Audit Slams Status of Cable Pacts

Los Angeles has failed to renegotiate contracts with the city’s cable providers even though the pacts expired three years ago, according to a city audit released Thursday.

Instead, the city has extended existing contracts, which were first signed 18 years ago, and officials acknowledge they have yet to begin negotiations on new agreements.

City Controller Laura Chick said the arrangement harms Los Angeles because it cannot seek better service or more revenue from its four major cable television providers without new contracts.

The cable industry has changed dramatically since the pacts were created in 1987, Chick said, noting the advent of high-speed cable Internet, digital telephone service, and video on demand. Chick says Los Angeles could get more revenue from many of the new services, which have increased the value of the cable lines regulated by the city.

“We need new agreements that reflect the value generated from this changing industry,” she said.

The audit comes after a city commission last week approved some of the nation’s toughest regulations covering services the cable companies provide. The city receives more than 2,500 complaints a year from residents about their cable service, including poor picture quality, shoddy customer service and missed repair appointments.

Every year, Los Angeles collects $20 million in franchise fees from cable operators. Of that money, $12 million goes to the general fund, covering such agencies as the Police and Fire departments, and the rest pays for programming dealing with government, education and public access issues.

The city began preparing for negotiations in 1999, three years before the contracts expired. But city officials debated Thursday why discussions on new contracts haven’t begun.

Councilman Jack Weiss, who heads a committee on cable issues, blamed the city’s Information Technology Agency for the lengthy delay. The agency regulates cable service in Los Angeles.

“This agency has been nonresponsive on a whole host of important issues over the past few years,” Weiss said.

But the agency’s general manager, Thera Bradshaw, said her department already did its job when it submitted a report to the City Council in 2003 saying what the city should seek from the cable providers.

“It’s the council’s authority to negotiate cable franchise agreements. ITA did our job,” said Bradshaw, adding that the city’s chief legislative analyst’s office is selecting a negotiator to lead the franchise talks.

Last year, Weiss supported a change that gave the City Council greater authority to handle the city’s negotiations with cable companies. Weiss said the move would streamline the renegotiation process, which he said had fallen far behind. But the move was criticized by some members of the city’s Board of Information Technology Commissioners, who feared more council involvement would politicize the franchise negotiations.

The cable companies -- Time Warner, Adelphia, Comcast and Cox -- have expressed interest in hammering out new deals with the city, said Deane Leavenworth, who heads the Los Angeles Cable Operators Assn. It was the city, rather than the cable companies, that requested extensions of the existing contracts, he said.

“The cable operators are ready, willing and able to negotiate whenever, wherever and whomever the city designates to renew these franchises,” Leavenworth said.

A consumer group applauded the audit, saying the delay in negotiations has been a costly missed opportunity.

“We could seriously negotiate things for the schools, the libraries, which could be helping Angelenos, certainly. We could have had that three years ago,” said Jennette Gayer of Angelenos for Equitable Access to Technology, a group of consumer interest groups and labor unions that hopes to influence the franchise negotiations.

It remains unclear how the city’s revenues will change when the contracts are renegotiated. Though cable services have expanded in recent years, some customers have abandoned cable for satellite TV, which is not regulated by the city.

Chick’s audit, which was conducted from February 2004 to February 2005, also faulted the agency for being several years behind in auditing the fees paid by the cable companies and being unable to demonstrate that it collected certain fees the cable firms are required to pay.

Bradshaw said that since February, the agency has completed financial audits for 2002 and 2003, and is working on 2004.