Comcast Sued by Viamedia for Monopolization of 'Spot' Cable Ad Sales Market

By Shalini Ramachandran 

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 [e-mail]

(END) Dow Jones Newswires

May 23, 2016 19:09 ET (23:09 GMT)

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