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HomeMy WebLinkAbout03/08/1982 Meeting e e e ~ M I NUT E S Eugene City Council Work Session Treehouse Restaurant March 8, 1982 5:00 p.m. PRESENT: Mayor Gus Keller, Councilors Bill Hamel, Emily Schue, Mark Lindberg, Cynthia Wooten, Brian Obie, Gretchen Miller, and Betty Smith; Micheal Gleason, City Manager; Dave Whitlow, Assistant City Manager; Pat Lynch, Carol Baker, Kent Gorham, City Manager's Office; Keith Martin, City Attorney's Office; and Susan Pack, Eugene Register-Guard. I. ORDINANCE AMENDING TELEPROMPTER FRANCHISE Mr. Martin reviewed the changes in the Teleprompter franchise as recommended by the Metropolitan Cable Commission. He said that leased access did not apply to the access center, but the access center could have privately financed program- ming with corporate identification as long as the identification was not a commercial. Mr. Martin believed the access center would be heavily used for governmental and educational cablecasting. One of the provisions of the fran- chise would allow an individual to buy a low-cost single-channel converter to watch either the commercial programming on Channel 4 or convert to a second access center channel. Mr. Martin emphasized that these changes give the Cable Commission the responsibility for success of the access center. Ms. Wooten asked about procedures for arbitration should one of the three jurisdictions not approve the franchise as amended. Mr. Martin said that in the event arbitration is necessary, the commission and Teleprompter would try to select a single arbitrator. Failing that, each would select an arbitrator and still try to pick a third. If they cannot pick a third, the presiding judge of Lane County Circuit Court selects a third arbitrator. Ms. Wooten asked if arbitration would be limited to a single issue of concern or if the entire agreement would be open to arbitration. Mr. Martin said that the agreement stated that a process of fact-finding and mediation would occur first, followed by binding arbitration if mediation does not resolve the controversy. He felt that the changes in the ordinance would be the issue. Mr. Gleason said that typically a mediation or arbitration process attempts to narrow the focus of the discussions. Mr. Martin explained that the agreement, as far as Teleprompter was concerned, was a package deal. The agreement requires Teleprompter to stipulate which items are in agreement and which are not and they, in theory, could open the entire agreement to arbitration. Or they could keep the focus narrow. Ms. Wooten asked if the council could theoretically approve all of the agreement except for one particular section. Mr. Martin stated that under the terms of the settlement with Teleprompter, the council could not. Ms. Miller asked about the cost of binding arbitration. Mr. Martin said it would probably cost about $1,000 a day. MINUTES--Eugene City Council Work Session March 8, 1982 Page 1 e e e Regarding a definition for pay television, Mr. Martin said that it was the commission's desire to expand its scope of coverage as much as possible. The language, as proposed, would provide that any time a signal has been broadcast, no matter where in the country, it could not be captured and transmitted by satellite and treated as pay television in Eugene. If Teleprompter chooses, in cooperation with the commission, to put a signal that is only a cablecast signal into Section 5 (Programming), it loses its characteristic as pay television and becomes subject to the commission. As long as a signal stays as a private cablecast signal, not subject to the language of the franchise directly, it is pay television and outside the scope of the existing franchise. Mr. Lindberg asked for further clarification. Mr. Martin said there is a Federal definition of pay television which has allowed the Federal government to pre-empt the pay television area, except where local governments have agreed with their franchise to the contrary. If a cablecast signal becomes part of the package that sets the rate, then that signal is no longer subject to the Federal rules and comes under the commission's jurisdiction. Mr. Martin noted further changes in the ordinance on page 4 where it stated that the cable company is required to give notice to the commission 60 days before undertaking the installation of equipment to expand the system. This change was the result of negotiations. Teleprompter's position was that the decision to expand the system or not was a private business decision; the commission's position was that expanding the system or increasing the assets so that it became part of the rate base would allow rate increases the commission would be unwilling to accept. The 60-day notice will permit the commission to tell Teleprompter not to ask for an adjustment in the rate base because of improve- ments. The commission would take the improvements into account when future rate requests are considered. The notice will also provide time for public discus- sion before any expansion is executed. The commission does not have the power to veto that business decision, but it at least has the ability to