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Volume 21 No. 2
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Cablevision takes on carriage deals

Though sports channels aren’t part of Cablevision’s bundling complaint against Viacom, the case filed in February could affect several smaller sports networks.

The issue comes down to the cable industry practice of tying smaller channels into carriage deals with bigger ones. Cablevision argues that Viacom wouldn’t allow the cable operator to take its must-have channels, like MTV and Comedy Central, unless it also agreed to take Viacom’s smaller, little-watched channels, like Tr3s or Nicktoons.

Cablevision signed a long-term deal to carry all of Viacom’s channels — including 14 of the smaller ones — in December. Two months later, Cablevision filed suit in a federal court, alleging that Viacom would assess a $1 billion penalty if Cablevision opted to not carry Viacom’s smaller networks.

Though Viacom has not responded to the complaint officially, it has released statements calling Cablevision’s complaint misleading. Like other programmers, Viacom has said that it grants discounts on its more popular channels if distributors take all of its channels, including the smaller ones.

A Cablevision victory in this lawsuit has the potential to throw the entire pay-TV business out of whack. In years past, broadcasters have decided to use their retransmission rights to launch broadcaster-owned channels with cable operators in lieu of collecting a fee. That’s how smaller channels like Fox Soccer Channel and Fuel got their start.

Over the past few years, however, the broadcasters’ strategy changed and they started demanding cash for carriage, at rates that can be as high as $1 per subscriber per month.

The ironic part of this case is that in February 2012, Time Warner Cable complained that MSG was tying carriage of its two regional sports networks with carriage of the poorly viewed Fuse. The Dolan family heads up both MSG Networks and Cablevision.