City of Los Angeles Files $10 Million Suit Against Time Warner Cable

Operator allegedly underpaid franchise fees

The city of Los Angeles is suing Time Warner Cable for nearly $10 million in allegedly unpaid franchise fees, a backlog that stretches back to 2010.

In a complaint filed Friday with the United States District Court for the Central District of California, city attorney Mike Feuer charged Time Warner Cable with bilking the municipality to the tune of $9.7 million, a sum that includes $7.19 million in unpaid 2010 and 2011 franchise fees and another $2.51 million in delinquent payments from the previous two years.

“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 … fully for this privilege,” the complaint reads, before going on to note that the cable operator generates “more than $1 billion in revenue every two years from the residents of Los Angeles, a sum dwarfing the fees it is required to pay the city in return.”

The city’s attorneys said that the unpaid franchise fees and Public, Educational, Government use fees represent millions that could be put to use to pay firefighter and police officer salaries and maintain parks and libraries.

While the charges in the suit are characteristically byzantine, the city’s central argument would appear to boil down to the “precipitous and wrongful withholding” of contractually owed monies. Feuer’s office seems particularly enraged by the fact that the operator underpaid by as much as $5.22 million at the end of the city’s 2010-11 financial year, which only served to “exacerbate the City’s well-publicized fiscal crisis.”

The defendants cited in the 24-page complaint are Time Warner Cable, Inc., Time Warner Cable Pacific West, Time Warner Cable Enterprises and the Time Warner Entertainment Advance/Newhouse Partnership. 

The operator responded to the lawsuit with the following statement: “As a major job creator, tax contributor and service provider…Time Warner Cable is an active and responsible corporate citizen. We are disappointed the city has chosen to bring this action, which we strongly believe is without merit. It will now be resolved through the legal process.”

Per details of the complaint, Time Warner Cable pays a premium to operate within the confines of Los Angeles. The operator forked over $46.1 million in 2010 and 2011 franchise fees, or a little more than $23 million per annum. 

The lawsuit arrives at a particularly inopportune moment for Time Warner Cable, which is preparing to be bought out by Comcast in a $45.2 billion deal. What was already certain to be a regulatory boondoggle may have become that much more of a target for crusading lawmakers.