place Tele- prompter on notice if there are apprehensions about it. Page 5 of the ordinance defines what constitutes the basic services and identifies the new service to be provided no later than January 1, 1983. The commission has agreed to the removal of the KVDO signal from the basic service which can be removed by special permission of the FCC since it is a duplication of public programming from KOAC in Corvallis. Further language in this section of the ordinance deals with a multiplicity of duplicating programs on several channels. It also allows Teleprompter to provide a network signal from some other affiliate if the local affiliate's broadcast signal is interrupted. Mr. Martin said that the ordinance also states that Teleprompter may operate its own signals over KOZY after the public access center is operating. KOZY's programming is now restrained, giving a priority and preference to local access programming and requiring that certain other signals be carried on it. Ms. Schue asked who would decide what would be programmed on the access channel. Mr. Martin said it would be the decision of the Cable Commission and the operator of the access center. Ms. Wooten asked if Teleprompter would provide the lines for direct cablecast of such things as City Council meetings. Mr. Martin said Teleprompter has agreed to do that. Providing direct cablecast from the Perform- ing Arts Center poses a number of problems in terms of copyrights, performance rights, etc., that have not been resolved by the Cable Commission. MINUTES--Eugene City Council Work Session March 8, 1982 Page 2 e Page 7 of the ordinance, Mr. Martin said, deals primarily with the adjustment in programming that results in the January 1, 1983, deadline for conversion of the program as outlined in the cover memorandum to the council. Some of the signals that are now part of the basic service will be moved up to the next tier. People can buy a converter from Teleprompter at cost and pay an installation fee set by the commission or buy a converter from a private outlet. What is part of the basic program and what requires a converter will always be an item open to discussion. e The access facility, its equipment, and Teleprompter's obligation are outlined on page 9 of the ordinance. Teleprompter must provide the studio and make available to the commission $140,000 within 30 days of the execution of the agreement, and the commission will use the money to determine what equipment is to go into the access center. The commission, not Teleprompter, will choose what equipment is needed. An additional $60,000 will be made available during the second year of the agreement. Teleprompter will provide one full-time technician to maintain equipment in the center and has agreed to provide $50,000 per year for the operation of the access center. The Cable Commission and Teleprompter will meet no later than September 30, 1983, to examine what is happening to the financing of the access center and whether independent sources of revenue have been developed for the access operation. Responsibility for the success of the center has been given to the Cable Commmission with Teleprompter providing some financial support. Ms. Wooten asked how the negotiated budget for the access center compared with other agreements Teleprompter has executed in other cities. Mr. Martin said it varied widely. New franchises give more but want a twenty-year agreement. The agreement negotiated by the Cable Commission is reviewed every three years for possible changes. Mr. Martin urged the council to keep in mind that Tele- prompter's capital investment is in a system that can't automatically jump to a system of increased channels because it would require very expensive changes. In negotiating a budget for the access center, Mr. Martin said that the commis- sion was aware that costs provided by Teleprompter would get passed on to individual subscribers. Ms. Wooten also asked about remodeling costs for a studio. Mr. Martin said what constitutes providing and maintaining a studio was still to be discussed. What costs the $50,000 will go toward has not been decided by the commission. Other questions yet to be resolved include whether there will be charges for using the center, what the priorities will be, and what the regulations will be. A 2l-member committee established by the commission is working on those questions. Mr. Martin noted that the fourth channel for public access has been defined more clearly in the proposed ordinance. In continuing his review, Mr. Martin said that rates must be filed with the commission. There was considerable debate by the commission about what was meant by reasonable standards in the indudstry. He said the commission felt reasonable standards related to comparable systems. In resolving the legal implications of using the word "reasonable," the City Attorney's Office has clarified in the language of the ordinance what the expectations are in terms e MINUTES--Eugene City Council Work Session March 8, 1982 Page 3 e of rate adjustments and performance reviews. The issue at the time of rate review will be whether Teleprompter is performing the franchise. One of the