1:21pm PT by Eriq Gardner
Fox News Claims Charter Has Used TWC Merger to Commit Fraud
Charter is now facing a pair of lawsuits that contend it has leveraged its merger with Time Warner Cable to underpay license fees.
On Tuesday, Fox News sued the cable giant, after Univision filed its own lawsuit earlier in the month. Both legal actions pose the question of whether Charter can hold up TWC agreements as governing carriage on its cable system.
According to Fox News' complaint, "To avoid the clear application of the Charter Agreement, which has higher rates than Fox News Network's contracts with TWC, Charter is claiming that TWC was the party that survived the acquisition and that TWC's contracts with Fox News Network survive as a result."
Fox News says that Charter's alleged position that it has been acquired by TWC is a "ruse" and a "fraud" both on it and the public at large.
The fact that the 2006 agreement between Fox News and TWC predates a 2014 deal between Fox News and Charter probably explains why Charter was paying more. Every year, the market rate for carriage of premium cable networks seemingly goes up.
Fox News says it informed its counter-party in a June 9 letter that its agreement with TWC was terminated as of May 18, the closing date of Charter's acquisition of TWC. Two weeks later, Charter responded by noting its new Spectrum brand and asserting this was a "Time Warner Company."
The lawsuit points out that the letter came from Charter's general counsel Richard Dykhouse and that the new company is dominated by Charter executives in the Stamford, Conn., headquarters where Charter previously maintained offices. Regulatory filings and other evidence suggesting Charter's primacy is also cited in Fox News' attempt at a declaratory judgment that the Charter deal is the governing agreement.
Fox News, represented by Louis Solomon and Jason Scurti at Greenberg Traurig, is also suing Charter for allegedly committing fraud and misrepresentations and allegedly breaching contract through anticipatory repudiation.