The entrance to Viacom's headquarters in New York. (Mark Lennihan / Associated…)
Pay-TV distributors Time Warner Cable and DirecTV have come out in support of Cablevision Systems Corp.'s lawsuit against Viacom Inc.
The battle is over how Viacom, parent of more than 20 cable channels including MTV and Nickelodeon, sells its networks to cable and satellite companies. Cablevision claims that Viacom illegally forces distributors to carry low-rated channels in return for access to its popular networks.
The practice, known as bundling, is commonplace in the media industry. Walt Disney Co. and News Corp. also bundle packages of channels together. However, Viacom is seen as being a particularly aggressive bundler, media executives say.
There is a growing backlash against bundling in part because distributors are having to pay record amounts of money to carry sports networks. That means they are looking to cut costs elsewhere.
DirecTV, which has about 20 million subscribers, said in a statement that "there’s no question that the current all-or-nothing system dictated by programmers is completely broken," and called the bundling practice "shameful."
Time Warner Cable said the Cablevision lawsuit "raises important issues, and we look forward to their resolution in the courts.”
Smaller programmers who often find it hard to get distribution because of the clout of larger programmers are also cheering Cablevision's actions.
"The U.S. TV market is not a free market and we support Cablevision's effort to draw attention to the anti-competitive practices that keep independent networks like Ovation from competing on a level playing field," said Chad Gutstein, chief operating officer of the arts channel Ovation.
Brad Siegel, vice chairman of GMC TV, parent of cable channels GMC (formerly Gospel Music Channel) and Aspire, said, “The aggressive stance taken by large media conglomerates leaves less room and money to go around for independent, vibrant programmers that serve smaller, but passionate audiences."
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