Cablevision Takes a Swing at Time Warner - TheStreet

Yet another programmer is in a tussle with yet another cable TV system operator.

New York-based

Cablevision Systems

(CVC)

filed suit Friday against

Time Warner's

(TWX)

cable TV operation, saying that Time Warner Cable -- the nation's second-largest operator of cable TV systems -- was unfairly trying to change the terms of the agreement under which Cablevision's AMC movie channel runs on Time Warner systems.

The lawsuit calls Time Warner's move to terminate the current terms "an attempt to alter the affiliation agreement unilaterally, in bad faith, to impose much lower prices" for AMC.

The AMC lawsuit -- which seeks $250 million in damages -- alleges that Time Warner has attempted to terminate the contract on the basis of material changes in "the general quantity and quality" of programming on AMC. Such changes haven't occurred, says AMC.

AMC further alleges that Time Warner personnel "have openly admitted that this dispute is only about 'leverage,'" evidently to be used in unrelated negotiations that Time Warner is having with AMC's parent, the Rainbow Media programming division of Cablevision.

"We believe the lawsuit is totally without merit," a Time Warner Cable spokesman said Monday.

The dispute between the two companies is only the latest in a series of dust-ups between television programmers on the one hand and cable systems on the other. In recent weeks, for example,

Cox Communications

( COX) CEO Jim Robbins has

complained often and loudly that prices for sports programming are rising at an unacceptable rate.

Also in recent weeks,

Comcast

(CMCSA) - Get Report

-- the nation's largest operator of cable systems -- and programmer

Liberty Media

(L) - Get Report

settled litigation over the terms under which Liberty's Starz Encore Group premium channels run on Comcast's systems. That settlement, which ended up clearly in Comcast's favor, resulted in analysts' cutting their financial forecasts for Liberty.

Underlying these conflicts is the open question of which side has the upper hand in such negotiations. On the one hand, cable operators, as consumer gatekeepers, can threaten to remove programming from their systems if they are unsatisfied with the terms under which they carry the programming. The larger the cable operator, the greater the power of the gatekeeper.

On the other hand, if system operators try to exercise that power by dropping programming from their systems, they run the risk of alienating consumers expecting to see, for example, popular sports channels or movie channels on their TV. The absence of such programming could lead to consumers' deserting cable for a competing satellite service -- a threat that gives programmers power in their negotiations with cable operators.

Cablevision's shares fell 62 cents Monday to trade at $20.56.