Former Starz VP Says Network Manipulated Comcast Merger, Asked Him To Inflate Subscriber Numbers

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As the saying goes, hell hath no fury like a former senior vice president of sales and affiliate marketing at a premium cable TV network. A recently dismissed Starz exec is now alleging that his former employer had been up to no good, manipulating the (since-failed) swap of markets between Comcast and Charter, and asking executives to inflate the network’s subscriber numbers.

This is all found in a lawsuit [PDF, via Deadline.com] filed yesterday in a California court by former Starz SVP Keno Thomas against the network, its top brass. Liberty Media — the former parent company of Starz, and part-owner of Charter Communications — is also named.

The lawsuit accuses the network of, among other things, firing Thomas after he repeatedly brought up concerns about allegedly questionable business practices at Starz.

First, after a former DirecTV executive was added to the Starz board of directors in 2013, Thomas says he raised questions about potential conflicts of interests and access to confidential information from the satellite company. Thomas claims that his direct supervisor, Chief Revenue Officer Michael Thornton (a named defendant in the complaint), told Thomas he’d be fired if he brought up the topic one more time.

Then, on April 28, 2014 — the same day that Comcast and Time Warner Cable (then attempting to merge) announced a deal with Charter to swap a few million customers and spin off others into a new company (partially owned by Charter) — Thomas says he attended a dinner in Los Angeles where his boss Thornton bragged that he and Gregory Maffei (Chairman of the Board at Starz and CEO of Liberty Media) had, according to Thomas “successfully and illegally manipulated a pending merger” in order to benefit Starz.

At the time, Comcast’s contract with Starz was set to expire, meaning the network was likely in for a protracted renewal negotiation.

But at that dinner, Starz announced that it had reached a new agreement with Comcast — without having to go through the typical rigmarole.

That’s when, per the complaint, Thornton explained that Maffei had called Comcast and talked them into extending their agreement with Starz — at a loss to Comcast.

Since Starz executives were not supposed to have any advance knowledge about this market-swap deal between Comcast and Charter, the suit implies that Maffei, whose Liberty Media controls 27% of Charter, was able to use the Comcast/Time Warner Cable/Charter ménage à trois, which would have added some 10 million customers to Comcast’s roster, to the benefit of Starz.

Thomas claims he then brought up the issue of the legality of this sort of maneuver, but was told by Thornton to never repeat those concerns or he’d risk losing his job.

The lawsuit also points out that Starz was one of the few content providers to openly support the Comcast/TWC merger.

Shortly after this dinner, Thomas says that even though it was largely his role to negotiate the network’s contract with DirecTV, other Starz execs began omitting him from communications involving this deal.

As part of the deal that was eventually negotiated with DirecTV, the satellite TV service would not have to begin integrating Starz into its marketing program until 2015. Thomas says this lack of promotion was hurting the network’s subscriber and revenue numbers.

That’s why, Thomas alleges, in Sept. 2014, he and others were directed to provide inflated revenue and subscription figures to the network’s board of directors.

Thomas claims that even though this order came through the network’s director of finance, it was really a directive from Thornton and Starz CEO Chris Albrecht.

He says he defied this directive, believing it to be unlawful. Not long after, he was let go after ten years with the network.

“Starz ultimately terminated Mr. Thomas for his whistleblowing, his refusal to participate in illegal activities, and his advocacy on behalf of women and minorities,” reads the complains, which also alleges Thomas was fired for “bringing to light the unlawful influence Liberty had on the deal between Comcast and Starz.”

For its part, the network is denying the allegations made in the suit.

“Normally, we would not comment on pending litigation, and, in this instance the company has not even been served,” a rep for Starz told Deadline. “However, based on reading the complaint in the press, rest assured that Starz, as well as the other defendants cited, will defend themselves vigorously against these scurrilous, unsubstantiated and offensive attacks by a disgruntled former employee.”

by Chris Morran via Consumerist