Cablevision-Viacom Fight Boils Down to Leverage Play

Lawsuits underscores age-old tensions in biz negotiations

Cablevision-Viacom Fight Boils Down Leverage Play

There are two kinds of people in Hollywood: Those with leverage, and those who want leverage.

Over the years, leverage has gone by very different names, ranging from the nefarious to the euphemistic — monopoly, block booking, tying, vertical integration, packaging, bundling. But all of them come back to the same basic underlying notion: If you have something I want, you have an advantage when trying to give me something I don’t necessarily want quite so much in order to get it.

As a consequence, it’s hard not to chuckle at the reaction unleashed by Cablevision’s lawsuit against Viacom, claiming the conglomerate bundled more unattractive, low-rated cable channels with its high-profile networks. That’s not because such practices don’t happen, but because they’ve been happening forever, and getting angry about it is almost like the scene in “Casablanca” where the police prefect is shocked, shocked to discover gambling is going on.

In TV terms nowhere has leverage been more a part of the business than syndication, where major distributors have traditionally bristled (or worse) at the mere suggestion they’d creatively arm-twist stations into committing to new programs.

Then again, outfits like King World — which in its heyday howled like a wounded beast whenever anyone dared intimate “The Oprah Winfrey Show” or “Jeopardy” might help secure clearances for lesser titles — clearly enjoyed an edge smaller suppliers didn’t when dealing with major station groups.

Calculations regarding leverage also reside at the heart of studios growing and unwinding themselves. Moguls once assumed they had to be bigger and more diverse to wield maximum clout within the marketplace. But now there’s a sense being smaller, or at least more nimble and focused, possesses certain benefits as well, which explains why Tribune is no longer touting TV-newspaper synergies and News Corp. is spinning off its publishing assets.

The Tennis Channel is among those independent players who have cried foul over the treatment of smaller networks — without the cable portfolio of Comcast, Disney or Viacom — by multichannel video program distributors. In fact, the channel petitioned to the Federal Communications Commission arguing Comcast played favorites toward its own channels (such as Golf and NBC Sports Network) while discriminating against Tennis within its lineup.

The FCC ruling in Tennis’ favor has since been winding through the courts. But it’s difficult to contend with a straight face channels like Tennis, Current and Ovation don’t face a handicap in carriage deals compared to, say, ESPN’s third or fourth network.

“It’s as old as the business,” said Norman Horowitz, a veteran syndication exec who ran MGM and Columbia’s distribution arms. “The people who are harmed the most are the independents.”

It’s also worth noting the Dolan family, which owns Cablevision, understands the concept of leveraging a sought-after network. After all, they also control the AMC Networks, where flagship AMC helps prop up little-seen brethren IFC and Sundance Channel.

Granted, there are antitrust rules to prevent companies from blatantly extracting concessions, as well as legal remedies for profit participants who feel such practices have deprived them a fair share of their just rewards. The producers of “Home Improvement,” for example, have sued Disney twice — first in the 1997, and again last week — claiming the studio failed to maximize returns on the hit comedy, by negotiating a “sweetheart deal” with ABC, and by not full exploiting its syndication value. Rivals once joked about all the unwanted sitcoms pulled along by the “Home Improvement” Express.

Still, even when those with leverage fastidiously avoid alleged transgressions, they have every incentive to sidle up to the line.

So while Cablevision might position itself as striking a blow on behalf of consumers by challenging Viacom — and some media observers, such as Los Angeles Times columnist David Lazarus, have cited the lawsuit, whatever its motives, as a possible step inching toward a la carte cable pricing — let’s not fool ourselves.

Media companies use all their resources to seek a competitive edge. And more often than not, one’s perspective on whether that amounts to playing with a stacked deck or plain old savvy negotiating depends on who, at that moment, is holding the winning hand.