Regular 10.
Regular City Council Meeting
- Meeting Date:
- 06/24/2013
- TITLE
- Cable Television Franchise Transfer -- Revised
- PRESENTED BY:
- Tina Volek
- Department:
- City Hall Administration
Presentation:
Information
PROBLEM/ISSUE STATEMENT
An agreement to transfer control of Bresnan Communications, its Billings cable franchise and the local cable system to Charter Communications Operating, LLC, was entered into in February by CSC Holdings, LLC, an indirect parent of Bresnan and a wholly owned subsidiary of Cablevision Systems Corporation. Cablevision Systems (doing business as Optimum West) acquired the franchise from Bresnan in December 2010.
The Federal Communications Commission (FCC) requires cable companies to seek consent to the change in control from 150 cities in Montana, Wyoming, Colorado and Utah that have issued franchises to Bresnan Communications. The cities have 120 days to accept or deny the request for transfer; if the cities take no action, they are presumed to have agreed to the transfer. For the City of Billings, the deadline for approval is June 25, 2013.
Staff has been negotiating with Cablevision and Charter since April through the City Attorney's Office and special counsel at Best, Best & Krieger, LLP. Among the issues have been continuation of franchise fees that totaled more than $800,000 in City General Fund revenue in 2013; maintenance of more than 500 jobs in Billings, including those at a call center paid for in part with economic development funds; continued support for Channel 7; and the impact on customer service. Attached are a resolution, transfer agreement and letter from Charter that staff believes address these concerns.
Additionally, the City is scheduled to renew Bresnan's non-exclusive franchise agreement by July 9, 2013. The attached resolution extends the term of the franchise two years, through July 9, 2015, so the City and Charter have an opportunity to negotiate a new franchise agreement for a term to be determined. If a new franchise agreement cannot be negotiated by July 9, 2015, the franchise automatically will be extended for another two years.
Charter is a Delaware corporation headquartered in Stamford, CT. It provides cable service to about 3,100 communities nationwide.
The Federal Communications Commission (FCC) requires cable companies to seek consent to the change in control from 150 cities in Montana, Wyoming, Colorado and Utah that have issued franchises to Bresnan Communications. The cities have 120 days to accept or deny the request for transfer; if the cities take no action, they are presumed to have agreed to the transfer. For the City of Billings, the deadline for approval is June 25, 2013.
Staff has been negotiating with Cablevision and Charter since April through the City Attorney's Office and special counsel at Best, Best & Krieger, LLP. Among the issues have been continuation of franchise fees that totaled more than $800,000 in City General Fund revenue in 2013; maintenance of more than 500 jobs in Billings, including those at a call center paid for in part with economic development funds; continued support for Channel 7; and the impact on customer service. Attached are a resolution, transfer agreement and letter from Charter that staff believes address these concerns.
Additionally, the City is scheduled to renew Bresnan's non-exclusive franchise agreement by July 9, 2013. The attached resolution extends the term of the franchise two years, through July 9, 2015, so the City and Charter have an opportunity to negotiate a new franchise agreement for a term to be determined. If a new franchise agreement cannot be negotiated by July 9, 2015, the franchise automatically will be extended for another two years.
Charter is a Delaware corporation headquartered in Stamford, CT. It provides cable service to about 3,100 communities nationwide.
ALTERNATIVES ANALYZED
The City Council may:
- Approve the transfer agreement and resolution, authorizing the change of control of Bresnan, its Billings cable franchise and the local cable system to Charter Communications Operating, LLC;
- Modify the transfer agreement or resolution, but authorize the change of control; or
- Deny the transfer agreement and resolution. Charter would be able to conclude the transfer since it has the approval of a majority of the cities in the Optimum West area, but would have to reopen negotiations for the renewal of its non-exclusive franchise in Billings.
FINANCIAL IMPACT
The City received a $5,000 fee with the request for approval of the change of control, as required by BMMC 7-902.
Cable rates are controlled by the FCC, not the City of Billings. Charter says it has no current plans to change the terms, conditions of service or operations of the system, including subscriber rates and services. However, it notes that it has no intent to prevent any changes in rates or services currently planned by Bresnan. It also notes that it will evaluate subscriber rates and services after the close of the transfer and reserves the right to make changes that customer and company needs dictate, based on market and operational factors.
The proposed transfer agreement prohibits Bresnan from increasing rates solely based on the amount Charter paid for the system. It also requires that a 25-cent per month per subscriber PEG support fee and the franchise fee to the City continue to be paid at the same rate as in the past. Further, it requires Charter to maintain fiber links already in place to Channel 7 from the City Hall, Yellowstone County Courthouse and School District #2 Board Room, and adds the Library to those facilities. Efforts will be made to provide similar service to Dehler Park, the Alberta Bair Theater and the Babcock Theater.
Charter also will pay the City $50,000 within 60 days of the change of control for capital expenditures for Channel 7, followed by another $25,000 after the 2015 extension. The capital funds will be used to purchase portable, high definition equipment to provide live coverage of events remote from the City's main locations.
Cable rates are controlled by the FCC, not the City of Billings. Charter says it has no current plans to change the terms, conditions of service or operations of the system, including subscriber rates and services. However, it notes that it has no intent to prevent any changes in rates or services currently planned by Bresnan. It also notes that it will evaluate subscriber rates and services after the close of the transfer and reserves the right to make changes that customer and company needs dictate, based on market and operational factors.
The proposed transfer agreement prohibits Bresnan from increasing rates solely based on the amount Charter paid for the system. It also requires that a 25-cent per month per subscriber PEG support fee and the franchise fee to the City continue to be paid at the same rate as in the past. Further, it requires Charter to maintain fiber links already in place to Channel 7 from the City Hall, Yellowstone County Courthouse and School District #2 Board Room, and adds the Library to those facilities. Efforts will be made to provide similar service to Dehler Park, the Alberta Bair Theater and the Babcock Theater.
Charter also will pay the City $50,000 within 60 days of the change of control for capital expenditures for Channel 7, followed by another $25,000 after the 2015 extension. The capital funds will be used to purchase portable, high definition equipment to provide live coverage of events remote from the City's main locations.
RECOMMENDATION
It is recommended that the City Council approve the Transfer Agreement and Resolution authorizing Charter Communications Operating, LLC, to assume control of Bresnan Communications, its Billings cable franchise and the local cable system, and to extend the franchise term to July 9, 2015.