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ATTACHMENT A Franchise Fee Disputes Involving Advertising Commissions and Launch Revenue, Other-City Experiences In addition to Los Angeles and Oregon' s own Metropolitan Area Cable Commission (MACC) experi- ences, the City of Tacoma, Washington conducted a Comcast franchise review, after which Comcast was informed there were deficiencies in franchise payments during the review period Jan. 1, 2000 through March 31, 2003. Comcast concurred with a portion of the findings and paid additional franchise fees related to (a) itemized FCC regulatory fees, (b) Itemized PEG fees and (c) inconsistency in video reve- nue determination. However, Comcast disputed the findings related to (d) Gross advertising sales reve- nues, (e) Revenues from programmers, and (f) cable modem service. At this time, Tacoma is awaiting for the City's Tax and License Division's more formal tax audit of Comcast to be concluded (within the next two months) before deciding its next steps. Chandler, Arizona is currently in a similar dispute after conducting an independent franchise fee audit of Cox Communications. The City is reviewing their options and next steps. Montgomery County, Maryland advises that it would be totally inconsistent for Comcast to contest pay- ing franchise fees on such ad revenues in their area under their franchise agreement although it has not yet conducted the fee review to obtain documentation that such fees are being withheld. Sacramento, California has presented a demand for over $300,000 in franchise fees owed in a case al- most identical to Los Angeles, Eugene, Springfield, Lane County and others. It does not have a bind- ing arbitration provision which makes possible the termination of the franchise for breach of contract. Indianapolis/Marion County, Indiana audited Comcast and received amounts due related to non- advertising commissions revenue and errors in addressing. The audit also revealed amounts due as a result of Comcast not paying franchise fees on revenue from advertising commissions and launch fees and the City/County are evaluating their debt collection options. Walnut Creek, California had a franchise fee dispute with TCI Cable (predecessor to ATTBB and Com- cast) in the mid-90's. Issues were using affiliates to sell advertising and reporting a fraction of the advertising revenues back to the local franchisee, deducting advertising commissions was another issue, and launch fees (TCI refused to provide any information). A lump sum settlement was reached avoid- ing litigation but allowing the practice of under-reporting for a specified limited time. Eugene staff are currently looking into dispute similarities in Oakland and Berkeley, California; details were not available at the time of printing. L:\CMO\2004 Council Agendas\M040421\S040421A. doc