In the meantime, until the permanent injunction is in place, the court ruled that Verizon must pay ActiveVideo $2.74 per FiOS TV subscriber per month starting December 1. For Verizon, which has about 3.98 million FiOS TV subscribers, this works out to about $10.9 million per month.

Active Video, an interactive TV vendor whose largest client is Cablevision, initially filed suit against Verizon back in May 2010. In August 2011, the court concluded that Verizon’s FiOS TV violated four of five patents asserted by ActiveVideo and awarded the company $115 million in damages. Later that month, ActiveVideo filed a motion for a permanent injunction against the telco barring it from using two of the patents in its video-on-demand (VoD) service. And just last month, the court added at least $24.1 million in supplemental damages and interest to the amount Verizon owes ActiveVideo.

“There is no doubt that ActiveVideo suffers indirect losses when Cablevision suffers direct losses from Verizon’s infringement,” Judge Jackson wrote in the order released last Wednesday.

In a statement released last Friday, Verizon said it would appeal the injunction ruling, as well as the damages awarded and the fundamental decision of infringement. The telco also said it is working with Cisco Systems on changes to its VoD service to avoid using the ActiveVideo patents in question.

In related but separate news, Verizon also had brought suit against Cablevision and a complaint before the U.S. International Trade Commission (ITC), alleging the cable provider violated several of its patents. Back in May 2011, the ITC rejected Verizon’s claims and tossed out the case.

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The recent announcement by Affinegy of its Home Portal v2.0 software and related announcement that Cablevision is deploying it, is further evidence of the growing importance of the converged home to service providers’ business plans. Viodi TV  caught up with Affinegy CEO Melissa Simpler at the Parks Associates Connections conference, where she discusses Home Portal v2.0.

In addition to the discovery and simplification of devices on a home network, the Home Portal v2.0 software effectively allows service providers to create personal data clouds for their customers. The Affinegy software, which identifies the devices on the home networks, serves as an orchestra leader of sorts directing the devices as to where to stream data.

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AMC Networks owns AMC, IFC, WE TV and the Sundance Channel. AMC also owns IFC Films and international programmer and TV program distribution unit. Speculation is that a deal for AMC Networks could run in the $3 billion range.

None of the organizations has commented publicly on the rumor. Of course if a deal is to go through it will provide the wining content provider with even more market power in retransmission consent negotiations.

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Verizon claimed that three Cablevision set-top boxes (STBs) violated five patents held by the telco. Verizon released the following statement last Friday: “Our pursuit of this action reflects our long-established commitment to protect and enforce our intellectual property rights.”

Cablevision responded: “This is a significant victory for Cablevision, the judge rejected four of Verizon’s five claims in the case and the fifth had already been invalidated by a Virginia court. We are obviously pleased and will continue to defend ourselves vigorously as the process continues.”

Verizon is currently preparing a second case for review citing two additional patents that it believes Cablevision to be violating. If Verizon is victorious, the court will block Cablevision from importing three digital set-top models from Cisco, key hardware which subscribers use to record programs on the MSO’s new network DVR service.

In related news, ActiveVideo, an interactive TV vendor whose largest client is Cablevision, is waiting for a decision in a suit filed against Verizon for similar patent infringements in May 2010.

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TWC first launched the controversial application last month and it immediately set off a firestorm of controversy related to video content rights. TWC initially offered about 30 cable networks, however, in the face of substantive opposition, the cable provider temporarily removed more than a dozen channels from its iPad line up.

In a pre-emptive legal move, TWC filed a request for declaratory judgment that says the cable company can transmit Viacom programming — such as MTV, Comedy Central and Nickelodeon — to any device in a customer’s home.”We have steadfastly maintained that we have the rights to allow our customers to view this programming in their homes, over our cable systems, without artificial limits on the screens they can use to do so, and we are asking the court to confirm our view,” Time Warner Cable general counsel Marc Lawrence-Apfelbaum said Thursday. “With over 360,000 downloads of our TWCableTV™ app, it is clear that our customers welcome the convenience and flexibility our new app provides.”

In a separate lawsuit, Viacom asserts that TWC doesn’t have that permission under the current licensing agreement. Viacom also acknowledges that Time Warner Cable’s actions “will interfere with Viacom’s opportunities to license content to third-party broadband providers and to successfully distribute programming on its own broadband delivery sites.” Viacom is countersuing for breach of contract and copyright violations and is seeking injunctive relief and damages.

