01-05-1999 - Cable Television Negotiations UpdateA
iCity of West Covina
Memorandum
TO: City Council AGENDA
ITEM NO.' G-3
FROM: City Manager . DATE January 5, 1999
SUBJECT: CABLE TELEVISION NEGOTIATIONS UPDATE
SUMMARY: Council Member Steve Herfert has expressed an interest in having
this issue discussed publicly. As a follow-up, I discussed this at the
Mayor/Mayor ProTem on Wednesday, where it was agreed to put it
on Tuesday evening's agenda.
I have talked to your Cable Television Negotiations Counsel, Bill
Marticorena, and he will be available on Tuesday night.
Daniel G. Hobbs
City Manager
DGH/srg
Dec-28-98 02:57pm From-RUTAN & TUCKER LLP, +
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December'28, 1998,
VIA FAX
Celeste Vossmeyer, Esq.
Vice President and Senior Counsel
Law & Regulatory Affairs
charter Communications
12444 Powerscourt Drive, #100
St. Louis, Mo 63131-3,660
T-64F P.02/02 F-291
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Re: City of,West Covina
Dear Ms. Vossmeyer:
j
Mr. Marticorena passed on to me.your December 22'11998 letter.
As the City Attorney, I would like to respond. Under the Brown
Act, we cannot reveal specific closed session discussions, and I am
sure that no West Covina councilmember would do so. The actions of
a majority of- the City council will speak for. themselves. ' You will,
have to decide for yourself if and when West Covina is authorized
or is going to sue.
Your confusion undoubtedly stems from, your continuing
inappropriate' contacts with councilmembers coupled with continuing
misstatements and character' attacks on Mr. Marticorena. If you are
concerned about a resolution, why don't you sit down with the
negotiators designated by the'entire City council.
Very .truly yours,
RUTAN & TUCKER, LLP
Elizabeth L. Martyn,,
ELM:sk
bc: ' -Dan Hobbs (via fax)
Jack Keating (via fax)
Mayor Richard Melendez and councilmembers (via fax)
William Marticorena, Esq.
Dec-23-98 11:58am From-RUTAN & ER LLP +71454690 T-918 P.02/02 F-217
CHAR .�
COMM UNICATIC]NS
December 22. 1998
William M. Marticorens, Esq.
RWtan 8 Tucxer, "P
611 Anton Boulevard, 5uita 1400
Costa Mesa, CA 92626-1098
RE. City of west Covina, Caiifom;a (the -City-), Applicat►on of antities affiliated witn Charier
Communications, Inc (collectively, -Charter) for Transfer of Control of cable television
francnise (me `Francnisel to Paul -Alien (tne "Transferee-)
Dear Mr. Marticorena•
I am in receipt of your letter clatea December 21. 1998 regarding the City's position with respect to
Charter and me City's continuing. out az yet not completes, efforts to negotiate the terms of the renewal
of the Franchise and octain the City's consent to a transfer of control to Mr. Allen. i am quite surprised
py the assertion that the City Council nas "autharizea ana directed the City Manager and the City
Attorney to taKe whatever actions are necessary, incluaing without limitation the initiation of litigation, to
prevent an wnautnorizea and material oreacn of 'me Franchise tnrougn a dosing of the transaction." In
writ,nu►ng negotiations with mempers of the City Council. Charter representatives nave peen repeatedly.
aavisae that the City Council wishes to reacn a resowtion through discussions which are now ,n
progress, anq has not authorized such legal action. 1. therefore, am requesting for you to acivise me of
the form of approval that the City Council has autnonzea for the threatened lagai action.
At the request of the City. Mr. Tom Schaeffer ciei,verea today a letter to The Mayor ana City Council
members summarizing Charters position whn respect to me proposal the City made last week. In an
effort to snow our commitment to woric towara a resolution of me transfer ana renewal terms, Charter nas
increasea its offer for a one-time Pl=d grant from $5513,000 to $1500,000 As you are aware, Charter nas
no logai owigation to provide continuea PEG funding for non -capital items. However, we value our
relationship wim the City ana are willing to support the City's cnannel with this grant.
