Fox News Says It Was Cheated in Charter/Time Warner Deal

      MANHATTAN (CN) — Fox News sued Charter Communications over its $60 billion purchase of Time Warner Cable, claiming the telecommunications giant has illegally reneged on a 2014 agreement to boost carriage rates on the conservative channel.
     The July 19 lawsuit claims Charter, which is now the second-largest broadband company in the United States, lied in its filings with the Securities and Exchange Commission, Federal Communications Commission, and in correspondence with Fox News, by muddling whether it was purchasing Time Warner, or Time Warner was purchasing it.
     As a result of the merger, a 2014 affiliation agreement between Fox News and Time Warner was scrapped, despite assurances that the agreement would survive corporate acquisition of Time Warner.
     On May 18, Charter purchased Time Warner for roughly $60 billion. The deal also included Bright House Networks.
     At the time, Charter spokesman Alex Dudley was reported as saying Charter would phase out the Time Warner Cable name over time.
     After the purchase, the acquisition agreement included a proviso that all previous agreements would be terminated, including the 2014 rate-agreement with Fox News. That agreement would expire in 2018, according to the lawsuit filed in New York County Supreme Court. The exact terms of the deal are now publicly known.
     Fox News claims that it was aware of the potential of a Charter acquisition in 2014, and that its agreement took that possibility into account.
     However, the 2014 agreement was fraudulently scrapped due to a complicated ruse in which Charter took the position that it was being acquired by a Time Warner holding company, when in fact the reverse was true, the lawsuit states. The ruse was “no more clearly seen that, since its acquisitions of TWC, Charter has reportedly decided to vacate the Time Warner Center and move all operations to Charter’s offices in Connecticut,” the lawsuit states.
     The lawsuit cites several financial filings with the Securities and Exchange Commission, which state that Charter would be the ultimate parent company.
     However, in a June 24 letter, Charter’s general counsel and corporate secretary Richard Dykhouse told Fox News that both former Time Warner systems and Charter systems were now owned by the Time Warner-related entity Spectrum Management Holding Company.
     “We appreciate that, as publicly reported, the transactions were not self-explanatory,” Dykhouse wrote in the letter. “[C]ontrary to the assertions in your letter, [Charter systems] are eligible for inclusion under the applicable TWC agreement and will be governed by the terms of the applicable TWC agreement.”
     Earlier this month Univision filed a similar breach-of-contract lawsuit against Charter, claiming the company was trying to jack up programming rates. Unlike Fox News, however, Univision’s contract with Charter runs through 2022.
     It appears that the Fox News lawsuit might follow in Univision’s footsteps. Lawyers from Greenberg Traurig, who represent Fox News, have asked to attend a July 26 judicial conference in the Univision case.
     An e-mail request for comment from Charter on the two lawsuits was not immediately returned.

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