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Rainbow Sues Time Warner Over Sub Fees

Rainbow Media Holdings Inc.’s American Movie Classic Co. is suing Time Warner Cable, alleging that the MSO is trying to strong-arm it into a lower subscriber fee. The network is seeking $250 million in damages.

In court papers filed Friday in New York Supreme Court, AMC said Time Warner has twice threatened to terminate its carriage deal for allegedly violating content provisions.

According to the documents, AMC is disputing Time Warner’s moves because "there has been no material change in the general quantity and quality of the programming on the American Movie Classics programming service." It contended that the cable operator’s notice was an attempt "to impose much lower prices on AMC."

The distribution pact was negotiated in September 1993. In December 2000, the deal was extended through Dec. 31, 2008, according to AMC. AMC is largely an analog service on Time Warner systems.

The network said its carriage deal stipulates a quality of programming on AMC and gives Time Warner the right to pull the channel if that quality deteriorates. But AMC said the agreement "does not require that there be no changes to the content of AMC’s programming."

That’s likely the sticking point: In an attempt to draw younger viewers and the ad dollars that chase them, AMC has started accepting commercials and running more contemporary movies and original programming.

Among the assertions in those notices, AMC said, is that the network is prohibited from airing movies that were made after 1993. The network said there is no such requirement in its contract.

Time Warner has, AMC noted in the court papers, included content provisions in contracts for other Rainbow Media services (the networks were not identified specifically, but Rainbow also owns WE: Women’s Entertainment and The Independent Film Channel).

AMC said it was notified by Time Warner June 30 of the MSO’s intent to terminate. The network contended that this was a "bad-faith attempt" to renegotiate for a lower subscriber fee.

Then on Sept. 30, AMC said, it received another notice to terminate and "purported unilaterally to reduce the price to be paid to AMCC."

The network said it rejected both notices and asserted that Time Warner is trying to wrestle a lower subscriber fee and to influence negotiations with another cousin company (it did not specify if that is Rainbow or corporate parent Cablevision Systems Corp.).

A Time Warner spokesperson responded, "We believe the lawsuit is without merit, and we cannot comment on pending litigation."