We are concerned that we nave not yet resolved the outstanaing issues witn the City and )oaK forward to
a friendly resolution of the transfer and renewal terms_ ,
i look forward to nearing from you
Si'nrerely.
M. Ceie5te Vossmeyer
Vice President — Govemment Relations
MCV:smf
cc. Tom Schaeffer
Merry Kent
Dave Sarfora
Curt Shaw
Richard Pawn
12444 PG—rara,,rt WAc - Swae 100 - SL Lo as, M,ssoun 63131 - (314) 965.0555 -Fax (3142 965.66ao • inmrnni nnp //.MW malv=M com
Received Dec-N-98 04:23cm From-314 965 6840 To-RUTAN ii TUCKER LAP Pale 02
ATTACHIIM��ENT L
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OF
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MICHAEL T. HORNAK
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EOWARD D.
gYBESMA, JR.-
DAVID J.
GARIBALDI. III
December 21, 1998
Celeste Vossmeyer, Esq.
Charter Communications, Inc.
12444 Powerscourt Drive, Suite 100
St. Louis, MO 63131-3660
Re: City of West Covina, California (the "City"); Application
of entities affiliated with Charter Communications, Inc.
(collectively, "Charter") for Transfer of Control of
cable television franchise (the "Franchise") to Paul
Allen (the "Transferee")
Dear Ms. Vossmeyer:
As you know, this office serves as City Attorney for the
above -described City. Charter has filed an FCC Form 394' (the
"Application") requesting the City Council's consent to a transfer
of control (the "Transfer") of the entity granted a cable
television franchise by the City (the "Franchisee") to the
Transferee or entities associated therewith. On December 1, 1998,
the City Council disapproved without prejudice the Transfer as set
forth in the Application for the reasons set forth in a Resolution
adopted on that date (the "Denial Resolution")-. On December 15,
1998, the City Council authorized and directed the City Manager and
the City Attorney to take whatever actions are necessary, including
without limitation the initiation of litigation, to prevent an
unauthorized and material breach of the Franchise through a closing
of the transaction set forth in the Application in violation of the
Franchise itself and the Denial Resolution. Please be advised that
a transfer of the Franchise and/or transfer of control of the
Franchisee without the affirmative written consent of the City
Council constitutes a material breach of the Franchise as well as
certain provisions of the West Covina Municipal Code. (See West
Covina Municipal Code (11WCMC11) Sections 11-2(d) and 11-25(d)). Any
attempt to transfer the Franchise, the Franchisee, or control
thereof, without the prior written consent of the City Council will
constitute an irrevocable and incurable material breach of
124/014125-0005/3228135. a12/21/98
RUTAN & TUCKER,_ LLP9
ATTORNEYS AT LAW
A PARTNERSHIP. INCLUDING PROFESSIONAL CORPORATIONS
Celeste Vossmeyer, Esq.
December 21, 1998
Page 2.
Franchise subjecting the Franchise and the Franchisee to all
available legal remedies. In addition, the Franchisee. renewal
rights, if any, pursuant to Section 626 (a) et sect. of the Cable
Communications Policy Ac5t of 1984, as amended,,may be seriously
jeopardized. The invocation of self-help .by Charter and/or the
Transferee in this matter, as opposed to the timely and orderly
exhaustion of Charter's legal remedies, will not be tolerated under
any circumstances.
If Charter' and/or the Transferee intend 'to close the
transaction described in the Application prior to -obtaining the
prior written consent of the City Council,: the City hereby
respectfully requests that Charter provide no less than seventy-two
(72) business. hours advance notice to the City, through the City
Attorney's Office, so that the City, if it chooses, can seek
appropriate judicial. remedies; including without limitation,
temporary restraining orders and/or preliminary injunctions. To
the extent that a scheduled-closing.date exists as of this date,
please provide that date so that all of the parties can approach a
closing in a rational and legally cognizable manner. In addition,
please _provide the address, fax and phone numbers of the
individual(s) who are authorized to accept service of process and
ex parte notice on behalf of Charter and the Transferee.
