NEW YORK (CNNfn) - Viacom’s MTV Networks, which airs pop-music videos to over 300 million homes worldwide, said Wednesday it is cooperating with a federal antitrust probe of the cable network's dealings with music companies. |
U.S. Justice Department spokeswoman Jennifer Rose would only confirm that the agency is, "looking at the possibility of potentially anti-competitive practices involving music video networks.”
A spokesman for Viacom Inc.'s (VIA.B) MTV Networks said in a statement, "We are cooperating fully with the Department of Justice's review of our transactions and believe that when it is concluded they will agree that the programming-services market in which we operate is highly competitive."
MTV Networks includes MTV, M2 and VH1 cable music channels.
Recording artist Tyrese. Image source: MTV.com
Investigators are reportedly probing MTV’s practice of demanding exclusive rights to music videos on release.
Concerns have been raised that MTV has demanded attractive licensing deals for digital-format music videos, allowing them to be shown on MTV Networks’ Web sites.
MTV dominates the cable-music-video market, reaching 72.6 million homes in the United States, while VH1, which is geared to a slightly older audience, is available in 68.8 million homes.
Around the world, Music Television is seen in an estimated 300 million homes and because of this prominence, music industry executives complain that MTV can make or break a recording.
Analysts did not seem concerned about the probe and the news apparently had little impact on Viacom’s stock, which was down 9/16 in recent trading.
Viacom’s stock activity over the last 12 months
Jill Krutick, an analyst with Salomon Smith Barney, wrote that the company had been under similar investigations before "which uncovered nothing of substance.”
"MTV has been extraordinarily successful,” Krutick wrote in a research report, "but this does not suggest that they should be punished for their success. We think that this is noise that is surfacing before the pending closure of the Viacom/CBS deal and we believe that the development is unlikely to have an impact on that outcome.”
Michael J. Schroeder, a partner with Wasmer, Schroeder & Co., suggested that the Justice Department "is feeling a little full of themselves right now probably out of the advances they made in the Microsoft (MSFT) case.”
"I don’t imagine it gaining too much support,” Schroeder said. "You’re not going to see all the attorneys general jumping on the band wagon. A lot of issues come into play here ... but there are also a lot of gray areas.”
Schroeder said competitors have noticed MTV’s strong hold on the highly desired youth market.
Scott Davis, an analyst with Schroeder & Co., said that even if MTV lost its exclusive video arrangements it would hardly affect the company’s powerful position.
"Who is going to compete against them?” he asked. "You can’t ignore MTV. Other networks can start another network, there’s nothing stopping them. MTV is doing incredibly well and it has gotten there perfectly legitimately.”
Davis noted that in recent years videos have played less of a role on MTV, as the network offers original programs such as the Real World, Road Rules and others.
--from staff and wire reports