SBJ/September 8 - 14, 2003/Other News

YES Network claims in lawsuit it is target of cable scheme

A lawsuit filed by the YES Network against Time Warner Cable does not just allege that Time Warner breached its contract by repositioning YES as an à la carte service, it goes on to claim that Time Warner and Cablevision are scheming together to keep the YES Network off of basic cable while giving the cable channels they own the widest possible distribution.

Time Warner Cable called the suit "totally without merit and consumer unfriendly," and said it will defend itself vigorously and expects to prevail.

The suit, filed in New York State Supreme Court on Aug. 28, says that Time Warner broke the terms of its distribution contract because when it started charging cable subscribers $1 per month to receive YES last month, it did not levy the same surcharge against MSG Network and Fox Sports Net New York.

Cablevision, which owns the New York-based MSG and Fox, has an interim agreement with YES to distribute all three channels on a pay tier or à la carte basis, reached this past spring following a year-long impasse.

Time Warner reacted to the Cablevision deal by invoking its "most-favored-nation" clause in its contract with YES — entitling it to the same terms any other cable company can negotiate — and attached the $1 monthly charge to YES starting Aug. 1.

In the lawsuit, YES says Time Warner had no right to do this because the most-favored-nation clause only allows it to distribute YES on the same tiers as MSG and Fox, and Time Warner continues to distribute MSG and Fox on expanded basic cable.

The suit goes on to say that Time Warner has intentionally made no attempt to move MSG and Fox Sports Net to a pay tier for several reasons, one being that Cablevision and Time Warner just reached a deal for Cablevision to carry Time Warner-owned cable channel Turner Classic Movies.

"It is no coincidence that at the same time that TWC announced it would eliminate YES from expanded basic ... while keeping MSG and FSNY on expanded basic, Cablevision announced that for the first time it would commence distribution of TWC's affiliated network Turner Classic Movies," the suit said. "Cablevision even agreed to carry TCM on expanded basic. Up until this time Cablevision refused to distribute TCM on any level of service because it competes with Cablevision's own American Movie Classics."

The suit also claimed that Time Warner Cable CEO Glenn A. Britt told YES CEO Leo Hindery Jr. that his company was trying to influence the outcome of pending arbitration between Cablevision and YES.

YES further contends that Time Warner and Cablevision already have a tacit agreement not to move MSG or Fox off basic cable, a claim that, if true, undermines both companies' stated position that regional sports networks should be on pay tiers.

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