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HomeMy WebLinkAbout1999-07-26 99-267 RESOLVECOUNCIL ACTION rem W. Gate: nt 36,3999 It<nchise to Resolver Againstonthe Requester FronGerYsian to Transfer Its Cable Television Franchise to Melpoia Comrwniralione Corporation. Responsible Oe"Manea: Lepel As you are aware, Adelman Cnmttmnitalbns is in the fortress of amarnng FmnBervision table. In order fa Nis process to mage forward, we must mender and give approval rethe Manor aMe franchise MAdolphe. Cooudaatioo of 0is tl¢nafw data been cmNiantetl NrougM1 @e Cable funsoNum afwhiN we ere nmanbv. no wvwrtium has used onside legal add financial wnsullandtoreviewtM warned Mehnnsfer documenh and a Wblic baringwetheldthiswokw GlowfmpublIccomma . The following dommenls have previously been provided to Me Commit by way of last week's Municipal Operators Committee somas: A Franchise Transfer Financial Review performed by CTIC Associates; A pressor Agreement developMbythe lege normal of Me Customers; and a smGerd fame resolve connecting bo de menchisenumber. Tae FNaneiG Review concludes And edge Adelphia is not we of Me financial ly arranged multi-symen cable me�Yvrs, h"appem b be a frmaddly responsible opmma of cable television syskms. Adelphia Me Me( iG monsoon and pude to wool incomes to damn ge Me taspoonilvlhiass fianMicee of Me able television systms presently owned by FroatierVisim, b operate and mmormin the cable system, b most obligations as they come one and W land capial expeadioues for separation, extensions, mgmtlu oral improvmnetm." fee minister agreement addrows second important saves ofconcem. FimS fed composite represent and warrant Nat the propoaMnartsaction will not cause any trews in Me ads gamble service. Further Memmpaniesreprowntand a tG ,in Neeventfatauatof ery sbdyisum brystifynta Mrbwiccableserviceatmytimein Ne fuNre,Me purehue price in seems ofnttbttA; value an Mezaus Adetime ofacquisitlon shall nose included in the detmoinatim of Me roe ofserviw or recovered through rats. This War promote addresses enema over the per nominator Mine which Adelaide him agreed to lay and brain Me wet formula N actual asset book value The transfer agreement also pmvidos that my inland services shall be record be cable services and Mat my revs um bare such services; will M covered by Me fimchiu Is and that Me company will Main my required federal, mon or Real mforintims began MoviNng my nm -cable for ice over Me cable sysem. Finally. Me wmpnny will comply wish GI odered, mare. and local requirements with respect b access to Meir cable matlem platform far providers of Ism otservice. Based on Me redew Met has been cerfomel by that wide osnsoMLm Mpop, Me consortium a rttannettling approval of Me handtke bartsfer. uepartrtrem near Manager's comments: Municipal Operations has removetl and mannan ands your�yipmva�ia, (� 0y/ f/f+'��s // f City Manager Associated Information: Resolve, Transfer Agreement between CRnzorGum and Companies. Budget Approval ULY'nousecourn- Introduced for _passage Rent Reading piege_a —R al Assigned to couvciloc ftL July 26, I999 CITY OF BANGOR (TITLE.) Resolve, Actino f Fronbervislon To Transfer Its Cable Television Franchise to Adelphia Communications Corporation WHEREAS, Frontlewalon Opera" Partners, L.P. (the "Franchisee') currently owns and operates the cable television system (the "Systemy in the City of Bangor (the "Municipality) under the authority of a franchise granted on December 8, 1997; and WHEREAS, FrontlerVision Holdings, L.P. CFranderVision'), B the sole general partner of the Franchisee; and WHEREAS, FrontierVision Partners, L.P. ("FrontlerVlsion'), as the sale geneml partner of FV Holdings, controls the Franchisee; and WHEREAS, the Franchisee has informed the Municipality that the general and limited partners of FrormtlerVision and Adelphia Communications Corporation ("Adelphia') have entered Into a Purchase Agreement, dated as of February 22, 1999 (the"Purchase Agreement'), providing for, among other things, the sale of the partnership interests in FrontierVislon to Adelphia (the "Pmposed Transaction') and requiring the Franchisee to obtain the consent of the MuncipalRy for the Proposed Transaction; and WHEREAS, Section 9.1 of the MunidpalWs fable communications regulatory ordinance (the "Cable Ordinance") requires that any transfer of control of the Franchise be approved by the Municipality; and WHEREAS, on or about March 12, 1999, Adelphia and FrontierVision