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HomeMy WebLinkAbout1996-124 Council ResolutionResolution 96- 124 RESOLUTION CONSENTING TO THE TRANSFER OF CONTROL OF AND CERTAIN OWNERSHIP INTERESTS IN A CABLE TELEVISION FRANCHISEE TO US WEST WHEREAS, the cable television franchise (the "Franchise") of the municipality of Lino Lakes (the "Authority") is currently owned and operated by Group W Cable of the North Central Suburbs d/b/a Meredith Cable Company ("Group W"), which is owned by Meredith/New Heritage Strategic Partnership, L.P. ("MNHSP"); and WHEREAS, the general partner of MNHSP, has entered into a Purchase Agreement dated March 15, 1996 with Continental Cablevision, Inc. ("Continental") whereby Group W will be owned by Continental (the "Meredith/Continental Agreement"); and WHEREAS, Continental will guarantee the Franchise obligations pursuant to a Corporate Guaranty; and WHEREAS, the Authority has consented to the transaction described in the Meredith/Continental Agreement; and WHEREAS, Continental intends on merging into US WEST, Inc. or a wholly owned subsidiary of US WEST, Inc., (herein collectively known as "US WEST") pursuant to that certain Agreement and Plan of Merger dated February 27, 1996 (the "Continental/US WEST Agreement"); and WHEREAS, Group W will continue to hold the Franchise; and WHEREAS, the Authority has received a request for consent to the merger of Continental and US WEST (the "Continental/US West Merger"); and WHEREAS, no notice of breach or default under the Franchise has been issued by Authority within the past 12 months and none is outstanding; and WHEREAS, the Authority has determined that subject to certain conditions which must be met, US WEST possesses the requisite legal, technical and financial qualifications; NOW, THEREFORE, BE IT RESOLVED, that the Continental/US West Merger is hereby consented to by the Authority and permitted conditioned upon: 1. Execution and delivery of a Corporate Guaranty from US WEST, Inc. in the form attached hereto; and 2. Securing all necessary federal, state, and local government waivers, authorizations, or approvals relating to US WEST's acquisition and operation of the system to the extent provided by law; and 3. Reimbursement of all reasonable fees incurred in the Authority's review of the proposed transactions; and 4. The successful closing of the Transaction described in the Continental/US WEST Agreement. BE IT RESOLVED FURTHER, that nothing herein shall be construed or interpreted to constitute any approval or disapproval of or consent or non -consent to US WEST's Petition for Special Relief currently pending before the FCC, or any other federal, state, or local government waivers, authorizations or approvals, other than that transaction delineated above. BE IT RESOLVED FURTHER, that US WEST may, at any time and from time to time, assign or grant or otherwise convey one or more liens or security interests in its assets, including its rights, obligations and benefits in and to the Franchise (the "Collateral") to any lender providing financing to US WEST ("Secured Party"), from time to time. Secured Party shall have no duty to preserve the confidentiality of the information provided in the Franchise with respect to any disclosure (a) to Secured Party's regulators, auditors or attorneys, (b) made pursuant to the order of any governmental authority, (c) consented to by the Authority or (d) any of such information which was, prior to the date of such disclosure, disclosed by the Authority to any third party and such party is not subject to any confidentiality or similar disclosure restriction with respect to such information subject, however, to each of the terms and conditions of the Franchise. ADOPTED by Lino Lakes City Council this 9th day of September , 1996. Attest: Clerk -Treasurer City o ino Lakes Po M! or The undersigned, being the duly appointed, qualified and acting Clerk of the City of Lino Lakes, Minnesota hereby certify that the foregoing Resolution No.96-124 is a true, correct and accurate copy of Resolution No.96-1241uly and lawfully passed and adopted by the City of Lino Lakes on the 9th day of September , 1996. 121P- Cler SUMMARY OF PROPOSED TRANSFERS OF OWNERSHIP Transfers of ownership of cable systems require the consent of the local franchising authority (City). The City has traditionally delegated through its joint powers agreement the review process to the cable commission. The process is lengthy and complicated, and has been conducted by the commission over the past four months. In this case, the issues were further complicated by the fact that at the same time as Continental was purchasing Meredith, US West was proposing purchasing Continental. Therefore, the Commission (and now the City) needed to review TWO transfers of ownership. Enclosed are the results of that review. FREQUENTLY ASKED QUESTIONS: 1. Will the rates go up as a result of these transfers? Although no one can guarantee cable rates, the companies have assured the Commission that there are no plans to increase rates. If Meredith had retained ownership of the systems, they could have increased rates, and the new owners will not be able to increase rates any more than Meredith could have. 2. Will any channel or program offering on the system change? No. However, companies often change program channels in response to the interests of subscribers, and the new companies have the right to do the same. 3. Will there be a decrease in customer service or change in local management? No. The local management team will remain intact, as will the existing customer service representatives. 4. Will all commitments to local programming remain the same? Yes. 5. What is the phone company doing owning our cable system? US West cannot own your cable system without receiving special permission from the Federal Communications Commission. They have applied for a limited waiver (permitting them to own the systems for up to 18 months) and that petition is pending. If they do not receive the waiver, they cannot close on the sale, and Continental will retain ownership of the systems. The FCC may decide (as we argue the law requires) that the waiver requires the approval of the city. If that is the case, that decision will come back to the city, BUT THAT DECISION IS A SEPARATE DECISION FROM THIS TRANSFER DECISION. 