MTV Subject of Antitrust Probe Over Purchase of Competitor

MTV Networks, which runs the world’s dominant video music channels, is under investigation for alleged antitrust violations by the U.S. Justice Department.

The government probe was launched seven months ago after MTV’s parent, media giant Viacom Inc., notified the Justice Department that it planned to acquire a small competing video channel, the Box, as part of a joint venture with TCI Music, a unit of Liberty Media Corp.

“We are investigating the possibility of potentially anti-competitive practices involving music video networks,” Justice spokeswoman Jennifer Rose said. The Justice Department declined to discuss any details of the probe, which was first reported Wednesday in the Wall Street Journal.

Record industry sources said the government is trying to determine whether MTV, which reaches more than 300 million homes worldwide, has crossed the line by requiring some U.S. record labels to grant the station exclusive rights to air some music videos. Officials also are looking into MTV’s recent efforts to cut cheap licensing deals to air videos on the station’s new Internet Web sites, sources said.

The Justice Department began looking at MTV’s alleged lock on the industry before the Box deal closed in July. Officials have interviewed MTV executives and requested documents from Viacom over the past few months, sources said.

On Wednesday, an MTV spokeswoman said the company is working to aid the government and is confidant that officials will conclude the investigation in the company’s favor.

“We are cooperating fully with the Department of Justice’s review of the Box transaction and believe that when it is concluded they will agree that there is no violation of antitrust law and that the program-services market in which we operate is highly competitive,” a spokeswoman said.

Top executives at several major record companies privately predicted that the probe would not result in any significant action against MTV. Two years ago, the Justice Department began investigating alleged antitrust violations involving MTV in Europe, but took no enforcement against the company, sources said.

Thousands of videos are submitted to MTV each year by record companies who use the channel to gain exposure for their artists in hopes of stimulating record sales. In 1999, MTV negotiated exclusive rights deals for only four music videos: Korn’s “Freak on a Leash,” Limp Bizkit’s “Nookie,” the Offspring’s “Why Don’t You Get a Job,” and the Spice Girls’ “Good Bye.”

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.

MTV’s top opposition is the Black Entertainment Television network, which airs primarily R&B; and rap videos, as well as other black-oriented shows and programs. BET Holdings is owned by entrepreneur Robert Johnson and Liberty Media Corp.