Paper-City Squabble Impacts InterMedia

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A squabble over records access between the local newspaper
and the city of Asheville, N.C., may delay a refranchising agreement there with the local
cable operator, InterMedia Partners.

The operator was dragged into a dispute over its
franchise-fee accounts. The local daily, the Asheville Citizen-Times, has been
covering the negotiations between the town and InterMedia. The paper's interest
increased when an audit conducted on behalf of the city indicated that Tele-Communications
Inc., which owned the system prior to 1995, underpaid its franchise fees.

TCI had deducted franchise fees from its gross revenues
before computing the amount that it had to pay the city. Including franchise fees
collected from consumers in gross revenue results in taxes on taxes, operators have
argued.

But the city of Baltimore challenged this interpretation in
a federal court, and municipalities prevailed on the issue. The court ruled that franchise
fees are actually rent, and not a tax, and that they must be included within gross
revenues.

The change in computation rules has caused records reviews
by cities -- and, in some cases, by the local press -- to see if regulators have left any
potential revenue on the table.

The Citizen-Times asked Asheville officials for
InterMedia's franchise-fee reports to determine on its own whether the cable company
was underpaying on its obligations. But on the advice of city attorney Bob Oast, the City
Council refused the paper's request.

Under state law, charges imposed by cities are taxes, Oast
maintained, adding, "Records that may disclose a business' gross revenues must
remain private."

If the council released the information, its members could
be guilty of misdemeanors, he said.

But the Citizen-Times disagreed.

"We feel, based on the past record, that those are
fees for the use of the rights of way," said George Benge, the paper's executive
editor. Since they are not taxes, they are subject to the state's open-records laws,
he asserted.

To protect the public's right to know, the paper sued
the city in Asheville Superior Court in February. Earlier this month, Judge Claude Sitton
ruled in favor of the newspaper. Sitton said the franchise records don't meet the
state definition of local-tax records, but instead, they are public documents.

"All records should be public, unless the law says
otherwise," Sitton said.

InterMedia was not a defendant in the case, but it won
status as an intervenor. This means that the cable company can appeal Sitton's
ruling. According to local sources, InterMedia has filed a notice of appeal and applied
for a stay of the release order pending the appeal.

InterMedia's general manager did not respond to calls
for comment.

The city attorney said Asheville's council has not
decided whether it will also appeal Sitton's ruling. But regulators added that they
will not complete negotiations with InterMedia on its franchise until the legal dispute is
concluded.

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