Judge Nixes Town’s Play for System

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<p>SNAPSHOT: Martinsville, Va.</p>

Population: 14,900

Mayor: Kimble Reynolds, Jr. (pictured)

Cable Subscribers: 4,000 in the city, 16,000 total

Prior Operator: Adelphia Communications Inc.

Future Operator: Comcast Corp.

A U.S. District Court judge in Virginia has dashed the hopes of a small town that wanted a chance to buy the local Adelphia Communications Corp. system out of bankruptcy, rather than see it transferred to a large multiple-system operator.

Judge Michael Urbanski ruled last week in favor of the acquiring operators, Comcast Corp. and Time Warner Cable, on a suit brought by local corporation Martinsville Cable Inc. Led by Mayor Kimble Reynolds Jr., Martinsville Cable was set up to buy the local cable system for the community.

The judge noted Martinsville Cable’s only asset was the purchase rights, and determined the corporation hadn’t acted in a timely manner under federal guidelines. There is no “indication that it was either capable of matching the offer or willing to do so,” the judge wrote.

Martinsville, a town of 14,900 on the state’s south central border, has language in its cable franchise that allows it the “right of first refusal” if the franchisee should opt to sell.

Henry County, which includes Martinsville, also has the purchase rights in its franchise. Last year, when Comcast and Time Warner announced plans to acquire the bankrupt cable operator’s assets, the city of Martinsville made a deal with the county to assume its purchase rights, according to court documents.

The theory: With the county’s purchase rights, the city could then submit an offer for the majority of the regional system, which serves about 16,000 customers, including 4,000 in the city limits and 12,000 in the county.

Martinsville sued in June 2005, asking a county court to support its purchase rights, but the case was moved to the U.S. District Court for Western Virginia. The suit named Time Warner NY Cable LLC, the unit acquiring the Henry County assets.

Comcast, however, was to become the ultimate owner of the system, in a post-bankruptcy swap with Time Warner Cable. The parties mutually agreed that Comcast could run the system as the suit was pending, as long as the operator did not make any “substantive changes” or complete the system swap with Time Warner.

In a counter-complaint, attorneys for Time Warner argued, among other things, that the cable company has no standing to sue — only the city and county have that right. Were those parties to sue, state law prevents the county from operating a cable system.

State law requires that a city must hold a public hearing, do feasibility studies and hold a public referendum to enter the cable business, steps Martinsville didn’t take, cable attorneys added.

The judge ruled on the summary judgment in favor of the cable operators, striking the case from the active docket.

“Comcast had already assumed responsibility for temporary operations of the Martinsville cable system, so the transition will be smooth and seamless,” said Comcast spokeswoman Lisa Altman.

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