Very truly yours;
RUTAN &`TUCKER, LLP
illiam M. Marticorena�
WMM:ELM:vjb
cc: Dan Hobbs, City Manager
Jack Keating, Communications Director
Elizabeth L. Martyn, Esq.,.City Attorney
124/014125-"5/3228135. a12/21/98
Dec-15-98 05:18pm From -CHARTER COWUNICATIONS 314-965-6640 T-470 P.02/09 F-130
CHARTOR •
COMMUNICATIONS"
December 15, 1998
The Honorable Richard Melendez
Mayor VIA FAX TRANSMISSION
The City of West Covina 626-814-8406
1444 W. Garvey Blvd.
West Covina, CA 91790
Dear Mayor Mele.ndez:
As we near the end of the 120 day approval process relative to Paul Allen's acquisition of
Charter Communications, Inc. (Charter), it has come to my attention that some
communities in Northern and Southern California have raised an. issue regarding the
potential impact this transaction may have on subscriber rates.
It seems that many consultants have sought to calculate the amount needed to "service"
The purchase price as if the purchase price were'comprised primarily of debt- Fortunately
for Charter, the communities we service and the subscribers .we serve, Paul Allen will
acquire a strong equity position in Charter. The- equity that Mr. Allen will invest in
Charter will neither be serviced as debt or carried as debt. Equity, as you know, has no
guaranteed rate of return or "debt' service requirement. What this means for you and
your constituents is that there is no new`pressure on rates. You can rest assured, that no
portion of the purchase price will be used as a basis,to increase rates.
As you know, Charter manages and/or owns cable TV systems in 19 different states.
serving 1,300,000 subscribers. We are proud of our growth and our commitment to
customer . service- We were recently ranked by J.D. Powers & Associates (an
independent research firm) as Number 3 in customer service -for providers of CATV
service. We are proud of this accomplishment but not satisfied. As we continue to serve
your community, We strive for the Number 1 spot. . We look forward to achieving that
goal as we provide new and advanced services to your community.
j : al l en/3 94tren s fcr1w mco v ina4
12444 Powerscourt Drive - Su,re 100 - St Louis, 4ssoun 63131 - (314) 965-0555 - Fax (314) 965-6640.1ntemet hup://www ehaitrrcom.com
Dec-15-98 05:18Pm From -CHARTER COfvprIUNICATIONS 314-965-6640 T-470 P.03/09 F-130
The Honorable Rice Melendez .
December 15, 1998
Page 2'
We sincerely hope that you will place our request for transfer on the next available City
Council agenda so that this transaction can be concluded on a timely basis.
Sincerely,
4
Jerry Kent
President & Chief Operating Officer
JLK/unt
cc_ Mel Matthews
yallen/394uawfertwcovina3
Memorandum
December 7,.1998
To: City Manager
From: Communications Director
Subj: Financialsupport for CATV Station WCCT-TV Mt. San Antonio College
Summary.
This report provides a brief summary of the financial ,support provided by Charter
Communications for the operation of WCCT-TV, channel 56 on our CATV system.
Background.
WCCT-TV Mt. San Antonio College (Mt. Sac) is operated under a triparte agreement
between the City, Mt. Sac, and Charter Communications. The initial agreement dated
July 1987 delineated the responsibilities of each participant with respect to the operation
of WCCT-TV. In terms of funding support, it required the City to contribute $50,000 per
year (plus a 1 time payment of another $50,000 the first year), and Charter (then Choice)
to pay $36,000 per annum.
Over the years the Agreement has been amended several times and the contribution levels
changed. The most recent change occurred in September 1995 with the final resolution of
the transfer of ownership of the CATV Franchise from Crown Cable to Charter. Included
in the terms of that Settlement Agreement, was a guarantee of support for WCCT from
FY1995-96 through the life of the franchise. The budget for WCCT, as provided in the
Agreement, includes activities undertaken by the City (e.g. maintaining the position of
Commuity Television Producer) as well as activities undertaken by Mt. Sac "(e.g. studio
related expenses).
