HomeMy WebLinkAbout6.c. Approval of ownership change for Charter cable
EXECUTIVE SUMMARY
City Council Regular Meeting: November 17, 2015
AGENDA ITEM: Approval of ownership change for Charter
cable AGENDA SECTION:
PREPARED BY: Alan Cox, Communications Coordinator
& Emmy Foster, Assistant City
Administrator
AGENDA NO. 6.c.
ATTACHMENTS: Proposed Resolution APPROVED BY: ddj
RECOMMENDED ACTION: Motion to approve the attached resolution approving a
change in ownership of Charter Communications.
Charter Communications, which holds a franchise to provide cable television service in Rosemount, plans
a change in its ownership structure. The change requires the City Council’s consent.
BACKGROUND
The Council last year agreed to a change in control of Charter in anticipation of an agreement between the
company and Comcast that would have restructured ownership of the companies’ systems in Minnesota.
Early this year, Charter and Comcast abandoned the agreement after regulators raised anti-competitiveness
concerns.
Charter then entered into agreements to merge its cable systems with those owned by Time Warner Cable
and Bright House Networks. The owners of those systems will hold a minority ownership in the new
Charter. State law requires approval by the franchising authority to any “fundamental corporate change.”
The Apple Valley, Farmington & Rosemount Cable Commission instructed its attorney to review the
transaction. In consultation with the company, the attorney drafted the resolution proposed for action
tonight.
FEE DISPUTE
As part of the discussions between the attorney and counsel for Charter, the company has agreed to
partially resolve a disagreement with the Commission over a fee imposed for cable boxes needed at city
facilities. The cities’ franchises with the company require it to provide free cable service to city facilities.
When Charter converted to all-digital transmission last year, the signal provided to the cities became
unusable without cable boxes available solely from the company. Charter began to bill the cities for the
boxes; the City of Rosemount refused to pay. Charter agreed last year to waive the fee through the end of
2014, on the assumption that the company and the Commission would reach an agreement on the fee
issue.
That issue is now part of negotiations for the renewal of the Charter franchises in the three cities. The
franchises originally expired in 2014. After delays last year in the company’s willingness to enter
negotiations for a new franchise, the Rosemount City Council agreed to extend Charter’s franchise
through December 31, 2015. The Commission’s attorney has advised the Commission that negotiations on
the franchises have begun, but it is uncertain when they will be complete. Negotiations so far suggest that
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the company will propose a reduced rental rate to the cities for the boxes.
As part of the discussions over the change in control, Charter has agreed to waive cable box fees to the
City of Rosemount through calendar year 2015 following passage of the resolution under consideration
tonight.
RECOMMENDATION
The Cable Commission voted unanimously on November 5 to recommend that the three City Councils
approve the proposed resolution for a change of control of Charter’s systems.
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CITY OF ROSEMOUNT
DAKOTA COUNTY, MINNESOTA
RESOLUTION NO. 2015 - 91
RESOLUTION GIVING CONSENT TO CHANGE OF CONTROL
OVER CABLE FRANCHISEE
WHEREAS, the City of Rosemount (City”) is a member of the Apple Valley, Farmington,
Rosemount Cable Commission (“Commission”), a municipal joint powers entity;
WHEREAS, the Commission advises the member cities regarding cable television regulatory
matters and provides community programming services to the cities;
WHEREAS, the City and Commission’s other member cities enacted identical cable franchise
ordinances (together, “Franchise”) with Charter Cable Partners, LLC, a Delaware limited liability
company (“Franchisee”), an indirect, wholly-owned subsidiary of Charter Communications, Inc.