6. The League of Minnesota Cities has told us that US West has sued a city in Minnesota over the use of rights-of-way. Why would we want to cooperate with US West in this transfer? It is true that US West has an ongoing dispute with Minnesota cities over ordinances which attempt to control use of rights-of-way. That dispute is not related to this transfer, except for the fact that it is the same company involved in the dispute. The simple answer is that the law requires that you must consent to the transfer unless you have a reasonable basis to deny, based on the limited standards of review -- the legal, technical and fmancial characteristics of the purchaser. YOU MAY NOT DENY THE TRANSFER SIMPLY BECAUSE YOU DO NOT LIKE US WEST. 7. What are these corporate guaranties, and why are we requiring them? During the analysis, the complicated corporate structure proposed by both companies caused the commissions to be concerned about which entity could be turned to if a catastrophic problem arose with the local system. Therefore, we determined it to be in the best interest of the cities that the assets of the parent corporations be pledged to support the local systems. This is an extraordinary remedy, and not often secured. However, the commission has received from both parent companies a pledge that they will give such guaranties, and your resolution will not be effective until such guarantees are received. 8. If we are in the process of renewing our franchises, won't this slow us down? Certainly the dynamics of the renewal processes have been changed. However, the companies have assured the commissions that the local management will remain responsible for negotiating renewals, and they will be authorized to enter into all necessary agreements. US West, if they receive the FCC waiver, will have to divest themselves of the systems within 18 months. There has been some concern about US West's desire to enter into long term commitments with systems they will not own. This is a legitimate concern. Should the commission determine that they new company is not negotiating in good faith, remedies such as denying the renewal or extending the franchise until the new owner is in place are all available to the cities. 9. Will our existing cable franchise remain intact? Yes. The company holding the local franchise will not be changed because the transfers are occurring farther up the "corporate ladder". Any transfer of ownership requires that the purchasing company agree to comply with all existing franchises, as amended, and any other agreements which the current owner has with the cities and commissions. TDC/rs C:\CABLE\MEREDITH\SUMMARY SUMMARY OF PROPOSED TRANSFERS OF OWNERSHIP Transfers of ownership of cable systems require the consent of the local franchising authority (City). The City has traditionally delegated through its joint powers agreement the review process to the cable commission. The process is lengthy and complicated, and has been conducted by the commission over the past four months. In this case, the issues were further complicated by the fact that at the same time as Continental was purchasing Meredith, US West was proposing purchasing Continental. Therefore, the Commission (and now the City) needed to review TWO transfers of ownership. Enclosed are the results of that review. FREQUENTLY ASKED QUESTIONS: 1. Will the rates go up as a result of these transfers? Although no one can guarantee cable rates, the companies have assured the Commission that there are no plans to increase rates. If Meredith had retained ownership of the systems, they could have increased rates, and the new owners will not be able to increase rates any more than Meredith could have. 2. Will any channel or program offering on the system change? No. However, companies often change program channels in response to the interests of subscribers, and the new companies have the right to do the same. 3. Will there be a decrease in customer service or change in local management? No. The local management team will remain intact, as will the existing customer service representatives. 4. Will all commitments to local programming remain the same? Yes. 5. What is the phone company doing owning our cable system? US West cannot own your cable system without receiving special permission from the Federal Communications Commission. They have applied for a limited waiver (permitting them to own the systems for up to 18 months) and that petition is pending. If they do not receive the waiver, they cannot close on the sale, and Continental will retain ownership of the systems. The FCC may decide (as we argue the law requires) that the waiver requires the approval of the city. If that is the case, that decision will come back to the city, BUT THAT DECISION IS A SEPARATE DECISION FROM THIS TRANSFER DECISION. 6. The League of Minnesota Cities has told us that US West has sued a city in Minnesota over the use of rights-of-way. Why would we want to cooperate with US West in this transfer? It is true that US West has an ongoing dispute with Minnesota cities over ordinances which attempt to control use of rights-of-way. That dispute is not related to this transfer, except for the fact that it is the same company involved in the dispute. The simple answer is that the law requires that you must consent to the transfer unless you have a reasonable basis to deny, based on the limited standards of review -- the legal, technical and financial characteristics of the purchaser. YOU MAY NOT DENY THE TRANSFER SIMPLY BECAUSE YOU DO NOT LIKE US WEST. 7. What are these corporate guaranties, and why are we requiring them? During the analysis, the complicated corporate structure proposed by both companies caused the commissions to be concerned about which entity could be turned to if a catastrophic problem arose with the local system. Therefore, we determined it to be in the best interest of the cities that the assets of the parent corporations be pledged to support the local systems. This is an extraordinary remedy, and not often secured. However, the commission has received from both parent companies a pledge that they will give such guaranties, and your resolution will not be effective until such guarantees are received. 8. If we are in the process of renewing our franchises, won't this slow us down? Certainly the dynamics of the renewal processes have been changed. However, the companies have assured the commissions that the local management will remain responsible for negotiating renewals, and they will be authorized to enter into all necessary agreements. US West, if they receive the FCC waiver, will have to divest themselves of the systems within 18 months. There has been some concern about US West's desire to enter into long term commitments with systems they will not own. This is a legitimate concern. Should the commission determine that they new company is not negotiating in good faith, remedies such as denying the renewal or extending the franchise until the new owner is in place are all available to the cities. 9. Will our existing cable franchise remain intact? Yes. The company holding the local franchise will not be changed because the transfers are occurring farther up the "corporate ladder". Any transfer of ownership requires that the purchasing company agree to comply with all existing franchises, as amended, and any other agreements which the current owner has with the cities and commissions. TDC/rs C: \CABLE\MEREDITH\SUMMARY