HomeMy WebLinkAboutRES-95-5761 (CABLE TV/FRANCHISE/TRANSFER)1
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WHEREAS, ML Media and Century Communications Corp., a New Jersey Corporation.
("CCC") have entered into a Purchase Agreement as of November 28, 1994 (the "Agreement"),
wherein ML Media will sell to CCC, subject to certain closing conditions, certain assets of ML
Media, including the cable television system owned and operated by ML Media serving the City of
Hermosa Beach, including without limitation, the Franchise (hereinafter referred to as the "System
Assets"). CCC has further entered into an Assignment and Assumption Agreement (the
"Assignment Agreement") whereby, upon the close of the Agreement, the System Assets will be
transferred to Century Valley Cable Corp., a Delaware corporation and an indirect wholly-owned
subsidiary of CCC ("Century"). (The Purchase Agreement and Assignment Agreement and the
Franchise transfer ultimately as contemplated thereby will hereinafter be collectively referred to as
the "Transfer");
WHEREAS, ML Media and Century have filed a FCC Form 394 with the City requesting
City Council approval of the Transfer;
WHEREAS, in support of its Form 394 Application, ML Media and Century have
submitted to the City the following documents which are on file with the City Clerk, and are
collectively referred to as the "Transfer Documents":
1. Form 394, filed with the City on February 1, 1995;
2. Letter with exhibits from ML Media to Scott Field, special counsel to the City,
dated February 28, 1995.
3. Nine page facsimile transmittal from ML Media to Scott Field, special counsel to
the City, dated March 1, 1995.
4. Four page facsimile transmittal from ML Media to Scott Field, special counsel to
the City, dated March 3, 1995.
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5. One page facsimile transmittal from ML Media to Scott Field, special counsel to the
City, dated March 17, 1995.
WHEREAS, as part of the Form 394 application, Century certified that it "will use its best
efforts to comply with the terms of the franchise and applicable state laws or local ordinances and
related regulations, and to effect changes, as promptly as practicable, in the operation of the
system, if any changes are necessary to cure any violations thereof or defaults thereunder presently
in effect or ongoing";
WHEREAS, the Conference Report to the 1992 Federal Cable Television Act, in discussing
franchise renewal under Section 626 of the Communications Act of 1934 (47 U.S.C. § 546) states
that transferees of a cable television franchise are not responsible for breaches of the franchise
committed by the transferor. Consequently, the City Council finds that it is necessary that all
franchise noncompliance issues be remedied prior to the Transfer;
WHEREAS, the City has evaluated the ML Media's compliance with the Franchise,
including obtaining a report from Diehl, Evans & Company reviewing the payment of franchise
fees;
WHEREAS, the City has evaluated CCC's and Century's qualifications to hold the
Franchise as described in the Agenda Report regarding the Transfer, dated July 25, 1995.
WHEREAS, ML Media and CCC have extended the time for the City to act on the Form
394 until July 26, 1995;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH,
CALIFORNIA, DOES RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
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The Hermosa Beach City Council finds that, based upon the representations contained in
the Transfer Documents, and the terms and conditions of this Resolution, Century will have
the legal, financial, and technical qualifications to hold the Franchise. Subject to the
provisions of Section 2 of this Resolution, the City Council approves and consents to the
Transfer of the System Assets, including the Franchise, from ML Media to Century as
described in the recitals to this Resolution.
The City Council further consents to the transfer of the Franchise to any affiliate or wholly-
owned subsidiary of CCC or Century, provided that any transfer to an affiliate or subsidiary
is conditional on CCC and the subsidiary or affiliate executing an Acceptance and
Guarantee in substantially the form of Exhibit A, attached hereto. An affiliate or subsidiary
is limited to any business entity not less than 95% owned by CCC.
The City Council hereby consents to and approves the creation of security interests in and
the encumbrance of the Franchise and cable television system serving the City of Hermosa
Beach in order to secure indebtedness to be incurred by CCC or Century or any such
affiliate or wholly-owned subsidiary of CCC.
