Viacom Antitrust Complaint - Part II

["James P. Love" <love@essential.org>]

TAXPAYER ASSETS PROJECT
INFORMATION POLICY NOTE
OCTOBER 8, 1993

               PARTIAL TEXT OF VIACOM ANTITRUST ACTION AGAINST
               CABLE COMPANIES CONTROLLED BY JOHN MALONE

               PART 2 - "OVERVIEW OF DEFENDANTS MONOPOLIZATION
               SCHEME"

Enclosed is another section of the antitrust complaint filed by
Viacom on September 23, 1993 against Tele-Communications,Inc.,
Liberty Media Corp., Satellite Services, Encore Media, Netlink
USA, and QVC Network, Inc., companies partly owned or controlled
by John Malone.  

Also enclosed is an index of the entire Viacom complaint. If you
want part of the complaint or the entire complaint send an e-mail
message to "mike@essential.org".  In the message specify what
sections of the complaint you want mailed by using the numbers in
parenthesis. The complaint is available in ASCII or Wordperfect
format.          Michael Ward <mike@essential.org>

---------------------------------------------------------------
I.   OVERVIEW OF DEFENDANTS' MONOPOLIZATION SCHEME
     AND OTHER ANTCIOMPETITIVE ACTS
         36.  During the past twenty years, the delivery of
television programming has undergone a dramatic transformation.
Until early 1970, virtually the only way to receive television
programming was via local, over-the-air broadcast television
stations.  Now more than 60 percent of the homes in the United
States with televisions subscribe to cable television ("CATV")
distribution systems or own home satellite dishes ("HSDs") that
enable viewers to receive television programming services not
available from over-the-air broadcast stations ("non-broadcast
television programming services").
         37.  Malone and defendants, both among themselves and
with others, have conspired to engage and have engaged in an
integrated series of predatory acts and strategies.  That conduct
has been designed to weaken or take over defendants' competitors
in the national markets for the distribution of television
programming to CAT operators and HSDs and in the national markets
for non-broadcast television programming services and submarkets
thereof.  The purpose and effect of this scheme has been to raise
barriers to entry and expansion in those markets, to acquire
monopoly power in those markets, and to weaken competition in
those markets.  This conduct has harmed the competitive process,
hurt consumers, and damaged plaintiff.
         38.  For providers of non-broadcast television
programming ("non-broadcast programmers"), CAT systems and HSD
distributors are as a practical matter the only path to potential
subscribers.  Without access to CAT systems or HSD distributors,
non-broadcast programmers are cut off from their subscribers and
cannot survive.  By deciding which non-broadcast television
programming that they will carry, those who control CAT systems
and HSD distribution, such as defendants, can determine which
nonbroadcast programmers will have meaningful access to consumers
and therefore will survive.
         39.  In order to further their own monopolistic and
anticompetitive interests, Malone and his fellow conspirators
have engaged in a scheme to block the path to as many cable and
HSD subscribers as possible.  They have succeeded in blocking
access to cable and HSD subscribers in the following ways:
(1)  Defendants have engaged in a pattern of continued
     acouisitlon of cable systems ln an effort to obtain monopoly
     control over local markets for cable televislon. Defendants
     are thus able to deny programmers access to the critlcal
     mass of viewers necessary to support a viable programmlng
     service.

(2)  As the operators of cable systems, defendants have refused
     to carry programming offered by programming services, and
     they have exacted onerous terms as a condition of carriage. 
     At the same tlme, they have unfairly favored their own
     programming services.

(3)  TCI has secured control over technology necessary to deliver
     programming services to HSDs.  TCI has engaged ln an
     elaborate scheme to deny programming services access to that
     technology, except on onerous terms.

(4)  Defendants have launched their own programming services in
     order to crowd competing services off the path of cable and
     HSD subscribers.

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APPENDIX A
INDEX OF ANTITRUST COMPLAINT:    
                    VIACOM INTERNATIONAL INC.
                               V 
TELE-COMMUNICATIONS, INC., LIBERTY MEDIA CORP., SATELLITE
SERICES, INC., ENCORE MEDIA CORP., NETLINK USA, AND QVC NETWORK,
INC.

     NATURE OF THE ACTION (1-16) [Viacom v Malone - PART 1]

     THE PARTIES (17-13)

     JURISDICTION AND VENUE (14-29)

     RELATED INDIVIDUALS AND ENTITIES (30-35)

I.   OVERVIEW OF DEFENDANTS' MONOPOLIZATION SCHEME AND OTHER
     ANTICOMPETITIVE ACTS (36-39) [Viacom v Malone - PART 2]

II.  STRUCTURE OF THE MARKETS AFFECTED (40-85)
     A. Non-Broadcast Television Programming
          1. Non-Broadcast Television Programming Services
          2. Pay Television Programming Services
          3. Distribution of Cable Television to Subscribers
     B. Distribution of Non-Broadcast Programming
          1. Distribution of CATV Systems
          2. Distribution of Programming to Home Satellite Dishes
          3. Encryption Systems
          4. Digital Compressions Systems

III. ANTICOMPETITIVE CONDUCT (86-141)
     A. The TCI/GI Conspiracy
     B. Coerced Use of and Exclusion From the TCI Authorization 
        Center
     C. TCI's and Liberty's Conspiracy to Eliminate Competitor
        SNI
     D. Access Foreclosure Through the Introduction of TCI's
        and/or Encore Media's New Pay Movie Programming Service

IV.  DEFENDANTS' UNLAWFUL ATTEMPT TO ACQUIRE PARAMOUNT (142-171)
     A. Defendants' Interference With the Viacom-Paramount Merger
       Agreement
          1. The Viacom-Paramount Merger Agreement
          2. Announcements Intended to Lower Viacom's Stock Price
     B. Defendants' Anticompetitive Bid For Paramount

V.   EFFECTS OF CONDUCT AND INJURY TO PLAINTIFF

CLAIMS FOR RELIEF (175-248)

PRAYER FOR RELIEF
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