The URL can be used to link to this page

Home My WebLink AboutMINUTES - 01231996 - SD1 r��: BOARD OF SUPERVISORS 5E_.�• } Contra FROM: Phil Batchelor, County Administrator %` Costa January 18 1996 County 7"iAY/ DATE: rfJrr �t a coux� SUBJECT: APPROVE THE TRANSFER OF CONCORD TV CABLE LICENSE TO TCI CABLEVISION OF CALIFORNIA, INC. SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS. SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: 1. Subject to the following terms and conditions, CONSENT to the transfer from the Chronicle Publishing Company, doing business as Concord TV Cable ("Transferor") to TCI Cablevision of California, Inc. ('Transferee")of the license for the cable system operated by Transferor in the unincorporated Concord area: (a) On or before February 15, 1996,the Transferor shall pay to the County all license fees due for the period July 1, 1995 through December 31, 1995,and shall deliver to the Countythe statement of gross annual receipts required under Section 58-6.002(f)of the County Ordinance Code. The Transferee shall be responsible for the payment of license fees accruing after December 31, 1995. (b) The Transferor and Transferee shall be jointly and severally liable for any license fee under- payment that occurred prior to the closing date of the transaction between the Transferor and Transferee ("Closing Date"), including without limitation license fees payable on advertising revenues received indirectly by the Transferor during the period January 1, 1991 through the Closing Date. (c) As provided in the attached agreement, neither the Transferee nor Transferor shall factor goodwill into any cost-of-service showing unless and/or until FCC regulations at the time expressly allow it. Further, the County's approval of the change of ownership shall not be construed as a rebuttal of the presumption that goodwill is disallowed forthe purpose of any proceeding to calculate or determine any regulated rate subject to the County's jurisdiction. CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURES: ACTION OF BOARD ON 3• APPROVED AS RECOMMENDED OTHER VOTE OF SUPERVISORS 1 HEREBY CERTIFY THAT THIS IS A TRUE —ZUNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. Contact: 3 CC: ATTESTED1996 PHIL B HELOR,CLE OF THE BOA D OF SUPERVISORS AND COUNTY ADMINISTRATOR BY DEPUTY M382 (10/88) ' w v (d) On or before the Closing Date, the Transferee shall file with the Clerk of the Board of Supervisors its written acceptance of the license, in a form satisfactory to the County Counsel, together with all required bonds and insurance certificates, and its agreement to be bound by and to comply with and to do all things required of the Transferee by the provisions of Division 58 of the County Ordinance Code(Ordinance No.93-55)and license award resolution(Resolution No. 94/365 adopted July 12, 1994) and to expressly assume all obligations of the Transferor, as required by Section 58-4.028(1) and (k) of the County Ordinance Code. (e) The transfer of the license shall not become effective unless the County receives the items specified in paragraphs (a) and (d) by the applicable deadlines. Should these items not be submitted on time, this Resolution shall be of no further force or effect and the application for transfer of ownership shall be deemed to have been denied without prejudice. 2. APPROVE the attached Transfer of License Consent agreement and AUTHORIZE the Chair of the Board to execute the agreement on behalf of the County. FINANCIAL IMPACT: None. BACKGROUND: On September 11, 1995, Concord TV Cable(or'Transferoe)filed with the County an FCC Form 394 requesting that the County consent to a transfer from Concord TV Cable('Transferor")to TCI Cablevision of California, Inc. ("Transferee") of the license for the cable system serving the unincorporated Concord area. Section 58-4.028 of the County Ordinance Code(Ordinance No.93-55)requires that all proposed transfers of licenses be submitted to the County for review and decision by the Board of Supervisors. Pursuant to Section 617 of the federal Cable Act (47 U.S.C. Section 537), the County has 120 days to act upon any request for approval of a transfer. Following receipt of the FCC Form 394, staff worked with the City of Concord to review the legal,technical and financial qualifications of the buyer. It was determined that Transferee was qualified to operate the Concord system. Then a compliance review of Concord TV Cable was conducted by staff.Concord TV Cable had renewed their license in 1993. A review of their technical and financial qualifications was conducted at that time. Recently, staff has resolved with Concord TV Cable certain issues relating to the payment of license fees on advertising revenues and late fees. However,an outstanding issue still remains over whether license fees are payable on those advertising revenues received indirectly by the Grantee(e.g., revenue used for operating expenses of Bay Cable Advertising and revenue received by the parent(s)of the Grantee). This same issue is currently being pursued by the County and a consortium of eight local cities with TCI's local systems. Appropriate language has been added to this Resolution to enable the County to continue to pursue this issue with TCI. In addition, staff is aware of another jurisdiction in which a cost-of-service showing submitted for rate increases after a transfer included costs for goodwill related to the transfer of the system. This increased basic rates significantly. Currently, FCC regulations exclude the use of goodwill in rate calculations, although some cable operators continue to include it until their dispute with the FCC over this issue is resolved. To avoid any significant rate increase in basic service rates because of goodwill as a result of this transfer,staff has included the attached agreementwhich conditions the transfer on the Transferee's agreeing not to include