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1992-01-14 - AGENDA REPORTS - RESO KING VIDEOCABLE TRANSFER (2)
AGENDA REPORT City Manager Approval Item to be presented by: John Medina CONSENT CALENDER DATE: January 14, 1992 SUBJECT: Resolution, King Videocable Transfer DEPARTMENT: Public Works BACKGROUND On September 29, 1987, the Supervisors of the County of Los Angeles, under Section 16.58.010 of the Los Angeles County Code, adopted Ordinance No. 87-1069F granting King Videocable Company -Newhall, a cable television franchise to construct, operate, and maintain a cable television system. King Videocable Company is a wholly-owned subsidiary of King Broadcast Company. King Videocable Company is requesting the City's approval of the purchase of King Broadcast Company by King Holding Company, which will be equally owned by the Providence Journal Company and Kelso Partners IV, L.P. Under provisions of the FCC, a transfer of ownership requires approval of the governing body. As requested, King Videocable Company has submitted documents, which are on file with the City Clerk, in support of its Transfer Application to the City. Staff and legal counsel have reviewed the documents submitted on behalf of King Holding Company and approve of the transfer as described in the attached resolution. Attached is a summary of essential items contained in the resolution of which a copy with complete text is on file with the City Clerk. Adopt Resolution 92-14 based upon the representations contained in the documents submitted to the City, indicating that King Holding Company has the financial responsibility to comply with the franchise. Attachments: Resolution 92-14 Exhibit A, B, C Letter to Council from Scott F. Field dated January 6, 1992 Adopted: i - Ages AT,� ESSENTIAL ITEMS CONTAINED IN RESOLUTION AGREEMENT King Holding Company accepts and guarantees performance of all obligations contained in the Franchise. King Videocable will reimburse the City for reasonable administrative, consulting, and legal costs incurred in processing the application for transfer. King Videocable will notify the City by letter directed to the City Clerk upon consummation of stock merger. King Videocable will submit a proposal to the City to provide educational and governmental programming channel capacity and equipment no later than sixty (60) days after adoption of resolution. King Videocable will submit an FCC proof -of -performance test to the City on or about the last working day of each quarter of the year. King Videocable will remedy any deficiencies identified in the test no later than ten (10) working days after receipt of the results by the City. The City may invoke Franchise termination for failure to comply with any material provision of the resolution. VENTURA COUNTY OFFICE 2310 PONDEROSA DRIVE SUITE 1 CAMARILLO, CALIFORNIA 93010 (8051 987-3468 TELECOPIER:(805) 482-9834 Honorable Mayor City Council LAW OFFICES BURKE, WILLIAMS & SORENSEN 3200 BRISTOL STREET SUITE 640 COSTA MESA, CALIFORNIA 92626 (714) 545-5559 January 8, 1992 and Members of the CITY OF SANTA CLARITA 23920 Valencia Blvd. Ste. 300 Santa Clarita, CA 91355 LOS ANGELES OFFICE 611 WEST SIXTH STREET, SUITE 2500 LOS ANGELES, CALIFORNIA 90017 (213) 236-0600 TELECOPIER: 1213) 236-2700 Re: Application of King Videocable - Newhall for Approval of Change of Control of Cable Television Franchise Dear Mayor and Members of the City Council: King Videocable Company -Newhall ("KVCN") holds a franchise to operate a cable system within the western portions of the City of Santa Clarita and the adjacent unincorporated areas. KVCN is a wholly owned subsidiary of King Video Cable Company, which is in turn a wholly owned subsidiary of King Broadcasting Company. KVCN has applied to the City for consent to the change of control of King Broadcasting Company, via a reverse stock merger, to King Holding Corp., which will equally be owned by the Providence Journal Company and Kelso Partners, IV, L.P. KVCN then will be managed by Colony Communications, the cable television subsidiary of the Providence Journal Company. For the reasons set forth below, it is recommended that the Council approve the attached Resolution authorizing the change of control. Background On September 29, 1987, just prior to City incorporation, the Board of Supervisors of the County of Los Angeles granted KVCN a new franchise to operate a cable system. A franchise is similar to a contract and authorizes the cable operator to use the public right-of-ways for a private purpose. Because the franchise is comparable to a contract, the City.has relatively limited authority to amend the franchise or to regulate the operator Mayor and City Council CITY OF SANTA CLARITA January 8. 