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HomeMy WebLinkAboutAGENDA REPORT 1998 1202 CC REG ITEM 09DTO: FROM: DATE: CITY OF MOORPARK AGENDA REPORT Honorable City Council ITEM q • • 338'. 7 CITY OF MOORPARK, CALIFORNIA City Council Meeting of I2-2-ga ANION: Ac( n + eoi esolubon No . 9q -155o John E. Nowak, Assistant City Manager November 16, 1998 (CC Meeting of 12/02/96 SUBJECT: CONSIDER RESOLUTION NO. 98- APPROVING MODIFICATIONS TO THE CABLE TELEVISION FRANCHISE HELD BY ENTERTAINMENT EXPRESS LIMITED AND EXTENDING SAID MODIFIED FRANCHISE TO DECEMBER 20, 2000. BACKGROUND: In 1984 a non - exclusive cable franchise was granted to Mountain Meadows Cable Television for a period of fifteen (15) years. The franchise expires on June 10, 1999. Entertainment Express Limited (EEL) is the current name of that company. The owners of EEL have requested the City to extend that franchise to December 20, 2000 to provide an opportunity for the possible change of ownership of the franchise. DISCUSSION: In June 1984 the City Council approved Resolution No. 84 -99 granting a fifteen (15) year non- exclusive franchise to Mountain Meadows Cable Television for the installation and operation of a cable television system within the City. That resolution was amended in July 1994 by Resolution No. 84 -117. The expiration of the franchise remained the same. Earlier this year the owners of EEL requested that the City Council extend its current franchise for an eighteen (18) month period to provide it an opportunity to sell its franchise to a firm capable of providing service to the community. The extension would also allow a new owner to negotiate the franchise renewal with the City. The requested extension to December 2000 would also place this cablevision provider on the same 000419 Extension of EEL Franchise Meeting of 02 December 1998 Page 02 timeline for renewal as the City's other provider, TeleCommunications, Inc. (TCI). In June 1998 the City Council approved a schedule for addressing the cable television franchises. It included requesting public input on the proposed EEL franchise extension. Over 63 written and phone comments were received from subscribers between August and early November. Almost all of the comments were in the form of complaints regarding EEL. These could be categorized into five principal areas: (1) lack of responsiveness to service calls; (2) poor quality signals; (3) billing errors; (4) lack of channel offerings; and (5) just want a bigger company. In considering the franchise extension request, the City Council is reminded of a local government's authority under current federal laws. Congress has repeatedly reduced a local government's ability to regulate the cable television industry. In order to deny a franchise renewal, the City must make findings that either the cable operator did not substantially comply with the terms of the franchise; or the services have not been reasonable in light of community needs; or the operator does not have the financial, legal or technical ability to provide the services; or a proposed renewal is not reasonable to meet future cable - related community needs. An extension request would need to be judged on similar grounds. To deny a change of ownership of a franchise or a transfer the Council must prove that the new operator does not have the financial, technical or legal qualifications to provide cable services to the community. Failure to approve the extension would require EEL to submit a franchise renewal request in time to allow the City Council to take action prior to June 10, 1999. Under federal regulations the renewal would be automatic unless the City is able to prove that the company has not met the requirements of the current franchise and is not capable of doing so. Since there are no alternative providers currently in the area, the options are no cable service or a City acquisition of the assets. 0Dd4Z0 Extension of EEL Franchise Meeting of 02 December 1998 Page 03 One of the principal purposes for the franchise extension is for Entertainment Express Ltd. to sell its franchise. The owner has indicated that a major national cable television provider has provided a letter of intent to purchase the franchise in Moorpark. Among the conditions of the transfer is that the franchise extension be approved by the City Council to allow the new company to negotiate the franchise renewal, and that the City Council approve the change of ownership. Due to federal regulations, the application, review and approval process for a change of ownership could take as long as four (4) months. To allow for the change of ownership review and provide the City with adequate time to review and negotiate a franchise renewal, the eighteen (18) month extension would be appropriate. Staff has prepared a resolution to modify and extend the cable television franchise held by Entertainment Express Ltd. for the Council's consideration. The points included in the resolution are: 1.) The franchise would be extended to December 20, 2000. 