goodwill unless expressly authorized to do so. Staff believes that these conditions are necessary to assure compliance with'the County's cable television ordinance and FCC rate regulations. CONSEQUENCES OF NEGATIVE ACTION: If the Board does not take the action recommended above,the application for consent to transfer would be deemed automatically granted. This could potentially limit the County's ability to recoverunderpaid license fees and could possible increase rates by the inclusion of goodwill for the citizens in the unincorporated Concord area. MAR -- 1 S - 9 El FR I 1 6 S2 F _ E+ 4 TRANSFER OF LICENSE CONSENT AGREEMENT This Consent Agreement, dated January' 23 , 1996, is entered into between TCT Cablevision of California, Inc. ("TCI/California") and the County of Contra Costa ("Grantor") . RECITALS A. The Chronicle Publishing Company, doing business as Concord TV Cable ("Grantee") is the duly authorized holder of a license (the "License") authorizing operation of a cable television system (the "System") servicing the residents in the unincorporated Concord arca. B. Grantee and TCI/California have requested that the Grantor consent to the transfer of Grantee 's License to TCI/California, as more fully described in the FCC Form 394, filed with the Grantor in this regard. C. Grantor is willing to consent to the transfer of the Grantee ' s License, upon the. condition that TCI/California execute this Agreement . D. TCI/California is willing to execute this Agreement in connection with obtaining Grantor's consent, with the understanding that this Agzeement will become effective upon close of the escrow for the transaction between Grantee and TCS/California. IN CONSIDERATION OF wM FOREGOING, and of the obligations contained below, Grantor and TCI/California agree as follows: Section 1 The consent of the Grantor to the transfer of the Grantee 's License do not constitute and shall not be construed to constitute a waiver of any obligations of Grantee or any of its successors in interest under the License. Section 2 As provided in the Board order approved January 23, 19961 TCI/California acknowledges and; agroes that, notwithstanding the 1 MAR - 1 S - 9b FR I 1 E. .33 F' 6 transfer of the License, it remains legally responsible for any default under the License not currently known to Grantor, including, but not limited to, any license fees which may be due to the Grantor. Section 3 The Grantor hereby consents to and approves the assignment, mortgage, pledge or other encumbrance, if any, of the License, System or assets relating thereto, or of the interests in the permitted holder thereof, for collateral fora loan. Section 4 As a part of the transfer, .TCI/California agrees and acknowledges that! a) this approving agreewtent is not a new license, the granting of a license, or the renewal of' -the existing license, but rather is exclusively an agreement to the transfer of the Grantee ' s License, and neither affects nor prejudices in any way the Grantors rights thereunder; and b) that compliance with the License, as of the closing date of the transaction between Grantee and WI/California ("Closing, Date") , is neither commercially impracticable ars the term is used in Section 625 (f) o£ the Cable Communications Policy Act of . '1.984 and/or the Cable Television Consumer Protection and Competition Act of 1992 (collectively the "Cable Ac:t.") nor economically infeasible upon the transfer of License based on (1) any. a.nd all debt service incurred, or to be incurred, to directly or indirectly finance the transfer of License, or (2) any return on equity made, or to be made, based upon the equity portion of the financing relating to the transfer of License . Section 5 After the Closing Date, . TCl/California will not factor goodwill into any cost-of-service . stjowing submitted by it for regulated rates subject to Grantor's jurisdiction unless and/or until (FCC) regulations at the time expressly allow it . Further, TCI/California agrees that the Grantor's approval of the transfer of License, shall riot b0 construed as a rebuttal of the presumption that goodwill is di.sallowed. for the purpose of any 2 MAR - FR I. 1 ,S : :34 P proceeding to calculate or determine any regulated rate subject to Grantor's jurisdiction. Section 6 If any section of thia .Agreement is held by court or by any Federal, State or local agency of competent jurisdiction to be invalid as conflicting with any Federal, State or local law, rule or regulation now or he•reafter .in effect, or is held by such court or agency to be modified in any way in order to conform to the requirements of any such law, rule or regulation, said section shall be considered a separate, distinct and independent part of this Agreement, and such holding shall not affect the validity and enforceability of all other sections hereof. Section 7 This Agreement shall become effective on the Closing Date. AGREED BY: County of Cont a Costa TCI Cablevision of California, Inc. By: . C r , Board of By: . __ __.... . . Super isore Stephen M. Brett Title: Vice President ATTEST: Phil Batchelor, Clerk of the Board of Supervisors and By: County Administrator �y� . _...�..._....._..__.. v Deput C erk 3 STATE OF COLORADO ) COUNTY OF DENVER ) On April 9, 1996, personally appeared before me, a Notary Public in and for the State and County aforesaid, Stephen M. Brett, Vice President, and Mary M. McChesney, Assistant Secretary, of TCI Cablevision of California, Inc., personally known to me to be the persons whose names are subscribed to the above instrument in such capacities, who acknowledged that they executed the same. Notary-Public [SEAL] My commission expires: � MAR - 15 - 96. FRI IS .- :95 P . 07 RECOMMENDED FOR APPROVAL: : Phil Batchelor; County . Administrator By: -6- 64 Patricia Burke, Cable TV Administrator APPROVED AS TO FORM: Victor J. Westman, Counter Counsel David F. Schmidt,, Depu.t,y .County Counsel