submitted FCC Forth 399 to the Municipality pursuant to the 1992 Cable Act and FCC regulations, and requested that the Municipality approve the application for transfer of control of the Franchise to Adelphia (the "Applicatlon7; and WHEREAS, the Municipality is a member of the Penobscot-Downeast Cable Television Consortium (the "Consortium') and relies on the recommendations of the Consortium in matters related to cable television; and WHEREAS, the Consortium has negotiated a Transfer Agreement with FronberVision, FV Holdings, the Franchisee, and Adelphia, and has recommended that the Municipality consent to the Proposed Transaction; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNIL OF THE CITY OF BANGOR, THAT Section 1. The Municlpallho consent to, and approval of, the Poposed Traroaction is hereby GRANTED in accordance with Section 9.1 of the Cable Ordinance, subject to the following conditions: (a) that on or before July 31, 1999, Front erVision, FV Holdings, the Franchisee, and Adelphia enter Into and execute a Transfer Agreement, substantially in the form of Exhibit A, attached herd; (b) that the Proposed Transaction is consummated on or before February 15, 2000, unless that date's extended, as provided in the Transfer Agreement; and (c) that the Proposed Tansaction is misummated an terms and conditions identical in all material respects to those described in the Application and the Transfer Agreement. Section 2. If any of the conditions specified in Section 1 or in Exhibit A are not satisfied, then the Municipality's corneal to, and approval of, the Proposed Transaction is hereby DENIED as of the date hereof. Section 3. If any representations made to the Municipality or the Consortium by FrontierYsion, the Franchisee, or Adelphia prove to be Incomplete, untrue a in orteate In any material respect, it shall be deemed a material breach of the Franchise and the Municipality shall have available to R all remedies provided under the Franchise and applicable law including, without limitation, revocation or termination of the Franchise. Section 9. The terms of the -Transfer Agreement are hereby ratified, and the exemtion of the Transfer Agreement by the Consortium shall be deemed to constitute execution by the Municipality. Section S. This Resolve is effective immediately U Cm cc 6 July 26. 1999 Motion for Passage Hale aed Secmded 99-26) D 8D E8 Title, acting on the Ee9oest Of vroatiet- vlsloa to Ttmeter its Cable Telsvisioa Praochiee to ddelphia Communications Cotporatiov 99-269 ' TRANSFERAGREEMENT zzG THIS AGREEMENT is made day of July,1999, by and between: I.I.I. Penobscot-Dowaeast Cable Television Consortium, a'municipal joint powers authority ("Consortium'); 1.1.2. FromierVision Holdings, L.P., a Delaware limited partnership ("PV Holdings"); 1.1.3. FromierVision Partners, L.P., a Delaware limited partnmsbip ("FromierVision"); _ 1.1.4. FromierVision Operating Partners, L.P., a Delaware limited partnership ("Franchisee");and LL5. Adelphia Co=urucadons Corp., a Delaware corporadon ("Adelphia" ). 1.1.6. Adelphia, FV Holdings, FromierVision and the Franchisee may be referred to collectively herein as "Companies". RECITALS VVIM AS, the Franchisee crarm ly owns and controls cable television systems located is Bangor, Bar Harbor, Belfast, Brewer, BudspoM Dexter, Ellsworth, Hampden, Milford, Old Town, Orringtoa, Oman, Southwest Harbor and Veazie, Maine (the "Member Communities'); and WHEREAS, the Franchisee operates the cable system in each of the Member Communities (the "Systems') under the terms and conditions of cable franchises granted by each of the Member Communities (the "Framidoes"); and WHEREAS, FV Holdings is the sole general partner of the Franchisee, FrontierVision is the sole general partner of FV Holdings; and WHEREAS, the general and limited partners of FrontierVision and Adelphia have entered into a Purchase Agreement, dated as of February, 22, 1999 (the "Purchase Agreement'), providing for, among other things, the sale of the partnership interests m FrontierVision to Adelphia (the "Proposed Transaction") and requiring the Franchisee to obtain the consent of the Member Communities for the Proposed Transaction; and WHEREAS, the Member Communities have each eructed a Cable Communications Regulatory Ordinance (the "Cable Ordinances') and entered into franchise agreements with the Franchisee (the "Franchise Agreements'), the terms of which are substantially identical (the Cable