California Elections : Cable TV Firms Pushing for Longer Franchise Period on June 3 Ballot

Los Angeles’ 14 cable television franchises held by 12 companies reflect a mixed bag of financial success. Some are on solid financial footing and others face uncertain futures.

Twelve of the 14 franchises come up for renewal next year, which is why Charter Amendment D and Ordinance Proposition E are on the June 3 Los Angeles primary ballot.

Under a 59-year-old city ordinance, the cable companies’ franchises could be renewed for up to 10 years. However, the firms successfully argued before the City Council last July that the law, passed before anyone imagined television’s impact on society, is too shortsighted.

A 10-year franchise, they contended, does not allow for long-term capital planning and makes it difficult to attract new financing in an industry that demands heavy cash infusions in the beginning years.

As a result, on a motion by City Councilwoman Joan Milke Flores and Councilman Michael Woo, the council unanimously approved placing the matter before the people in the form of two measures on the June ballot.

Charter Amendment D asks voters for a “yes” or “no” on granting renewal franchises for up to 15 years, five years beyond the current limit. Ordinance Proposition E is the implementing law.

Both measures must be approved by voters on the June 3 ballot for the five-year franchise extension to become law. As under present law, final authority for deciding the duration of each franchise would rest with the City Council, up to the 15-year limit if the measures are approved by the voters.

Susan Herman, general manager of Los Angeles’ Telecommunications Department, which oversees the local cable television industry, told The Times that in her view, the key to the ballot measures lies in their discretionary nature.

“The voters should understand,” she said, “that all they are doing is giving the city the discretion to provide cable firms with additional time to get a return on their investment.”

Herman added that none of the cable firms should assume that they will get their franchises renewed for the full 15 years.

“Maybe none of them will,” she said.

A public meeting is scheduled for May 6 at City Hall between members of a City Council panel with cable television jurisdiction and Herman’s group to review the franchise renewals.

Cable television executives argue that it takes seven years or more to get a return in a field that has proven a risky investment for many entrepreneurs.

Passage of the two measures “makes a very big difference” in terms of attracting adequate financing for the future growth of cable television in Los Angeles, said William Cullen, president of the Southern California Cable Assn., a group of local operators.

“Very few (cable television) companies in Los Angeles are actually making money right now,” said Cullen, who also is president of United Cable TV of Los Angeles Inc., one of the cable firms here.

Passage of the ballot measures, he said, “will improve the financial strength of companies operating in Los Angeles by helping to assure that they are properly capitalized.”

Bernie Evans, chief deputy to Flores, supports this view.

The nation’s cable television lenders, he said, “feel cable is not the most terrific investment in the world.” However, passage of Charter Amendment D and its accompanying ordinance, he said, would make a “tremendous” impact on lender interest in the industry--offering investors a better chance to make a profit on their investment.

Although there will be no ballot argument against the measures, not everyone fully agrees with these views.

A spokesman for the Bank of Boston, one of the nation’s leading cable television lenders, said the extra five years “may make a difference, but it’s not that big a deal.”