Policy

Sacramento, Comcast Head for Arbitration

4/21/2004 7:18 AM Eastern

A third-party arbitrator will decide a dispute between regulators and Comcast Corp. in Sacramento, Calif., as the two sides have been unable to negotiate terms of past and future franchise-fee payments.

The Sacramento Metropolitan Cable Commission had directed staff members to continue to negotiate with the cable company over a disagreement on what fees should be paid on advertising revenue.

That two-week period passed Monday. Now the two sides have until May 17 to agree on outside arbitrators to settle the issue.

If regulators and Comcast can’t agree on the type of arbitrator that will become involved, the issue could go back to the commission, possibly for a declaration that Comcast is in breach of contract.

The biggest issue is advertising commissions. Comcast does not pay franchise fees on the estimated 15% earned by agencies for placing ads on local cable channels.

The operator argued that it never receives those funds and it shouldn’t be required to pay fees on them. Regulators countered that fees are paid on gross revenues and the commission is part of gross.

Rich Esposto, executive director of the Sacramento commission, said the amount in dispute isn’t a large part of Comcast’s overall system revenue, but, by conservative calculations, it could mean an estimated $3 million to the city and county over the life of Comcast’s franchise there.

A recent renewal extended the franchise into 2023.