The city of Cleveland may refuse to transfer Cablevision Systems Corp.'s franchise to Adelphia Communications Corp. unless Cablevision coughs up nearly $1 million in fees.
Mayor Michael R. White promised to veto the transfer unless the incumbent operator pays what the city claims are unpaid fees.
White said a recent audit revealed that Cablevision had not included the 5 percent franchise fee in gross-revenue figures used to calculate the city's take each year, even though Cablevision passed the fee onto consumers. With the extra revenue, the MSO would owe the city $797,634, plus $191,743 in interest, he added.
At press time, a spokesman for White had not returned repeated phone calls. But the Cleveland Plain Dealer quoted White as saying that the city "will make every effort" to recover the money.
The City Council is preparing to hold hearings on the proposed transfer of Cablevision's franchise, which is set to expire next year.
Cablevision spokeswoman Carol Caruso said the MSO could not comment since it had not received a copy of the audit.
A landmark court ruling involving the city of Dallas found that local governments could require cable operators to include franchise fees in gross revenues reported to cities.
But adding that fee onto a cable company's gross revenues amounts to a "fee on top of a fee," Caruso said.