2.) EEL would be required to guarantee a good quality transmission of the Channel 10 signal. 3.) The franchise fee would increase to 5% beginning on January 1, 1999 to coincide with the franchise fee paid by TCI. ($45,868 was collected in FY 1997/98) 4.) EEL will make a one time payment of $20,000 to cover the City's administrative and related costs. 5.) No later than June 30, 1999 a written application for a franchise renewal must be submitted to the City by EEL or the new owner. This coincides with the TCI application deadline. 6.) A fifteen thousand - dollar ($15,000) franchise transfer fee must be paid to the city to reimburse the City's costs if the City grants a transfer. 0004 Oka "1 Extension of EEL Franchise Meeting of 02 December 1998 Page 04 The Council's Ad Hoc Committee on the Entertainment Express Cable Television Franchise met with the owner of EEL to discuss the extension request, the comments received from the community, and other proposals made by the owner. Based on the meetings and certain written assurances given by the Owner (see attached letter), the Committee recommended that the City Council approve the franchise extension based on the following: 1) That the conditions set forth in the resolution be strictly adhered to. 2) That EEL proceed with the application for a change of ownership to a major national cable provider, and that said application is submitted to the City no later than January 15, 1999. 3) That EEL add six (6) channels to its basic service at no additional cost to subscribers (Cartoon Network, Comedy Channel, E., Sci -Fi, Animal Planet and Golf Channel). 4). That no rate increase takes place during the 1998 -99 cycle. (Current rates are shown on attachment.) 5). That a direct customer service telephone line be established to handle complaints from subscribers. 6) . That EEL provide a contribution to the City for cable related improvements in the amount of $9,000. 7). That no later than July 1, 1999 a local office be established within a commercial zoned area. Granting the franchise extension requested by EEL will provide the company an opportunity to apply for a change in franchise ownership to a firm that has the financial capacity to upgrade services in the Mountain Meadows area. Specifics would be part of the renewal negotiations. It 0.00422 Extension of EEL Franchise Meeting of 02 December 1998 Page 05 will allow the City to negotiate both franchises at the same time to assure full and equal coverage of services to all residents in the City. while in the correspondence received from EEL subscribers, there is opposition to an extension, to those people staff has talked with and explained that a primary purpose is to allow for a sale to a larger cable provider, there was no opposition to the extension. An important point to remember is that the current franchise held by EEL is non - exclusive. Any company has had the opportunity to request a franchise to serve the Mountain Meadows area since 1984. The fact that the City received no such application is an indication of the state of the industry. It is very expensive to build parallel cable service infrastructure. Upgrading an existing one is more economical. The best opportunity for the City to assist residents in the Mountain Meadows area with cable service improvements is to bring a company in to upgrade the existing infrastructure and improve programming. These are requirements that can be included in a renewal process. This matter has been advertised for a public hearing at this time. STAFF RECOMMENDATION: That following the public hearing and considering the input received, the City Council adopt Resolution No. 98- amending Resolution No. 84 -99 by approving modifications to the cable television franchise held by Entertainment Express Ltd. and extending said modified franchise to December 20, 2000. (ROLL CALL VOTE REQUIRED) Attached: Resolution Current rates Letter from Entertainment Express 000423 Y ENTERTAINMENT EXPRESS/ MOUNTAIN MEADOWS CABLE TV SCHEDULE OF RATES & FEES Effective 4/1/96 SERVICE LEVEL Basic Service* Basic Service + 1 Premium Basic Service + 2 Premium Basic Service + 3 Premium '*May require converter. HBO, Showtime, Cinemax, Monthly Charge Primary Each Additional Outlet Outlet $. AEP4 S0.10 $_ QDa/ $6.50 $6.50 $6.50 9.95 EA $2.00 Decoder charge on first premium service (included in rate table above) Primary Each Additional Outlet Outlet ENTERTAINMENT PACKAGE u de d ill bax i c- . ' 11�3 -98 PAY - PER -VIEW CLUB $6.00/MONTH INCLUDES ONE FREE MOVIE PAY- PER -VIEW MOVIES /EVENTS: