Viacom Claims Cablevision Engaged in Fraud in Pact for Channel Carriage

Viacom is claiming that Cablevision’s 2012 negotiations for carriage of its cable networks were a “complete sham” and is asking a federal judge to void an agreement that gives the cable operator rights to carry MTV, Comedy Central, Nickelodeon, BET and other channels.

Viacom’s claims, revealed in a court filing on Friday, are in response to an antitrust lawsuit that Cablevision filed in February, 2013, two months after signing the carriage agreement.

The stakes in the case were increased in June, when U.S. District Judge Laura Taylor Swain refused to toss out Cablevision’s lawsuit. It claims that Viacom forced it to carry 14 lesser-watched channels as a condition of getting carriage of MTV, Comedy Central, Nickelodeon and BET, known as Viacom’s “core” channels.

But Viacom contends that Cablevision’s “true intention” was to challenge the agreement in court after receiving favorable terms for carriage of their core networks.

“Through its misstatements and omissions, Cablevision fraudulently induced Viacom to enter into the very agreement that it now challenges as unlawful,” Viacom said in its counterclaim. Viacom said that Cablevision had a “secret plan” in which it would obtain “all the benefits it had negotiated to obtain and ask the court to void the rest.”

Viacom said that during talks, Cablevision sought to carry only highly rated networks, but Viacom viewed such a position as negotiating tactics, not “laying the groundwork for a lawsuit.” Eventually they reached a deal for carriage of all the channels, with Cablevision extracting lower rates for the core networks in return for broader carriage of the other networks.

“Viacom, unaware of Cablevision’s true plan, reasonably and justifiably relied on Cablevision’s misstatements and omissions in entering into the 2012 agreement and agreeing to provide Cablevision with the right to distribute the core services at lower cash payment rates and to provide Cablevision other favorable rights, terms and conditions,” Viacom stated.

Viacom is seeking that the 2012 agreement be declared null and void, and a declaration that the pact cannot be changed or broken into parts.

In a statement, Cablevision said, “This baseless filing is a transparent attempt by Viacom to delay and distract attention from Cablevision’s valid antitrust claim against Viacom for illegal channel tying.  Viacom’s practice of tying of its popular networks to carriage of its lesser-watched networks is anti-consumer and wrong, and we look forward to further pressing our case at the next stage of the proceeding.”

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