SR-090374-7AIntroduction
This report submits to Council a staff recommendation regarding the attached
proposed rate increase request dated August 16, 1974 £rom Theta Gable
Company of California.
Backgraund
By memorandum dated June 17, 1974 staff provided to Council a status report
of the then pending rate increase request from Theta Cable, At that time,
staff advised that the City of Los- Angeles Board of Public Utilities and
Transportation had granted a rate increase to Theta Cable substantially less
ti_han that of which they had requested in their original request dated
December 5, 1973,
Theta Cable then submitted additional financial data in support of their original
requested rates. As noted in the August i6 letter the Los Angeles Board of
Public Utilities and Transportation approved the rate structure as originally
requested by Theta Cable.
This rate structure does not include provision for the "Z" channel commonly
referred to as Pay T, V, 1t has only recently come to staff's attentio:i that
Theta Cable commenced marketing its "Z" channel approximately four (4'j
months ago. Section 4-USES PERMITTED BY GRANTEE, of Ordinance
To: Mayor and Council -2- August 23, 1974
NO. 734 (CCS)~ establishing the terms and conditions for the operation of
Cable Television in Santa Monica prohibits the grantee of the franchise from
establishing a separate and distinct charge for Pay T. V, Staff contacted
a respresentative of Theta Cable who advised that Theta was relying on a
federal communications commission interpretive ruling No. FCC 71-946
dated September $, 1971, copy attached. FCC interpretive ruling No, 71-946
provides that ?.'the commis Sion has pre:-empted the field of pay television cable
casting so that local franchise terms. are inoperative and no further affirmative
authorization is required". There is a clear conflict between the City's
Ordinance No, 734 and the interpretive ruling upon which Theta Cable is
relying in establishing its charge for pay T, V, outside. of .Resolution Nos.
3644 dated August 8, 1967 and 4211 dated November 9, 1971 which established
the current rates,
Recommendations
1. It is recommended that the City Councii defer any action on Theta
Gable's request for a rate increase pending final disposition of their
rate increase request before the Los Angeles City Council and Mayor
Bradley, It is estimated by the Los Angeles Board of Public Utilities
and Transportation representatives that this process will take approx-
imately three months.
20 .The City Manager has requested that the City Attorney furnish the
Council with an opinion concerning the apparent conx7.ict between
the City's prdinancs No. 734 and FCC interpretive ruling No, 71-946.
Prepared by: Jim Connolly
3EC:rs
cc: City Attorney
~~~
August lfi, 1974
City Council
City of Santa Monica
1685 ma; r. Street
Santa Monica, California
F,e: Rate Increase Request
Dated December 5, 1973
Gentlemen: __
Office of the Presitle nt
The referenced letter with supporting financial data was hand delivered
to the City of Santa Monica on December 5, 1973. Subsequently the City
Staff of the City of Santa Monica dete_*~rmined the City woul3 not expend
the manpower required to duplicate the analysis of Theta's financial data
then being made by the Staff of the Department of Public Utilities and
Transportation, City of Los Angeles (DPU&T).
That staff studied the data submitted by Theta in support o£ a rate in-
crease in great detail for five mon',hs and issued its report on May 10, 1974,
recommending approval by the City of Los Angeles Board of Public Utilities
an_d Transportation of the rate increase requested by Theta. (Enclosure.:. 1)
Following publication of this report the City of Los Angeles Board of
Public Utilities and Transportation departed. from the recommendation made
by its Staff and then tentatively adopted a rate schedule which raised the
first outset rate. from $S.GO to $5.50 and the rate for each additional out-
let from $1.00 to $2.00. (Enclosure 2j
Following this action Theta filed a protest of the Board°s action.
(Enclosure 3)
On August 15, 1974, the Los Angeles Board of Public Utilities-.and Trans-
portation again considered the subject of CATV rates after being provided
with an updated projection of Theta's revenues and expenses prepared by
the Staff of the Los Angeles Department of Public Utilities and Transportation.
(Enclosure 4)
The Board of Public Utilities and Transportation concluded at its August 15, 1974,
meeting that the requested rate increase as specified in Enclosure 1 was in
fact fully justified on the basis o£ the financial analysis lade by the depart-
mer_tal Staff.
