Comcast Sued by Viamedia for Monopolization of 'Spot' Cable Ad Sales Market
May 23 2016 - 7:40PM
Dow Jones News
Viamedia Inc. has filed a lawsuit against Comcast Corp.,
alleging that the cable giant violated antitrust law through its
business practices in the $5 billion local cable advertising-sales
market.
Viamedia, which competes against Comcast in the business of
local cable advertising, accused Comcast of outsize influence and
business practices that are squeezing out firms like Viamedia and
causing them financial harm. The suit was filed on Monday in
federal court in the Northern District of Illinois.
The U.S. Justice Department has already been probing Comcast's
practices in the so-called "spot" cable ad sales business since
late last year. The Wall Street Journal reported in November that
the Justice Department had requested additional information from
several companies in the market, including Comcast, for an
investigation focused on "monopolization or attempted
monopolization" in locations where Comcast offers service.
In a statement, Comcast said the advertising market is "robustly
competitive" and local cable advertising only accounts for 7% of
local ad sales because of competition with other media like radio
and broadcast TV. "We are currently reviewing the suit and
generally do not comment on pending litigation," Comcast said.
Viamedia is seeking damages of at least $75 million, according
to the suit. The firm said it has lost potential investors and
customers as a result of Comcast's practices.
Spot cable advertising is a relatively obscure part of the $70
billion television advertising market. It deals with the roughly
two minutes per hour that cable channels typically set aside in
their carriage agreements for pay-TV providers to sell ad time to
local, national and regional advertisers.
Comcast takes the lead on negotiating with advertisers on behalf
of rival pay-TV providers in many markets, and it also owns a
majority stake in NCC Media, one of the main companies that helps
national advertisers buy ad time from cable providers across
multiple local markets. Viamedia alleged in the suit that Comcast
has taken steps to exclude Viamedia from participating in both the
national and regional cooperatives.
Regional advertisers buy through "interconnects," which are
sales and technology cooperatives made up of cable TV providers in
a particular market. The dominant provider in each market makes
deals with advertisers on behalf of other members in the
interconnect. Comcast, as the biggest cable operator, manages
interconnects in 26 of the top 50 TV markets. Its unit called
Comcast Spotlight also provides so-called representation services,
which Viamedia offers as well, to help smaller pay-TV providers
sell, bill and insert ads into programming.
In the lawsuit, Viamedia alleged that Comcast has been excluding
Viamedia and rival cable firms represented by Viamedia from
interconnects it controls. As one example, Viamedia said Comcast
has excluded it from the Chicago and Detroit interconnects and told
the pay-TV rivals Viamedia had been representing—WideOpenWest and
RCN—that they would have to use Comcast's representation services
if they wanted to access the interconnect. RCN had previously said
it was loath to use representation services from Comcast, with whom
it competes.
Though Comcast offered Viamedia a deal to re-enter, Viamedia
refused because it was a "commercially unreasonable" ask. Now, WOW
and RCN have switched to using Comcast Spotlight.
Viamedia said it has also been asking the NCC to renew its
agreement for access, but alleges that the NCC has "refused to
entertain a long-term extension" beyond the current contract, which
expires in December 2017. Viamedia said NCC and Comcast have
approached "several" of Viamedia's remaining clients and urged them
to terminate their agreements with Viamedia if they wanted to
continue to have access to NCC.
Many of Viamedia's complaints in the lawsuit mirror its prior
objections filed with the Federal Communications Commission during
Comcast's doomed attempt to buy Time Warner Cable. Comcast at the
time defended its practices, saying that "there is nothing
anticompetitive about a firm electing not to do business with one
of its competitors."
Write to Shalini Ramachandran at
shalini.ramachandran@wsj.com
(END) Dow Jones Newswires
May 23, 2016 19:25 ET (23:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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