01-19-1999 - Cable Television Franchise StatusTO:
FROM:
RE:
SUMMARY
City of West Covina
Memorandum
AGENDA
City Council ITEM NO. G-1
City Manager DATE 1/19/99
®PRINTED ON RECYCLED PAPER
Communications Director
CABLE TELEVISION FRANCHISE STATUS
The City Attorney will brief the City Council on Charter Communications' breach of the
City's cable television franchise agreement.
DISCUSSION
On January 6, Mr. Marticorena, the City's special counsel for cable television franchise
matters, reported to the City Council that he had received a verbal confirmation that
Charter Communications had affected a transfer of control of the City's cable television
franchise to Paul Allen/Vulcan Cable, Inc., during the Christmas holidays, despite the
fact that the City Council had previously denied the transfer. Since- Mr. Marticorena is
unable to attend this City Council meeting, the City Attorney will advise the City Council
on the ramifications of the action by Charter, and the alternative actions available to the
Council.
As a matter of information, Charter's non-exclusive, franchise agreement to provide
cable television services citywide, expires as of February 1. Additionally, the Tripartite
Agreement between the City, Charter Communications, and Mount San Antonio College
(Mt. SAC) for the support of community cable television programming also expires on
February 1. Within the past week the City received Charter's final payment of $55,966
as per the terms of the Tripartite Agreement, and is now processing the final payment of
$29,662. to Mt. SAC. Mt. SAC was asked by staff to comment on its ability to continue
its support of WCCT-TV, at its current level of operation, without additional funding
support from the City (see attachment 1). Mt. SAC's response is enclosed as attachment
2.
RECOMMENDATION
It is recommended that the City Council receive and file this report and authorize the City
Manager to send a formal written demand to Charter Communications, Inc. to comply
with the requirements of the agreement.
T. Keating
Communications Director
Attachments: 1) J. T. Keating letter of 1/6/99 to Mr. William Eastham
2) William Eastham letter of 1/11/99 to J. T. Keating
3) Dan Hobbs letter of 1/12/99 to Charter Communications, Inc.
Communications Deparnnent
January 6, 1999
Mr.. William Eastham
Director of Campus Events and Broadcasting
Mount San Antonio College
1100 N. Grand Avenue
Walnut, CA 91789
Dear Bill:
As you know, in accordance with the terms of the Triparte Agreement between the City
of West Covina, Mt. SAC, and Charter Communications, concerning the operation of
WCCT-TV, Charter is obligated to pay the City, as pf December 1, 1998, the sum of
$55,966. In turn, on January 1, 1999 the City is to forward to Mt. SAC, the sum of
$29,662 as partial payment for the FY98-99 support provided by Mt. SAC.
To date the City has not received Charter's December 1998 payment, nor has it
processed the payment to Mt. SAC. Additionally the City has denied Charter's request
,to approve a transfer of ownership of the West Covina CATV franchise from Charter to
Mr. Paul Allen, and progress towards resolving that issue has stymied In fact we learned
today that Charter has already completed the sale without the City Council's permission.
To allow the City Council to make informed decisions on whatever actions it may now
wish to pursue, I'd appreciate hearing Mt. SAC's response to the following:
1) What would be the impact on Mt. SAC's ability to continue to perform its duties
and responsibilities as outlined in the Tripartite Agreement beyond February 1,
should it receive only $29,662 for the entire FY which expires June 30? and
2) What would be the impact on Mt. SAC's ability to continue to perform its duties
and responsibilities as outlined in the Tripartite Agreement beyond February 1,
should it not receive any funding from the City for the entire FY ending June
30?
Bill, I'm not suggesting that either situation will occur, but we do need to go through the
"what if" exercise so we fully appreciate the consequences. I would appreciate hearing
from you as soon as practicable. I suspect the City Council will decide the course of
action it intends to follow early next week, and it would be helpful to have your response
in hand by then.