Box 25990, Los Angeles, Calir'ornia 90025 Telephone (2I3) 829-2676
A subsidiary o` HughesAircraft Company and Teleprompter Corporation
City Council
Page 2
august lo, 1974
As previously stated, the analysis of a11Theta's financial data in support
of the requested rate increase has been completed. (Encl. 1). We have
been informed that the work papers in support of this analysis will be made
available for review by members of your City staff on request at the offices
of .the DPU& T, City of Los Angeles. No further financial analysis by that
staff is anticipated on this natter.
I fully appreciate the reluctance ofyour staff to duplicate the exhaustive
financial study made by personnel of the DPU & T over the past seven months.
Since our request was made to you the inflationary influence on our costs
has seriously worsened our financial position.. An upward revision to the
CATV rates requested by Theta ismost urgent. These rates have remained
unchanged since Theta began operation in your city.
Vow that the analysis is completed, I must ask for your. earliest considera-
tion of our request of December 5, 1973.
Very truly yours,
-, _ ,,
ohn W. Atwood
`,president and General Manager
JGIA : eb
Enclosures
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.o]'!s ±
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BEFORE 1'iiE
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:;s>. bS tste ticc[is(•e,
c the needs o. file j
FI;DERt1L CflltiiillUNICATIONS C®i11nIISSIflN:.... ~
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SiCnt Nlth Pal- ~ ~. 11TAS111NGTON, I~.~`i. - {
;rrndy2viue-]ltaitx j In ReP.equestby - ~
;lte Covuuissian j TayE-Llr-7:13rw.wcAS'r
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STERLING jI.1\IIAT7':1N C:inLE TtiLEYISION INC. '~ .' ~. •'
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.sae is nt acco
and ihat the
t ,
b'orItitt7rpretiveRulina
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,s
mtral_y to Cout- ,' ;' r +
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n261ic vttmest.
SXP'1'EDInEx 8, 2972.
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;nd csusc for the _ g D_~x ;bin h1F:72SOY: ~'11is is m reply to your. let#er of.J2tty.7,.1971
- '~
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dd a vteittorlous ,
Yt
rltfen on beliHTf of Hine=Life iiroadcast, Inc, and Stciltne t1tA71-
to t}i!a p tst pm- t
IiattaaCaLl~ 7cievision, Iuc., iv tt~hicll }_ott ask thl Connuissionto l
suc
`
in tlto past, Ueeu .
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1n interpletlt-e rulvt~r t]tat pay telet-i~iau caLleca_tut'r o tt rations I7
1
Y
_~ihesi~niiicance
e that the cases ,
~ Starlntg llan'tattan C'allle ielei=ision are "atlii•nt:t4iYely tnttharized."
f Yoit state that ailirm:ttire rmthorizat}on by the Ceiuuuission is ne
t fore hrautthe cds-
sary for C'\Y1" s}•stetns piescntl} $•anchised in \uc loci: City be-
nieritorlnus pro-
that the
i ~ cat€~ Seaton 1(1) of the .sett 1 oil. Cit}- Fraiuhisc. issued to Stcr}inj;
itihmhattan C ilil
T
l
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i
ce
nat e
e
ev
,
nn, Stites in part that, •'~he Canpnuy shall
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„ releeant.; Rtxl, not enmane ]n I ay
I
elerision nor shall it delirer si~nnls n1` any pclsov
e
to ~ ~it-en nt the entageil
in 1'ay 'ielecisioii, unless end until idlirlrratiral}' ua[horized
'
o the n-ordiu~ of L}-the FCC.
