The City of Los Angeles on Friday filed a civil lawsuit against Time Warner Cable, seeking close to $10 million and claiming the cable operator has fallen short on payment of franchise and other fees.
Legal experts believe more legal action might be in the offing, as communities served by Time Warner Cable seek fees they believe are owed ahead of the company’s proposed $45.2 billion acquisition by Comcast.
Jonathan Kramer, a Los Angeles-based telecom attorney and a member of the California chapter of the National Association of Telecommunications Officers and Advisors, said it was “inevitable that [more] of these types of lawsuits will be filed.”
“Strategically, it makes sense to file now, because Comcast and Time Warner want something: a clean transfer,” Kramer said.
Time Warner Cable said in a statement: "As a major job creator, tax contributor and service provider in the City of Los Angeles, TWC is an active and responsible corporate citizen in the City of Los Angeles. We are disappointed the City has chosen to bring this action, which we strongly believe is without merit. It will now be resolved through the legal process."
In a filing in U.S. District Court for the Central District of California, Los Angeles city officials claimed that Time Warner Cable withheld millions of dollars in franchise fees and access-channel support.
The city said Time Warner Cable has failed to live up to franchise obligations, despite collecting some $1 billion in revenue every two years from some 600,000 cable subscribers in the Los Angeles area.
The city is seeking from Time Warner Cable $9.7 million, which includes $2.5 million in franchise and PEG (public, educational and government channel) fees and support for 2008 and 2009, plus another $7.2 million owed for 2010 and 2011.
“This is the day that we stand up and say ‘enough is enough,’ ” Los Angeles City Attorney Mike Feuer said in a statement.
Kramer said that other cities are considering similar action, but that “Los Angeles is first to pull the trigger.”
“It’s the devil you know,” Kramer said. “We know Time Warner. But Comcast is much more aggressive when it comes to pushing back (against) local jurisdictions.”