Time Warner Cable Inc (TWC) sued by Los Angeles city attorney

Posted Mar 15, 2014

Time Warner Cable Inc (NYSE:TWC) has been hit with a federal lawsuit on Friday by Los Angeles city attorney Mike Feuer. Feuer is accusing Time Warner Cable of failing to pay around $10 million in franchise and public, educational, and government fees owed from 2008 and 2009.

“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,? the statement read. ?We believe (the legal action) is without merit. It will now be resolved through the legal process,” said Time Warner in a response to the lawsuit.

Feuer said that state law changed in 2008 regarding the franchise fee and it shifted to the state from local jurisdictions. However, the city of Los Angeles was able to keep a formula where it continued to charge for the use of right of way, networks of cable wires and boxes on city streets, and telephone poles.

Feuer said that Time Warner Cable’s decision to withhold the funds came at the height of the recession, which was a difficult time for the city of Los Angeles. “The suit alleges that at the same time Time Warner was withholding payments to the city, it was raking in billions of dollars in revenue. They had a virtual monopoly for the provision of cable service in Los Angeles,” added Feuer.

Is the timing of this lawsuit coincidental? Feuer said that the legal action has nothing to do with Time Warner’s negotiations with Comcast. He added that the city has been in negotiations with Time Warner since 2011.

[Source: Los Angeles Times]