'
ant more claselp In pars m €ph 17 of the ;j once o{Proposed f'~ute 7IaF.•itrry i72 DocTi•et
kept ,oi •tn ad- 783Dc. 15 I CC d -r17 (19GS), the Counnisston iudlrited that C
tT1"s
-
t
;'ed.' Scc Tinited _
catld
nial.e per-probrant cha acs. _lloTe recent]}'; aft Otui•ijtr<etibla of
'
'
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o~ -, lc leased- ~ G
r1TT
1'
ii~t Peport,?O 1~CC 2d 7I1 (1GG9}, t-his L,onnnis~tmt ruled
I
tiiai }uini Zl tttitnl't CIC5 aTC t)tY'.-CID nt~+ri frrun in+nr F...-:,,.. ,..; tt, t.,,l,.-...iT_-
ion 1o enlarge ts- (
oration I
k Cor
' antitoTlzed G1Tj' ori~inationancLidc•el[t;nr;. _lec~ldvtbl}', the Cati _
niision 1iRS hre-em
tect the f
ld
f
•
l
p
ar
-d helots and IS ~ p
ie
o
p~~}
t(
es isiou cahlectstim* so that
locRl franchix terms are iuopelatare and vo fuTtlscr athrmatlre au- -
thoriration is required. In an}' eeent, the cited Actions msl:e clear
issuellisredesia-
' the Colmnission's reco~nitimi that pay telorisicui on c.tblc may
sl-
aedinj _~PL 1 serca the public i»terest and it has, to the esteutsndicated, already
,
Ruthoi-ized such operations. _lucl see "Letter'af Intent of ;1u~ust 5
TRG hss been meri. ,
1971", FCC 71-78Z
s so as to constitute ,}ny sash operation must be consistent kith the C~omntission`s Ares-
-star as it rel:rtes to~ evt regulations (See Seetiou 7#.1121 of the Conullission's Pules) and
~
udens of lirnreed- any ret-ISion thereof (e.~r., see [l'otir,•e of 1';•oposeca' Rule .1[akin~ z-n
IJocTet ~l'a. 18~ip3,7~ CC SO-G78). Phis present letter- is tints not
to he
,n the issue herein ,
cmista'ited to sanction, authorize, or encourage the carl•iatse of :uty spe-
,Tpcratiou, cific pro~rant on pay cab]csisirni..>Ls yon latotY, tll~ Connnissiou has is
Co~[snsstoN, ~ expressed its cauhnued concern that nrorr;uuuuu-~-aintr preseutPd on
":n>r.E, Secretary. hrnatleast television mightha siphoned oti' to cuLle, and it inf2•ncls to
keep a closo tratch wi this qucskton and Yo take n-}2atever action is
he nd Sitlon o[ n sePsrota 71000SSrll'y t0 pt'OtCCt the puh11C ltltel'CSt. - i
r~.-r- lvsuea 1-!1; the tesut
.:~, tssuca 1-1u nx movnnt- ~ -. - (;
-. _ 31 A'.C.C. °_d.
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?4S I*erlerad Comnureiratiaia Conauaisslote P,e~iorta
~fl'e trust the fore,oin_• nch~quatelc~supplies tlrc iuformntiou swr_Lt
in }'our letdcr of Juh~ 7, 1U71. '
Commissioner Pobert JJ. Lee clot participatin,*: Cotinnissinncr
Jolurson conenrrinn in part and disseniiug in reirt and is~uin~, ;t
stntetizent; Couunissimner Cells concurring iu t-lie- result,
13r I~IP.EI'1'IO\ oe 1nr CoxaasstG~.
13rs 1. 1C:u•Lk:, Secrvtury.
Orlxlo~ nt Coaratlssm~r:r. ,707I~3G\. CO\CLt:P.t~G I~ P.u;1
3SD DISSk:S'r1SG I_\" 7.1121
This letter constitutes, in it_1' judgurent, :n major ca6ie policy aecisiun
hytheFederalComuuuniattionsCmnmisston.
lS'e me nut-horiziug subscription te)orision on cable telecisiou sta-
tuns (1) by the cnbte operators or (3) br Ieasees of their 1'acilitie-.
1Ioreorcr,-tire are ruling this is so, uottcithstanilim* the c~press
prohibition of such pro,;rainming b~- the local itnnchisir% nu:horih--
~Iere, the Cit}- of S"c:v 1 orlc.
I belief e the issues here inrolcecl are of ntfticient consequence that.
they- oaght. to he considered in n little more thorough trnl- th.m a
speciallyproceed, Iate-agenda-item letter to an ;nttorne}'.
I concur in authorizing cattle operators to lease chnmlels £ot' suh-
scription tclet isiwn purposes. l,rcu a., to that issue; l.otceeer, I l;eliere
11'c have net in this instance gireu adequate consideration to the in-
teresta o£ local gul~ernments iu such nmttere.
1~'e are nor; iu the ptroecss of issuing a near major police shntenient
on cable. See "Letter o£ Intent`' of ~unust 5, 19i 1: I'C'C it-~ ~7. I be-
liere it is untintelc to Le issuin_ a separate poiicl• statennent un>urh
n sl:ecific signifcaintissue a4 this time.
- 31 F.C.C. ^_cr -
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