Viacom, MCA Go to War Over New TV Land

Cable television partners Viacom Inc. and MCA Inc. went to war Monday over a new channel that shows reruns of “Hogan’s Heroes,” “The Sonny & Cher Comedy Hour” and “Green Acres.”

MCA fired the first shot, filing suit against Viacom in Delaware Chancery Court over Nick at Nite’s TV Land, a 24-hour channel of classic reruns that Viacom launched Monday night with a flick of the switch at a star-studded party on the Paramount Pictures lot.

MCA says the channel breaches the terms of Viacom and MCA’s joint cable venture operating the profitable USA Network and the start-up Sci-Fi Channel. Under the agreement, which Viacom inherited when it bought Paramount Communications two years ago for $10 billion, any advertising-supported competitor to USA must be launched through the joint venture.

Viacom countered the suit immediately Monday, alleging in its own lawsuit filed in Delaware that TV Land is just an extension of the Nick at Nite evening programming on its successful Nickelodeon channel, which Viacom built long before it bought Paramount. Viacom alleges that MCA is trying to pressure Viacom into selling its 50% stake to MCA on the cheap. Some analysts believe the channel overall could be worth as much as $4 billion.

MCA argues that over the years, the clause has tied its hands in starting up or investing in any basic cable or pay-per-view networks and that Viacom should play by the same rules. It also alleges that Viacom has been in violation of the agreement ever since it bought Paramount, because it operates the ad-supported children’s channel Nickelodeon, along with music channels MTV and VH1.

“MCA has always lived up to its obligations in the agreements and intends to ensure that Viacom does the same,” MCA General Counsel Karen Randall said.

The move is a bold strike by MCA and its top executive, Seagram Co. Chief Executive Edgar Bronfman Jr., but it is one that carries risks. For one thing, Viacom Chairman Sumner Redstone usually takes a no-holds-barred approach to legal disputes with other companies.

The two companies are partners in several ventures, and a bitter dispute could endanger those dealings; a joint video distribution operation; and a chain of movie theaters in Europe. It’s also important for MCA to maintain good relations with Viacom’s Blockbuster Entertainment--the nation’s largest video chain--and Blockbuster Music.

In its complaint, Viacom alleges that Bronfman broke a verbal promise made to Redstone in February that he wouldn’t challenge the launch of TV Land.

That promise, the suit says, came in exchange for Redstone’s waiving a one-year noncompete clause prohibiting Frank J. Biondi Jr., whom he fired as chief executive in January, from going to work at MCA. Biondi was named MCA’s chairman and chief executive last week.

Viacom also dredged up a quote from Bronfman in the Wall Street Journal describing Viacom as a “good partner,” adding that Seagram was responsible for press leaks making Redstone look bad in the negotiations.

Viacom further alleges that MCA went behind Viacom’s back to try to lure producer Aaron Spelling to MCA. Viacom says that would have interfered with Viacom’s attempts to sell Spelling Entertainment, which the producer founded. The suit says that “Mr. Spelling--unlike MCA--acted honorably” and turned MCA down.

Viacom also says that MCA last year actively explored using USA as a way to buy CBS Inc. before the network was acquired by Westinghouse Electric Corp. Finally, Viacom, which has been known to get personal when it files lawsuits, also included in its suit a thinly disguised put-down of Seagram by describing it as a company that is “known for its alcoholic beverages businesses and has little experience in the entertainment industry.”

The legal war comes after attempts to work out a resolution failed. Last week, it appeared the two sides would work out a compromise after Redstone freed Biondi from his legal binds to go to MCA.

The suit puts Biondi in an awkward position. Viacom argues that Biondi personally gave the green light to TV Land and that he was the most passionate about Viacom’s position in regard to MCA.

Redstone, answering a question Monday at a speech before the Newspaper Assn. of America, said: “From my standpoint, it’s even more unfortunate that Frank Biondi is in exactly the position that I sought to avoid putting him in.”

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“He was at Viacom the leading advocate for our position, having aggressively taken that position not only with Viacom executives, but with MCA executives,” Redstone said, according to an Associated Press account.

The stakes are clearly higher than putting “Petticoat Junction” and “That Girl” on the air.

Cable channels provide companies, especially ones such as Paramount and MCA with extensive libraries of TV programs, a chance to give those old shows renewed value long after they have been paid for. Sources close to MCA say executives there believe that TV Land will make it harder for MCA to exploit on cable its own extensive library of classic shows.

“If this had been about a new music channel, this suit wouldn’t have happened,” one source said.

Over the years, sources said, MCA and Paramount were interested in cable ventures--such as buying the former Financial News Network--only to have their plans nixed.

Under the contract, both sides can get out of the deal through a “buy-sell” escape clause when there is a change of control in either company. MCA changed hands twice--first to Japan’s Matsushita Electric Industrial Co. and then to Seagram--but Paramount and Viacom never exercised the clause.