Following on TWC’s heels, Cablevision released its own Live TV iPad application last week which boasts more than 300 channels. Viacom now appears poised to take legal action against Cablevision as well. In a statement emailed to Multichannel News, the content provider states:

Cablevision has seized distribution rights that Viacom has not granted. Viacom grants rights to distribute our content based on specific technologies and devices. We have extensive relationships with dozens of distribution companies who deal with us fairly and deliver outstanding consumer experiences on a variety of platforms. These relationships are based on fair licensing agreements that provide appropriate value for everyone involved. We will take the steps necessary to ensure that Cablevision respects our rights.

It’s clear that these court battles are groundbreaking and may prove precedent setting for future video content rights negotiations.

In related news, ESPN announced late last week its flagship cable sports network is now available on Apple’s mobile devices for Time Warner Cable, Verizon Communications Inc. and Bright House Networks subscribers. As opposed to Cablevision and Time Warner Cable’s offerings, ESPN’s new app can be used anywhere and is not restricted to in-home use.

For more, see this website which Time Warner Cable has set up to influence public opinion.

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TWC’s application requires customers to subscribe to both its television package and broadband service, and it is currently restricted to in-home viewing. To use this feature, customers download the app from the iTunes App Store, launch it, log in and scroll through the channel lineup to select preferred programming. TWC was the first out of the gate with this  live streaming application, although many of its competitors already offer video on demand (VoD) services to the iPad.

TWC initially offered about 30 cable networks, however the cable provider soon faced opposition to its distribution strategy from several major cable networks. Late last week TWC abruptly removed 12 channels from its iPad app. Viacom, Fox Cable Networks, Scripps Networks and Discovery Communications were minutes away from filing their legal paperwork when the cable provider agreed to remove their channels, according to three people with knowledge of the planned filing.

Distributors such as Time Warner and Cablevision assert that their existing contracts with content providers allow them to turn iPads and other devices into TV sets. In fact, TWC said in a statement that it believed it had “every right to carry the programming on our iPad app” and it would consider its legal options.

For their part, the content providers expect additional payment for streaming to a tablet device, maintaining that it constitutes a new distribution channel. Content providers may also be worried about the security of their programming. Down the line the consumer will want — and expect – to take his tablet with him outside the home, and, as a result, the content might be accessible to hackers who can grab the signal without paying for it.

Despite programmer opposition, TWC is moving forward with its iPad application, announcing last Friday that it has added an additional 17 cable channels to the app, including A&E and Bravo.

Meanwhile, over the weekend Cablevision launched a new streaming Optimum App for iPad.  The service is free for existing Optimum cable television customers. In addition to approximately 300 live channels and access to VoD, the Optimum App for iPad integrates enhanced guide information. Programming is fully searchable, including by genre, and the application includes the ability to schedule DVR recordings and manage recorded content. Up to three iPads per home are authorized to use the service, but only two simultaneously.

Cablevision boldly states in its release: “The application turns the iPad into an additional television, enabling Cablevision customers to view the same live programming and VoD content already being delivered to other TVs in the home as part of the service they have paid for. Cablevision has the right to distribute programming over its cable system to iPads configured in this way under its existing distribution agreements with programming providers.”

The key point here is that Cablevision refers to the iPad as an “additional television.” This might be a hard nut for content providers to argue with.

For a complete channel lineup and more information on the TWC app, visit the Time Warner Cable blog.
For more info on the Cablevision offering, see the release.

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Rainbow Media Holdings (AMC, WE TV, IFC, Sundance Channel, IFCEntertainment) will follow Madison Square Garden which was spun-off by Cablevision earlier this year. The move, described as a “tax free pro rata distribution” for shareholders, is thought to be positioned for completion in mid 2011.

Cablevision CEO James Dolan said in a prepared statement, “We believe this will provide both Cablevision and Rainbow with greater flexibility to freely pursue their own strategic objectives and individual business plans, while allowing investors to more clearly evaluate each of the separate companies’ assets and future potential.”

For more, see this release.

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The carnage began last week when Comcast announced that it had lost 275,000 basic cable subscribers. No. 2 cable provider Time Warner Cable followed suit, announcing that it has lost 155,000 cable subscribers during the third quarter, which included 46,000 digital video subs. Charter Communications reported that it lost 63,800 basic cable subscribers during the previous quarter, and Cablevision announced that it lost 24,500 subscribers during the same period, including about 5,000 digital video subscribers.

