HomeMy WebLinkAboutMINUTES - 07121988 - 1.125 • TO: � Board of.Supervisors
FROM: Sara Hoffman, Franchise Administrator
DATE: July 1Z 1988 7o"
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SUBJECT: VIACOM FRANCHISE FEE PAYMENT
Specific Request(s) or Recommendations(s) & Background & Justification
RECOMMENDATION
1. Fix July 19, 1988 as the date for the Board to hear Viacom's administrative appeal of the decision of the
Franchise Administrator relative to franchise fee deficiencies.
2. Direct the Clerk of the Board to give at least five days' written notice of the hearing to Viacom pursuant to
Ordinance code section 14-4.006.
FINANCIAL IMPACT
Granting Viacom's appeal will result in a loss of revenue to Contra Costa County in the amount of$36,991.32.
(NOTE: Originally the Franchise Administrator requested a back payment of$41,077.52. However, as Viacom
pointed out, this calculation included installation revenue which is excluded from the franchise fee). Granting
Viacom's appeal could also result in requests for reimbursement from four other cable companies under Ordinance
1980 who have paid franchise fees on their premium pay cable revenue. Reimbursement of the years 1985, 1986
and 1987 could potentially cost from $37,000 to $42,000.
REASONS FOR RECOMMENDATION/BACKGROUND
Viacom's franchise fee is governed by Ordinance 1980. The basis is"gross annual receipts" which is defined as
"any and all compensation and other consideration in any form whatsoever and any contributing grant or subsidy
received directly or indirectly by a licensee from subscribers or users and payment for television or FM radio signals
or service excluding the installation and line extension charges received within the County."
Until 1977, the provisions of Ordinance 1980 were moderated by an FCC exclusion of premium pay cable service
receipts from the definition of income subject to a franchise fee. In 1977,the FCC modified its previous ruling,thus
subjecting premium pay cable services to a franchise fee.
Most cable company's in Contra Costa County began including premium pay cable services in the calculation of
their franchise fee payment in 1977. Viacom did not. Instead Viacom sent a letter to the then Chairman of the Board
of Supervisors at his district office informing them of the new FCC ruling. Viacom's letter states that the County
would need to amend Ordinance 1980 to collect franchise fees on pay revenues. Apparently the County did not
officially act upon the letter(there are no records in the Clerk of the Board files).
Continued on attachment: XX yes Signature:
Recommendation of Recommendation of
County Administrator Board Committee
Approve Other:
Signature(s):���
Action of Board on: i2 YdV'Approved as Recommended _ Other
Vote of Supervisors I HEREBY CERTIFY THAT THIS IS A TRUE
AND CORRECT COPY OF AN ACTION TAKEN
_ Unanimous (Absent ) AND ENTERED ON THE MINUTES OF THE
Ayes: Noes: BOARD OF SUPERVISORS ON DATE SHOWN.
Absent: Abstain:
Attested 2 Z
Orig. Div.: CAO (Franchise) it Batchelor
cc: County Counsel Clerk of the Board of Supervisors
Viacom (via Franchise) and County Administrator
By . 2-x :s , Deputy Clerk
SH:eh(vicomfee.bo)
VIACOM FRANCHISE FEE -2- July 19, 1988
Viacom believes that lacking specific direction from the County to include premium pay services in its franchise
fees, Viacom was not liable for the payment. To the contrary, County Counsel and the Franchise Administrator
believe that the ordinance clearly included all revenues including premium pay cable services which were
temporarily excluded due to FCC ruling.
County Counsel's and the Franchise Administrator's position on inclusion of premium pay services in the franchise
fee is obviously shared by the cable industry: most of the operators in Contra Costa County adjusted their payments
to include the premium pay services in 1978. Only two cable operators did not do so,both of whom have made back
payments, as requested.
The Franchise Administrator requested back payments for three years only (1985, 1986, 1987). Technically, the
County might have been able to request back payment to the date of the FCC ruling, i.e., 1977. Ten years back
payment was not requested however,because the current cable ordinance, Ordinance 82-28, appears to limit back
payment liability to three years. The Franchise Administrator used this as policy guidance.