1992 Page 2 except as so authorized by the franchise, or with the agreement of the cable television company. Because the franchise is granted to one company on the basis of its professional, financial and technical ability to operate the system, it may not be transferred to another company without the consent of the City. The purpose of City consent to a transfer is to insure that the new owners have the professional, financial and technical ability to operate the system and, further, whether KVCN is presently in full compliance with the terms of the franchise, and finally whether the financial terms and.conditions of the stock merger would negatively impact cable operations. Analysis In order to answer these questions, the City Attorney's office requested detailed documents and information from Colony Communications. From the responses to these documents, we have determined as follows: 1. Colony has the professional, financial and technical ability to operate.the system.. Colony is a multiple system operator with franchises throughout the Country. Colony presently operates franchises in partnership with Copley Newspapers in the Cities of Irvine, Costa Mesa, Tustin, Orange, Cypress, La Palma and the San Pedro area in Southern California. In addition, apart from this purchase in Santa Clarita, Colony is purchasing a system in Lakewood. 2. The financing of this acquisition does not appear to have any negative impacts on the operation of the system. Several years ago, during the time of highly leveraged transactions, cable systems were being bought and sold very frequently through the use of "junk bond" financing. In some cases, the high interest rates resulting from highly leveraged transactions put inordinate pressure on the operator to raise rates. However, this is not a highly leveraged transaction. That is not to say that the City may not see rate increases in the near future, but they will not likely be due to the financing terms. 3. KVCN is presently in compliance with the franchise ordinance. KVCN is presently in the middle of rebuilding the cable system. The City is fortunate that King has chosen to Mayor and City Council CITY OF SANTA CLARITA January 8, 1992 Page 3 rebuild the system with a high-technology, "fibre to the nodes" system. This is relatively new technology and should permit for better picture quality and more channels. In order to institute this improvement in the new system beyond what was originally required by the County, the City previously granted a six month extension of time for KVCN to complete the rebuild. Under the franchise extension, KVCN is required to complete the rebuilt by June 30, 1993. At this time, KVCN anticipates that the rebuild will be complete prior to this date. 4. In addition, since the County granted KVCN the new franchise, the National Cable Television Association, an industry trade group, has promulgated voluntary consumer service standards for all of its members. These standards establish subscriber service criteria in the areas of office hours, telephone response time, time to correct system and individual outages, and a time to install new subscriber service. As a condition of the franchise transfer, King has agreed to incorporate these subscriber service standards into the franchise, with certain revisions from the industry standards to close potential loopholes. 5. One final area of potential franchise compliance is "Access Programming". The County was somewhat ambiguous on the requirements for Access Programming, although they did incorporate requirements in the franchise that KVCN develop an Access Program. Access can mean many different things, including Public Access. However, at a minimum, it is frequently used as a means to provide governmental programming on the cable system, including cablecasting of City Council meetings. Staff is presently in negotiations with both KVCN and Paragon to develop a joint access program that would permit, upon City request, the carrying of governmental and educational programming on the cable system. Development of this Access Program will take additional time because it requires: (1) interconnections between the cable systems and the government buildings, (2) interconnection between the two cable operators; and funding for videocasting equipment. Mayor and City Council CITY OF SANTA CLARITA January 8, 1992 Page 4 Conclusion In summary, for all the above reasons, it is recommended that the Council adopt the attached Resolution authorizing the transfer of the Franchise. Respectfully submitted, Scott F. Field of BURKE, WILLIAMS & SORENSEN Enclosure cc: George Caravalho, City Manager Jesse Juarros, General Services Manager Carl Newton, City Attorney Michael Isaacs, Colony Communications Jeanne Spinner LaMar, Colony consultant Shirley Aronson, King Videocable Edward Hewson, King Broadcasting Company sff\8544.LTR vol I.r, r ana.rL°u.3 ire:cMws' �BM 1x21' • 1`• 1 +I i" C:w.l w}.vr'4 °4'sy4 b �''• /�mta+zCT uaGnnm 1' ' ? e° •y'ORT [a%�1: •\r�e -1 y1--�i ancil I`ep M,a115+ a 1 •rel i y„___ ___ q^ ___•_�" '- -- ....... i. 