Sincerely,
T. Keating
Communications Director
14.44 West Garvey Avenue South • P.O. Box 1440 • West Covina • CA 91793 • Phone (626) 814-8580 • Fax 626) 813-8674
SAN7-12-1999 10:13 Sac Event Services 909 468 3940 P.02
1100 North Grand Avenue • Walnut, CA 91789-1399
January 11,1999
Mr. Jack Keating
Communications Director
The City of West Covina
1444 West Garvey Avenue South
Post Office Box 1440
West Covina, CA. 91793
Dear Jack,
Thank you for the candid review of the status of the negotiations with Charter
Communications. I have reviewed the situation with our President, Bill Feddersen,
our Vice President of Student Learning, Rita Burleigh and our Vice President of
Institutional Advancement, Pat Rasmussen. As we stated at the City Council
meeting last Tuesday, .Mt. San Antonio College remains very committed to the long-
term partnership between the City and the College, and we are very supportive of
the negotiating efforts being put forth by the City's team.
The college feels that it is critical for WCCT to continue to. operate at full capacity
during the difficult period ahead since the channel is such an important conduit for
information. As these issues continue to come before the City Council, the citizens of
West Covina need to stay informed. The impediment to maintaining full operations
at this time is financing.
The 1996 revision to the tripartite agreement that provides for the operation of
WCCT expires on February 1, 1999, concurrent with the end of the present franchise
agreement. Under this agreement, the per month funding for operations in this fiscal
year was considerably lower than per month funding in the previous fiscal year.
This situation has already led to a deficit in operational funds for the channel.
In the draft budget plan that was submitted to the City last September, we
anticipated that an additional $52,238 would be required to resolve the underfunding
from the present agreement and to operate the channel at a status quo level through
June 30, 1999. Since this is a fairly lean budget that is heavily weighted by the
expense of one full time employee, the WCCT Broadcast Engineer, trimming this
budget is quite difficult.
(909) 594-561.1 a Fax (909) 59d-7661 a http://www.mtsac.edu
.JAN-12-1999 ' 10:14
0. Sac Event Services 909 468 3940 rP.03
40
Assuming that the final payment that is now due under the existing agreement is
received in a timely manner, the College is prepared to assist in the short term
funding for the operation of WCCT. The College is willing to extend funds from our
operational reserves to allow continued full operation of the channel through June
30, 1999, subject to the following stipulations.
1. If the City prevails in its efforts and receives full maintenance of effort funding
from Charter (or its successor to the franchise agreement) prior to June 30, ,
the College would receive repayment of these funds as part of a new agreement
between the City and the College for the operation of WCCT.
2. If the City does not renew a long-term agreement with the College for operation
of WCCT prior to June 30, 1999, the College would receive in -kind payment for
the funding provided. This payment would consist of the City owned equipment
specified in Section 2 of the 1996 agreement. This equipment was purchased
under the 1987 grant from Falcon Cable to cover .startup costs for the mobile
production van. This equipment was originally valued at approximately $50,000
although the present value of this equipment is considerably less.
This proposal would sustain the operation of WCCT through the end of the June
1999 at very little risk to the City. The equipment provided in the 1987 grant is only
o
useful when combined with a considerable amount of College owned production
equipment. Even if this equipment was returned to the City at the end of the
agreement in February, no meaningful production work could be accomplished
without a substantial investment in new equipment.
Once the Citv resolves the present difficulties with respect to the transfer and
renewal of the ' franchise, the College is ready and willing to develop a new
agreement to maintain the partnership that operates WCCT. Any new agreement
should be based on reasonable and sustainable funding levels, and expectations
about the performance of all parties to the agreement should be in alignment with
whatever new funding levels are achieved through the current negotiations.
Sincerely,
011
William Eastham
Director, Campus Events and Broadcasting
Cc.:` Dr. William Feddersen, President, Mt. San Antonio College
Dr. Rita Burleigh, Vice President, Student Learning
Dr. Patricia Rasmussen, Vice President, Institutional Advancement
Dr. Tames Albanese, Vice President, Administrative Services
•
CJ
January 12, 1999
Trudi McCollum Foushee
Vice President and Senior Counsel
Charter Communications, Inc.
12444 Powerscourt Drive, Suite 400
St. Louis, MO 631-3660
Re: City of West Covina, California (the "City"); Application
of entities affiliated with Charter Communications, Inc.
