Charter Communications’s $78.7 billion acquisition of Time Warner Cable and Bright House Networks has yielded two major spats over license fees, including one involving top Spanish-language broadcaster Univision Communications.
On July 8, Univision — the biggest player in the U.S. Hispanic media world — filed a lawsuit against Charter in New York Supreme Court seeking a legal solution to its claim that the company’s contract with Time Warner Cable, rather than with Charter, is the controlling contract. The suit claimed that Charter was trying to pay for Univision’s network at Time Warner Cable’s lower license fee.
Charter completed its acquisition of Time Warner Cable and Bright House Networks on May 18, a deal that bolstered Charter’s overall cable subscriber rolls from about 4 million to more than 17.3 million. Time Warner Cable had been the second-largest cable operator in the country prior to the deal, with about 11 million video customers. TWC’s deal with Charter is not set to expire until 2022.
“Univision had no alternative because Charter outright refused to negotiate a renewal agreement,” the company said in a statement. “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.”
Charter has remained relatively mum on the spat, stating, “We have a long-term contract with Univision and we expect them to honor it.”
For its part, Univision is seeking to stir up the pot. “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,” the broadcaster said in a statement. “Indeed, Charter pitched this deal to regulators, its subscribers and the public as one where its management team would take control of the combined company, and that is exactly what happened. Quite simply, Charter promised one thing publicly in order to secure approval for its acquisition and is now privately claiming the exact opposite to Univision.”
According to copy of the lawsuit obtained by Multichannel News, Univision licensed its programming to Charter pursuant to a 2014 distribution agreement that was set to expire June 30. That agreement contained a provision that stated if Charter were to purchase the distribution systems of another entity, “the purchased distributor would remain subject to the operative agreement between Univision and that other distributor, but only until the end of the calendar year in which the acquisition occurred. After that time, the Charter agreement would govern the acquired systems.”
Univision isn’t the only media company challenging Charter’s view on what controlling contract shall be enforced regarding network license fees. In mid-July, 21st Century Fox sued Charter for applying its TWC contract to Fox News Channel and Fox Business Network, rather than a deal signed with Charter in 2014. As with the Univision agreement, Time Warner Cable’s deal with 21st Century Fox was for a lower rate.
Court dates for the 21st Century Fox and Univision lawsuits have not yet been set.