HomeMy WebLinkAboutCC AG PKT 2005-11-14 #H AGENDA REPORT (i)L," 63
DATE: November 14, 2005
tja , ;) ,...t - i f,p,.
TO: Honorable Mayor and City Council � + r I(
THRU: John B. Bahorski, City Manager a `.) .-7 -`r �
FROM: June Yotsuya, Assistant City Manager VV 11 /
SUBJECT: ADOPTION OF RESOLUTION AUTHORIZING
ASSIGNMENT OF CABLE TELEVISION FRANCHISE
BY ADELPHIA CABLEVISION OF SEAL BEACH, LLC
TO TIME WARNER NY CABLE LLC, AN INDIRECT
SUBSIDIARY OF TIME WARNER CABLE INC.
SUMMARY OF REQUEST:
That the City Council adopt Resolution No. 5385 authorizing the assignment of a cable franchise
by Adelphia Cablevision to Time Warner Cable.
DISCUSSION:
As mentioned in a June 2005 report to City Council on cable television, Adelphia Cablevision is
in the process of selling its assets to Comcast and Time Warner. In a complicated, multi - layered
transaction, Comcast and Time Warner will in turn be trading their assets to create larger
contiguous regions of service for each company. In California, it is anticipated that Comcast and
Time Warner will rearrange their services so that Comcast will be the largest provider in
Northern California and Time Warner will be the largest provider in Southern California. In
transfers of cable assets, it is normally assumed that the new cable provider will accept the
existing terms and conditions of the existing franchisee and therefore, the transfer process does
not provide an opportunity for cities to seek different or greater terms from the new provider.
Cities have the ability to review and consider acceptance or denial of proposed transfers.
However, denial on the part of a local city does not necessarily mean that the transaction will not
take place, especially since these transactions are part of a financial program to address
Adelphia's bankruptcy issues.
The City Attorney's Office has reviewed FCC Form 394 filed with the City in mid -June 2005
that formally addresses the proposed assignment of the City's cable television franchise by a
subsidiary of Adelphia Communications Corporation to Time Warner NY Cable LLC, which
will be an indirect wholly -owned subsidiary of Time Warner Cable Inc. Our attorney has
reviewed the voluminous documents submitted by the cable operators with the FCC Form 394,
as well as the supplemental documents that were provided as additional information and
clarification concerning the transaction. The review did not disclose any significant negative
information that would preclude the City Council from making the findings that Time Warner
Agenda Item /y
November 14, 2005
City Council Agenda Report-Adopt Resolution Approving Transfer of Cable Television
Franchise by Adelphia to Time Warner .
Page 2
Cable Inc., or its wholly -owned subsidiary, Time Warner NY Cable LLC, have the "financial,
technical and legal qualifications" to perform, or to ensure the performance of, all of the
obligations imposed by the existing cable television franchise agreement with Adelphia
Cablevision of Seal Beach, Inc.
Although Time Warner Cable Inc. has a long history as a cable service provider, Time Warner
NY Cable LLC is a new entity with no history related to the ownership and operation of cable
television franchises. Consequently, the "Assignment and Assumption Agreement and
Guarantee of Assignee's Obligations" relating to the transaction is attached as Exhibit A to the
transfer resolution. Schedule 1 to Exhibit A requires that Time Warner Cable Inc. guarantee the
franchise obligations of Time Warner NY Cable LLC, its indirect wholly -owned subsidiary that
will become the City's new franchised cable operator upon
FINANCIAL IMPACT:
The franchisee will reimburse the City of Seal Beach up to $2,500 for the cost of transferring the
franchise.
RECOMMENDATION:
It is recommended that the City Council adopt Resolution No. 5385:
"A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEAL BEACH
CONDITIONALLY AUTHORIZING THE ASSIGNMENT OF A CABLE TELEVISION
FRANCHISE BY ADELPHIA CABLEVISION OF SEAL BEACH, LLC TO TIME WARNER
NY CABLE LLC, AN INDIRECT SUBSIDIARY OF TIME WARNER CABLE INC."
Submitted by:
J e Yots a, Assistant City Manager
N0 D APPR • - ��
IF /' 6 ti, --
Jo . , B. Bahorski, City Manager
r
Attachment:
Resolution 5385
Exhibit "A" & Schedule 1
RESOLUTION NUMBER 5385 .
