Time Warner Cable is on the verge of merging with Comcast, but as the contractual paperwork begins to take effect, the cable company has to deal with another legal matter of the courtroom variety. The Los Angeles City Attorney’s office announced March 14 it filed a lawsuit against Time Warner seeking nearly $10 million.
According to a statement released by City Attorney Mike Feuer, Time Warner has allegedly refused to pay fees to the municipality despite “raking in billions of dollars of revenue.”
“The City of Los Angeles enabled Time Warner to make billions and in turn they shortchanged the taxpayers millions,” Feuer stated.
Specifically, the lawsuit seeks $9,697,896 from Time Warner, including more than $2.5 million in fees owed for 2008 and 2009, plus nearly $7.2 million for 2010 and 2011.
The money allegedly owed is for franchise Public, Educational, and Government (PEG) fees.
“Time Warner Cable … has derived billions of dollars from its cable television franchise in the City of Los Angeles, yet stubbornly continues to flout its statutory obligations to compensate the City of Los Angeles … fully for this privilege,” the opening salvo of the 24-page complaint alleges.
City attorneys made two contentions to support its allegations against Time Warner.
“Time Warner enjoys a virtual monopoly for the provision of cable television services to the residents of the City, and it has blatantly refused to live up to its obligations to the City resulting from the grant of that effective monopoly,” the complaint asserted.
The funds City Hall alleges have not been paid by Time Warner could have been used to pay for “core services,” such as fire and police protection, sanitation services, and operation of libraries, parks, and senior centers, the complaint continued.
Since 1986, City Hall has authorized “local cable franchises” divided into geographic segments within city limits.
“The Cable Act (and California law) permitted the City to require an operator to assume certain obligations in return for the non-exclusive right to occupy valuable public property – the rights-of-way – to build a system to provide cable,” the complaint stated.
In exchange for the “right to occupy valuable public property,” City Hall was authorized under the Cable Act (also known as the Cable Communications Policy Act of 1984) to collect a franchise fee equal to five percent of the operator’s gross revenues.
The Act also allowed a city could enforce requirements for PEG facilities and equipment.
City Hall issued 12 local franchises to Time Warner, according to the complaint.
The complaint details City Hall’s relationship with Time Warner and how that relationship may have changed in light of new state legislation and a law enforcement action filed in 2008 by Los Angeles against the cable provided and alleging deceptive, fraudulent, and unfair practices.
Mike Dundas, a deputy city attorney, will oversee the litigation.
