HomeMy WebLinkAboutResolution No. 4580
RESOLUTION NO. 4580
A RESOLUTION CONSENTING TO AT&T ACQUIRING
CONTROL OF TCI, SUBJECT TO SPECIFIC CONDITIONS.
The City Council of the City of Eugene finds that:
A. The City Council granted TCI Cablevision of Oregon, Inc. a non-exclusive franchise
to operate a cable television system in the City of Eugene on May 13, 1991. Lane County, and the
City of Springfield have identical franchise agreements with TCI Cablevision of Oregon, Inc.
B. On September 2, 1998, TCI Cablevision of Oregon, Inc. gave notice to the cities of
Eugene and Springfield, and to Lane County, of a proposed change in control that would result from
a merger between Tele-Communications, Inc. (TCI), the local franchisee's parent, and AT&T Corp.
(AT&T), and requested that the City consent to the transfer of control.
C. As provided in the franchise agreement, on September 28, 1998 the City requested
that the Metropolitan Policy Committee (MPC) initiate an inquiry into the proposed merger of TCI
and AT&T. MPC initiated such an inquiry, the respective jurisdictions forwarded a request for
information to TCI Cablevision of Oregon, Inc., and AT&T has responded by letter dated November
25, 1998 from Richard E. Thayer to Milo Mecham, Lane Council of Governments.
D. At the present time both TCI and AT&T have raised a legal challenge to City
Ordinance 20083, and are in non-compliance with that ordinance. Consent to the proposed merger
is in reliance on AT&T's responses to MPC's inquiry and is conditioned upon TCI and AT&T
agreeing to promptly cure the non-compliance with Ordinance 20083 if the City ultimately prevails
in the pending litigation.
NOW, THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EUGENE, a
Municipal Corporation of the State of Oregon, as follows:
Section 1. That the City of Eugene hereby grants its consent to permit AT&T to acquire
control ofTCI Cablevision of Oregon, Inc., through the merger ofTCI and AT&T as set forth in the
September 2, 1998 notice from TCI Cablevision of Oregon, Inc., a copy of which is attached hereto
as Exhibit A, subject to the following conditions:
1. 1 That if the City of Eugene ultimately prevails in the legal challenges to
Ordinance No. 20083 filed by TCI and AT&T which are now pending, TCI and AT&T, who
are now in non-compliance with that Ordinance, will promptly cure such non-compliance,
Resolution - 1
including, but not limited to, the filing of all required forms and payment of all sums due,
including penalties and interest not prohibited by the judgment, except to the extent that a
portion of the ordinance has been declared invalid; and provided that nothing in this resolution
shall be deemed to consent to AT&T's or TCl's current noncompliance with Ordinance
20083 or to waive or limit any power the City has to enforce the provisions of Ordinance
20083 now or in the future.
1.2 That AT&T as the ultimate parent of the franchisee TCI Cablevision of
Oregon, Inc., will not cause the franchisee to increase the rates of its customers in the City
of Eugene for the purpose of paying for AT&T's purchase ofTCr.
1.3 That TCI Cablevision of Oregon, Inc. comply with all valid local laws, and
acknowledge that refusing to so comply is a violation of the franchise.
1.4 That there be no negative impact on any scheduled upgrades or rebuilds as a
result of the merger.
1.5 That the City's consent to the transfer and merger shall not be construed to
constitute a waiver or release of any rights the City has under the franchise, whether those
rights arise before or after the transfer of control from TCI to AT&T.
1.6 That AT&T provide to the City a binding statement that acknowledges the
existing franchise, that it will cause the franchisee TCI Cablevision of Oregon, Inc. to comply
with its terms and provisions, and agreeing that neither AT&T nor any of its subsidiaries or
affiliates will cause the franchisee to breach or violate the franchise.
1.7 That AT&T comply with the commitments made in its letter dated November
25, 1998 from Richard E. Thayer to Milo Mecham, a copy of which is attached hereto as
Exhibit B, and shall cause TCI and any affiliates of AT&T or TCI to comply with those
commitments.
The foregoing Resolution adopted the 9th day of December, 1998.
((-4//7
City Recorder
Resolution - 2
EXHIBIT A
@.