SECTION 2. The approval of the Transfer is subject to the following conditions of
approval:
I A.
Century and CCC shall comply with and be bound by the following documents:
(a) The Cable Television ordinance, as amended by Ordinance No. 94-1103.
(b) The Franchise Ordinance.
(c) This Resolution and the Exhibits attached to it.
(d) To the extent of any inconsistency between the provisions of the Cable Television
Ordinance, the Franchise Ordinance and this Resolution, the provisions of the
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Franchise Ordinance shall prevail over the Cable Television ordinance, and the
Resolution shall prevail over both.
Prior to the consummation of the Transfer, ML Media shall comply with the
recommendations of the Diehl, Evans Report by paying the City $6,114, plus
interest as required by the Franchise.
ML Media and Century shall include as part of gross revenues -all educational and
governmental ("EG") fees itemized on subscriber bills.
The City Council further finds that ML Media failed to include the franchise fee as
part of gross revenues subject to the franchise fee. The FCC is currently
considering whether the franchise fee may be collected on the franchise fee itemized
on subscriber bills in the proceeding entitled "In the Matter of United Artists Cable
of Baltimore". D 95-737 (decision of Chief of the FCC Cable Services Bureau,
released April 6, 1995) ("In re Baltimore"). In re Baltimore is on appeal. If the
FCC makes a final administrative determination through In Re Baltimore or another
administrative proceeding that the itemization of the franchise fee on subscriber bills
legally must be included as part of gross revenues subject to the franchise fee, then
Century shall begin including the itemized franchise fee as part of gross revenues
within thirty (30) days of the FCC's final decision. The foregoing shall not in any
way limit Century's right to challenge any such determination in any legal or
administrative forum. The City acknowledges that Century is entitled to pass-
through and recover the full cost of any "fee on fee" imposed pursuant to this
paragraph from subscribers.
Pursuant to Sections 5(a) and (c) of the Franchise Ordinance, ML Media and/or
Century shall pay the City Two Hundred Twenty Five Thousand Dollars
($225,000.00) upon the close of the Transfer. Said payment may be passed through
to subscribers at the rate of $0.24 per subscriber per month until Century has
received the amount of $231,750, after which, such access fee shall cease. In no
event shall the access fee continue beyond the term of the Franchise.
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2. In addition, upon 30 days written request from the City, Century shall pay the City
up to Twenty Five Thousand Dollars ($25,000.00) pursuant to Section 5(c) of the
Franchise Ordinance. Said payment may be passed through to subscribers as an
access fee pursuant to then -applicable Federal law and FCC Regulations.
This Resolution constitutes a written decision regarding the basic service tier rates and
charges of ML Media and/or Century within the meaning of Section 76.936 of the Rules
and Regulations of the Federal Communications Commission ("FCC"). Effective April 4,
1995, the maximum permitted basic tier rates, and associated equipment and installation
charges, including those proposed on ML Media's Form 1205 and 1210, submitted to the
City on March 5, 1995, areas follows:
Basic tier service (38 channels)
$19.88
Installation of Unwired Homes
$77.23
Installation of Prewired Homes
$42.90
Installation of Additional Connections
at time of initial installation
$25.74
Installation of Additional Connections
requiring separate installation
$34.32
Unwired home underground install
$111.55
Remote control/type 1
$0.59
Remote control/type 2
$0.36
Converter (type 1)
$2.63
Converter (type 2
$3.29
Wire maintenance service
$0.95
Tier Charge
$2.00
Beginning October 1, 1995, ML Media and/or
Century shall separately itemize on
subscriber bills all tier rates and equipment and service charges. For example, the individual
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rates for basic tier service, the new product tier (i.e., ML Media "Super Cable Package")
and wire maintenance service shall be separately itemized.
