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Federal Judge Refuses to Toss Cablevision’s Antitrust Suit Against Viacom Dealmaking

A federal judge is refusing to dismiss Cablevision’s antitrust case challenging Viacom’s insistence that it carry 14 lesser-watched channels as a condition of getting carriage of MTV, Comedy Central, Nickelodeon and BET.

U.S. District Judge Laura Taylor Swain, in a decision issued on Friday, rejected the legal grounds on which Viacom sought to have the Cablevision suit tossed. She wrote that Cablevision had pleaded facts “sufficient to support plausibly an inference of anticompetitive effects.”

The litigation now proceeds, potentially to a trial.

“We are gratified the court has ruled that Cablevision has stated a valid antitrust claim against Viacom for illegal channel tying,” Cablevision said in a statement. “We continue to believe that Viacom’s tying of popular networks to carriage of its lesser-watched ancillary networks is illegal, anti-consumer, and wrong.”

The litigation goes to the heart of deal making over the carriage of cable channels, at a time when cable operators are pinning the blame on content companies for rising cable rates. Cablevision claims that in carriage negotiations, Viacom required it to carry more than a dozen networks like MTV Hits and VH-1 Classic as a condition of gaining licensing rights to the four most popular networks. Cablevision alleges that it faced financial penalties if it refused to carry the channels, and that Viacom’s practice was in violation of antitrust laws prohibiting “tying” arrangements and “block booking.”

In a statement, Viacom said that its “programming licensing arrangements are flexible, competitive and the result of good-faith negotiations with distributors.  Cablevision’s action in this case is simply part of an ongoing effort to renege on a long-term business agreement, using arguments directly contrary to positions it has taken in other cases and to its own business practices.  Although we are disappointed that the court did not dismiss these claims at the outset, we are confident that Cablevision will fail to prove the facts required to prevail in their case.”

An initial pretrial conference is scheduled for Aug. 1.

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