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF SEAL BEACH CONDITIONALLY AUTHORIZING THE
ASSIGNMENT OF A CABLE TELEVISION FRANCHISE
BY ADELPHIA CABLEVISION OF SEAL BEACH, LLC TO
TIME WARNER NY CABLE LLC, AN INDIRECT
SUBSIDIARY OF TIME WARNER CABLE INC.
RECITALS:
A. Adelphia Cablevision of Seal Beach, LLC ( "Franchisee ") is the
authorized holder of a franchise ( "Franchise ") that authorizes the construction, operation,
and maintenance of a cable television system within the City of Seal Beach ( "Franchise
Authority").
B. On April 20, 2005, Time Warner NY Cable LLC ( "TWNY "), an
indirect subsidiary of Time Warner Cable Inc., and Comcast Corporation ( "Comcast "),
each entered into separate definitive agreements to acquire, collectively, substantially all
of the assets of Adelphia Communications Corporation ( "Adelphia ") for a total of
$12.7 billion in cash (of which TWNY will pay $9.2 billion and Comcast will pay the
remaining 53.5 billion) and 16% of the common stock of Time Warner Cable Inc. At the
same time that Comcast and TWNY entered into the agreements to purchase Adelphia's
assets, Time Warner Cable Inc., Comcast, and their respective subsidiaries also agreed to
swap certain cable systems to enhance their respective geographic clusters of subscribers
( "Cable Swaps "). The asset purchase transaction by TWNY that includes the City's
cable franchise is not, however, dependent upon the consummation of the Cable Swaps
transaction, nor upon certain redemption transactions whereby Time Warner Cable Inc.,
the parent company of TWNY, will redeem Comcast's 17.9 percent equity interest in
Time Warner Cable Inc. in exchange for $1.9 billion in cash plus 100 percent of the
common stock of a Time Warner Cable subsidiary that will own cable systems located in
four states other than California.
C. On June 14, 2005, the Franchise Authority received from the
Franchisee and from Time Warner NY Cable LLC ( "Transferee "), an application for the
assignment of the existing Franchise. This application included FCC Form 394 titled
"Application for Franchise Authority Consent to Assignment or Transfer of Control of
Cable Television Franchise." Supplemental information was provided to the Franchise
Authority by the Transferee on July 25, 2005.
D. In accordance with Section 6.10.015(4) of Chapter 6.10 of the Seal
Beach Municipal Code, the Franchise Authority has the right to review and to approve
the financial, technical, and legal qualifications of the Transferee in connection with the
proposed assignment of the Franchise.
E. The staff of the Franchise Authority has reviewed the
documentation that accompanied FCC Form 394 and, based upon the representations set
forth in that documentation, has concluded that the proposed Transferee has the requisite
financial, technical, and legal qualifications to adequately perform, or to ensure the
performance of, all obligations required of the Franchisee under the Franchise, and that
the Transferee will be bound by all existing terms, conditions, and obligations of the
Franchise as it currently exists or as it may be modified or superseded by the parties prior
to the closing of the asset purchase transaction described above in Recital (B).
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SEAL
BEACH RESOLVES AS FOLLOWS:
Section 1. In accordance with Section 6.10.015(4) of Chapter 6.10 of
the Seal Beach Municipal Code, the Franchise Authority consents to and approves the
proposed assignment of the Franchise by Adelphia Cablevision of Seal Beach, LLC to
Time Warner NY Cable LLC, which, upon the closing of the asset purchase transaction,
Resolution Number 5385
will be an indirect subsidiary of Time Warner Cable Inc., and will be qualified to conduct
business as a limited liability company in the State of Califomia.
Section 2. The authorization, consent and approval of the Franchise
Authority to the proposed assignment are conditioned upon compliance by the Franchisee
or the Transferee with the following requirements:
(a) Within 60 days after the adoption of this resolution, the Franchisee and the
Transferee will execute and file in the office of the City Clerk an .
"Assignment and Assumption Agreement" in substantially the form
attached to the agenda report as Exhibit A. The Mayor is authorized to
execute that document and thereby evidence the written consent of the
Franchise Authority to the assignment and assumption of all rights and
obligations under the Franchise.
(b) An original or conformed copy of the written instrument evidencing the
closing and consummation of the asset purchase transaction involving the
proposed assignment of the Franchise must be filed in the office of the
City Clerk within 60 days after that closing and consummation.