Ordinances and the Franchise Agreements shall be referred to jointly as the "Franchise Documents"); and WHEREAS, the Member Communities have each delegated the regulatory responsibility mtd authority to administer their Franchises to the Consortium, a joint powers authority that is responsible for overseeing cable franchise regulation and enforcement for the Member Communities, among others; and WHEREAS, the Cable Ordinances provide fen prior approval of the Member Cormnunities is required for the Proposed Transaction; and WHEREAS, on or about March 12, 1999, Adelphia and FrontierVision submitted FCC Form 394's to the Member Communifies pursuant to the 1992 Cable Act and FCC regulations, and have requested that the Member Communities approve the application for transfer of control of the Franchise to Adelphia (the "Applications'); and 2 WHEREAS, relying on the representations of the Companies, the Consortium has recommended that the Member Communities each grant their consent to the Proposed Transaction, as long as the representations of the Companies are complete and accurate; and WHEREAS, the approval of the Proposed Transaction by the Member Communities is therefore appropriate if Adelphia agrees to assume and be bound by all of the provisions, terms, conditions and limitations prescribed in the Franchise Agreement and all applicable federal, state, and local laws and WHEREAS, the parties anticipate that each of Member Communities will ratify this Agreement, individually grant its consent to the Proposed Transaction by reaolmion, and thereby become a party to this Agreement; NOW, THEREFORE, in consideration of City's approval of the Application, THE PARTIES DO HEREBY AGREE as follows: - I. TRANSFER OF FRANCHISE . LI. In consideration for the promises and performances of the Companies, as expressed elsewhere in this Transfer Agreement, the Consortium recommends that each Member Community consent to the minister of the cable systems specified in the Applications by adopting arosolutiion substantially in the form ofExldbft A(the "rounder Resolution). Uponadoptionof the Transfer Resolution, each Member Community shall be deerned a parry m this Agreement and to have consented to the transfer in consideration for the promises and performances of the Companiesinthis Agreement 1.2. The Consortium and each Member Community reserve all rights not expressly 'granted in this Transfer Agreement. In particWar, and without limitation: 99-26) 1.2.1 Neither this Transfer Agreement, nor any other action or omission by the Consortium or a Member Community at or before the execution of this Transfer Agreement, shall be construed to grant the consent of the Consortium or any Member Community to any fume trans£ of the Franchises and/or any of the Systems, and/or change in ownership and/or control of the Franchises and/or any of the Systems, or to mean that the consent of the Consortium or arty Member Community to any future transaction is not required 1.2.2. The consent given by the Consortium or any Member Community to the Proposed Transaction is made without prejudice to, or waives of, the Consortium's or the Member Community's right to fully investigate and consider Adelphia's financial, technical, and legal qualifications and any other relevant considerations during any fume franchise renewal or transfer process. 1.2.3. At no time will the Companies contend, either directly or indirectly, that the C nsomum or a Member Community is bawd, by reason of the Proposd Transaction, from considering, or raising claims based on, Franchisee's failure to comply with the terms and conditions of the Franchise Uocaments or with applicable law. 124. The Consortium and the Member Communities waive none of their rights with respect to the Franchisee's or Adeipbia's compliance with the terms, conditions, requirements aad obligations set forth in the Franchise Documents, including the right to compel Adelphia to camply with the Franchise Documents, subject to applicable law. The approval of the Proposd Transaction shall in no way be deemed a representation by the Consortium or a Member Community that the Franchisee is in compliance with all of its obligations trader the Franchise Documents. 4 99-26) 2. ACCEPTANCE OF MANCHISE OBLIGATIONS 2.1 Franchisee hereby reaffirms that it accepts the Franchise, and acknowledges and agrees that it shall comply with and continue to be bound by all of the commitments, duties, and Obligations, present, continuing andfuture, of the Franchisee embodied in An Franchise Documents to the extent consistent with applicable law. Adelphia hereby ratifies said reaffirmation, effective upon completion of the vansfer of control of the Franchise. 