05 Staff Report - Extending Cable TV Agreement
DATE: TO: FROM: SUBJECT: MEETING DATE: 3/15/04 ITEM NO. COUNCIL AGENDA REPORT MARCH 15, 2004 MAYOR AND TOWN COUNCIL __ DEBRA J. FIGONE, TOWN MANAGER -----ADOPT A RESOLUTION EXTENDING
THE CABLE TELEVISION FRANCHISE AGREEMENT WITH COMCAST CORPORATION FROM MARCH 31, 2004 to MARCH 31, 2005 RECOMMENDATION: Ap.opt a resolution (Attachment No. 1) extending the Town ofLos
Gatos Cable TelevisionFranchise Ag,reement with Comcast Corporation from March 31, 2004 to March 31, 2005. BACKGROUND: On March 31, 2004, the Town's cable television franchise agreement
with Comcast will expire. In Spring 2003, the Council authorized a one-year extension ofthe franchise agreement, extending the agreement from March 31,2003 to March 31, 2004 to conduct
and conclude renewal activities in preparation of the cable television franchise renewal negotiation process. DISCUSSION As discussed at the January 29, 2004 Council Study Session, the
franchise renewal process involves three significant milestones -completion ofa community cable needs assessment, negotiations, and a draft franchise agreement to be considered bythe
Council via a public hearing process. The Town, in coordination with Miller and Van Eaton, a cable television franchise renewal consultant and legal representative has completed the
initial phase ofthe assessment process to identify the community's cable needs and interests. The assessment process involved various research methods, including a statistically valid
telephone survey and focus group workshops and questionnaires. Existing Public, Educational, and Governmental (PEG) access resources and strategic plans and other materials submitted
by the Town and other local government representatives were also analyzed. PREPARED ADMIN1STRATIVE ANALYST ,.JeT N:\MGR\JHaruyama\StaffReports\Comcastext04wpd.wpd
Reviewed by: QJ.::5 Assistant Town Manager .$-Attomey Revised: 3/10104 11:01 am Reformatted: 6/21102
PAGE 2 SUBJECT: ADOPT RESOLUTION EXTENDING THE CABLE TELEVISION FRANCHISE AGREEMENT WITH COMCAST CORPORATION FROM MARCH 31, 2004 to MARCH 31, 2005 March 15, 2004 The Town is now
preparing for the second milestone -the negotiation process, which involves the development of negotiation strategies. To provide adequate time to prepare for and enter into negotiations
with Comcast, staff in consultation. with Miller and VanEaton recommends that Council approve an exten,sioll ofthe Town's existing cable television franqhise agreement. It is not uncommon
for a town,· city, and!or county to grant one or more extensions ofan existing franchise during the cable rene",:,al process as it can be highly technical, complex, and labor intensive.
According to Millel\ind Van Eaton, the Town does have the option ofnot granting an extension, so as long as Comcast is able to continue to operate under the terms and conditions ofthe
existing franchise. Ifthe Town attempted to prevent Comcast from operating under the terms and conditions ofthe franchise, Comcast could claim that the Town has effectively denied it
renewal by not going through the formal renewal process as outlined in the federal Cable Act provisions. However, even ifthe Town does not try to prevent Comcastfrom operating under
the terms and conditionsof the franchise, Comcast could seek court intervention if it believes it is put at risk by the refusal to grant an extension. In cases where a cable operator
has stalled the renewal process and/or was not negotiating seriously or diligently, municipalities have chosen not to grant an extension ofthe franchise. However, these circumstances
do not apply to Los Gatos at this time as the Town is in the early stagesofthe renewal process and recently completed the initial phase ofits cable television needs assessment. At this
time, it is recom.niended that the Council grant a 12-month extension of the franchise ·agreement. IfCouncil approves the extension, it would become effective March 31,2004 and expire
on March 31, 2005. Should renewal negotiations become protracted resulting in the need to continue beyond March 31, 2005, staff will consult with Miller and VanEaton to determine a recommended
course ofaction for the Council to consider. FISCAL IMPACT: There is no direct fiscal impact to the Town if an extension of the cable television franchise agreement is granted.' The
FY 2003/04 budget allocation is $80,000 for the franchise agreement renewal project. However, given the technical and lengthy nature of the renewal process and potential for protracted
negotiations, additional funding may be req"Uired. As the renewal project progresses, staffwill evaluate the need for supplemental funding and address it during the FY 20042005 budget
