Univision today filed a lawsuit against Charter Communications Inc. in New York Supreme Court accusing the cable operator of breach of contract over carriage fees after its $71.4 billion dollar acquisition of Time Warner Cable.
According to the complaint, Univision alleges Charter purposely avoided negotiating its carriage agreement, which expired June 30, in order to try to take over TWC’s lower programming fee deal when the merger was completed.
In the complaint, attorneys argue the Univision’s 2014 distribution agreement with Charter, which just expired, “contained a heavily-negotiated provision concerning corporate acquisitions” that in essence, would allow Charter to keep TWC’s rates in place until the end of 2016. “After that time, the Charter Agreement would govern the acquired systems.”
Univision alleges Charter wants to enforce and adopt TWC’s 2009 distribution agreement, which expires in June of 2022, for the entire company, including legacy Charter systems.
One of the key points in the argument is which company acquired control after the merger.
“Charter insists that the contract Univision had with Time Warner Cable is controlling, rather than its own contract with Univision. Charter bases this argument on the preposterous theory that as a result of the merger, Time Warner Cable, rather than Charter, is managing all these cable systems. But everyone knows that is not true: the longstanding CEO and the executive team of Charter, as well as its pre-existing board of directors, now manage and control all of the cable systems,” Univision said in a statement.
A Charter spokesman only sent a one-line statement about the matter: “We have a long-term contract with Univision, and we expect them to honor it.”
He did not confirm if the contract referenced is the TWC agreement.
Univision seeks to have the license fees in the TWC Agreement apply to only the Legacy TWC Systems until December 31, 2016, terminating the agreement at that time. It’s also seeking damages to compensate for the difference, “the exact amount of which will be determined at trial.”
