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Cablevision and Viacom reach agreement to resolve bundling lawsuit

Published 10/16/2015, 06:29 PM
Updated 10/16/2015, 06:34 PM
© Reuters.  Two cable giants -- Cablevision and Viacom -- settled a longstanding bundling lawsuit on Friday

© Reuters. Two cable giants -- Cablevision and Viacom -- settled a longstanding bundling lawsuit on Friday

Investing.com -- Cablevision Systems Corporation (N:CVC) and Viacom B Inc (O:VIAB) announced on Friday that they resolved a longstanding antitrust litigation between the two companies, stemming from a carriage agreement reached in 2012.

In a February, 2013 lawsuit, Cablevision accused Viacom of forcing it to pay for more than a dozen low-rated networks if it also wanted access to a number of more popular channels such as Comedy Central, VH1 and TV Land. According to Cablevision, if it objected to the bundling agreement, it would have been subject to a $1 billion penalty by Viacom. In response, Viacom said the package deals were common in the cable industry.

Then, last August, Viacom asked a U.S. District Court to void the carriage agreement, arguing that the deal was a "complete sham." At the time, Viacom threatened to pull other top networks including: MTV, Nickelodeon and BET from Cablevision's system, which services approximately three million subscribers nationwide.

"We are pleased to have put these matters behind us in ways that benefit both of our companies and look forward to working together to benefit Cablevision's customers," the companies said in a joint statement.

Details of the agreement were not disclosed.

Cablevision was under pressure to come to terms on an agreement, after it was acquired by European telecommunications company Altice last month for $34.90 a share. The $17.7 billion deal, including debt, created the fourth largest cable company in the U.S.

"The strategy of Altice in the large and highly strategic US market is reinforced with the acquisition of Cablevision," Altice president Patrick Drahi said in a statement last month. "We will be in a stronger position, as in all other markets in which we operate, to deliver the best services, invest in the most advanced technology, and develop innovative products for the benefit of our customers."

Cablevision is a leading cable provider in the New York City metropolitan area, which encompasses parts of New York, Connecticut and New Jersey – one of the most attractive cable markets in the U.S.

"We believe that Patrick Drahi and Altice will be truly worthy successors, and we look forward to doing all we can to affect this transition for our customers and employees," Cablevision CEO James Dolan said following the announcement of the deal. "We expect that Cablevision will be in excellent hands."

On Thursday, Altice officially filed an application with the Federal Communications Commission to complete the merger. The deal is subject to FCC approval, which entails a review period that typically lasts 180 days and includes a schedule for public comment.

Shares in Viacom closed on Friday at 49.75, up 0.51 or 1.04%, while shares in Cablevision lost 0.10 or 0.29% to close at 33.01.

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