Century will give the City thirty (30) days prior written notice in the event it determines to
seek a modification of any existing Franchise commitment regarding facilities and
equipment on the basis of "commercial impracticability" under Section 545 of Title 47 of
the United States Code as a result of the Transfer approved herein, based upon (i) any and
all debt service incurred, or to be incurred, by CCC or Century, or any related parent or
affiliate, to directly or indirectly finance the Transfer, or (ii) any return on equity investment
made, or to be made, by CCC or Century, or any related parent or affiliate, based upon the
equity portion of the financing provided for the Transfer.
The City Council hereby finds that the obligations set forth at Subsections I, J and P of
Section 2 of this Resolution are not "external costs" under Title 47, Sections 76.922 and
76.925 of the Code of Federal Regulations. Century agrees with this interpretation, and
waives any claim that said obligations constitute external costs.
Century agrees that notwithstanding Section 521 et. s. of Title 47 of the United States
Code, it will assume responsibility for all acts or omissions of its predecessor, ML Media.
The City Council hereby finds that the Franchise is presently in full force and effect, and to
the best of its knowledge and information, and upon performance of the actions
contemplated by Subsections B, C, D, E, 12 and P of this Section 2, ML Media is currently
in compliance with the Franchise and its obligations.
1. Pursuant to Title 47, Section 76.309(c)(1)(iii) of the Code of Federal Regulations,
Century has the equipment and shall perform surveys to measure compliance with the
telephone answering standards set forth at Section 7.5-28 B2 of the Cable Television
Ordinance. The results of the surveys shall be submitted to the City quarterly. After one
year of submitting telephone answering surveys to the City, Century may request that it be
relieved of the requirement of submitting such surveys. The City Manager may relieve
Century of the survey requirement if he finds, based upon the surveys and the level of
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customer complaints, that Century is in full compliance with the telephone answering
standards.
Subsequently, should the City Manager find, based upon a historical record of complaints,
that Century is no longer in full compliance with the telephone answering standards, he may
reinstitute the survey requirements, upon thirty days written notice to Century.
2. Beginning October 1, 1995 ML Media and/or Century shall provide quarterly
customer service reports to the City. The reports shall provide the following
information:
a. Volume of phone calls received by the customer service department.
b. Percentage of time trunk lines were busy, and the abandonment rate.
C. Average time to complete out -of -service calls, and all other service calls.
d. Average time to complete new installations.
e. Detailed customer complaint and outage reports.
Century shall continue to operate the local origination and production studio located in
Hermosa Beach, California, at the current level of staffing.
Following close of the Transfer, Century shall give the City thirty (30) days advance notice
of any filing it determines to make pursuant to the Report and Order and Further Notice of
Proposed Rulemaking [MM Docket No. 93-215, CS Docket 94-28] March 30, 1994 (the
Cost of Service Report) relating to the justification of any regulated rates charged to
subscribers in the City.
ML Media and/or Century shall not encrypt or scramble any channels presently on the basic
service tier of the Hermosa Beach cable television system from the effective date of the
Resolution through one year following the closing of the Transfer. In the event that
subsequent to such one year period, Century introduces converters to any level of cable
service not currently requiring a converter, Century agrees to submit its marketing plan for
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such introduction to the City at least 15 days prior to initial notice to subscribers.
Subscriber notice shall be repeated and shall be communicated in more than one medium.
M. Failure of Century to comply with any material provision of this Resolution or the Franchise
shall be grounds for the City to invoke any of the City's remedies under and in accordance
with the Franchise.
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The consent herein granted shall be effective upon the closing of the proposed transfer and
the City shall be notified by letter directed to the City Clerk promptly upon such closing.
CCC, Century and ML Media shall, within ten (10) days of the adoption of this Resolution,
file in the office of the City Clerk, a written Acceptance and Guarantee of this Resolution
executed by CCC, Century and NIL Media in the form of Exhibit A, attached hereto. By
executing and filing the Acceptance and Guarantee, Century accepts and CCC guarantees
performance of all obligations hereunder, and ML Media agrees to perform the obligations
imposed upon it pursuant to the terms and conditions of this Resolution. The Acceptance
and Guarantee shall be notarized so as to indicate that the persons executing the
Acceptance and Guarantee have the authority to bind CCC, Century and ML Media.
