NEW YORK (CNN/Money) -
YES, the regional TV sports network controlled by the New York Yankees, sued Cablevision Systems Inc. Monday, seeking to get the team's games to the cable operator's 3 million New York-area customers.
The suit by the Yankees Entertainment and Sports Network charges it is being blocked from the Cablevision system "for purely anti-competitive reasons." Cablevision owns and operates two of its own New York regional sports networks, including the MSG Network, which had broadcast the Yankees games until this season.
Officials of Long Island, N.Y.-based Cablevision (CVC: down $1.23 to $22.47, Research, Estimates) responded that the suit is not the best way to settle the dispute.
"This lawsuit is entirely without merit, and is the YES Network's latest ploy to pressure Cablevision into accepting an expensive 'take it or leave it' demand that is not in the best interests of all our customers," the cable operator said. "We hope YES will spend less time in the courtroom and more time at the negotiating table."
Shares of Cablevision lost about 3 percent to hit a new 52-week low after news of the suit.
Cablevision stock has declined steadily since the dispute heated up in March, about a month before the start of the season. YES has been urging Yankees fans who have Cablevision to switch to DirecTV, the satellite television service owned by Hughes Electronics (GMH: down $0.40 to $14.70, Research, Estimates).
"I'd prayed this day would never come, but it is now obvious that Cablevision, which has a history of anti-competitive behavior, hopes to run YES out of business and restore and protect its own stranglehold over local sports," said a statement from YES CEO Leo Hindery.
Hindery told CNN/Money that YES is still eager to negotiate an agreement with Cablevision, but said the cable operator had refused to negotiate along the same lines as the region's other cable systems.
"This has nothing to do with Cablevision the cable company," he said. "It has everything to do with Cablevision, the owners of MSG and Fox Sports New York."
YankeesNets, the company that owns the Yankees baseball team, the New Jersey Nets basketball team and the New Jersey Devils hockey team, owns 60 percent of YES Network, with Hindery, Goldman Sachs (GS: Research, Estimates) and Providence Equity owning the other 40 percent.
Cablevision, the New York region's largest cable operator, has offered to air YES Network as a premium channel that would cost its subscribers extra to view. YES has insisted that Cablevision, which has about three-eighths of the homes in the region wired for cable or satellite television, follow all the other cable operators in the region and air games as part of the basic cable package, which would increase YES's potential audience and advertising revenue. YES wants Cablevision to pay it the same $2 per subscriber that the other cable operators have agreed to pay.
The lack of Cablevision homes has cost YES not only subscriber fees but advertising dollars due to lower viewership of Yankees games so far this year. Still, Hindery told CNN/Money earlier this month that the company is about breaking even without Cablevision and despite having to pay the Yankees $54 million a year in a rights fee, slightly more than the team got from MSG last year.
Some antitrust attorneys said that it is unlikely that the suit would reach a conclusion during the 2002 baseball season, meaning that without further negotiations between YES and Cablevision the Yankees fans who do have Cablevision probably won't get to see the 120 games a year on the new network.
Hindery said YES would be seeking an expedited hearing, but could not give a time frame for when he hoped to win relief from the court.
Some antitrust attorneys said that it will be a tough antitrust case for YES to make, given that Cablevision is offering to air the games but only on its own terms.
"My first impression is it sounds more like a contract dispute than an antitrust case," said Mark Schechter, an antitrust lawyer with the Washington law firm of Howay Simon Arnold White. Schechter did qualify his remark, saying he had not seen the detailed arguments presented in the case.
Hindery bristled at that characterization of the suit, pointing out that YES is represented by David Boies, who is the lead attorney for the Justice Dept. in its antitrust suit against Microsoft Corp.
"This is the appropriate response to the stalemate in which we find ourselves," he said.
The suit charges Cablevision with violating the Sherman and Clayton acts as well as Federal Communications Commission rules. It charges Cablevision stated that it would carry YES Network only if there was cable exclusivity and YES Network was not made available to satellite distributors.
The suit was filed in U.S. District Court for the Southern District of New York by Boies.
"Cablevision's conduct is an attempt to monopolize the sports programming market and is part of the company's continuing pattern of abuse of its monopoly position," said a statement from Boies. "This limits viewer choices and it prevents YES from competing on a level playing field."