2.2 The Companies agree that neither the Proposed Transaction nor the approval of the Applications shall in any respect relieve the Franchisee or any of its successors in interest of responsibility for past acts or omissions, knowa or uNmowa; and the Franchisee hereby reaffirms that it shall be liable for and accepts the consequences of, any such acts and omissions, known and unknown, including liability for any and all previously accrued but unfulfilled obligations to the Member Communities under the Franchise Documents and applicable law, for all purposes, including review of past performance for purposes of determining whether may of the Franchises should be renewed. The proposed Transaction shall not permit Franchisee to take any position or exercise any right that could not have been exercised prior to the Proposed Transaction. 3. ADDITIONA LCONDITIONS 3.1 It is expressly recognized by the parties that the Proposed Transaction requires the approval of the local legislative body of each Member Community in accordance with applicable law. Such approval is a condition precedent to this Transfer Agreement as to each Member Community. The execution of this Transfer Agreement by the Consortium in no way binds my Member Community to approve the Proposed Transaction, and this Transfer Agreement shall -5 99-367 automatically become null and void as to any Member Community if the Member Community does not ratify this Agreement and approve the Proposed Transaction. 3.2. If the Proposed Transaction does not close by February 15, 2000, or closes on terms that are in any material respect different from the terms disclosed to the Consortium and the Member Communities in writing, then any consent to the Proposed Transaction shall be void and of no force or effect, and the Proposed Transaction deemed to have been timely denied, provided that the Companies may request a reasonable extension of the closing date, which shall not be unreasonably denied. 3.3. The Companies hereby waive any and all claims that they may have that any denial of the Applications that results from Secfion 3.2 fails to satisfy the deadlines established by applicable law including, without limitation, claims based on, arising out of, or relating to 47 U.S.C. § 537, as amended, and agree that they shall be deemed to have agreed to an extension of the time to act on the Applications as required to make any denial effective. 3.4. The Companies shall pay the processing fee required by Section 9.6 of the Cable Ordinances by reimbursing the Consortium and the Member Communities for the actual legal and consulting fees incurred by the Consortium and the Member Commmddes in connection with Nese consideration and review of the Application and this Transfer Agreement The Consortium will present to the Franchisee a single invoice itemizing the fres and other out-of- pocket costs incurred by the Consortium and the Member Communities, together with supporting documrnts. Franchises shall remit to the Consortium payment for such fees and costs within thirty calendar days after its receipt of the Consortium's invoice. No reimbursement made under this Transfer Agreement shall be considered a franchise fee. -6- 99-26) 4. RATES 4.1 The Companies represent and warrant that the Proposed Transaction will not cause any increase in the rates for cable service. The Companies agree that the Proposed Transaction, or any agreements associated with the Proposed Transaction, shall not be structured in a way that would adversely affect the financial position of the Franchisee, or limit the funds available to it. 4.2. The Companies represent and warrant that, in the "am that a cost of service study is used to justify rates for basic cable service at any time in the future, the purchase price of the assets in excess of the net book value of the assem at the time of acquisition shall not be included m the detemunation of the cost of service or recovered through rates. The Companies shall maintain their records in a marmer so that the value of the Franchisee's assets with and without the allocation ofthe purchase price above net book value can be determined. 