Ohio Franchise Case Could Set Precedent

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An Ohio district court recently handed the cable industry a setback when it ruled that the city of Brunswick was justified in refusing to renew Cablevision Systems Corp.'s franchise.

The decision was considered the most significant cable-related court victory by a municipality since the mid-1990s, when Sturgis, Ky., prevailed over its local operator by claiming the company's plans were not sufficient to meet the community's future needs.

In the case of Brunswick, city officials rejected Cablevision's renewal proposal on grounds that the MSO had failed to live up to local-origination programming requirements contained in its existing franchise.

One industry observer said the district court decision "will be cited just like Sturgis" by other local franchising authorities embroiled in renewal disputes.

Complicating the current situation is the Brunswick system's recent sale to Adelphia Communications Corp., which inherits the renewal headache.

As a result, Adelphia may face pressure from fellow operators that may want it to appeal rather than leave the decision "hanging over the industry," said John Mansell, cable analyst for Paul Kagan Associates. "Or [Adelphia] might want to settle just so that the subject will die."

With Cablevision out of the picture, Brunswick officials might also be eager to reach an accommodation, he added. "It might be that the city is happy with Adelphia, and Adelphia may be happy with the city."

Randy Fisher, Adelphia vice president and general counsel, said any appeal of the court's decision will depend on a fact-specific review of Cablevision's operations in Brunswick.

"Right now, we're studying the case and its implications," Fisher said.

In a 17-page decision, Judge Ann Aldrich ruled that evidence in the case would have led any "reasonable fact-finder" to conclude Cablevision had not complied with franchise terms.

Specifically, Aldrich ruled that Cablevision failed to provide 20 hours a week of local-origination programming, as required in its deal with the city. Using the company's own figures, Aldrich said the cost of providing the programming was between $118,000 and $177,000, or "sufficient to permit a finding that Cablevision's [franchise] breach was substantial."

Brunswick officials had lost an earlier round when an independent examiner ruled that the city's renewal demands did not consider the fact that added costs would ultimately be passed along to residents of Brunswick and Brunswick Township.

Ignoring the examiner's ruling, the city proceeded to deny Cablevision a renewal, a move which sent the case to the courts.

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