Cablevision sues Viacom to break up the bundle — or get a better deal

Cablevision (s CVC) has filed a federal antitrust lawsuit against Viacom (s VIA) in New York Tuesday in an attempt to break up the bundle of channels that Viacom is selling the cable operator. Cablevision’s lawsuit alleges that Viacom is forcing the operator to carry 14 networks it and its customers don’t want, including MTV Hits and VH1 Classic.

The operator now wants to invalidate a deal the two parties struck just two months ago, and instead just get the good stuff. You know, Comedy Central, Nickelodeon, and maybe a little bit of MTV proper.

Cablevision sent out the following statement about the lawsuit:

“The manner in which Viacom sells its programming is illegal, anti-consumer, and wrong. Viacom effectively forces Cablevision’s customers to pay for and receive little-watched channels in order to get the channels they actually want. Viacom’s abuse of its market power is not only illegal, but also prevents Cablevision from delivering the programming that its customers want and that competes with Viacom’s less popular channels.”

A Viacom spokesperson sent us the following statement in response:

“At the request of distributors, Viacom and other programmers have long offered discounts to those who agree to provide additional network distribution. Many distributors take advantage of these win-win and pro-consumer arrangements. Reflecting the highly competitive cable programming business, these arrangements have been upheld by a number of federal courts and on appeal. Viacom will vigorously defend this transparent attempt by Cablevision to use the courts to renegotiate our existing two month old agreement.”

The lawsuit also alleges that Viacom threatened “massive financial penalties” if Cablevision refused to carry the 14 lesser-watched channels in question. The operator is asking for a permanent injunction that would bar Viacom from bundling its lesser-watched channels with its more popular core offerings.

On paper, this lawsuit is an interesting challenge to the cable bundle, which has been largely dictated by the broadcasters. Operators have long said that they would like to sell their customers smaller and more flexible bundles. Broadcasters have made this impossible by either directly bundling all their channels into one big package, or by other conditions that make sure operators can’t sell bundles without certain channels.

However, it’s unlikely that this lawsuit will be fought out until the bitter end. Because at the core, this is about something else: Broadcasters have in recent years significantly increased the carriage fees for their fares, leading to a number of nasty fights that left consumers without their favorite channels for weeks. In the end, content owners always won, and carriers caved in, agreeing to pay more before their customers have yet another reason to cut the cord.

Cablevision and Viacom negotiated a last-minute carriage agreement in late December. Details of that deal were not made public, but it’s obvious that Cablevision wasn’t happy with the outcome. Now it wants to get a better deal, and threatening the bundle is the biggest asset it has in this fight.

Image courtesy of Flickr user  nyghtowl.