Franchise Transfers Go Slowly

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Operators are experiencing delays in their attempts to transfer ownership of Adelphia Communications Inc. systems to Time Warner Cable in California, where regulators say they need more information before approving the transactions.

Local officials use the transfer process to resolve lingering operating issues and Adelphia has a lot of baggage. For example: Fern Taylor, chief of telecommunications franchising for Los Angeles County, which has 13 sizable Adelphia franchises, said officials there want to conclude negotiations over franchise-fee audits before approving a transfer to another operator.

That ongoing argument has been complicated by Adelphia’s bankruptcy filing. A U.S. Bankruptcy Court must approve agreements between local regulators and the company.

Deane Leavenworth, Time Warner Cable’s vice president for media and government relations in Southern California, said the requests for information from cities are “pretty standard,” adding that his company is responding to requests for more information.

“It’s all part of the process; it’s moving as we expected,” he said of the transfers.

Transfer issues are especially troublesome in Southern California. The Adelphia transfer is paired with a system swap between Comcast and Time Warner that will see Comcast exiting the market. Officials say they remain unclear, after the initial filings in support of the Adelphia transfer of ownership, exactly what business unit will own the properties after the deal is done. The asset and financial base of the ownership company is ill defined, officials say.

“We are concerned about the ultimate owner,” Taylor said.

San Diego County has already asked to extend the transfer process for 30 days. Taylor said her county needs to take the issue to its Board of Supervisors by the end of October to meet the federal statutory deadline on the transfers, but added that it’s likely to request such an extension from the operators.

Such transfer disputes typically do not affect closing on mergers nor do they prevent businesses from changing hands. Century Communications Inc. operated systems in Los Angeles for nearly a decade before the city came to a legal resolution with the company and acknowledged the transfer from a previous owner.

Disputes do give communities bargaining chips, resulting in concessions from cash to in-kind payments by operators.