Time Warner Cable has more problems in Los Angeles.
Los Angeles City Attorney Mike Feuer took a swing on Friday, filing a lawsuit against the region's largest pay TV provider. The federal suit, filed on behalf of the city of Los Angeles, alleges that Time Warner Cable has "stiffed" the city out of nearly $10 million in fees -- during the financial crisis when the city was struggling to make ends meet, as the cable company was raking in billions of dollars from its customers.
"This is a day where we are saying enough is enough," Feuer said Friday morning at a City Hall news conference announcing the lawsuit.
The 24-page lawsuit contends that Time Warner Cable "has blatantly refused to live up it its obligations to the city" despite collecting "more than $1 billion in revenue every two years from the residents of Los Angeles."
The lawsuit comes at a sensitive time. Time Warner Cable has been playing hardball with DirecTV, Dish Network, Charter Communications, AT&T U-Verse, Cox Communications and Verizon FiOS over carriage of the new Los Angeles Dodgers channel, which launched on Time Warner Cable systems last month.
The other pay TV distributors are balking at carrying the channel, contending that Time Warner Cable is demanding fees that are too high. At more than $4 per month per subscriber, the channel would cost pay TV subscribers in the region more than $50 a year for the channel -- whether those customers watch the Dodgers or not.
Feuer said the lawsuit was not related to the kerfuffle over the Dodgers channel. Fans who do not subscribe to Time Warner Cable have been growing anxious, worried that they might miss watching the Dodgers play when the season begins later this month.
Instead, Feuer said the city has been negotiating with Time Warner Cable for several years over the disputed fees -- to no avail. The time for negotiation was over, Feuer said.
"Time Warner pocketed the money from its subscribers and did not turn it over to the city of Los Angeles," Feuer said, adding the $9.7 million in fees that it says the company owes could have been used to hire 100 police officers.
Time Warner Cable, in a statement, denied the allegations.
“As a major job creator, tax contributor and service provider in the City of Los Angeles, Time Warner Cable is an active and responsible corporate citizen in the City of Los Angeles," the company said in a statement. "We are disappointed the city has chosen to bring this action, which we strongly believe is without merit."
At issue is whether Time Warner Cable owed $2.5 million in franchise fees and public, education and governmental channel fees in 2008 and 2009 and another $7.2 million in fees in 2010 and 2011.
Cities require franchise fees in lieu of rent for the cable company's use of public right-of-way to install and maintain its wires and cable boxes.
The other type of fees -- public, education and governmental channel fees, which were required until 2009 in Los Angeles -- were used by governments to support the government and public access TV channels offered to cable subscribers.
The city contends that on two separate occasions, once in 2008 and again in 2011, Time Warner Cable withheld more than $5 million in fees the city said it was owed. When Time Warner Cable finally paid a portion of the disputed fees, it then subtracted the same amount from its franchise fee bill, resulting in another underpayment, Feuer said.
Until this season, Dodgers games were available in Los Angeles on local television station KCAL-TV Channel 9 and Fox’s Prime Ticket regional sports cable network. But for the first time in the team's history, none of the team's games will be available on free, over-the-air television. Fans will have to subscribe to a pay-TV service if they want to watch the Dodgers.
Time Warner Cable agreed to an $8.35-billion, 25-year deal to run the new Dodgers channel, called SportsNet LA. The annual fee that Time Warner Cable must pay to the Dodgers starts at $210 million this season and rises dramatically through the life of the contract.
[For the record, 1:05 p.m.: A previous version of this post incorrectly attributed Time Warner Cable's statement to the city of Los Angeles.]
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