AOL Time Warner has launched a second multi-million legal action against an Israeli cable outfit, one week after announcing that it was suing Israeli cable operator Tevel for $17m for allegedly breaking the terms of their output deal.
AOL Time Warner is now suing cable operator Golden Channels in a California court for $22m, after Golden Channels decided unilaterally to cut the price it pays for television series broadcast on Channel 3 and television movies.
The suit against Tevel was filed in Los Angeles last week, and claimed that Tevel broke the license terms for films supplied by AOL Time Warner. AOL Time Warner expects to cancel the contract and is demanding compensation in excess of $17 million.
Facing strong competition from rival satellite television broadcaster Yes, the country's three cable operators Tevel, Golden Channels and Matav - which are trying to merge - have waved fat cheques at leading suppliers over the past two years to secure content. However, the cost of the content has brought the companies to the verge of bankruptcy with one cable provider, Tevel, already granted court protection from its creditors
The cable operators have been trying to renegotiate the terms of their contracts for many months. The AOL Time Warner action obviously indicates they failed to reach an agreement.
Though the exact terms of the contracts have not been published, the cable operators committed themselves to an estimated $100 million output deal with Sony and $70 million deal with AOL Time Warner.