(c) Regardless of whether the asset purchase transaction described in the FCC
Form 394 actually closes, the Franchise Authority will be reimbursed for
all costs and expenses reasonably incurred by the Franchise Authority in
processing and evaluating the information relating to the proposed
assignment of the Franchise; provided, however, that those costs and
expenses will not exceed the sum of $2500 and will be set forth in an
itemized statement transmitted by the City Manager, or the City
Manager's designee, to the Franchisee and the Transferee within 45 days
after the effective date of this Resolution. The Franchisee or the
Transferee must pay to the Franchise Authority the total amount set forth
in that itemized statement within 30 days after the date of the statement.
Section 3. If the conditions set forth above in paragraphs (a) and (c) of
Section 2 are not satisfied within the period of time specified in each of those paragraphs,
then the authorization and consent of the Franchise Authority to the proposed assignment
as provided for in this resolution will be revoked and rescinded without further action by
the Franchise Authority, and the FCC Form 394 application will be denied in all respects.
In such event, the City Manager is authorized and directed to give written notice to all
affected parties of that revocation and rescission, which will be deemed to be without
prejudice to the right of those parties to submit a new FCC Form 394 to the Franchise
Authority if required by the Franchise or local ordinance.
Section 4. The City Clerk is directed to transmit a certified copy of
this resolution to the following persons:
Mr. Roger Keating, President
Los Angeles Division
Time Wamer Cable Inc.
959 South Coast Drive, Suite 300
Costa Mesa, CA 92626
Brad M. Sonnenberg, Esq.
Executive Vice President,
General Counsel and Secretary
Adelphia Communications Corporation
5619 DTC Parkway
Denver, CO 80111
Section 5. The City Clerk is directed to certify to the passage and
adoption of this resolution.
Resolution Number 5385
PASSED, APPROVED AND ADOPTED by the City Council of the City of Seal
Beach this 14th day of November , 2005 by the following vote:
i •/
AYES: Council Members i. „✓ - /I /�A.w Ile 'i4, ./. ii!
4
NOES: Council Members 0
ABSENT: Council Members e. ` l .° ' `"
ABSTAIN: Council Members 1(-)9711
__,e Mayor
ATTEST:
��� SEA( j'
c� l 4,01\P Or�r0
Ci y Clerk
0
•
STATE OF CALIFORNIA ) ,C OUNT`1 S-
COUNTY OF ORANGE ) SS
CITY OF SEAL BEACH )
I, Linda Devine, City Clerk of the City of Seal Beach, California, do hereby certify that
the foregoing Resolution is the original copy of Resolution Number 5385 on file in the
office of the City Clerk, passed, approved, and adopted by the City Council of the City of
Seal Beach at a meeting thereof held on the 14th day of November , 2005.
i d, 4..,, i.r.
ity Jerk
ASSIGNMENT AND ASSUMPTION AGREEMENT
AND
GUARANTEE OF ASSIGNEE'S OBLIGATIONS
(CABLE TELEVISION FRANCHISE AGREEMENT)
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ( "Agreement ") is entered
into this day of , 2005, between Adelphia Cablevision of Seal
Beach, LLC, a Delaware limited liability company ( "Assignor "), Time Warner NY Cable
LLC, a Delaware limited liability company ( "Assignee "), and the City of Seal Beach, a
California municipal corporation ( "Franchise Authority").
•
RECITALS:
A. Assignor is the authorized holder of a franchise that authorizes the
construction, operation, and maintenance of a cable television system within the City of
Seal Beach, California.
B. Subject to the prior consent of the Franchise Authority, Assignor
desires to assign to Assignee, and Assignee desires to assume, effective as of the closing
of the asset purchase transaction described in the FCC Form 394 as filed with the
Franchise Authority on June 14, 2005 (the "Closing ") all rights, duties, and obligations
under the cable television franchise agreement between the Franchise Authority and the
Assignor ( "Franchise Agreement ") as it currently exists or as it may be modified or
superseded by the parties prior to the Closing.
THE PARTIES AGREE AS FOLLOWS:
1. Effective as of the Closing, Assignor assigns and transfers to
Assignee all of Assignor's rights, duties, and obligations under the Franchise Agreement.
2. Effective as of and contingent upon the occurrence of the Closing,
Assignee covenants and agrees with Assignor and with the Franchise Authority to assume
all rights and to assume and perform all duties and obligations of the Assignor under the
Franchise Agreement. The Franchise Authority reserves any and all rights with respect to
any non - compliance issues that may exist prior to the Closing, and Assignee reserves any
and all rights and defenses with respect to any such non - compliance issues.
