Cable Takeover Proposal Hits Snags in 2 Cities : Television: Officials in Glendale worry that new owner will not carry out renovation of its system. Burbank is concerned about service cuts.

A Dallas-based company’s bid to take over cable television operations in Glendale and Burbank has stalled amid delayed negotiations and questions about the company’s financial viability, officials said this week.

Glendale city officials say Marcus Cable, which is negotiating to buy more than 200 cable outlets serving 650,000 subscribers in several states from Sammons Communications, has failed to provide certain financial information to assist in evaluating the company. The Glendale City Council may vote later this month to reject the transfer of a franchise agreement from Sammons to the new firm.

But a Marcus official countered that the cities of Glendale and Burbank are to blame for stalling negotiations by refusing, until recently, to sign a confidentiality agreement that prevents competing cable operators from obtaining sensitive financial data about the company.

“We’re very excited about the prospect of being in Glendale and Burbank, but at the moment we’re very frustrated,” said Joe Camicia, the company’s manager of government relations. “We’d like to sit down and discuss the issues and work out our differences with them, but if we can’t do that then we’ll cut this franchise out of the transaction and move on.”

Marcus, a limited partnership that entered the cable industry in the late 1980s, would jump from being the country’s 43rd largest operator to the ninth largest upon completion of the $1-billion Sammons deal, which is expected to be wrapped up by Thanksgiving, Camicia said. Nearly all the franchise transfers involved in the deal are either complete or near completion. Glendale and Burbank are among “the very few” that have been problematic, Camicia said.

But Glendale officials say they are concerned about Marcus’ ability to finish a $15-million renovation of the city’s cable system, which was promised by Sammons in their recently approved 10-year franchise contract--a condition that would transfer to the new owner. The renovation, which includes using fiber optics to improve picture quality and channel capacity, is aimed at alleviating longstanding residents’ complaints about cable service.

“This isn’t like Time Warner coming in,” said Bill Marticarena, a legal consultant for the two cities. “Marcus has no history in Southern California and a limited history in the cable business. Plus, this is a rare case where you have a smaller company buying out a larger one in a very leveraged transaction, so it’s no wonder that the cities have a lot of questions.”

One high-ranking Glendale official, who asked not to be named, added: “This is a very slick organization we’re dealing with. We are very concerned about these guys and their intentions. We don’t want someone who’s going to come in and cut staff, jack up the rates and then sell the company for a big profit.”

Federal law allows the cities to research Marcus’ financial, technical and legal background in weighing approval of the franchise transfer. In addition to Marticarena, the two cities have jointly hired an accounting firm that is reviewing the company’s finances, and a technical consultant to review Marcus’ cable operations.

The Glendale and Burbank city councils have both scheduled meetings Sept. 26 to discuss their cable franchises. On that date, Glendale will consider a motion to deny the transfer to Marcus, while the Burbank City Council will hold a study session to discuss what the consultants have learned about Marcus.

If either city rejects the takeover, Marcus could reapply for the transfer, but the changeover, if approved, is not likely to be completed until next year, officials said.

If Marcus abandons its bid, Sammons Inc.--which is in the process divesting itself of the cable business--would be forced to remain at the helm until a new buyer is found. Officials at Sammons’ corporate offices in Dallas and its local Glendale office could not be reached to answer questions about the firm’s ability to continue running the operation.

But officials with both cities said they are prepared for such a scenario.

“We’re not stalling anybody. We just don’t think Marcus has put us in the position to be too serious with them,” said Steve Helvey, Burbank’s assistant city manager. “Ultimately, if they decide not to buy the franchise, that’s their decision.”

Burbank’s franchise agreement with Sammons expired this year, and is currently being extended on a month-to-month basis. The city has been negotiating with Sammons for a system overhaul like that promised to Glendale, but Helvey said officials are now concerned about Marcus’ ability to pay for Glendale’s renovation without cutting staff or raising subscriber rates companywide to pay for it.

Glendale and Burbank, which have about 45,000 and 35,000 cable subscribers, respectively, are apparently not the only cities where Marcus has had trouble becoming the cable company of record. Last month, the Whittier City Council rejected the proposed franchise transfer due to concerns about the company’s finances and future rate hikes, said Doug Chotkevys, Whittier assistant city manager.

Camicia said he plans to attend the Sept. 26 meetings, and said he hopes the strained relations between the parties can be mended.