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L.A. OKs Transfer, With Conditions

8/04/2002 8:00 PM Eastern

The Los Angeles City Council has approved franchise transfers related to the AT&T Broadband- Comcast Corp. merger, but with conditions to which the companies have objected.

One condition is open access — not for Internet-service providers, but for video content. The city is renegotiating its franchises and the council has started to examine whether to require non-exclusive programming contracts.

The city does not want competitors to lose access to programming. Council members note that a potential overbuilder, Altrio Communications Inc., has an application pending to compete with AT&T. Altrio has agreed to nonexclusive programming arrangements, members said.

AT&T executive director of corporate communications Patti Rockenwagner said the company was pleased the transfers were approved. But attorneys are still assessing the conditions inserted in the ordinance, she said.

VERIZON POKES IN

Ironically, it was Verizon Communications — which left the cable business and sold its unprofitable systems to AT&T — that stumped on behalf of programming nonexclusivity. The telco sent attorneys from Los Angeles and Washington, D.C., law firms to lobby for that condition.

Verizon attorneys cited Comcast's move to deliver Comcast SportsNet, its Philadelphia regional sports network, terrestrially, thus preventing direct-broadcast satellite carriers from carrying the channel. But AT&T executives noted that Comcast makes the network available to overbuilders that compete with the MSO.

Because DirecTV holds exclusive rights to the National Football League's "NFL Sunday Ticket" out-of-market, pay-per-view package, Comcast withholds the Philadelphia iteration of CSN — which carries the Philadelphia 76ers, Flyers and Phillies — in a "tit-for-tat thing," AT&T Broadband vice president Perry Parks said.

The council decided to amend the AT&T Broadband transfer with language that reserves its right to prevent nonexclusive programming contracts, pending the outcome of its 180-day policy review.

AT&T Broadband objected to the language, as the company has no plans for exclusive programming deals, executives said.

The parties had also been arguing over the ultimate guarantor of performance for the six local franchises. The city wanted a corporate guarantee; the operator said the guarantor would be a division of AT&T Comcast Corp.

To break the impasse, the city drafted language requiring that the divisional parent survive the merger and maintain $25 billion in assets. Should it fall below that level, the guarantee reverts to the parent company, the ordinance said.

City officials said AT&T Broadband must agree to the conditions by Aug. 12, the date of the ordinance's second reading. If it does not accept the conditions the transfer will be deemed denied without prejudice.

Negotiations would then continue, according to Liza Lowery, general manager of the city's Information Technology Agency.

 

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