Attached is a 12/13/95 memo from then Assist. City Mgr. Steve Wylie outlining the
schedule of payments required by Charter to satisfy this requirement. You'll note that
the Fiscal Year total for `96-97 is $154,690, and for `97-98 is $157,474. Charter's
current year's payment of $55,966 represents only '/z year since..the Franchise Agreement
itself expires on February 1. .
In preparation for negotiating a franchise renewal, Mt Sac has submitted a draft budget
for the 5 year period 1998-2003. It totals $460,519 and when added to the City's current
budget for WCCT expenses of $75,000 per annum (increased 3% per yr for the next 5
yrs), the total annual funding requirement for WCCT-TV for the next 5 years is
$858,719, extended for 10 yrs is $1,867,544. The total amount then is consistent with
what we are getting now and will simply allow a continuation of existing operations.
Page 2,of 2 to Communications Director memo of 12/7/98
As, a point of information, the $1.6 mil one time payment requested in the preliminary
draft agreement which was forwarded to Charter by Bill Marticorena on November 12, is
essentially this $1.8 mil discounted to its present value. (Incidentally Bill's letter of
transmittal with that document clearly stated that neither city staff nor the City Council
'had seen it.) The basis for the one time payment is that it would be more palatable to
Charter for us to ask for the $ as a one-time payment rather than dragging it out over the
life of the renewal. No doubt Charter will argue that City expenses relative to the WCCT
operation should be funded from Franchise fee revenues. .
5*T.
yl Keating
Encl: (1) Copy of S. Wylie memo of 12/13/95
cc: A. Fields (w/copy of encl)
City of West Covina
To: Basil Panas, Controller Memorandum
FRom. Steven W,.' Wylie, Assistant City Manager December 13, 1995
SUBJECT: REVENUES FROM CHARTER COMMUNICATIONS
This note will help in forecasting revenues for FY 1995-96 through FY 1998-99. As a
result of, negotiating the transfer of the cable franchise -from. Crown Cable to Charter
Communications, the City will realize a total of $500,000 over the next four fiscal years.
The payments will be made according to the following schedule. These revenues are for
the support of WCCT and related programs, and are to be credited to .the General Fund.
These payments are over, and above the normal, ongoing 5% franchise fee, also paid by
Charter.
Fiscal Year Payment Due Amount Fiscal Year
Total
1995-96 December 1, 1995 $65,935-
"June.1, 1996 $65,935 $131,870
1996-97 December 1, 1996 $77,345
June 1, 1997 . $77,345 $154,690
1997-98 December 1, 1997 $78,737
June 1, 1998 $78;737 $157,474 ,
1998-99 December 1, 1998 $55,966 $ 55,966
Please let me know if you have any questions.' S / n
Steve Wylie
Assistant City Manager
0
City of West Covina
1VMemo'a' ndum
December 31, 1998
To: City Council
City Manager
From: Communications Director
AGENDA
ITEM NO. 6 - 3
DATE -MAf- 5, 5
Subj: Charter Communications support of franchise cities' Public, Education, and
Government (PEG) Channel Access Requirements
SUMMARY
This report responds to the City Council's request that staff determine the level of PEG
access support provided by Charter Communications to other franchise cities.
DISCUSSION
Several cities, including some served by cable companies other than Charter, were
contacted by telephone and the information obtained is listed on Attachment (1).
Unfortunately the cognizant personnel at a few other cities are on vacation through the
holidays and no information can be obtained until they return.
While the information obtained is somewhat limited and is based on staffs' understanding
of the individual franchise agreements, it is readily apparent that the level of PEG usage
varies widely from city to city, and further that Charter's support also varies. (West
Covina seems to have more programming than most other cities; for a more. detailed
itemization of WCCT-TV programming, see attachment (2).) The data also suggests
that Charter's overall support to West Covina with almost 15,000 subscribersjs not all
that much more than what it provides to Azusa and Walnut; and secondly, that our total
dollar expenditure for PEG access is not all that different from what other cities are
spending. The primary differences between West Covina and Azusa and Walnut are that
in our case Charter provides its support in dollars (both the City's and Mt. Sac's costs),
thereby providing us total control of the operation, whereas Azusa receives personnel in
kind services and Walnut uses its General Fund monies.