Tel
MIKE WHITE
General Manager
September 2. 1998
City of Eugene
Jim J ohnson~ City ~1anagel
777 Pearl Street
Eugene, O~ 97401
Re: Tel MERGER WITH AT&T
Request for Consent to Change of Control
Dear Mr. Johnson:
As I informed you in previous correspondence, Tele-Communications, Inc. (TCI), the
ultimate parent corporation of your cable franchisee, has announced its intention [0 merge with
AT&T. We are writing to provide you with additional information regarding this merger, and to
formally request any consent. that may be required by the franchise or applicable law.
Both TCI and AT&T are excited about. the merger, which-we believe \\'ill have significant
benefits to our customers. With the combined expertise and initiative of Tel and AT&T, we
hope to offer an expanded choice of products and services to our customers.
(,Tnder the terms of the tn.erger agreement, AT&T \vill become the parent company of
TCI. Tel will continue to exist as a corporation and a ,vholly o,,vned subsidiary of AT&T. All of
the cable television franchises held by TCl enthjes v/ill continue to be held by those entities. Our
records indicat{~ that our franchise \'lith YG!:':. nlay require t.'1ai: we obtain. your consent to this
change of c0!"itroL The tnerger will not involve a transfer' of 'the fran~;hise. The current cable
franchisee will continue to hold the f~anchise~ and localln.anagernent. and employees of TCI will
remain in place. The nlcrger will, however, result in a new parent company for TCI and
indirectly~ f0r your cable franchi$ee.
To pro'.-ide you with all information necessary to grant the consent we seek, we are
including three copies of the Federal Communications Commission's (FCC's) Form 394.
According tCi ~he FCC~ the Form 394 is designed to provide a franchising authority with the
information necessary to assess the financial, legal and technical qualifications of the proposed
new controlling em:ity. l\.'~. P&'1 of that Fonn, yeu are receiving a copy of the Inerger agreement,
Tel of Oregon
2897 Chad Drive
Eugene. Oregon 97408
(541) 484-3500
FAX (541) 431.3655
Email: white.mike.t@tci.com
575
An Equal Opportunity Employer
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EXHIBIT B
Richard E. Thayer
Chief Commercial Counsel
..
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AT&T
GOVER.NMENTS
Room 1575
1875 Lawrence Street
Denver. CO 80202
303 298-6495
November 25,1998
Milo Mecham
Lane Council of Governments
125 East Eighth Avenue
Eugene, OR 97401
Dear Mr. Mecham:
Thank you for your letter of November 17, received by us on November 19,1998. The
information you have requested is provided below.
As a,preliminary matter, 'l'>rea~e 'letirrie' c.onlnleht generally: on thefreIations1llp AT BiT will have
with the EugeIie;SpringfieId,: and Lane' County fT~nchises:'~"As you know: we ar~ iibt ~e'eking
coIise.nt to' transfer those franchises' teA T &T~ Our-request ):-:elates' only to: a charige of cOntrol
oithe franchisees' ultimate' parenf cbrpo'rati on', Tele-Commiiiiications,'ln6~' ("Tel"). Under
the terms of the. mer get agreement; AT&T will become the parent Company' of TCI, which
will continue to exist as a corporation and a wholly owned subsidiary of AT&T. TCI
Cablevision of Oregon, Inc. will continue to hold the Eugene, Springfield, and Lane County
franchises, and will operate under its current local management. Tel West, Inc. will continue
to be the guarantor of the franchise obligations. I emphasize these points beCause some of
your questions imply an involvement by AT&T in the management of the Eugene,
Springfield, and Lane County franchises which will not occur.
Turning to your specific questions:
1. Does the new controlling entity intend to alter the current ongoing improvements to
the cable system? If so, what are the proposed controlling party's intentions with regard to
timing, monetary investment and/or technical capacity?
Answer: AT&T does not have any plans to alter ongoing improvements. AT&T has
confirmed its commitment to honor: all terms and conditions of the franchise agreements,
including meeting' commifnients on the tilnelines yeju liave discussed with local mana~ement.
As yoti know~ Tel CableNisionof Oregon; Ine~ h~s undertaken an upgrade of the.l<?cafcable
systems Whi6his proeeeding:expeditiously> The upgrade to a minimUII1"Capacity ofa 750
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Milo Mecham
November 25~ 1998
done so as to have no impact on cable rates in the Lane County, Eugene, or Springfield
systems. Finally, AT&T and TCI can confirm that TCI Cablevision of Oregon, Inc. will not
be an obligor for any debt that may be incurred to meet this cash funding requirement and no
assets of the cable systems in Lane County, Eugene, or Springfield will be encumbered as a
result of any such financing.
