Cable TV Firm Ends Struggle for Franchises

Century Communications Corp. has given up its year-long struggle to take over cable television franchises in five South Bay cities.

In its place, American Television and Communications Corp. (ATC), the nation’s second largest cable television operator, will try to assume operation of the former Group W Cable franchises in El Segundo, Gardena, Hawthorne, Lawndale and Torrance.

ATC will seek the cities’ permission to take over interim management of the South Bay systems immediately while the cities review its request to become the permanent operator, ATC Vice President Fred Dressler said in a telephone interview from the company’s headquarters in Denver.

The firm, with 3.2 million subscribers nationwide, is expected to have better luck than Century had getting the cities’ approval. “We’re dealing with different personalities, with a different corporation, with a different attitude,” said Warren Carter, Torrance’s cable administrator. “ATC will have to go through the same review process, but given ATC’s size and reputation, I don’t expect any delays.”

Different Atmosphere

“I think the atmosphere will be different,” said cable television consultant Carl Pilnick of Telecommunications Management Corp. in Los Angeles. “ATC will not necessarily be easier to negotiate with, but the feeling is that ATC is well financed and if they make an agreement they will live up to it.”

ATC and Century are among five companies that jointly purchased Group W Cable Inc. from Westinghouse Electric Corp. in December, 1985. The other members of the consortium are Tele-Communications Inc., Comcast Corp. and Daniels & Associates Inc.

The five companies last January divided up the hundreds of Group W franchises throughout the country. Century, which owns the cable system in Redondo Beach, selected the five South Bay franchises, as well as systems in Los Angeles, West Hollywood, Santa Monica, Beverly Hills, El Monte and South Gate.

But in the last 12 months, the consortium has had trouble getting South Bay cities to approve the sale to the consortium or the eventual transfer to Century. Gardena, El Monte and South Gate had approved the sale to the consortium, but were withholding approval of Century as the operator.

Approved by L.A.

Only Los Angeles--where Group W had served the Sherman Oaks and Eagle Rock areas--and West Hollywood have approved both changes. Century will continue to operate there.

The other cities have balked at allowing Century to take over their systems because the company has a reputation for running a lean operation, city officials said.

Pilnick, in a report prepared for El Monte, said Century had borrowed heavily to purchase the systems, creating a fear among many city officials that it would increase rates and reduce service, although Century officials said no changes were planned.

City officials also had complained that Century was slow to provide them with financial and technical information that would allow them to determine whether Century was capable of running the systems as specified in the franchise agreements. Century officials said it took time to gather the information.

Two Key Factors

Pilnick said there were two key factors working against Century:

- Century has sued Palo Alto, which awarded a franchise to a nonprofit cooperative and refused Century’s bid to build a second system. The suit challenges Palo Alto’s right to award an exclusive cable television franchise. Many city officials questioned whether Century would continue to honor any agreements with cities if it won the lawsuit.

- Because Century had borrowed heavily to purchase the systems, it might resell some of them to raise additional money, forcing the cities to investigate yet another operator.

Century President Leonard Tow, in an interview from the company’s headquarters in New Canaan, Conn., would not discuss why he gave up his quest for the South Bay systems or the trouble his company had getting city approval. He would say only, “I wish them all well. I have no regrets. I’m happy to be in Los Angeles and I hope to make a significant contribution to the community.”

Withdrew Voluntarily

William Koplovitz, a New York attorney coordinating the transfer of Group W Cable systems to new owners, said Century voluntarily agreed to step aside and let another member of the consortium pursue ownership of the South Bay franchises.

Century had taken over interim operation of the South Bay cable systems in June when the consortium paid Westinghouse for the Group W subsidiary. Torrance, El Segundo, Hawthorne and Lawndale each filed suits claiming the sale was illegal because they had not approved it, as required in their franchise agreements. Torrance and El Segundo also received preliminary injunctions forcing Century out. Lawndale and Hawthorne have requests for injunctions awaiting court approval.

In September, Santa Monica revoked its franchise with Group W, claiming the agreement had been violated, and is now preparing to ask for new proposals from companies interested in operating its franchise. Beverly Hills has given Century until Tuesday to provide additional financial information--including a $4.5-million letter of credit in the city’s name to assure the upgrading of the 16-year-old-system--so it can decide whether to allow Century to take over its franchise, according to city spokesman Fred Cunningham.

ATC’s Dressler said the company is attempting to become the permanent operator only in the five South Bay cities. He said the company will ask to be the interim operator in South Gate and El Monte but may not end up as the permanent operator theremember.

No South Bay Franchises

ATC has no franchises in the South Bay, but operates in South Pasadena, San Marino, the city of Orange and San Diego. The bulk of ATC’s franchises are in the northeastern United States.

John Bernardi, city manager of South Pasadena, said he is happy with ATC’s service in his city. “To my knowledge, in the last two years there have been only two complaints,” he said.

The 5-year-old system offers 37 channels and serves 3,500 of the 10,500 households in the city, according to Antonio Dominguez, ATC’s general manager in South Pasadena. Basic service is $12.95, movie channels are $10.95, considered average for the industry.