Time Warner Cable, city of Los Angeles settle franchise fee suit: report

Time Warner Cable (NYSE: TWC) and the city of Los Angeles have settled a $9.7 million suit over franchise fees dating back to March 2014.

Terms were not disclosed, according to Variety, which first reported on the settlement. TWC did not immediately respond to inquiries from FierceCable

According to the city's complaint, the cable operator, which generates about $500 million in annual revenue from its Los Angeles system, owes $7.2 million in fees for 2010 and 2011 and $2.5 million in fees from 2008 and 2009.

The suit was filed just weeks after Comcast (NASDAQ: CMCSA) announced its ill-fated attempt to buy TWC. It also came on the heels of TWC announcing 6 percent across-the-board rate increases to local customers. The suit revolved around so-called "PEG" fees, which are meant to provide support for public, educational and government programs. 

The city alleged in federal court that TWC didn't pay PEG fees levied against it in 2008 at the time the last franchise agreement between the city and the MSO was hammered out. 

"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," TWC said in the statement released right after the suit's filing. 

TWC subsequently countersued the city, arguing that while the MSO has collected PEG fees from its customers since 2009, millions of those dollars have not been used to construct TV facilities as promised by the city.

In June, the city asked the federal court to issue a summary judgement against the MSO, calling the counterclaim "legal gymnastics." 

"[Time Warner] does not like the fact that these two PEG obligations overlapped for one year, so it simply ignored the city's request for payment of the 2008 PEG fee and began paying the fee on Jan. 1, 2009," the city said. "Aside from the legal requirement, this one year of overlapping PEG obligations upon an incumbent cable operator allowed for the continued access and maintenance of PEG and gave the city one year of cash support to prepare for the closing of TWC's studios."

For more:
- read this Variety story

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