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A contractual standoff between Univision and Charter Communications has escalated past the point of brinksmanship with millions of customers for Charter’s Spectrum cable service losing access on Wednesday to Univision’s popular Spanish-language television channels. Soon, a judge may have to rule on an emergency motion for a restraining order after Charter’s lawyers demanded a New York court’s immediate intervention.
“There is simply no legitimate reason for Univision to hijack this case — a lawsuit it initiated,” stated a letter by Charter’s attorney Judson Brown to the judge on Tuesday.
That lawsuit would be the one filed by Univision in July 2016 after Charter closed its deal to acquire Time Warner Cable and attempted to use the carriage deal negotiated by TWC as governing the parties licensing arrangement. Univision, like Fox News and Showtime in separate lawsuits, insists that distribution of its programming is pursuant to a deal made with Charter, not TWC, pointing to the way the cable giant told regulators and shareholders who was in charge of the company.
Univision’s deal with Charter expired last June, while Univision’s deal with Time Warner Cable extends to 2022.
In response to the lawsuit, Charter argued in September that if its own deal is the operative one, as Univision contends, it couldn’t have breached an expired contract.
If the contract is expired, though, that means Univision has the right to pull its signal from Spectrum. And so, Univision has taken this route, releasing a public statement that this was necessary in light of Charter’s rejection of a good-faith effort to reach an agreement.
Charter is irate.
In his letter, Brown informs New York Supreme Court Justice O. Peter Sherwood that Univision will be filing a motion to maintain the status quo of the business relationship during the pendency of the litigation.
Univision’s pulling of programming, Brown adds, results “in irreparable harm to Charter, because when a customer switches to another distributor they often sign long-term contracts that make it difficult, if not impossible, to get them back. Worse, by pulling its signal, Univision would essentially be directing a verdict in its favor in this case because its cessation of service is premised on the assumption that its position in this litigation (that no contract governs) is correct and that Charter’s position (that the TWC Agreement governs) is incorrect. But that is for this Court to decide.”
Jonathan Polkes, the Weil Gotshal attorney representing Univision, responded with his own letter to Sherwood with the demand the judge dismiss out of hand Charter’s “procedurally-defective effort … to intervene.”
He adds, “The Court should be extremely skeptical of Charter’s sudden claim of a ‘crisis’ that warrants extraordinary judicial intervention. Charter has had every reason to anticipate from the very outset of this dispute that Univision could and would exercise its right to de-authorize its signal at some point.”
Polkes points back to Charter’s motion to dismiss and what it said about an expired contract: “Having repeatedly recognized Univision’s right to ‘terminate the signal’ when it suits Charter’s own purposes, Charter has now done a 180-degree turn in a desperate last-minute attempt to forestall something it previously said was entirely appropriate for Univision to do.”
Although it’s not something that is likely to be highlighted in press releases, Charter’s lawyer told the court, “This dispute is about money, nothing more,” with Univision’s lawyer nodding to that sentiment and telling the judge he shouldn’t take seriously the arguments about irreparable harm.
Needless to say, Univision’s move is bold. If it’s wrong — and the TWC agreement applies — it risks paying damages for its own breach of contract.
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