New York City Comptroller William C. Thompson, Jr. announced today that Time Warner is paying the City more than $7.6 million in franchise fees and interest owed since February 1998. The agreement follows the Comptroller's finding that Time Warner improperly excluded franchise fees billed to customers from the gross revenue it reported to the City.

"When I took office, I vowed to be a fiscal activist," Thompson said. "I am following through on that pledge through my audits and my financial analyses, and I look forward to generating additional revenues for the City, particularly during this time of great fiscal need."

Under its seven franchise agreements with the City, Time Warner is obligated to pay the City five percent of its gross revenue (after payments to the New York State Public Service Commission) and must submit revenue reports to the City.

However, during audits of Time Warner's franchise agreements with the City, the Comptroller's Office discovered that Time Warner had dramatically underreported its gross revenue. An analysis by the Comptroller determined that, for the period from February 1, 1998 to May 31, 2002, Time Warner owed the City $6,725,829 in franchise fees and $951,692 in interest, totaling $7,677,521.

Time Warner negotiated in good faith an agreement to pay the City in full. The agreement with Time Warner was reached with the City's Department of Information Technology and Telecommunications (DOITT), which is responsible for administering Time Warner's 10-year franchise agreements with the City.

Before February 1998, Time Warner had reported the total amount it collected from subscribers (including franchise fees) on gross revenue statements and paid fees on those amounts. But Time Warner subsequently began to separately identify the costs of franchise fees in subscriber bills and then improperly excluded the franchise fee portion in gross revenue statements submitted to the City.

Time Warner has agreed to make the lump sum payment by May 31.

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