't Via,-. a [eona V►lley ffA�tt��JS O 1 1 1 �.`-•as'yc - ••--49.y1--------='•L9anm I _ tA•1 1 --q I u Q Is I t , • ' 9 .� •ib.7�TF• •.'_ NK!' 1 st a I a + I Leets WARM iNGS �Q' ! s .ted. 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In s I E r • A@:. a S.dO1e - . _ d , 1t I) I �iYi�•o it +�"+ +_11_\ a1, a adro-L '11' V n, I'=A, IMendMna fxib ° Ma Mar• . - - I do j Y WT 1AIt WT le wT KING VIDEOCABLE CO. I .° ' �t ! 'c $1e „ "' 1 » u , » I ;1f Is F I N I s ;I le a la z ➢l » 1• I IKVoncSn,a w yr N 4 I S I .e a, I ,py ...ContraU Me,e' Meridenha IrwfaS _. _.-- --- I of - -y—C - _-- J --' - "' ` o - _T/ MK^BeJ _� .r SP Y 'x� Pe k ;60� ATC CABLEVISION _ —'-- �sA aA 'uouNrnlNs W24 wT:l gS' . 36 )5 M. r I ` s. �I el-- '----- ;\ate FRANCHISE BOUNDARY _ __ t T. 3 N. A r1 S -. N I ? _ ��s. Y! a•3.Ini.n Csrl 1'.�es a FRANCHISE BOUNDARY N °dT I ! I I L Am ,pnnn I e ' •st eT" Jo— sa'd' I Mount ' - �; - . _ � __ 1 _ „ ,Frl -S\- `.�?_-__ •!I'� e ♦ I dl x c _,• '1 Yn]Ina1Al.! nd a'''aYra9lwr a •.i ,xle�4a H�eo+a fiyarl tar „`� EXHIBIT A - 1 lb. +A.:..nr. ., f aar.:.n.V r.9 IaGu`�7 I F -(-,. _.__,_. .._ s"14 % Moron 'ss v,•4. Ss'Imar L. CT, .. I• e _ _ i i„� i e/ L.^ •6 .Lk IN ~.:J' fit.'! 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LY_._J_:+`�-.. _.•--/.J � i:_�__. _. _ b�.�; `_;'Z ' l \C:/ �/ I •_' , , , 1 ,, �,a i 1'x �_�:_Ti+a,q' li, , 1 YYf ' .. 1� .r4'owz ♦_j_ • W j'1 ,` r 4, ' Q': (,♦ ' •it 1 i `\ 1!, t I 1 I 1 : \ Y t IrLEL; • J 'f ,: b I '`• 1 14F ♦ rl 1 1 " „ 1 1 r ✓ 1 ' , / ' i I , , V • • I I / 3g I { .--_J-- Al ♦�y`_�___<____ _1. _pO _'`_____. -L__2.2___ ___ _ _�2; _____�_ J�..______-__ _ _';'L` il. ___ __. _- �L•, EXHIBIT A .. RESOLUTION NO. 92-14 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA APPROVING THE CHANGE OF CONTROL OF THE KING VIDEOCABLE COMPANY-NEWHALL CABLE TELEVISION SYSTEM FRANCHISE WHEREAS, on September 29, 1987, the Board of Supervisors of the County of Los Angeles, pursuant to Section 16.58.010 of the Los Angeles County Code, adopted Ordinance No. 87-1069F granting to King Videocable Company -Newhall ("King"), a cable television franchise to construct, operate and maintain a cable television system (the "Franchise"); and WHEREAS, King is a wholly-owned subsidiary of King Videocable Company ("KVC"), which in turn is a wholly-owned subsidiary of King Broadcasting Company ("KBC"); WHEREAS, KBC has entered into an agreement through which King Holding Corp. will become the owner of the stock of KBC, which will be equally owned by the Providence Journal Company and Kelso Partners IV, L.P.; WHEREAS, King has requested the consent of the City to the transfer of control of King from the current shareholders of KBC to King Holding Corp.; WHEREAS, on December 15, 1987, the City of Santa Clarita was incorporated. The jurisdiction of the City includes that -portion of the service area of the Franchise depicted in Exhibit A, attached hereto; WHEREAS, in support of its Transfer Application, King has 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) Letter regarding transfer of King Franchise from Jeanne Spinner LaMar to Scott F. Field, dated September 8, 1991; (2) Letter from Scott F. Field to Jeanne Spinner LaMar, dated September 30, 1991. (3) Letters from Scott F. Field to Edward Hewson, Jr., dated June 26, 1991 and November 27, 1991; (4) Report regarding transfer of King Franchise submitted to City dated October 30, 1991; (5) Letter with enclosures from Michael B. Isaacs to Scott F. Field dated October 29, 1991; (6) Letter with attachments from Jeanne Spinner LaMar to Scott F. Field, dated December 9, 1991; and (7) Letter with attachments from Dodie Tschirch to Scott F. Field, dated December 12, 1991; WHEREAS, King has fulfilled all obligations set forth in City ordinances as a prerequisite to transfer of control; and WHEREAS, the City has considered the proposed transfer of control and has found no reasonable cause to deny consent to the transfer of control. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA CLARITA, CALIFORNIA, DOES RESOLVE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. Pursuant to the Los Angeles County Code, The Council finds that, based upon the representations contained in the Transfer Documents, King will continue to have the financial responsibility to comply with the Franchise. SECTION 2. The change of control of King is hereby approved subject to the following conditions of approval: A. The following documents constitute the "Franchise Documents" which, individually and collectively, represent the obligations imposed upon Colony, and are collectively referred to as the "Franchise"; sff\852234.RES (1) Section 16.58.010, et. sea. of the Los Angeles County Code; (2) Los