Time Warner Entertainment L.P. last Thursday filed a countersuit against American Movie Classics Co., arguing that it is within its contractual right to terminate Time Warner Cable's current AMC carriage deal.
The suit, filed in New York State Supreme Court, counters an action AMC brought against Time Warner on Nov. 14 seeking to bar the MSO from terminating its carriage agreement with the network on Dec. 31, owing to programming changes AMC, the formerly classic movie channel, had made. The network claims Time Warner's move is nothing more than a smokescreen to leverage a deal with AMC's sister regional sports services.
AMCC was eyeing at least $250 million in lost affiliate fees and advertising revenue if the service was terminated.
But Time Warner's legal document denies any attempt to use the AMC deal as a catalyst for negotiations for other networks, and claims AMC is no longer the classic movie service it signed up for when it renegotiated a long-term carriage pact in 2000.
According to the suit, Time Warner alleges that AMC breached its contract, which said the channel would consist of "classic motion picture films" and related programming. In recent years, the network has added more contemporary movies such as Alien Resurrection and An American Werewolf in Paris.
As a result, Time Warner on Sept. 30 gave AMCC 90 days notice that it would drop AMC, or renegotiate a new, lower rate per subscriber. Time Warner has also proposed offering AMC on a "lower penetrated tier," consistent with the proposed positioning for AMCC's digital AMC Hollywood Classics service.
Time Warner also claims a "senior" AMCC official "conceded" at last June's National Show "conceded" that AMC's transformation to AMC resulted in a "minor breach," but asserted that Time Warner Cable was "using the breach as leverage."
AMCC responded in a statement last Friday by saying Time Warner's countersuit "is just an irrelevant smokescreen in their ongoing campaign to create phony leverage that doesn't exist. Time Warner Cable is engaged in an illegal attempt to break its contract with AMC, which extends through 2008. We are confident that we will win in the courts."