Staff will continue its attempts to contact the cities which have not yet responded to our
request for information.
RECOMMENDATION
It is recommended that the City Council receive and file this report.
Keating
Communications Director
Attach: (1) PEG Channel Survey Results
(2) Definition of Programming on WCCT-TV
Attachment 1
PEG CHANNEL SURVEY RESULTS
CITY
NUMBER
TYPE OF
STUDIO.
STAFFING
FUNDING AND OTHER SUPPORT
OF SUBS
PROGRAMMING
Azusa
5,900
City Council meetings.
Charter Communications
Charter staff provides production
Charter provides
■ City events.
provides studio.
support. However, the City also uses
$100,000 for equipment.
one City staff member to support PEG
Staff assistance for all production.
access requirements.
Duarte
2,804
Informational
The City has a studio in a
One part time employee and volunteers.
Charter provides:
programming.
building, that is shared with a
An annual payment of $34,800 for part-time wages and maintenance of
■ High school student group
number of community groups.
equipment.
programming.
Monterey
9,000
M Police Department
The City uses Charter.
One full-time person, one part-time
Charter provides:
Park
programming.
Communications' Alhambra
person and six volunteers.
0 $100,000 lump sum payment.
■ Public events.
studio.
ff $20,000 annual payment in years 3 — 9 of the agreement.
■ City Council meetings.
E Up to $10,000 in free wiring of public facilities.
■ Planning commission.
Norwalk
11,000
M City Council meetings..
Studio originally built by Falcon
Unknown
City provides $70 - $75,000 per year from the General Fund.
■ Planning Commission
Cable.
Charter provides:
meetings.
a $10,000 per year.
■ Four City events each year.
0 Personnel to telecast two School District Meetings per month.
■ Personnel and equipment to telecast four major events per year.
Riverside
Unknown
Three channels for public
Charter provides studio .facilities
Charter provides one full-time and one
Charter provides:
access..
at independent site..
part time employee
0 $45,000 annual grant divided evenly among the three PEG channels.
Government Channel:
N A "Studio in a Box" estimated in value of between $50,000 and $75,000.
■ Fire training information
■ 'Production assistance within certain limits, as well as employee and studio
Educational Channel:
time.
■ Riverside Community
College programming.
Public Channel:
■ Local programming.
San Gabriel
4,000
a Electronic corkboard.
Charter provides City Clerk's
City Clerk updates corkboard with
Charter provides:
office with corkboard
assistance from other staff.
Corkboard equipment for City. Clerks Office and emergency operations
equipment, which is kept with
center. Valued at $10,000 - $20,000. This equipment is upgraded every five
the computer network.
years.
• Maintenance of equipment.
■ 1% of gross cable revenues (not franchise fees) put towards any cable City
related cable activities.
Signal Hill
2,000
0 City Council meetings.
No studio facility.
Unknown
City pays Charter $3,000 annually to tape City Council meetings.
Charter provides:
■ Ten half hour shows per year.
■ Skala program software (valued at $6,000-$10,000) for the City to produce
electronic corkboard information.
0
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Attachment 1
Continued
CITY
NUMBER
TYPE OF
STUDIO
STAFFING
FUNDING
OF SUBS
PROGRAMMING
Temple
5,000
Electronic corkboard.
Charter Communications
Unknown
Unknown
City
provides and operates a public
access studio located in South
Pasadena.
Walnut
5,500
Weekly News Program.
Charter funds a trailer located at
One full time employee & three - four
City provides $120,000 per year from the General Fund.
• City Council meetings.
Walnut High School.
interns.
Charter provides:
■ Commission meetings.
■ A one-time grant of $130,000 for equipment.
■ $300/month for rent on studio.
■ Maintenance/ replacement of all equipment.
■ Assistance in the production of six programs/events per ear.
West
14,000
E City Council meetings
The City uses Mt. San Antonio
Two full-time staff, three part-time
The City provides:
Covina
a Waste Management
College's studio.
staff, student volunteers and
• Approximately $75,000 per year from the general fund for personnel and
meetings City events
community volunteers.
miscellaneous expenses.