(collectively, "Charter") for Transfer of Control (the
"Transfer") of Cable Television Franchise (the
"Franchise") to Paul Allen (the "Transferee")
Dear Ms. Foushee:
This letter is.written to you in my official capacity as City
Manager of the City of West Covina. On or about August _, 1998,
an application, by way of an FCC Form 394, was filed with the City
requesting the City CouncillIs consent to a change. of control of
Charter Communications Entertainment Partnership, L.P., the City's
current cable television franchisee (the "Franchisee") whereby
control of said Franchisee would be transferred and assigned to the
Transferee (the "Transfer"). On December 1, 1998, by Resolution
No. (the "Denial Resolution"), the City Council of the
City of West Covina denied without prejudice its consent to the
Transfer for the reasons set forth in the Denial Resolution. The
City is informed .and believes, and thereupon alleges, that on or
about December 23, 1998, the Transfer was consummated and closed.
Based upon these set of facts, I have preliminarily determined, in
my role as City Manager, that the Franchisee, and certain related
parties, are currently in material breach of the Franchise as well
as certain provisions of the Municipal Code of the City of West
Covina (the "Municipal Code") and I hereby demand cure of said
breach or breaches.
Pursuant to the provisions of Chapter 11, Section 11-22(b)(2)
of the Municipal Code, this letter constitutes a formal written
demand that the Franchisee comply with the requirements,
124/014125-0005/3232691. a01112199
•
•
Trudi McCollum Foushee
January 12, 1999
Page 2
limitations, terms,.conditions, rules and regulations as set forth
in the following:
(1) Chapter 11, Section 11-25(d) of the Municipal Code.
(2) Chapter 11, Section 11-41(a) of the Municipal Code.
(3) Paragraphs 12.1 - 12.5 of that Agreement entitled "An
Agreement Granting a Non -Exclusive Franchise to Falcon Cable TV of
West Covina to Operate a Cable Television System in the City of
West Covina and Setting Forth Conditions Accompanying the Granting
of the Franchise", dated as of February 1, 1984, by and between the,
City and Falcon .Cable TV of West Covina, a' California Limited
Partnership of Falcon Communications, a California Limited
Partnership, and Venture Communications, Inc. (.the "Franchise").
If the failure, refusal, or neglect of the Franchisee to
comply with the provisions of the Municipal Code and the Franchise
cited above continue for a period of thirty (30) days following
this written demand, please be advised that the City Manager may
place his request for termination of the Franchise upon the next
regular Council Meeting Agenda. Pursuant to the.provisions of
Chapter 11, Section 11-22 of the Municipal Code, failure of the
Franchisee*to cure the above -described violations and breaches may
result in the revocation of the Franchise, a reduction in Franchise
term, or the imposition -of any other remedy which is legally
available to the City. pursuant to the Municipal Code, the
Franchise, or applicable law.
In addition, please be advised that the consummation of the
Transfer without the written consent of the City Council, and in
direct violation of the Municipal Code, the Franchise and the
Denial Resolution, constitutes a failure to comply with material
terms of the existing Franchise and with applicable law within the
meaning of Section 626 (c) (1) of the -Cable Communications Policy Act
. of 1984, as amended (the "Cable Act"). Notice of said violation is
hereby given and a demand to cure said violation is hereby made.
Failure of the Franchisee may seriously jeopardize.its rights of
renewal, if any, pursuant.to the relevant provisions of the Cable
Act.
It is my sincere desire that the'Franchisee bring itself into
compliance with.the material terms and conditions of the Franchise
and the Municipal Code within the timeframe set forth herein.
124/014125-0005/3232691. a01/12/99
Trudi McCollum Foushee
January 12, 1999
Page 3
If you have any questions in this matter, you may contact me
or William M. Marticorena, Special Counsel to the City, at your
convenience.
Sincerely,
Dan Hobbs
City Manager
City of West Covina
WMM:DH:vjb
cc: Honorable Mayor and Members of the City Council
Elizabeth Martyn, Esq., City Attorney
William M. Marticorena, Esq., Special Counsel
Jack Keating, Communications Director