Angeles County Ordinance No. 87- 1069F; and (3) Letter from Shirley Aronson to Ellie Kane, dated April 27, 1989; and (4) This Resolution. B. KVC and King, jointly and severally, accept and guarantee performance of all obligations contained in the Franchise. -2- sff\852234.RES C. King shall reimburse the City its reasonable administrative, consulting and legal costs incurred in processing the application for approval of the change of control which is the subject of this Resolution, within 30 days of receiving an invoice from the City. D. The consent herein granted shall be effective upon the closing of the proposed transaction and the City shall be notified by letter directed to the City Clerk promptly upon such closing. E. Colony Communications, Inc., a wholly-owned subsidiary of the Providence Journal Company, shall retain.management and operational control of the Santa Clarita cable television system operations after consummation of the transaction . F. King shall complete and deliver to the City a proposal on providing educational and governmental programming channel capacity and equipment no later than sixty (60) days after the date of this Resolution. Said proposal shall meet the terms of Section 6.E. of Ordinance No. 87-0169F. Upon completion of the proposal, King shall negotiate in good faith with the City on implementing said proposal. G. King shall comply with the Subscriber Service Standards attached hereto as Exhibit B. H. King will not seek a modification of any franchise commitment regarding facilities and equipment on the basis of "commercial impracticability" under Section 625 of the Cable Communications Policy Act of 1984 solely as a result of the change of control approved herein. I. King shall at all times maintain and operate the cable television system in compliance with the technical guidelines and/or standards promulgated by the Federal Communications Commission ("FCC") specifically, but not limited to, those set out in Part 76 of Code of Federal Registrar, Title 47. Annually, King shall perform a proof -of -performance test on the system. The test results shall be filed with the City. King shall remedy all deficiencies identified in the test results as soon as it is reasonably practicable, but in no event later than ten (10) working days after receipt of the test results. The City Manager may grant extensions of time to remedy deficiencies -3- identified in the test results for good cause shown; such consent shall not be unreasonably denied. J. Failure of King to comply with any material provision of this Resolution shall be grounds for the City to invoke any of the City's remedies under the Franchise, including but not limited to, Franchise termination. K. KVC.and King shall, concurrently with the closing of the Franchise transfer, file in the office of the City Clerk a written acceptance of this Resolution executed by King in the form of Exhibit C, attached hereto. KVC and King , by executing and filing the Acceptance, guarantee performance of all obligations hereunder. The Acceptance shall be notarized so as to indicate that the persons executing the Acceptance have the authority to bind KVC and King. This section is not intended as a definition of parent company or affiliate for purposes other than approval of this change of control. SECTION 3. By consenting to and agreeing to accept the change of control, neither the City nor King waives any rights either may have under federal, state or local law. SECTION 4. By delivering a -copy of this Resolution to King, the City hereby gives notice that pursuant to Revenue and Taxation Code §107.6, the Franchise may create a possessory interest which, if created, may be subject to property taxation and that King may be subject to payment of property taxes levied on such interest. SECTION 5. 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. sff\852234.RE5 -4- PASSED, APPROVED AND ADOPTED this day of January, pwiY.r AYES: NOES: ABSENT: ABSTAIN: ATTEST: CITY CLERK sff\852234.RE5 MAYOR, CITY OF SANTA CLARITA -5- EXHIBIT B SUBSCRIBER SERVICE STANDARDS SECTION 1.- SERVICE STANDARDS: Franchisee shall maintain an office reasonably accessible to subscribers to provide the necessary facilities, equipment and personnel to comply with the following consumer standards under normal conditions of operation: (a) Knowledgeable, -qualified consumer service representatives shall be available to respond to customer telephone inquiries, a minimum of 55 hours weekly, during normal business hours, Monday -Friday, plus supplemental hours on weekends or after normal business hours. An answering system will be available to record after-hours messages, including weekends and holidays, and customer service representatives will promptly answer phone messages the next business day. (b) A business and service office located either