CC - Item 5A - Staff Report - Consideration of Pending Charter Cable Tv by Paul Allen A
�� E
(I \`
\erT ' stafte ort
p
TO: HONORABLE MAYOR
AND MEMBERS \
1,�ROS/EMEAD CITY COUNCIL
FROM: IN rt�ANK G. TRIPEPI, CITY MANAGER
DATE: V NOVEMBER 16, 1998 .
SUBJECT: SCHEDULE FOR CONSIDERATION OF PENDING ACQUISITION OF
CHARTER CABLE TELEVISION BY PAUL ALLEN AND THE
RENEWAL OF FRANCHISE AGREEMENT
The purpose of this item is to discuss Charter's pending acquisition by Paul G. Allen and the
renewal of the City of Rosemead's cable television franchise agreement with Charter
Communications. These two issues are related because some of the same considerations must be
reviewed in connection with the sale of a cable television franchise as are reviewed in franchise
renewal. Therefore, while considering whether or not to approve the sale, staff suggests that this
is a good time to discuss renewal of the franchise agreement.
BACKGROUND
In 1985, the City of Rosemead granted a nonexclusive fifteen year cable television franchise to
Falcon Communications. The franchise granted authority to the cable operator to use public
streets and other public rights of way to engage in the business of operating a cable television
system. Ownership of the cable company has changed several times over the years. Charter
Communications has been the owner and operator of the cable system since October, 1995.
In August, 1998, Charter notified the City that Paul G. Allen, co-founder of Microsoft, had made
an offer to purchase Charter Communications. Charter therefore filed the required papers, and
requested the City's approval of the sale. Approval or rejection must occur by December 22,
1998, or the transfer is deemed approved.
DISCUSSION
The following is a summary of facts on the current franchise:
1. The term of the current franchise agreement is expiring on June 27 of 2000.
2. The City has met with Charter Communications regarding renewal of the franchise
agreement to discuss possible issues.
COUNCIL. AGENDA
NOV 241998
ITEM No V: 4 4 2
•
Charter Franchise Transfer
November 16, 1998
Page 2
legal basis and
rk
r
3 Section
626 of the Cable Act franchise renewals.provides
franchising authority must consider oall cable
derthe
television
following four factors:
* Whether the cable operator has "substantially complied" with the material terms
of the franchise and with applicable law.
* Whether the quality of the operator's service has been "reasonable in light of
community needs".
t
* Whether the cable operator has the financial,legal set forth and
technin the nical ality to
provide the services, facilities and equipment
* Whether the operators proposal is reasonable to meet the future needs and
interests of the community,taking into account the cost of those needs.
4. As part of the franchise renewal process, identification of cable-related community
needs and interests is required. In addition, a review of the performance of the
cable operator during the existing franchise term is also completed.
Section 76.502 of the FCC rules regarding cable franchises(47 C.F.R. § 76.502) provides that
franchising authorities can deny a request for transfer only if the proposed transferee lacks legal,
technical or financial qualifications to operate the franchise.
Under the Cable Act, a city can only deny a franchise if the incumbent company has substantially
iled
with the terms of the frchise,
lacks the financial, legaleor technical ability to plevels of service,has rto ovidesery es reasonable to satisfy community or
lure on
ineeds. ince City staff is n theseareas, he City is pro eeding with the renet aware of substantial fwral process. For the same rea part of Charter Coons unless ns
information comes to light that Mr. Allen lacks the legal, technical or financial qualifications to
operate the franchise, staff will recommend approval of the transfer.
putation
of franchise fees,scussion continuat odurn of Seniorrenewalg the Cit zen d scounts, con enience of bill paym payment locations,
recovery of renewal costs, educational and government access, equipment grants, including
su
provision of character generating equipment to post city notices, programming pPclu,
technology upgrades, and customer service requirements.
Charter Franchise Transfer
November 16, 1998
Page 3
SUMMARY
In order to proceed with the franchise renewal process, an opportunity for public input is valued
and necessary. The Public Hearing can be noticed and will request input on the four factors
outlined above that a franchising authority must consider. If it is the Council's decision to move
ahead with the renewal, it is anticipated the franchise renewal will be complete and ready for City
Council action in January, 1999. As a result, the content of the public testimony received during
the public hearing and the input received by City staff would be included in the remaining renewal
discussions with the Charter Communications. Staff is suggesting this matter be scheduled for an
adjourned meeting on December 15, 1998.
RECOMMENDATION
meeting onDecembern15f 998the ale of and notice arpubl Communications hearing for that same date to for
input
from the public on the renewal of the City of Rosemead's cable television franchise agreement
with Charter Communications.
eyy(ommJ198