process, if necessary. The Town will continue to collect cable television franchise fees from Comcast, which is limited to 5 percent ofgross revenues by federal law. CONCLUSION: It is
recommended that the Council adopt the attached resolution extending the Town's cable
PAGE 3 SUBJECT: ADOPT RESOLUTION EXTENDING THE CABLE TELEVISION FRANCHISE AGREEMENT WITH COMCAST CORPORATION FROM MARCH 31, 2004 to MARCH 31, 2005 March 15,2004 television franchise
renewal agreement with Comcast for a period of 12 "months. This extension wouldallow the Town to develop negotiation strategies and draft provisions for the proposed cable television
franchise renewal agreement. Attachments: Attachment No.1: Resolution Approving an Amendment Extending the Cable Television Franchise Agreement with Comcast Corporation from March 31,
2004 to March 31, 2005 Distribution: Eddie Garcia, Director GovernmentAffairs Manager, Comcast Corporation, 1900 South 10th St., San JQse, CA 95112
RESOLUTION NO. RESOLUTION OF THE TOWN OF LOS GATOS APPROVING AN AMENDMENT EXTENDING THE CABLE TELEVISION FRANCmSE AGREEMENT WITH COMCAST CORPORATION FROM MARCH 31, 2004 to MARCH 31,
2005 WHEREAS, cable television franchise renewal process serves as an opportunity to enhance cable communications services to the community; and WHEREAS, cable television franchise renewal
negotiations are highly technical, labor intensive, and require special expertise due to the complex laws that govern the renewal process; and WHEREAS, the Town of Los Gatos Cable Television
Franchise Agreement with Comcast Corporation will expire on March 31, 2004; and WHEREAS, an extension of the cable television franchise agreement is necessary to allow time to prepare
and enter in tonegotiations with Comcast Corporation. RESOLVED, by the Town Council ofthe Town of Los Gatos, County of Santa Clara, State ofCalifornia, that the Town ofLos Gatos approves
an amendment extending the Cable Television Franchise Agreement with Corncast Corporation Corporation from March 31, 2004 to March 31, 2005 (Exhibit B) and authorizes the Town Manager
to execute the amendment. PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the 15th day ofMarch, 2004, by the following vote:
COUNCIL MEMBERS: AYES: NAYS: ABSENT: ABSTA1N: SIGNED: MAYOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTEST: CLERK OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA N:\MGR\JHaruyama\Staff
Reports\cbleresoextend2004.wpd ATTACHMENT 1
AMENDMENT TO FRANCmSE ASSUMPTION AGREEMENT EXIllBITB This Agreement is made and entered into this day of , 2004, by and between the Town of Los Gatos, State of California, herein called
"Town," and TCl of Cleveland, Inc., a Tennessee Corporation ("Grantee"), and TCI Cablevision of California, Inc., a California Corporation as operator-infact ("Operator"), collectively
doing business as AT&T Cable Services ("AT&T"). This Agreement amends that certain Franchise Assumption Agreement entered into March 20, 1996 between the Town, Grantee, Operator, and
Brenmor Cable Partners, L.P., a California Limited Partnership ("Original Assumption Agreement"). RECITALS A. The Origilial AssumptionAgreementprovided for cable franchise service up
to and including March 31,2003. B. On July 12,2002, the Town approved a change ofcontrol ofthe Franchise Assumption Agreement to Comcast Corporation ("Comcast"). Following the change
ofcontrol, on May 19, 2003, the Town and Comcast agreed to extend the Original Assumption Agreement for a period of 12 months, up and including March 31, 2004. C. Giventhe technical
and complexnature ofthe cable television franchise agreement renewal process, an additional extension of the Original Assumption Agreement is necessary to prepare for negotiations with
the Town's cable operator. n" Comcastrepresents and affmns that it is willing to perform the desired work pursuant to the Original Assumption Agreement. AMEND:MENT 1. In consideration
ofthe promises, terms, and conditions ofthe Original Assumption Agreement, the parties agree to extend the Original Assumption Agreement up to and including March 3 I, 2005. 2. All other
terms and conditions of the Original Assumption Agreement and Amendment to the Franchise Assumption Agreement dated March 23, 2000 will remain in full force and effect. IN \VITNESSWHEREOF,
the Town and Comcast have executed this Agreement as of the date indicated on page one (1). Town ofLos Gatos, by: Debra J. Figone, Town Manager Town of Los Gatos Approved as to Form:
Orry P. Korb, Town Attorney Revised: 3119/02 N:IMGR\JHaruyama\StaffReportslassup agnnl2004.wpd -1-ATTEST: Clerk ofthe Town ofLos Gatos, California Marian V. Cosgrove, Town Clerk Comcast,
by: (Signature) (Print Name)
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