News Corp. fraud charge dismissed in N.Y.
NEW YORK — Time Warner won another skirmish in its legal war with Rupert Murdoch’s News Corp. Friday, as a federal judge threw out News Corp.’s charge of fraud.
That charge was one of the components of News Corp.’s civil antitrust lawsuit claiming that Time Warner Cable of New York City refused to make room for Murdoch’s Fox News Channel because TW wanted to protect its wholly owned cable network CNN from competition.
Fox alleged that TW fraudulently gave oral guarantees that it would take Fox News Channel on cable systems reaching 6 million of TW’s 12 million subscriber base, including the Gotham system. Fox argued that when Time Warner completed its merger with Turner Broadcasting, including Turner’s CNN, TW reneged on that oral agreement.
Judge Jack Weinstein dismissed the claim, saying TW and Fox “never reached — or even approached —agreement on the essentials to a contractual relationship. … The cajolery, as well as the blandishments, honeyed phrases and assurances that are to be expected in major negotiations … did not constitute fraud.”
No garden party
Characterizing the TW talks with Fox as “guileful rather than mendacious,” the judge said in his Friday decision, “These were not Adam-and-Eve-like innocents slipping naked into the cable-television and broadcast jungle to negotiate with each other and the serpent. They were hard-bitten executives steeled in such hagglings.”
Weinstein also changed the venue of the Fox antitrust suit, as well as TW’s counterclaim that Fox violated TW’s First Amendment rights by pacting with Gotham mayor Rudy Giuliani to carry the Fox News Channel on one of the city-owned channels. The venue change — from the Eastern to the Southern district of New York — will be convenient: That’s where TW’s lawsuit against the city of New York, also on First Amendment grounds, is pending.
In a statement, TW applauded the decision, saying it “makes clear that Time Warner’s executives committed no wrongdoing” during the original talks.
News Corp. put out a statement disagreeing with the decision, saying it will appeal immediately. Seeking a positive spin, News Corp. said the court “recognized that this is essentially an antitrust action involving numerous federal and state antitrust violations. The court has denied Time Warner’s motion to dismiss those claims. We are looking forward to bringing them to trial as quickly as possible in whatever court will hear them the fastest.”