Cable Firm, Santa Monica Reach Accord on Franchise

Century Southwest Cable Television has reached an agreement in principle with the City of Santa Monica on the terms of a franchise, and lawyers soon will begin drafting a formal agreement, according to the firm’s vice president, William J. Rosendahl.

Santa Monica Assistant City Manager Lynne Barrette confirmed that an oral agreement on all substantive issues had been reached.

Neither Century--which has been accused by two Westside cities of franchise violations--nor Santa Monica officials would disclose terms of the agreement, which is subject to approval by the City Council.

Council Not Told

Barrette said the council had not been informed of the content of the agreement.

“We decided it would be better to have a full public hearing when we have a specifically worded franchise agreement,” she said last week. “That way we can avoid any misunderstandings that might occur between the intent and purpose of some of the negotiated points and how it ends up in a legal document.

“I’m sure (City Council members) will want to have input,” she said.

The council last week postponed discussion of the matter until June 15, when a draft franchise agreement is to be presented.

Consumer Complaints

Century has been operating Santa Monica’s cable system without a contract since September, 1986, when the city terminated the firm’s franchise over what it considered a legal breach: The city had not granted approval of a transfer of stock to Century from the previous franchise holder, Group W, a subsidiary of Westinghouse Electric Corp.

The council now is concerned about widespread consumer complaints against Century Cable and about allegations that the company has violated franchise agreements in West Hollywood and Beverly Hills.

Last week, the West Hollywood City Council unanimously called for a public hearing on March 28, during which Century will be asked to show why its franchise should not be revoked or forfeited.

Last month, Beverly Hills notified Century of its intention to impose a fine of $250 a day until the firm conforms to franchise requirements.

Both cities contend that Century has failed to provide satisfactory customer service as specified in the franchise agreements. They also cite violations of more technical requirements of the agreements, such as fulfilling schedules for rebuilding aging cable systems and maintaining good signal quality.

Rosendahl has said that Century is in full compliance with the franchises in both cities, although he acknowledged a past problem with telephone response time, a problem he says has been alleviated.

48-Hour Service

“If someone calls in from West Hollywood, they will reach a live operator. If they need service, a truck will be out within 48 hours,” he said.

Still, Santa Monica officials are keeping a watchful eye on the firm’s disputes with West Hollywood and Beverly Hills.

“Most of us on the council are fairly cynical about Century,” Santa Monica Councilman David Finkel said. “Each of the issues that West Hollywood had trouble with was on the agenda between the staff and Century Cable. We should expect a presentation that addresses each and every one of those questions.”

Said Councilman Dennis Zane: “I personally will not agree to any program that doesn’t assure us that we will not have a similar experience (to those of West Hollywood and Beverly Hills).

“It is very difficult to dump a cable company, especially given recent special-interest legislation adopted by Congress, but not impossible. From my vantage point, poor quality service is not an acceptable option,” he said.

‘Just Not Practical’

Cable consultant Carl Pilnick said that largely because of the federal Cable Act of 1984, which deregulated the industry, “This is an entrenched monopoly. You have some ability to negotiate and maybe to fine them. But trying to get (franchisees) out just is not practical.

“There are 7,000 cable franchises. You can count on the fingers of less than one hand the cities that have tried to get a company out.”

“The primary remedy,” he said, “is some tool that makes the cable company pay attention. Taking money out of their pockets is one of the few things that does.”

Pilnick’s Los Angeles firm, Telecommunications Management Corp., has been engaged by both Santa Monica and Beverly Hills. He said Santa Monica is negotiating a sanctions provision that would require a letter of credit, as is the case in the Beverly Hills franchise.

Santa Monica and Century “are still discussing amounts and how (sanctions) would be used,” he said. Under the Beverly Hills franchise agreement, that city can, by certifying that violations have occurred and allowing Century a certain amount of time to rectify them, draw up to $4.5 million in prescribed penalties from a bank holding the letter of credit. The bank can then charge the amount to Century’s account as a loan.

Lawsuit Not Desirable

A letter of credit is especially useful, Pilnick said, because “it enables a city to get relief quickly and to defer legal action. You don’t want to get into a lawsuit with a cable company.”

Pilnick said that cable franchises are now being sold at the equivalent of more than $2,000 per subscriber. Thus, he said, the Santa Monica franchise, with its 16,000 or so subscribers, is worth at least $32 million to Century.

“A company is going to stay in court forever to defend those assets,” he said.

During a protracted court battle, he added, a cable company might disconnect service and the subscribers would be forced to bear the brunt. “And no other company will come in during a situation like that,” he said.

The Santa Monica City Council in 1982 appointed a task force to study cable issues. It completed a series of reports and disbanded in 1985.

Frank Mullin, former co-chairman of the task force, said he would attend any public meetings on cable franchising. “I don’t feel there’s sufficient awareness on the City Council of the issues involved,” he said.

Larry Bender, a member of the now-defunct group, said he and a few other members have been called to the city manager’s office for regular consultations.

“I want to see evidence that these things (violations such as those in Beverly Hills and West Hollywood) could not happen in Santa Monica,” he said. “I would want to see proof that (the other two cities’ problems) are cleared up.”