Fox News on Tuesday sued Charter Communications Inc., the nation's second-largest cable operator, for alleged breach of contract and fraud.
The lawsuit, filed in New York, comes in the wake of Charter's recent $60 billion acquisition of Time Warner Cable. Fox News, a unit of 21st Century Fox Inc., claims Charter is illegally seeking to apply Time Warner Cable's channel-carriage rates to carry Fox News Channel and its sister channel Fox Business Network in all of its roughly 17 million homes.
According to the suit, Charter isn't adhering to a 2014 agreement it signed with Fox News to distribute the two channels and instead is applying rates from an old agreement the network had with Time Warner Cable, which has lower rates.
Both the Time Warner Cable and Charter agreements with Fox News don't expire until 2018, a person familiar with the matter said.
Despite the suit, a Fox News filed a similar suit against Charterexecutive said there are no plans to attempt to remove Fox News Channel or Fox Business Network from Charter's channel lineup.
A spokesman for Charter said the distributor has a contract with Fox News that it expects to be honored.
Fox News is the second major programmer to accuse Charter of breaching contracts. Earlier this month, Spanish-language broadcaster Univision Communications Inc. filed a similar suit against Charter. Univision owns multiple cable networks as well as 59 local television stations.
"I would expect there are other companies out there that have these issues," said Tim Carry, executive vice president of distribution for Fox News.
Fights between programmers and distributors over fees have been on the rise for the past several years. Distributors have been consolidating in large part to increase leverage in negotiations with programmers. Content companies fear that they will be squeezed by distributors, hurting profits and leaving less money to create programming.
In this tussle, Charter claimed in a letter to Fox News that the public perception that Charter acquired Time Warner Cable isn't correct. "We appreciate that, as publicly reported, the transactions were not self-explanatory," Charter said, adding that Time Warner Cable now owns and manages the systems that were part of Charter.
Fox News's Mr. Carry said when the network negotiated the 2014 pact with Charter it took into consideration future deals with other distributors and that their agreement makes clear "anything that Charter acquires would fall under this deal."
In its filing, Fox News cites several examples where Charter said it was acquiring Time Warner Cable, not the other way around, including the joint proxy statement the two companies filed in the summer of 2015.
Fox News is one of the most expensive nonsports channels in television. While the terms of its deals with Charter and Time Warner Cable haven't been disclosed, the network gets an average of fee of $1.41 per-month, per-subscriber from pay TV providers, according to industry consulting firm SNL Kagan.
Fox News parent 21st Century Fox and Wall Street Journal owner News Corp. were part of the same company until mid-2013.
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