According to Univision’s suit, filed Friday in New York Supreme Court, the argument hinges on Charter’s assertion that its deal with Univision is now governed by the terms of contract that Univision set with Time Warner Cable prior to its merger with Charter. The Charter/TW Cable/Bright House Networks merger closed in May.
Univision asserts that when it sought to renegotiate its deal with Charter as the June 30 expiration date approached, Charter execs insisted that the existing Time Warner Cable contracts now cover the entire enlarged company. Because Time Warner Cable was a larger operator that Charter, it was able to secure better terms in retransmission consent deals for Univision O&Os and its cable channels.
The suit puts the spotlight on how Charter will exert its new-found clout with programmers now that it ranks as the industry’s second-largest cable operator behind Comcast. Charter’s ability to absorb the more advantageous terms of TW Cable’s programming deals has been seen as a plus for the enlarged company, in addition to the leverage it gains by reaching more than 17 million video subscribers.
“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,” Univision said in a statement. “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.”
In a statement, Charter said: “We have a long-term contract with Univision and we expect them to honor it.”
Univision’s suit asserts that a provision in its previous deal with Charter addresses the potential for Charter to acquire other cable operators that have pre-exisiting deals with Univision. That provision calls for the pre-existing deals to remain in force until the end of the year in which the acquisition was completed. In Univision’s view, that means its contract with the old TW Cable systems now owned by Charter expire on Dec. 31.
According to the suit, Charter programming chief Allan Singer “outright refused” to engage in negotiations regarding a renewal of deal. According to Univision, Charter maintains its contract with Univision runs through June 2022 as per the terms of its TW Cable deal. That deal was initially set in 2009 and extended in 2013.
Univision’s suit includes lengthy quotes of statements Charter execs made to state and federal regulators during the year-long merger review process. As the merger conditions agreement at the FCC is barely two months old, Charter is sure to be sensitive to accusations that it is abusing its power in the marketplace with an independent programmer such as Univision.