All told that’s more than 500,000 customers that left their cable provider last quarter, and that’s just data from four of the top five cable companies that publicly report earnings. (No. 3 cable provider Cox Communications is privately held and therefore doesn’t have to announce its subscriber losses.)

The Associated Press reports that there’s still a question about what’s causing these defectors to flee. It could be a sign that Internet TV services such as Netflix and Hulu are finally starting to entice people to cancel cable, though company executives say the weak economy and housing market are to blame.

For more, see this Associated Press article and this Gigaom post.

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Sen. John Kerry (D-Mass.) offers up some congratulations to all for getting it settled, while pointing out that there is work that needs to be done to protect the consumer.

Fox crows over the deals and hails the rules as working just fine; no details on either deal is revealed. Cablevision rails against the process and the heavy new fees it now has to pay. Dish Network thanks its staff that negotiated for sticking with it, and working out a “long-term” arrangement.

What do we take away from this round? We know that this isn’t the last time pay-TV distributors and broadcast owners are going to war over retransmission consent fees. We know that Cablevision isn’t happy with the deal it signed and isn’t afraid to tell everyone just how unhappy it is. We know analysts are pointing to a loss in advertising revenue as the reason Fox decided to go for more in this round.

The fact is the rule on retransmission consent no longer provides a safety valve for the broadcaster. It now provides a  whip the broadcaster is able to wield to keep the distributors in-line.

In a free market, this evolution of retransmission consent would be fine, if there were indeed alternatives that were just as fair and just as equal for everyone.

The fact is, depending on where you live you may have a choice between no reception or  high-cost and higher-cost distributers.

We know that this isn’t over yet. The analysts are all saying that this time Congress noticed. What we don’t know is if they will do anything to change what currently requires those who have no say in the the negotiation to endure blackouts.

Someone should remind the FCC that an alternate provider or an antenna may not be practical,  reasonable or possible.

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The FCC posted a consumer advisory on its website last night. The advisory reads, in part: “Cablevision and Fox had an agreement for Cablevision to carry WNYW, WWOR, and WTXF that expired at 11:59 pm EDT on October 15, 2010. They have been negotiating to renew that agreement, but failed to reach a new agreement before the deadline. As a result, Cablevision stopped carrying WNYW, WWOR, and WTXF. This dispute affects only Cablevision subscribers who wish to view programming on WNYW, WWOR, and WTXF. “

The commission notes, however, that Cablevision has also lost the signals for Fox cable networks including Fox Business, Fox Deportes and Nat Geo Wild.

It suggests that affected subscribers turn to over-the-air solutions, or competing pay-TV providers. The FCC states: “In the affected areas, other available pay services include: AT&T, DIRECTV, DISH Network, RCN (limited areas of Brooklyn), and Verizon FIOS. NOTE: Not all of these pay service providers are available throughout Cablevision’s service areas in New York, New Jersey, and Connecticut. You should contact the pay service provider to determine whether they provide service to your residence. In addition, you should be aware that DISH’s agreement for these stations is set to expire on November 1 unless a new agreement is reached between DISH and Fox.” (For more on Fox vs. Dish, see last week’s post.)

Cablevision has called on News Corp. to resume transmission immediately and submit to binding arbitration under a neutral third party. Cablevision says it pays $70 million a year for access to 12 Fox channels, including those in dispute, and News Corp. is asking for “outrageous fee demands” totaling more than $150 million a year for the same programming.

For its part Fox has blamed Cablevision for the impasse, saying the two remain “far apart.” It rejected the notion of binding arbitration, maintaining that it would “reward Cablevision for refusing to negotiate fairly.”

According to major news outlets, over the weekend Fox upped the ante, denying Cablevision’s broadband customers access to Hulu and Fox.com. Fox is using its online properties as a negotiating tool, a tactic which speaks to the growing importance of Web-enabled content. A Hulu spokeswoman told All Things D: “Unfortunately, we were put in a position of needing to block Fox content on Hulu in order to remain neutral during contract negotiations between Fox and Cablevision. This only includes Fox content. All other Hulu content is accessible to Cablevision [I]nternet subscribers. We regret the impact on Cablevision customers and look forward to returning Fox content to those users as soon as possible.”

Once this news was published, however, Fox quickly changed tactics, re-instating service to its Web properties.

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