(“Charter Communications”);
WHEREAS, the Franchise authorizes operation and maintenance of a cable communications
system and the provision of cable service in the City under specified terms and conditions and
applicable law;
WHEREAS, Charter Communications is currently the seventh-largest multichannel video
programming distributor in the United States serving approximately 4.2 million residential video
customers, including customers in 158 Minnesota communities;
WHEREAS, the Franchise provides that the City “may delegate any and all regulatory authority
to the Commission. A Grantee must fully cooperate with the Commission in the exercise of regulatory
authority delegated by the City”;
WHEREAS, under the joint powers agreement, the member cities delegated Franchise
enforcement authority to the Commission;
WHEREAS, the Franchise, as extended, expires on December 31, 2015;
WHEREAS, Franchisee requested renewal of the Franchise and the Commission and
Franchisee are currently engaged in processing that request;
WHEREAS, in August, 2014, Charter Communications filed an FCC Form 394 seeking approval
to restructure the company (“2014 Form 394”);
WHEREAS, the City conditionally approved the 2014 Form 394 but Charter Communications
subsequently did not complete the restructuring contemplated by the 2014 Form 394;
WHEREAS, on May 23, 2015, Charter Communications with its subsidiary CCH I, LLC (“New
Charter”), entered into agreements with Advance/Newhouse Partnership (“A/N”), the ultimate parent
company of Bright House Networks, LLC (“BHN”), Time Warner Cable, Inc. (“TWC”), and Liberty
Broadband Corporation (“Liberty”) (collectively “The Agreements”), the purpose of which are to
effectuate the acquisition of BHN and merger with TWC (“Transaction”), and
WHEREAS, Charter Communications will merge with a subsidiary of New Charter, and all
shares of Charter Communications will be converted into shares of New Charter, and New Charter will
assume the name Charter Communications, Inc. (“Charter”); and
WHEREAS, pursuant to the Agreements, A/N, TWC shareholders, and Liberty will acquire
minority ownership interests in Charter; and
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WHEREAS, on July 1, 2015, Charter Communications filed a FCC Form 394 seeking approval
for the Transaction; and
WHEREAS, under the terms of the Franchise, and pursuant to Minnesota Statutes, Section
238.083, subds. 1 and 2, the Transaction constitutes a “fundamental corporate change” which, by law,
“requires the written approval of the franchising authority.”
WHEREAS, Minnesota Statutes, Section 238.083, subd.4, provides: “[t]he franchising authority
shall approve or deny in writing the [request],” and “approval must not be unreasonably withheld.”
NOW, THEREFORE, BE IT RESOLVED BY THE CITY AS FOLLOWS:
1. The foregoing recitals are incorporated by reference. The City conditionally consents to the
Transaction as provided herein.
2. New Charter shall notify the City in writing within ten (10) days of completion of the
Transaction. Such notice shall include the certification provided in the 2015 Form 394, Section
V, Part II(c), stating that New Charter:
Will use its best efforts to comply with the terms of the franchise and applicable state
laws or local ordinances and related regulations, and to effect changes, as promptly
as practicable, in the operation of the system, if any changes are necessary to cure
any violations thereof or defaults thereunder presently in effect or ongoing.
Such certification shall be provided by, and executed on behalf of, New Charter.
3. Franchisee or New Charter shall reimburse the Commission and City’s legal fees and other
costs incurred in review of the 2015 Form 394 within thirty (30) days of receipt of an invoice
detailing such fees and costs.
4. Except as specifically stated herein, the City makes no findings or representations regarding
the continuing validity and enforceability of the Franchise, nor any Franchise compliance
matters. The City expressly reserves and does not waive authority to enforce the Franchise
with respect to any Franchise violations or compliance matters whether arising before or after
the date of this Resolution, and whether known or unknown as of the date hereof.
5. This Resolution shall be effective upon adoption. Violation of this Resolution shall render the
City’s consent to the Transaction null and void. The City shall endeavor to provide written
notice of any violation of this Resolution.
PASSED, ADOPTED AND APPROVED by the City Council of the City of Rosemount,
Minnesota this 17th day of November, 2015.
By:
Name: William H. Droste
Title: Mayor
ATTEST:
Clarissa Hadler, City Clerk