Cable users living in North Dakota may know that two well-known cable providers, Charter Communications and Time Warner Cable, merged in May 2016. However, one of the largest programmers in the country, Univision, filed a lawsuit against Charter on July 8 over a contract dispute.
Charter gained a lot of customers when it merged with Time Warner. Prior to the deal closing in May, it offered cable to 4.3 million households. Following the deal, it offers cable to over 17 million customers. This has given the cable distributor more power when it negotiates with programmers such as Univision, which was one of the reasons for the merger in an effort to resist higher contract rates. However, the programmer has plenty of leverage on its own because it is the biggest broadcaster of Spanish-language television in the country.
In the contract dispute, Univision claims Charter is openly breaching its contract by using the merger as an excuse to unilaterally enforce dramatically low license fees compared to the current fees for valuable Univision content. The contract it has with Charter ended on June 30; however, the contract it has with Time Warner is effective through 2022.
Court documents state that Time Warner paid much less per subscriber for the Univision channels, and Charter believes that the contract should stay in place. Univision, on the other hand, wants a new negotiation with Charter to obtain a higher rate per subscriber. A higher rate could cause consumer prices to rise, but it may also allow the programmer to produce more shows.
Although companies in the television business are no strangers to contract disputes, they do not often end up in court. In many cases, attorneys for the parties involved will attempt to negotiate a solution.
Source: CNNMoney, “Univision sues newly-expanded cable company Charter“, Brian Stelter, July 8, 2016
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