Stung by a Sept. 22 lawsuit from its erstwhile strategic partner U S West Inc., Time Warner Inc. shot back with its own bitter accusations in a countersuit filed Oct. 11 with the Delaware Chancery Court.
The month-long legal battle involves Time Warner’s proposed merger with Turner Broadcasting System Inc. and the resulting impact on Time Warner Entertainment L.P., of which U S West bought a 25.5 percent stake for $2.5 billion in 1993 (RCR, Oct. 9, 1995, p. 1).
Time Warner alleges, “U S West has systematically used its participation in and power within TWE to shield itself from competition at the expense of TWE.”
Specifically, Time Warner makes two accusations that concern the wireless industry.
First, that U S West scuttled a joint venture with a”major telecommunications company”-said to be AT&T Corp.-to offer local telephone and cable services through Time Warner’s cable systems.
Secondly, that U S West vetoed Time Warner’s participation in a consortium of cable companies-now known as Sprint Telecommunications Venture-that wants to provide wireless personal communications services. This consortium includes Tele-Communications Inc., the largest cable carrier in U S West’s territory.
“In addition to its desire to forestall competition in its local telephone market, U S West also blocked TWE’s participation in the Sprint joint venture because U S West had itself entered into a consortium including Nynex Corp. and Pacific Telesis Group to bid for PCS licenses, and wished to weaken Sprint as a potential competitor in the auction for those licenses,” Time Warner said.
U S West spokesman Steve Lang retorts, “When lawyers have the facts on their side, they pound hard on the facts; when lawyers have the law on their side, they pound hard on the law; when lawyers have neither, they pound hard on the table. Time Warner’s response is table-pounding.”
“The Time Warner Entertainment partnership makes sense, and we want Time Warner to honor the agreement. This is why we filed our suit,” he said.
Time Warner provided further proof that it intends to follow its own strategic vision by holding a grand opening of its first “in-line” store in Rochester, N.Y., where it inaugurated cellular resale service last December.
“The Time Warner Communications Store…features consumer-friendly, hands-on, one-stop shopping for cellular, paging and cable services,” said Dennis Patrick, president and chief executive officer of Time Warner Telecommunications, a division of Time Warner Entertainment.
“The grand opening is yet another tangible example of the leveraging of the company’s brand equity, marketing, distribution and entertainment capabilities,” the company said.
