One day before MundoMax it is scheduled to permanently go off the air, its Chicago affiliate is suing the short-lived network.
Attorneys for KM LPTV OF CHICAGO-13, L.L.C. today filed a complaint against RCN-owned MundoMax in the State of California, accusing the company of breach of contract, breach of the covenant of good faith and fair dealing, unfair business practices and false promises with no intention to keep them. In California that is considered fraud, according to Belinda Vega, an attorney from GERARD FOX LAW P.C., which is representing KM LPTV.
“MundoMax committed to certain obligations and failed to fulfill their promises,” Vega tells Media Moves.
KM LPTV OF CHICAGO-13 signed a four-year station affiliate agreement with MundoFox in May 2012. The obligations of that agreement were acquired by MundoMax when it became the sole owner of the network last year.
Under the terms of the original agreement, MundoFox/MundoMax became the WOCK TV 13’s exclusive national spot sales representative and guaranteed that if national advertising revenues during the second, third and fourth years of the deal was less than $600,000, the network would pay KM LPTV the difference.
According to the complaint, in February of 2014, under new management, but still under Fox-RCN co-ownership, then MundoFox agreed to pay KM LPTV on a quarterly basis, guaranteeing that if national revenues dropped below $150,000 in a quarter, they would pay the difference.
KM LPTV alleges that while it held its part of the deal, airing and marketing the network’s programming, “MundoMax booked $0 in national advertising sales revenue for the second, third and fourth quarters of the fourth year of the term” and then failed to pay the station the $450,000 it had guaranteed.
Since KM LPTV was bound by the agreement to have MundoFox/MundoMax as their exclusive sales agent, they were unable to seek other representation for national sales, resulting in “direct and consequential damages” for the station.
“MundoMax didn’t honor the agreement,” states attorney Vega, who argues KM LPTV did abide by the terms of the deal it signed. “MundoFox received a benefit and did not compensate KM LPTV for it and needs to do so.”
Although MundoMax will no longer operate as a network in the United States, they continue to have legal obligations.
“They’re alive and well as an entity, even if they’re winding down. They have an obligation to respond to the complaint,” says Vega.
KM LPTV is seeking a jury trial and $525,000 in damages.