In this paper, we study performance optimization for scalable video coding and multicast over networks. Multi-path video streaming, network coding based routing, and network flow control are jointly optimized to maximize a network utility function defined over heterogeneous receivers. Content priority of video coding layers is considered during the flow routing to determine the optimal multicast paths and associated data rates for each layer. Our optimization scheme attempts to find content distribution meshes with minimum path costs for each video coding layer while satisfying the inter-layer dependency during scalable video coding. Based on primal decomposition and primal-dual analysis, we develop a decentralized algorithm with two optimization levels to solve the performance optimization problem. We also prove the stability and convergence of the proposed iterative algorithm using Lyapunov theories. Extensive experimental results demonstrate that the proposed algorithm not only achieves the max-flow throughput using network coding, but also provides better video quality with balanced layered access for heterogeneous receivers.