elements of Teleprompter's performance will be whether it is providing program- ming, channels, and technology comparable with what is being offered in other communities similarly situated. The other criteria include the introduction of new technology, technical adequacies of the system, etc. Mr. Martin said the commission at any time can invoke franchise review and is not required to do it only every three years. He believes the commission needs permanent staff to continually monitor Teleprompter's performance. The important decision at the time of rate review concerning what the rate of return will be has been left with the commission. The commission can look at the rate of return of other companies and, using the calculation agreed to in the franchise amendments, can determine what Teleprompter's rate of return ought to be when compared to other operations and when compared to Teleprompter's performance. The rate of return can be calculated either on the assets or equity and Mr. Martin said both methods can be manipulated. The commission must be sure that when they compare this operation with similar operations they are comparing apples with apples. Mr. Martin said that it was an accounting problem and not a policy problem. Mr. Obie said that assets are more stable than equity. e Mr. Martin said that on page 14, the ordinance states that the requirement for renewal at the end of 15 years will be based on whether Teleprompter has imple- mented the programs and policies as well as the franchise. However, if Tele- prompter is not performing, the company should hear about it long before the fifteenth year. This particular system of evaluation of performance as written into the franchise three years ago places a responsibility upon the commission to be continually evaluating Teleprompter. Ms. Miller felt it was reasonable to expect the franchise itself (user fees) to pay for the staff to monitor it, and not the general fund. Ms. Smith noted that the increased responsibility given to the commission would indicate adequate staff was important. Mr. Martin said that currently three percent goes into the general fund as the fee for using the right-of-way. The Federal government has set up a system where if the jurisdictions go beyond the three percent, then all of the revenue must be dedicated for management of the franchise not just in excess of the three percent. Mr. Martin indicated that the commission did not wish to put the jurisdictions in that position by increasing the franchise fee to five percent because it would mean the loss of general fund revenues. Mr. Martin said that the remaining changes in the ordinance relate to the access center and define the Federal regulations which basically restrain how access channels may be used. Ms. Miller questioned why reference to "age of the franchise" was included in the agreement. Mr. Martin said it was included because the ongoing relationship between the parties in a different community may affect what is happening in that community, positive or negative. How long a company has been in a com- munity would affect the rate of return~ for example. Mr. Lindberg referred to the listed public access costs which figured out to $40 an hour for production costs. He wondered if there were figures available for e MINUTES--Eugene City Council Work Session March 8, 1982 Page 4 e approximately how many hours it would take to produce a basic half-hour program. Ms. Baker said that based on her experience in producing the budget program last year, it would take between 16-25 hours. She said that many local producers borrow the equipment and do a lot of the work themselves; their major cost is for editing. Mr. Martin explained that until the commission and the access center set the regulations, it would be difficult to project what the costs will be. Mr. Lindberg asked for the definition of public access. Mr. Gleason said that the commission, as a representative body, was the access point and would be setting the guidelines. Ms. Miller asked who handles complaints about Teleprompter's service. Mr. Martin said Teleprompter has pledged to do a more effective job of responding to problems. He said the local Teleprompter management is keenly interested in making public access work. Ms. Wooten asked for further clarification on the pay television issue. Mr. Martin said the commmission wanted to exert its control over every aspect of Teleprompter's business in the community whether it was HBO, Galaxy, basic, or tiered service. There is a Federal pre-emption of pay television and the only way to remove that pre-emption is if it is contractually established and both parties agree to it. At this point, Mr. Martin felt he had obtained as much control for the commission as he could. Mr. Hamel emphasized the importance of raising concerns about the franchise well ahead of the next scheduled review in three years. Mr. Martin said that the council needs to provide its delegate on the Cable Commission with what direction it wants the commission to take. ~ The work session was adjourned. (Recorded by Joyce Edwards) JE:cm/CM21b14 - MINUTES--Eugene City Council Work Session March 8, 1982 Page 5