within the Franchise area, or proximate to, shall be open Monday through Friday during normal business hours, and adequately staffed to accept subscriber payments and respond to service requests and complaints. Additionally, based on customer demand, Franchisee will staff the business and service office after normal business hours Monday through Friday and/or on weekends. If the business and service office is located outside.the Franchise area, a payment center shall be located within the Franchise area. (c) Franchisee shall provide an emergency system sff\994430R.Sss maintenance and repair staff, capable of responding to and repairing major system malfunctions on a twenty-four (24) hour basis . (d) Franchisee shall schedule service and installation appointments within a specified four (4) hour time period in compliance with California Civil Code Section 1772. (e) Telephone answer time by a customer service representative, including wait time, and the time required to transfer the call, shall not exceed 30 seconds. The number of routine rings shall be four or fewer. This standard shall be met no less than ninety percent of the time measured on an annual basis. (f) The customer will receive a busy signal less than three percent of the total time that the business and service office is open for business. (g) Franchisee shall provide written information in each of the following areas at the time of installation, at least once every year and upon request: products and services offered prices and service options installation and service policies how to use the cable service (h) Bills shall be clear, concise and understandable. -2- sff\994430R.SSS (i) Refund checks shall be issued promptly, but no later than the earlier of 45 days or the customer's next billing cycle following the resolution of the request, and the return of the equipment supplied by the cable company if service is terminated. (j) Customers within the Franchise area will be notified a minimum of 30 days in advance of any rate or channel deletion, within the control of the Franchisee. SECTION 2. - REQUESTS FOR CABLE SERVICE AND REPAIRS: (a) Franchisee shall render efficient service, make repairs promptly, and interrupt service only for good cause and for the shortest time possible. Major scheduled interruptions, insofar as possible, shall be preceded by notice. A written log or an equivalent stored in computer memory and capable of access and reproduction, shall be maintained for three (3) years. The log shall indicate the time and date of all significant service interruptions, requests for cable service or repairs, and responses to requests for cable service or repairs. (b) Franchisee shall maintain a repair force of technicians capable of responding to subscriber requests for service within the following time frames ninety five percent (95%) of the time on an annual basis and excluding circumstances beyond the Franchisee's control: -3- sff\994430R.SSS (i) System outage: Within two (2) hours, including weekends, of receiving subscriber calls which by number identify a system outage of sound or.picture of one (1) or more channels, affecting all the subscribers of the system or a considerable number thereof. (ii) Isolated outage: Within twenty-four (24) hours, including weekends, receiving requests for service from five (5) or more customers in the same geographical area identifying an isolated outage of sound or picture for one (1) or more channels. (iii) Inferior reception quality: Within forty-eight (48) hours, including weekends, of receiving a request for service identifying a problem concerning picture or sound quality. (c) Franchisee shall be deemed to.have responded to a request for service under the provisions of this Section when a technician arrives at the service location, if necessary, or otherwise begins work on the problem. In the case of a subscriber not being home when the technician arrives, response shall be deemed to have taken place if the -4- sff\994430R.SSS technician leaves written notification of arrival. (d) Not less than 95% of the time measured, on an annual basis, standard installations will be performed within seven business days after an order has been placed. "Standard" installations are up to 125 feet from the existing distribution system. -5- EXHIBIT C ACCEPTANCE OF TRANSFER OF FRANCHISE KING VIDEOCABLE COMPANY-NEWHALL hereby accepts, and KING VIDEOCABLE COMPANY hereby guarantees, each and every term of Resolution No. of the City of Santa Clarita, entitled "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA REGARDING THE CHANGE OF CONTROL OF THE CITYCABLETELEVISION SYSTEM FRANCHISE." DATED: , 1992 KING VIDEOCABLE COMPANY- NEWHALL By: _ Name: Title: KING VIDEOCABLE COMPANY By: _ Name Title: ,., • r.....w n.:w,..- rn. 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