Comcast, Time Warner Cable Accused of Racial Bias in $20 Billion Lawsuit

Comcast Time Warner Merger

Comcast and Time Warner Cable are among the defendants in a $20 billion racial discrimination lawsuit that claims the cable giants are shutting out African-American owned channels from their lineups.

But Comcast is calling the lawsuit “frivolous,” and other defendants are threatening a countersuit for defamation.

The lawsuit was filed last week in U.S. District Court in Los Angeles by the National Assn. of African American Owned Media and Entertainment Studios Networks, the media company founded by comedian Byron Allen.

The lawsuit also claims that Comcast, in securing approval for its 2011 acquisition of NBC Universal, reached memorandums of understanding with a number of civil rights groups, including the NAACP, the National Urban League and Al Sharpton’s National Action Network, that were a “sham” to “whitewash Comcast’s discriminatory business practices.”

The MOUs called for Comcast to carry 10 new independently owned channels by 2020, four of which will be African American owned and managed. The suit contends that the only 100% owned African American channel Comcast has agreed to broadcast is the Africa Channel, and that it is owned by Paula Madison, formerly chief diversity officer for NBC Universal, who was involved in putting together the MOUs.

Comcast has called the lawsuit “frivolous,” and Sharpton, who is also named as a defendant along with the civil rights organizations, said that the lawsuit was a “bogus statement from a person (Allen) who has no credibility.”

“There is no basis for this,” Sharpton told Variety.

The suit claims that Comcast made large cash donations to the groups in exchange for their support. It contends that Sharpton and National Action Network were given $3.8 million in “donations” and as salary for his MSNBC show, in a “blatant example of conflict of interest.”

The lawsuit claims that the MOUs have created two separate paths for channel carriage, with Comcast limiting the number of carriage agreements it will enter into with African-American owned channels and offering them inferior contracting terms.

The suit claims that when Entertainment Studios attempted to contract with Comcast, a Comcast executive told the company, “We’re not trying to create any more Bob Johnsons.” Johnson was the African American founder of BET, which he sold to Viacom in 2001.

Sharpton, however, said that the lawsuit actually could bolster a counterclaim for defamation.

“I know of no exchange of anything to get us to support a merger,” Sharpton added.

He said that Allen sought the civil rights groups’ assistance in securing carriage on Comcast, but that his networks were “below the standards of what we wanted to support.” He suggested that the lawsuit was filed by Allen to get parties to the bargaining table to cut a deal with his company.

As part of the MOU from the NBC Universal merger, Comcast has launched networks like Revolt, from Sean “Diddy” Combs, and Aspire, from Earvin “Magic” Johnson.

The lawsuit claims that African American celebrities are posing as “fronts” for the channels when they are actually owned and controlled by white-owned businesses.

The suit says that Entertainment Studios has carriage contracts with more than 40 TV distributors nationwide, including Verizon, CenturyLink and RCN.

National Assn. of African-American Owned Media and Allen’s company also have litigation pending against AT&T and DirecTV, which also are seeking to merge. That racial discrimination lawsuit was filed in December.

The lawsuit also claims that Time Warner Cable has been “gun jumping” and has adopted Comcast’s practices even though the merger has not yet been approved by regulators.

A Time Warner Cable spokeswoman said: “We have not yet been served with the complaint, so we can’t comment on it. However, we can say that until our merger closes, we remain two separate companies, and we are operating in that fashion, including with respect to programming decisions.”

The plaintiffs are represented by Skip Miller of the Los Angeles law firm of Miller Barondess.