Prices listed on Pay- Per -View program guide channel x+46. SERVICE FEES Installation & Hook -Up $44.95 Additional Outlet Installation Time & Materials Repair of customer equipment (2nd visit) Time & Materials Re- establishment of service disconnected for unpaid bill: $ 89.95 Fee for check returned for insufficient funds: $25.00 Late fee for balance due over 45 -days (45 -days from billing date): $6.00 ADDITIONAL NOTES Copyright and Franchise fees will be added to all applicable services. COPYRIGHT FEE - Royalty fee due to the owners of copyrighted materials provided in services delivered to you, collected by the cable company and forwarded to the Federal Copyright Office. FRANCHISE FEE - Fee charged by, collected for and paid directly to city franchise authority. • All rates subject to change without notification NOU 23 'ge 13:59 00042 PAGE. 06 NOV- 23--98 07:20 PM SKLAR 212 308 5905 P.01 Entertainment Express Apt. 23 303 E. 49 Street New York, NY 10017 14 November 1998 Mr. John Nowak, Asst. City Manager City of Moorpark 799 Moorpark Avenue Moorpark, CA 93021 Dear Mr. Nowak, In preparation for our meeting on November 17, 1998 at 4 :OOPM to continue our discussion with the City Council committee the matter of the extension of our Franchise to provide Cable TV services to the Mountain Meadows portion of :Moorpark, l have prepared the following summary of items previously discussed as well as other items that might be of interest to the members. 1. Per the suggestion of the members at our last discussion: a. We will effective on the first date after the grant of the extension include all the programming now included in our separate Entertainment Package in the basic cable programming package at no additional cost to the subscribers. This package of rive channels, Cartoon, Comedy, E.., Sci -Fi, and Animal Planet currently costs suberibers $6.95 per month. b. Prior to the first of January we will add the Golf Channel to our line -up at no additional cost. This is the most requested channel addition based on our consumer survey. Thus Ike Mountain Meadow consumers will be receiving ;six additional channels at nu cost immediately following grant of the extension. 2. As discussed earlier we are in serious contract negotiations with a national cable television provider concerning a sale of the system. We contemplate reaching an agreement for sale shortly. Immediately following the pending grant of the extension and signing of the sales agreement, we and the new owners will apply to the City for transfer of the franchise per Federal rules governing such a transfer. Assuming the normal processing and review time for such a transfer application there will be sufficient time for the new owner to file its plan for Franchise renewal by the City's target date in June 1999. 3. We contemplate no price rise this year end at our normal cost/price review period. This is despite a dramatic price cost rise to us in the cost of programming this past year. We have experienced a 16% price rise from our program suppliers over our 1997 costs. We will continue to absorb this cost increase thru the period until sale of the system is completed. As you know, due to the small size of our system, we are unregulated and could if we chose pass on these an our other system cost increases. (JO042i NOU 23 '98 15:22 212 308 5905 PAGE.01 NOV -23 -98 07:20 PM SKLAR 212 308 5905 P.02 4. We take serlott*,ftr agreement to provMe quality signal delivery for channnel 10 to our subscribers. At all times we will be response to the City's request far assistance in providing quality municipal cable service. S. We wish to discuss our credit policy and its implementation with you and the council members. 6. We are implementing a mail, electronic and phone system of improving communication with our subscribers. Some steps have been taken and we take seriously the councilmembers suggestions that this is an area in which improvment is needed. We look Toward to our meeting and hope to continue the progress we made at our last session. 00040206 NOU 23 '99 15:23 PIP 700 SgaS PC= R'D RESOLUTION NO. 98- A RESOLUTION OF THE CITY OF MOORPARK, CALIFORNIA, AMENDING RESOLUTION NO. 84 -99 BY APPROVING MODIFICATIONS TO THE CABLE TELEVISION FRANCHISE HELD BY ENTERTAINMENT EXPRESS LTD. AND EXTENDING SAID MODIFIED FRANCHISE TO DECEMBER 20, 2000. WHEREAS, Entertainment Express Ltd. has been granted a non - exclusive franchise to provide a cable television service within the City of Moorpark; and WHEREAS, said franchise is scheduled to expire on June 10, 1999; and WHEREAS, Entertainment Express Ltd. has made application to the City for an extension of said franchise to permit a transfer of ownership of said franchise; and WHEREAS, the City Council Cable Franchise Ad Hoc Committee has reviewed the application request and has made a recommendation that the franchise be extended subject to certain amendments to said franchise. