Viacom to Settle Rebate Lawsuit

A judge has given preliminary approval to a $13-million settlement between Viacom Inc. and 650,000 Bay Area cable television subscribers who claim never to have received rebates the media giant promised to pay them.

The payout stems from a rate hike Viacom charged customers in 10 Bay Area counties from 1991 to 1996 as the company sought to offset a 500% property tax increase. The rate hike amounted to about $1 a month on bills that at the time averaged about $10.

To quell subscribers’ protests that they were being gouged, Viacom announced plans to challenge the tax increases and pledged to issue rebates when the company prevailed.

Viacom did prevail in 1999, receiving a tax refund of about $45 million.

What followed was a dispute over how much of that money was owed to cable customers. The figure was difficult to pinpoint because it was not detailed on cable bills and because Viacom said subscribers were asked to bear only a portion of the tax increase, not the full brunt of it.

Critics contended that Viacom returned only part of what subscribers paid, and only in two of the 10 counties.

Customers filed a class- action lawsuit that led to three years of litigation, described by one attorney as “hand-to-hand combat.”

During the case, plaintiffs sought to prove that Viacom had reneged on its promise to refund the subscription-rate increases.

Viacom denied any wrongdoing.

The company argued that after spending millions in legal fees to protest what it considered an illegal tax increase, the award was not enough to repay all the customers, a source familiar with the case said.

The $13-million settlement figure reflects a compromise between the amount plaintiffs contended they were owed and what Viacom believed was owed, said Derek Howard, the attorney for the complainants.

It was not immediately clear Monday what the average refund would amount to.

Despite having no clear numbers to work with, Howard said he was pleased with the settlement.

“We believe it is fair and reasonable, but whether this [settlement] is finally approved is up to one person,” he said.

That person is Alameda County Superior Court Judge Ronald Sabraw, who is expected to issue a final ruling at a hearing Oct. 21.

“We are very pleased that we are able to resolve this matter, particularly in a way that benefits the community at large,” said Carl Folta, a spokesman for Viacom, which no longer owns the cable businesses at the center of the dispute.

Former Viacom customers who believe they are owed a refund can call (800) 697-1839 for more information.