3. Franchise Authority consents to the assignment and transfer by
Assignor to Assignee of all rights, duties, and obligations specified in the Franchise
Agreement, contingent upon the execution by Time Warner Cable Inc., as guarantor, of
the "Guarantee of Assignee's Obligations" that is attached as Schedule 1 to this
Agreement.
A -1
S7296-1093\836369v4.doc 11/1/05
4. This Agreement will become operative and enforceable upon the
closing of the asset purchase transaction described in the FCC Form 394 as filed with the
Franchise Authority on June 14, 2005.
•
TO EFFECTUATE THIS AGREEMENT, the parties have caused this
Assignment and Assumption Agreement to be executed by their duly authorized
representatives as of the date set forth below the authorized signature.
"ASSIGNOR"
ADELPHIA CABLEVISION OF ORANGE
COUNTY, LLC, a Delaware limited
liability company
By:
(authorized officer)
Title:
APPROVED AS TO FORM: Date:
Legal Counsel
"ASSIGNEE"
TIME WARNER NY CABLE LLC, a
Delaware limited liability company
By:
(authorized officer)
Title:
APPROVED AS TO FORM: Date:
- Legal Counsel
"FRANCHISE AUTHORITY"
CITY OF SEAL BEACH
APPROVED AS TO FORM: By: e f %�
)7/) Mayor _
t_� Date: // _ / L i" 0 b .
City Attorney
• ATTE, T:
/I, ��.
City C erk
A -2
S7296- 1093 \836369v4.doc 11/1/05
SCHEDULE 1
TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
AND
GUARANTEE OF ASSIGNEE'S OBLIGATIONS
GUARANTEE
GUARANTEE, dated as of , 2005, made by TIME WARNER
CABLE INC., a Delaware corporation ( "Guarantor "), in favor of the City of Seal Beach,
California, ( "Beneficiary").
For good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to induce Beneficiary to timely consent to the transfer of the cable
television franchise issued by Beneficiary and currently held by Adelphia Cablevision of
Seal Beach, LLC (the "Franchise ") to Time Warner NY Cable LLC ( "Transferee ") in
accordance with the Federal Communications Commission Form 394 filed by Transferee,
Guarantor agrees as follows:
Interpretive Provisions.
A. The words "hereof," "herein" and "hereunder" and words of similar import, when
used in this Guarantee, shall refer to this Guarantee as a whole and not to any
particular provision of this Guarantee, and section and paragraph references are to
this Guarantee unless otherwise specified.
B. The meanings given to terms defined herein shall be equally applicable to both
the singular and plural forms of such terms.
Guarantee.
A. Effective upon the close of the asset purchase transaction, Guarantor
unconditionally and irrevocably guarantees to Beneficiary the timely and
complete performance of all Transferee obligations under the Franchise (the
"Guaranteed Obligations "). The Guarantee is an irrevocable, absolute, continuing
guarantee of payment and performance, and not a guarantee of collection. If
Transferee fails to pay any of its monetary Guaranteed Obligations in full when
due in accordance with the terms of the Franchise, Guarantor will promptly pay
the same to Beneficiary or procure payment of same to Beneficiary. Anything
herein to the contrary notwithstanding, Guarantor shall be entitled to assert as a
A -3
S7296- 1093 \836369v4.doc 1111105
defense hereunder any defense that is or would be available to Transferee under
the Franchise or otherwise.
B. This Guarantee shall remain in full force and effect until the earliest to occur of:
(i) performance in full of all Guaranteed Obligations at a time when no additional
Guaranteed Obligations remain outstanding or will accrue to Transferee under the
Franchise; and (ii) subject to any required consent of the Beneficiary, any direct
or indirect transfer of the Franchise from Transferee to (or direct or indirect
acquisition of Transferee or any successor thereto by (whether pursuant to a sale
of assets or stock or other equity interests, merger or otherwise)) any other person
or entity a majority of whose equity and voting interests are not beneficially
owned and controlled, directly or indirectly, by Guarantor. Upon termination of
this Guarantee in accordance with this Section II (B), all contingent liability of
Guarantor in respect hereof shall cease, and Guarantor shall remain liable solely
for Guaranteed Obligations accrued prior to the date of such termination.