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOORPARK DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. That Section 2 of Resolution 84 -99, as amended by said Resolution No. 84 -117, be and the same is hereby amended to read as follows: "SECTION 2. GRANT OF NON- EXCLUSIVE FRANCHISE A non - exclusive franchise to construct, operate and maintain a cable television system serving the Property described in Exhibit "A ", until 11:59 p.m. December 20, 2000 is hereby granted to Grantee, with all the rights and privileges and subject to each and all of the terms and conditions of this Resolution. For the purposes of this Resolution, "Cable Television System" means a system of antennas...." SECTION 2. That Section 5 of said Resolution No. 84- 99 be and the same is hereby amended to read as follows: Resolution No. 98- Page 02 "SECTION 5. DURATION, OF GRANT The term of the franchise shall be from the Effective Date to 11:59 p.m. on December 20, 2000. The franchise shall be effective on...." SECTION 3. That Section 7.8 to said Resolution No. 84 -99 be and read as follows: "SECTION 7.8 CHANNEL 10 Grantee shall assure that continuous and good quality transmission of a Channel 10 signal (consistent with the quality of the signal received by Grantee) is provided and maintained to all subscribers and that such transmission is included in `Basic Cable Service'." SECTION 4. That Section 9.1 of said Resolution No. 84 -99 be and the same is hereby amended to read as follows: "SECTION 9.1 AMOUNT OF FEE Grantee and its successors and assigns shall, during the life of the franchise, pay to the City three percent (3 %) of gross annual collected receipts of the Cable Television System; provided, however, effective January 1, 1999, the Grantee and its successors and assigns shall, during the then remaining life of the franchise, pay to the City five percent (5 %) of gross annual collected receipts of the Cable Television System...." SECTION 5. That Section 9.4 to said Resolution No. 84 -99 be and read as follows: SCION 9.4 CHARACTER GENERATOR SYSTEM Grantee shall make a one -time payment of twenty thousand dollars ($20,000.00) to cover City's administrative costs for the extension review. Such payment shall be due on the 0®0'5108 Resolution 98- Page 03 adoption of this Resolution and shall be expended at the City's sole discretion." SECTION 6. That Section 16 of said Resolution No. 84 -99 be and the same is hereby amended to read as follows: "SECTION 16. RENEWAL On or before June 30, 1999, Grantee shall notify the City, in writing, of its intent, if any, to renew the franchise. Failure to so notify shall constitute a waiver of any and all rights Grantee may have as to renewal. Grantee and City agree to each use their best efforts to implement and develop an informal renewal procedure that is fair to Grantee and to the City upon Grantee giving the City its notice of intent to renew. Except as provided above, no other renewal rights shall be conferred upon or waived by either party consequent to Grantee notifying the City of its intent to renew. Except as provided above, no other renewal rights shall be conferred upon or waived by either party consequent to Grantee notifying the City of its intent to renew. Nothing in this Section 26 shall be construed so as to limit the City's ability to ensure cable television throughout the service area." SECTION 7. That Section 23 of said Resolution No. 84 -99 be and the same is hereby amended to read as follows: "SECTION 23. CHANGE OF OWNERSHIP OF FRANCHISE Grantee's ability to provide cable television to subscribers within its service area, the level of its corporate goodwill, and its management structure are unique and constitutes material consideration in the City's decision to grant this franchise. As such, the franchise shall not be assigned, transferred, sold or otherwise subjected to a change of ownership or control without the prior approval ()0 (3429 Resolution No. 98- Page 04 of the City Council. In the event the City Council does allow the franchise to be assigned, transferred, sold or otherwise subjected to a change of ownership or control, then a franchise fee of fifteen thousand dollars ($15,000) shall be assessed and become due ten (10) days after said approval by the City Council." SECTION 8. This Resolution shall be in full force and effect upon approval of the City Council. SECTION 9. That the City Clerk shall certify to the adoption of this Resolution and shall present a certified copy of same to Entertainment Express, Ltd. PASSED AND ADOPTED this 2nd say of December 1998. ATTEST: Deborah S. Traffenstedt, City Clerk Patrick Hunter, Mayor C031i3()