■ School sports events
Mt. San Antonio College provides:
■ Police programming
■ Approximately $81,900 per year for staff, equipment and maintenance costs.
■ Local resident
Charter provides
programming Hourly
$500,000 in semi-annual payments over the past 3 years to fund PEG
newsbreaks
activities.
■ Weekly news program.
" NON CHARTER COMMUNICATION CITIES PEG COMPARISON
CITY
NUMBER
OF SUBS
TYPE OF
PROGRAMMING
STUDIO
STAFFING
FUNDING
Covina
5,447
a City Council meetings.
Media One provides a
One full — time staff member and one
Media One provides:
(Media
0 City events.
production facility and
part-time. staff member.
0 Production facility and use of production van
One)
E High school football.
production van.
0 Production staff
• Other community
4 public access channels
programs.
5% of gross revenue
LA Verne
Unknown
City Council Meetings.
The City renovated its Veterans
Two part-time staff and 20 hours a
Under the current contract Century Cable provides:
(Century
City events.
Hall to serve as a studio.
week of cable.company staff time.
a $30,000 per year for operations..
Cable)
Weekly news show.
Student volunteers from the University
m All equipment maintenance.
of La Verne. "
Under a new contract Century Cable will provide:
■ $32,000 for operations.
■ $75,000 for equipment and maintenance.
P 20 hours of cable staff time for production.
0 Centu will exce t the liabili for o eratin the channel.
Attachment No. 2 •
Definition of Programming on WCCT
Live Local News Breaks
WCCT produces live local one -minute news breaks Monday through Friday. The local
newsbreaks are shown at 4 p.m., 5 p.m. and 6 p.m. and cover international, national and local
news.
Live Local News Program
WCCT produces a 30 minute live local news program called News Scene 56, that is shown live
on Tuesday at 6 p.m. The program is recorded and repeated two to three times a week. News
Scene 56 covers local events, sports and people, and _national and international news and sports. .
Live City Council Meeting
City Council Meetings are shown live on the first and third Tuesday of each month.
Live Commission Meeting
The Waste Management and Environmental Services Commission is shown live on the third
Thursday of Each month.
Corkboard
An electronic message board, that displays information about local events and businesses.
Prerecorded City Council Meeting
City Council meetings are recorded and replayed on the second and fourth Tuesday of each
month and every Saturday.
Prerecorded Local Programming.
Programs produced by WCCT for later use. They include On the Beat for the WCPD, Inside the
City, replaying of local sporting events, and shows produced by citizens.
Outside Programming
Programs produced by agencies outside of WCCT. These programs include Air Force News,
Health and Home Report produced by a New York agency, EcoNews. produced by a Los Angeles
agency, and Full Disclosure produced by a Los Angeles agency. In addition, WCCT will show
nostalgia shows including Danny Thomas Show, You Bet Your Life with Groucho Marx and the
Bob Cummings Show.
Community College Instructional Network
Mt. San Antonio College is the Southern California distributor of the Community College
Instructional Network that provides Tele-courses for students enrolled through local community
colleges.
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Weeks Two and Four
Week Three
DAY 10 p.m. to 9 a.m. 9 a.m..10 a.m. 10:30 11 a.m. 11:30 12 p.m. 12M' 1 p.m. 1:30 2 p.m. 2:30 3 p.m. 3:30 4 p.m. 4:30 6 p.m. 5:30 6
Monday :b
Frid
Saturd
Locally Produced Programs
1 minute live news breaks, produced by WCCT, are shown on the hour at.4 p.m., 5 p.m. & 6 p.m.
Live Local News Program FmLive Commission Meeting _Prerecorded City Council Meeting
Live City Council Meeting Corkboard Prerecorded Local Programming
7:30 8 p.m. 8:30 9 P.M. 9:30
6:30 7 p.m. 7:30 8 p.m. 8:30 9 p.m. 9:30
0
Outside Programming
Outside Programming
OCommunity College Instructional Network