Waiver. Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Guaranteed Obligations and notice of or proof of reliance by
Beneficiary upon this Guarantee or acceptance of this Guarantee. Guarantor waives
diligence, presentment, protest and demand for payment to Transferee or Guarantor with
respect to the Guaranteed Obligations; provided, however, that Guarantor shall be
furnished with a copy of any notice of or relating to default under the Franchise to which
Transferee is entitled or which is served upon Transferee at the same time such notice is
sent to or served upon Transferee.
Representations and Warranties. Each of Guarantor and Beneficiary represents and
warrants that: (i) the execution, delivery and performance by it of this Guarantee are
within its corporate, limited liability company or other powers, have been duly
authorized by all necessary corporate, limited liability company or other action, and do
not contravene any law, order, decree or other governmental restriction binding on or
affecting it; and (ii) no authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the due
execution, delivery and performance by it of this Guarantee, except as may have been
obtained or made, other than, in the case of clauses (i) and (ii), contraventions or lack of
authorization, approval, notice, filing or other action that would not, individually or in the
aggregate, impair or delay in any material respect such party's ability to perform its
obligations hereunder.
Binding Effect. This Guarantee, when executed and delivered by Beneficiary, will
constitute a valid and legally binding obligation of Guarantor, enforceable against it in
accordance with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency or other similar laws applicable to creditors' rights generally and
by equitable principles (whether enforcement is sought in equity or at law).
Notices. All notices, requests, demands, approvals, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly given and made if
A -4
S7296- 1093 \836369v4.doc 11/1/05
•
served by personal delivery upon the party for whom it is intended or delivered by
registered or certified mail, return receipt requested, or if sent by Telecopier, provided
that the telecopy is promptly confirmed by telephone confirmation thereof, to the party at
the address set forth below, or such other address as may be designated in writing
hereafter, in the same manner, by such party:
To Guarantor and Transferee:
Time Warner Cable Inc.
290 Harbor Drive
Stamford, CT 06902 -6732
Telephone: (203) 328 -0631
Telecopy: (203) 328 -4094
Attention: General Counsel
To Beneficiary:
City of Seal Beach
211 8 Street
Seal Beach, CA 90740
Telephone: (562) 431 -2527
Telecopy: (562) 493 -9857
Attention: Assistant City Manager
I. Integration. This Guarantee represents the agreement of Guarantor with respect
to the subject matter hereof and there are no promises or representations by Guarantor or
Beneficiary relative to the subject matter hereof other than those expressly set forth
herein.
II. Amendments in Writing. None of the terms or provisions of this Guarantee may
be waived, amended, supplemented or otherwise modified except by a written instrument
executed by Guarantor and Beneficiary, provided that any right, power or privilege of
Beneficiary arising under this Guarantee may be waived by Beneficiary in a letter or
agreement executed by Beneficiary.
III. Section Headings. The section headings used in this Guarantee are for
convenience of reference only and are not to affect the construction hereof or be taken
into consideration in the interpretation hereof.
IV. No Assignment or Benefit to Third Parties. This Agreement shall be binding
upon and inure to the benefit of the parties hereto. Nothing in this Agreement, express or
implied, is intended to confer upon anyone other than Guarantor and Beneficiary and
their respective permitted assigns, any rights or remedies under or by reason of this
Guarantee.
A -5
57296- 1093 \836369v4.doc 11/1/05
V. Expenses. All costs and expenses incurred in connection with this Guarantee and
the transactions contemplated hereby shall be borne by the party incurring such costs and
expenses.
VI. Counterparts. This Guarantee may be executed by Guarantor and Beneficiary
on separate counterparts (including by facsimile transmission), and all of said
counterparts taken together shall be deemed to constitute one and the same instrument.
•
VII. Governing Law. This guarantee shall be governed by and construed and
interpreted in accordance with the laws of the state of California without regard to
principles of conflicts of law.
VIII. Waiver of Jury Trial. Each party hereto hereby irrevocably and unconditionally
waives trial by jury in any legal action or proceeding relating to this guarantee and for
any counterclaim therein.
TO EFFECTUATE THIS GUARANTEE, each of the undersigned has
caused this Guarantee to be duly executed and delivered by its duly authorized officer on
the date set forth below the authorized signature.
"GUARANTOR"
TIME WARNER CABLE INC.
By:
Name:
Title:
Date:
"BENEFICIARY"
CITY OF SEAL BEACH
By:
Name: June Yotsuya
Title: Assistant City Manager
Date:
A -6
•
57296- 1093 \836369v4.doc 11/1/05