TWC Countersuit Says AMC ‘No Longer Exists’

Dec 8, 2003  •  Post A Comment

Time Warner Cable last week filed a counter-claim against American Movie Classics Co. in answer to a suit AMC filed last month, an indication that the companies’ internecine fight may not be settled quickly.
Time Warner Cable informed AMCC in a recent communication that it would renegotiate a carriage contract with the programmer, citing the so-called “content clause,” which gives operators the right to abrogate carriage agreements if a channel changes substantially. This dispute is a fundamental one that questions whether a cable operator has the right to act as an “editor” of the content it carries.
Time Warner Cable is arguing that it has no obligation to carry the current AMC because in essence that channel, after undergoing major changes, no longer exists. TWC cites a section of the current carriage agreement that states, “This Agreement shall expire if delivery of the [American Movie Classics] Service by AMCC is permanently discontinued.” And in its claim TWC says: “Since American Movie Classics was defined as consisting of classic vintage content of the type reflected in the Agreed Classic Programming Model, and since that content has now been materially changed, the American Movie Classics service has in fact been permanently discontinued.” Though Time Warner Cable concedes that AMCC had the right to go ad-supported in 1997, the claim makes a strong case that AMCC did not have contractual permission to transform the channel to one featuring recent films, such as those made in the 1990s. The counter-claim asserts that AMCC “has transformed `American Movie Classics’ from a classic film network consisting of older films primarily from the 1930s, 1940s and 1950s to a new service increasingly focused on contemporary Hollywood movies and related programming.
According to TWC’s filing: “Even the name of the service has changed-from `American Movie Classics’ to `AMC: TV for Movie People.’ While the movies provided by the service were once exclusively classic films such as `The Secret Life of Walter Mitty’ (1947) and `The Man Who Came to Dinner’ (1942), AMC’s lineup now routinely features contemporary movies such as `Alien Resurrection’ (1997) and `Broken Arrow’ (1996).”
TWC argues that the new American Movie Classics is a challenge to TWC’s “fundamental editorial role in choosing the nature of content provided through its cable service.” Time Warner Cable Executive VP Fred Dressler has stressed this role in his negotiations with programmers, those who have met with him said. The claim continues, “In an effort to create and maintain the most compelling programming mix for its subscribers, Time Warner Cable’s typical agreements with programmers carefully specify the nature of the programming that it agrees to carry. Deviations from agreed-to programming content materially breach those agreements. AMCC’s unauthorized changes to its specifically agreed-upon programming have upset this deliberate mix, entirely supplanting Time Warner Cable’s editorial judgments with its own.”
In a repeat of an argument made by TWC executives this summer, TWC alleges that AMCC “reduce[d] Time Warner Cable’s programming carriage agreement for the American Movie Classics service to little more than a generic `real estate’ lease of channel space over which AMCC can deliver any content it chooses. This is not the bargain that Time Warner Cable made with AMCC.”
In canceling the previous carriage agreement, which would have run until 2008, TWC cites aspects of its Content Clause, which stipulates that “if at any time during the License Period the general quantity and quality of the programming on the Service materially changes from that contained on the Service as of the date hereof,” as evidenced by the Agreed Classic Programming Model, Time Warner Cable would have the right to terminate on 90 days prior written notice.
The agreement expires “if delivery of the [American Movie Classics] Service by AMCC is permanently discontinued.”
This is a contention that AMCC will vigorously deny, and the current dispute could end up in court. Before that happens, however, AMCC would be dropped from Time Warner Cable, potentially a crippling blow to AMC.
Time Warner Cable spokesperson Keith Cocozza said the company “can’t comment on matters in litigation.” An AMCC spokesperson was not available.