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R-7312 L e e CA:RMM:llm091r City Council Meeting 9-23-86 Santa Monica, California RESOLUTION NUMBER 7312 (CCS) (City council Series) A RESOLUTION OF THE CITY COUNCIL OF SANTA MONICA TERMINATING THE CITY'S COMMUNITY ANTENNA TELEVISION SYSTEM FRANCHISE WITH THETA CABLE OF CALIFORNIA AND WITH GROUP W CABLE, INC. FOR NONCOMPLIANCE WITH ITS TERMS AND DENYING THE REQUEST FOR APPROVAL OF A FRANCHISE TRANSFER FROM GROUP W CABLE, INC. TO CENTURY SOUTHWEST COMMUNICATIONS, INC. WHEREAS, Ordinance Number 734 (eCS) was enacted on March 14, 1967, providing for the granting of CATV franchises in Santa Monica: WHEREAS, a non-exclusive franchise was awarded to Theta Cable on October 24, 1967 pursuant to Ordinance Number 756 (CCS): WHEREAS, Theta Cable's ten year term was renewed on December 13, 1977 pursuant to Ordinance Number 1074 (CCS): WHEREAS, section 7(d) of Ordinance Number 734 (CCS) states that the City I s CATV franchise is a privilege held in personal trust by the original grantee and that "[i]t cannot in any event be sold, transferred, leased, assigned or disposed of, in whole or in part, either by forced or inVOluntary sale, or by voluntary sale, merger, consolidation or otherwise, without the prior consent of the Council expressed by resolution, and then only under such conditions as may therein be prescribed. n WHEREAS, Theta, a subsidiary of Teleprompter, was acquired by and ultimately merged with Westinghouse in 1981 without - 1 - L e e seeking city Council approval as required by section 7 (d) of Ordinance Number 734 (CCS); WHEREAS, resolution of the issue of whether Theta's merger with Westinghouse without prior City approval constituted a material breach of the franchise agreement and what remedy should lie has been held in abeyance by mutual agreement pending negotiations with Group W which were to occur following citizen input from the Cable Communications Task Force, appointed in Fall, 1982; WHEREAS, shortly after initiating the renewal procedures specified by the Cable POlicy Act of 1984 on June 19, 1985, Westinghouse informed the City that it intended to sell its cable interests to a consortium of cable television operators including American Television & Communications Corporation (ATC); Comcast Corporation; Tele-Communications, Inc. ( TCl) ; Daniels & Associates, Inc. ; and Century Southwest Communications Corporation (Century); and that Century would ultimately be assigned the Santa Monica franchise; WHEREAS, the City informed Group W by letter on January 28, 1986 that its impending sale would constitute a transfer or assignment of the franchise under Section 7(d) of Ordinance Number 734 (CCS) and therefore required Council approval as well as adequate information enabling the Council to assess the transferees' financial capabilities; WHEREAS, on February 27, 1986, Group W requested approval of the ultimate transfer of the Santa Monica franchise to Century but has never requested approval of the stock transfer; - 2 - ~ e - WHEREAS, on June 19, 1986, without having sought or received Council approval as required by Section 7(d) of Ordinance Number 734 (CCS), Westinghouse announced that it had "completed the sale of its cable television business" and had sold the stock of its Group W Cable subsidiary to a consortium of cable operators, including American Television & Communications corporation (ATC); Comcast Corporation; Tele-Communications, Inc. (TCl); Daniels & Associates, Inc. ; and Century Southwest Communications Corporation (Century); WHEREAS, Century's operation and management of Santa Monica's cable system pursuant to a management contract with the consortium violates section 7(d) of Ordinance Number 734 (CCS); WHEREAS, despite detailed requests for information from the city on March 19, 1986, and May 29, 1986, Group W has not provided adequate information enabling the City to perform the necessary financial analyis of Century's qualifications nor to assess Century's technical operational capabilities and responsiveness to consumer needs, NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. Theta Cable and/or Group W's CATV franchise with the city of Santa Monica is hereby terminated effective December 13, 1987 due to the breach of Section 7(d) of Ordinance Number 734 (CCS) arising from Teleprompter/Theta's acquisition by and merger with Westinghouse without prior City Council approval. SECTION 2. Group W's CATV franchise interests in the City of Santa Monica are hereby terminated effective December 13, - 3 - e . 1987 due to the breach of section 7 (d) of Ordinance Number 734 (CCS) that occurred when Westinghouse transferred its stock in Group W Cable, Inc. to the consortium on June 19, 1986 without Council approval. SECTION 3. Group W's CATV franchise interests in the City of Santa Monica are hereby terminated effective December 13, 1987 due to the breach of Section 7 (d) of Ordinance Number 734 (CCS) that occurred when Century began operating and managing the Group W system pursuant to a management contract with the consortium. SECTION 4. Group W's request for City Council approval of the ultimate transfer of its assets to century is denied due to Group Wls failure to provide the city with information adequate to enable assessment of Century's financial and technical capability to operate the City's cable system and its responsiveness to consumer needs. SECTION 5. The City Clerk shall certify to the adoption of this Resolution, and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: ~ "'-.'~ 6 ROBERT M. MYERS City Attorney .. - 4 - .. e e Adopted and approved this 23rd day of September, 1986. Oick r--~l .L-~ Mayor I hereby certify that the foregoing Resolution No. 7312(CCS) was duly adopted by the city council of the City of Santa Monica at a meeting thereof held on September 23, 1986 by the following Council vote: Ayes: Councilmembers: Conn, Epstein, Jennings, A. Katz, H. Katz, Zane and Mayor Reed Noes: Councilmembers: None Abstain: councilmembers: None Absent: Councilmembers: None ATTEST: , Cl-. 'fh. yjj~ City Clerk