5. The disclosure documents revealed that TCI and Falcon have engaged in negotiations
leading to the transfer of franchises from Tel to a Falcon partnership. Have there been any
discussions with Falcon, or are any discussions contemplated that would involve an exchange
of subscribers in the Eugene, Springfield and Lane County area?
Answer: There "areiio-pHms"60i11enlpliitihglhinsrefof1lliy franchISeS inllie bugene~-'
Springfield, or Lane County area at this time.
6. In the summary statements originally provided after the announced merger, TCI and
AT&T indicated a willingness to comply with all local, state and federal laws. TCI of Oregon
and AT&T have chosen to not comply with a lawfully enacted ordinance of the City of
Eugene while that ordinance is being challenged in court. Will the proposed new controlling
entity alter that policy in any way? Are there examples from other areas where the proposed
controlling entity has complied with lawfully enacted ordinance or laws despite a policy
disagreement concerning such laws?
Answer: AT&T and TCI have always confirmed that they will comply with all
applicable and lawfullocaI, state and federal laws. With regard to the Eugene ordinance in
questio~ we respectfully do not agree that it was lawfully enacted. AT&T and Tel have not
ignored this ordinance, but have instead filed lawsuits asking the court to declare its invalidity.
The lawsuits are a result of our conviction that the City's ordinance is illegal and invalid under
federal and state laws and the federal and state constitutions, and is void ab initio. We
respectfully state that this is not a "policy disagreement." Of course, we will abide by any
final and nonappealable judicial resolution.
I trust the preceding is responsive to your request. Your primary contact regarding all
franchise matters remains Mike White, (541) 431-3500. Should you have further questions
for me, please feel free to call, at (303) 298-6495.
.~ nl
/ \~ l ~
Richard E. Thayer
cc: Gloria Crayton
Mike White
Debbie Luppold
l
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cd5@~
Lane Council of Governments
~
/'~
125 East Eighth Avenue, Eugene, Oregon 97401 (541) 682-4283 Fax: (541) 682-4099 7TY: (541) 682-4567
November 17, 1998
Mike White
TCI of Oregon
2897 Chad Drive
Eugene, OR 97408
Gloria M. Crayton
TCI of Oregon
3500 S.W. Bond
Portland, OR 97201
Dear Mike and Gloria:
This letter is a follow-up to several preliminary discussions concerning the review
by the City of Eugene, the City of Springfield and Lane County of the proposed transfer
of control of TCI Cablevision of Oregon to AT&T. In those preliminary meetings you
requested that a written list ?f issues be provided to you so that you might more fully
respond to the issues raised in the preliminary discussions.
The franchise provides that an inquiry may be made into "the qualifications of the
prospective controlling party." To make a determination concerning the qualifications of
the prospective controlling party, we would like answers or assurances with regard to the
following matters. For most of these matters the answer or assurance can take the form
of a written statement from a person in the prospective controlling party - AT&T - with
authority to commit the proposed controlling party.
1. Does the new controlling entity intend to alter the current ongoing improvements
to the cable system? If so, what are the proposed controlling party's intentions with
regard to timing, monetary investment and/or technical capacity?
2. What policies or expectations will the proposed controlling entity have with
regard to the extension of service into current! y unserved areas within TCI's service area.
While all areas are of concern, the response should include areas within the downtown
core of Eugene and Springfield.
3. Does AT&T, including all subsidiary companies, intend to offer any services
based on or using the cable facilities (fiber optic, coaxial cable, switching systems, and
transmitting and receiving signals via microwave and other methods) owned by TCI of
Oregon? If so, what additional services? To whom will such services be offered? What,
if any, modifications of existing TCI equipment will be required.? When are such
services to be put in place in the Eugene-Springfield area?
4. The submitted summary documents indicate that TCI will be borrowing funds to
assist the transfer of control. What is the total amount of expected debt to be incurred by
AT&T, TCI, and other, affiliated entities, in completion of the transaction? How will this
debt be apportioned? What security will be used? What is the source of the expected
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