they are facing increasing pressure from a rapidly changing media-technology environment in which some viewers are getting video from other sources such as Netflix. In its suit, Cablevision alleges Viacom forced it to carry and pay for 14 "lesser- watched" channels for the right to carry its more popular "must-have" networks, including Nickelodeon, MTV and Comedy Central. The practice of packaging channels together, known as bundling, is standard for network agreements with distributors. To show Viacom did anything illegal, Cablevision must demonstrate the terms are so onerous it was essentially forced to take all the channels, a practice known as tying. Viacom has said it will defend itself vigorously against the claims.

If the case undermines typical channel-bundling contracts, it could have far-reaching implications. Media companies may have to allow pay-TV operators to sell channels separately or in different groupings, possibly forcing less popular channels—which generate advertising revenue for networks—to shut down.