Failure of CCC, Century and ML Media to timely file the Acceptance and Guarantee shall
void the approval of the Transfer.
ML Media and/or Century shall reimburse the City its reasonable administrative, consulting,
accounting and legal costs incurred in processing the application for approval of the
Transfer within 30 days of receiving an invoice from the City. The reimbursement amount
shall not exceed Thirteen Thousand Dollars ($13,000). Notwithstanding Subsection 0
above, ML Media shall reimburse the City said costs after City approval of this Resolution
regardless of whether the Transfer closes.
Should the Transfer fail to close by December 31, 1996, then this approval of the Transfer
shall lapse and expire.
SECTION 3. By delivering a copy of this Resolution to CCC and Century, the City hereby
gives notice that pursuant to Revenue and Taxation Code §107.6, the Franchise may create a
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possessory interest which, if created, may be subject to property taxation and that CCC and
Century may be subject to payment of property taxes levied on such interest.
SECTION 4. The City Manager and the City Attorney, or their designees, are hereby
authorized and empowered to execute any documents necessary, in their discretion, to implement
the approvals contained herein.
PASSED
this 25 day of July, 1995.
iderWof the City Council and Mayor of the City of Hermosa Beach, California
ATTEST: \ APPROVED AS TO FORM:
City Clerk City Attorney
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ACCEPTANCE AND GUARANTEE OF
TRANSFER OF FRANCHISE
Subject to, and effective upon the closing of the Transfer, as defined in Resolution No. 95-
5761, Century Valley Cable Corp., ("Century") hereby accepts each and every term of Resolution
No. 95-5761 of the City of Hermosa Beach, entitled:
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HERMOSA BEACH, CALIFORNIA, APPROVING TIS
TRANSFER OF A CABLE TELEVISION FRANCHISE FROM
THE ML MEDIA PARTNERS, L.P. TO CENTURY VALLEY
CABLE CORP.
Dated: , 1995 CENTURY VALLEY CABLE CORP
Lo
Name:
Title:
ML Media Partners, L.P., hereby accepts each and every term applicable to it of
Resolution No. 95-5761 of the City of Hermosa Beach, entitled:
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HERMOSA BEACH, CALIFORNIA, APPROVING TIS
TRANSFER OF A CABLE TELEVISION FRANCHISE FROM
THE ML MEDIA PARTNERS, L.P. TO CENTURY VALLEY
CABLE CORP.
Dated: , 1995 ML MEDIA PARTNERS, L.P.
L -In
Name:
Title:
Subject to, and effective upon the closing of the Transfer, as defined in Resolution No. 95-
5761, Century Communications Corporation ("CCC") hereby unconditionally guarantees each and
every term applicable to Century of Resolution No. of the City of Hermosa Beach, entitled:
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HERMOSA BEACH, CALIFORNIA, APPROVING THE
TRANSFER OF A CABLE TELEVISION FRANCHISE FROM
THE ML MEDIA PARTNERS, L.P. TO CENTURY VALLEY
CABLE CORP.
CCC waives any right to require the City to proceed first against Century or pursue any other
remedy in City's power.
Dated: , 1995 CENTURY COMMUNICATIONS CORP
By:
Name:
Title:
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
CITY OF HERMOSA BEACH
I. Naoma Valdes, Deputy City Clerk of the City Council of the
City of Hermosa Beach, California, do hereby certify that the foregoing
Resolution No. 95-5761 was duly and regularly passed, approved and adopted
by the City Council of the City of Hermosa Beach at a Regular Meeting of
said Council at the regular place thereof on July 25, 1995.
,%we The vote was as follows:
AYES:
Benz, Oakes, Reviczky, Mayor Bowler
NOES:
Edgerton
ABSTAIN:
None
ABSENT:
None
DATED: July 31, 1995