5. REPRESENTA BONS AND WARRANTIES In addition to the representations and wartsnfies set forth elsewhere in this agreement: 5.1. Each of the Companies hereby. represents and warrants that or the time of the execution of this Agreement: (a) it is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized; (b) the Proposed Transaction and the approval thereof will not durmish the valid, binding effect of the Franchise Documents; dus Agreement, once exectned, wormholes a legal, valid and binding obligation of the Companies; (c) the execution and delivery of and performance by each Company coder, this Agreement and the Franchise Documents, where applicable, are within such Company's power and authority without the joinder or consent of any other party and have been duly authorized by all requisite corporate or parmership action on the part of such Company and are not in contravention of such .]. 99-267 Company's partnership agreement, charter, bylaws, and/or other organniatiunal documents; and (d) the execution and delivery of this Agreement does not contravene, result in a breach of, or constitute a deGult under, any contract or agreement to which any of Nem is a party or by which any of Nem or any of their properties may be bound (nor would such execution and delivery constitute such a default with the passage of time or the giving of notice or both), and do not violate or contravene any law, order, decree, rule, regulation or restriction to which any of them is subject. 5.2. The Companies represent and warrant that they are not asserting that they will be permitted to provide services in addition to cable services as a result of the approval of the Proposed Transaction. She Companies further represent and warmnt that they will not seek modification of the Franchise based on the failure of the Companies to satisfy any of the financial or technical assumptions that may underlie the transaction. 5.3. The Companies acknowledge and agree that the consent of the Consortium and the Member Communities to the Application is made in reliance upon the representations, documents, and information provided by the Companies in connection with the Application; each of the Companies is jointly and severally liable for the representations and warranties; and that the representations and warranties include, without limitation the following: 5.3.1. Any intemet services shall be deemed to be "cable services", as provided under Title VI of the Communications Act of 1934, as amended, urdess otherwise designated by applicable law. Revenues from such services, whether received by Franchisee or its affiliates, shall be included within gross revenues for purposes of the franchise fee calculation, to the maximum extent permitted under applicable state or federal law. -8- 99-26] 5.3.2. The Companies represem and warsavt that, for purposes of calculating franchise fee payments under applicable franchise provisions, any discount reflected in an aggregated bill for services which include cableservices shall be allocated proportionately to cable services provided by the Franchisee. Such proportional allocations shall be made by Franchisee in accordance with generally -accepted accounting principles (GAAP). 5.3.3. The Companies warrunt that they will obtain any required federal, state or local authorintions before providing my non -cable services over the cable system. If the Companies believe that a particular requirement is unlawful, it shall seek appropriate judicial relief, and nothing in this Section is intended to prevent the company from seeking such judicial relief. 5.3.4. The Companies shall honor all Ne lnstimtional Network obligations of the current Franchises, including but not limited to, adherence to the current build -out schedule commitments made by the Franchisee. 5.3.5. Franchisee agrees to comply with all lawful Federal, State and local requirements wiN respect to access to Franchisee'scable modem platform for providers of Internet service. Prenclrises also agrees Net each of the Member Communities may impose an access condition later, if such a condition could have been unilaterally imposed w a condition of the Member Community's consent to the Proposed Trmrsaction, pursuant 10 stable or legal precedent controlling in the State of Maine. 5.3.6. Each of the Companies agrees to indemnify and hold the Consortium and the Member Communities harmless against any loss, claim, damage, liability or expense (including, without limitation, reasonable attorneys' fees) proximately caused by any m