S-933 - 04/12/1999 - AGREEMENT - Ordinances Supporting Documents a i v '
s
C1
Q ~
�o
I
VILLAGE OF OAK BROOK
1200 OAK BROOK ROAD
OAK BROOK, ILLINOIS 60523-2235
?BONE: 630 990-3000
FAX. 630 990-0$76
MEMORANDUM I'
i
DATE; April 9, 1999
TO: Village President and Board of Trustees
SUBJECT: Cable Television Franchise Transfer
i
RECOMMENDATION: (1) That the Village Board arlopt.the attached ordinance
consenting to the transfer of control of the existing cable television franchise from
MediaOne of Northern Illinois, Inc. to TCI TKR of South Dade, Inc. and authorize
the execution of the attached'Transfer Agreement.
(2)That the Village Board adopt the attached ordinance consenting to the change of
control of the cable television franchise from 'TCI TKR of South Dade, Inc. to
AT&T Corp. and authorize the execution of the attached Change of Control
Agreement.
As we reported to the Board previously, the Village of Oak. Brook is in receipt of the Federal j
Communications Commission Forms 394 containing information intended to establish the
technical, legal and financial qualifications of TCI for taking ownership of the existing cable
television franchise from MediaOne. When TCI decided to reorganize its cable systems
nationally, it determined that the Chicago metropolitan area would be one of its prime markets.
As such, lengthy negotiations between MediaOne and TCI resulted in an asset exchange
agreement that would cause TCI's south Florida properties and some in California to be
exchanged for all MediaOne systems in the Chicago area and some in Michigan.
The franchising authorities in the affected communities are charged with reviewing the FCC
Form 394 to determine whether TCI is technically, legally and financially able to operate the
cable system. The ability to deny such transfer on any of these three bases is extremely
limited. Because the TCI deal affects a vast majority of area municipalities (MediaOne,
Multimedia, Time Warner and Jones systems are all affected), DuPage Mayors and Managers
and the other Councils of Government formed a consortium to obtain expert consulting at a very
reasonable cost. As a result, Dr. Barry Orton and Stuart Chapman were hired to conduct the
technical, legal and financial review for all affected communities.
The technical review included,anon other things, a physical inspection•f the various haad-cad
sites and an analysis of the cable type and size that would be used by TCI. The legal review
dealt primarily with TCI's use of subsidiary corporations as transferee vehicles, as well as any
outstanding claims against the company. Financial data was reviewed to determine whether TCI
had adequate resources to operate the cable systems. The review is complete, and the
consultants have concluded. that TCI has sufficiently demonstrated the adequacy of its technical,
financial and legal qualifications within the context of applicable law. r
�i
Concerns about changes in terms and conditions of service and operations, licensing of
transferees, consolidation of operations and customer service, and technical management
personnel were also addressed in the consultants' review. TCI has indicated that it will follow
the terms and conditions of local franchise agreements, and would license its subsidiary
corporations prior to the transfer. TCI's responses also note that there are no current plans to
consolidate or change operations, and it will handle customer service with the same personnel
who are currently providing the service. The attached ordinance incorporates ICI's
representations that the transfer is not expected to have any effect on cable television service,
rates or reduce the quality of customer service or cable service in Oak Brook.
AT&T ACQUISITION OF TCI
III
In mid-1998 while the TCl/MediaOne exchange was moving to its inevitable conclusion, AT&T
began proceedings to acquire TCI. The consortium consultants and many others affected by the
TCl/MediaOne exchange viewed this as a positive development since AT&T indicated that it
would require TCI to provide high quality cable infrastructure,and service. Additionally, AT&T
is believed to have significantly greater resources to devote to cable television operations.
I
It appears that the U.S. Department of Justice has approved the transaction between TCI and
AT&T, and we expect to receive the official FCC documents in the near future. In any event,the
consortium consultants have conducted, a technical, legal and financial review of AT&T and
l
recommend that communities approve the TCl/AT&T transaction at the same time as the
TCl/MediaOne exchange. The primary reason for passing the ordinances at the same time is to
afford communities the ability to work directly with AT&T as the ultimate cable franchise
holder. Because TCI has not had an unblemished record as a provider of cable service in the
Chicagoland area, and because AT&T has indicated that it would demand improved performance
of the system, I recommend that the Board also adopt the attached ordinance consenting to the
transfer of control of the cable television franchise to AT&T from TCI.
In conclusion based on the results of the review of qualifications and the fact a
q s stated by our
consultants, that Illinois municipalities have no legal basis upon whiich to deny approval of
the transfer of their cable franchises from MediaOne to TCI and control of the franchise
from TCI to AT&T, I recommend adoption of the two attached ordinances.
Michael A. Crotty, Assistarr: Villa_e Manager
hnac
!
Nays: 0 - None.
Absent: I Trustee Bartecki. Motion carried.
i
5) RDINAN E 95►-AG-CB-EX3-S-933 AN ORDINANCE OF ORD.99-AG---cB-ESC .
/r C
�-- HE VILLAGE OF OAK BROOK ILLINOIS CO] SENT3NG S-933
TO THE ANSFER OF CONTROL OF THE CABLE TRANSFER OF
TELEVISION FRANCHISEE FROA�I 14 EDIA C3NE OF WNTROL OF CABL
TELEVISION
H ItN II{LINOIS INC TO TO TKR OF SOUTH DADE. FRANCHISEE rROM
Mc_ ONE OF
NORTHERN ILLINO ;
The Village of Oak Brook is in receipt of the Federal INC. TO TCI TM
Communications Commission Forth 394 containing information of SOUTH DADE, It
intended to establish the technical, legal and financial qualifications
of TO for taking ownership of the existing cable television franchise
from MediaOne. When TO decided to reorganize its cable systems
nationally, it determined that the Chicago metropolitan area would be
one of its prime markets. Lengthy negotiations between MediaOne
and TO resulted in an asset exchange agreement that would cause
TO's south Florida properties and some in California, to be �I
exchanged for aril MediaOne systems in the Chicago area and some in
Michigan.
i
I
The franchising authorities in the affected communities are charged �
with reviewing the FCC Form 394 to determine whether TO is
technically, legally and financially able to operate the cable system.
The ability to deny such transfer on any of these three bases is
extremely limited. Because the TCI deal affects a vast majority of
area municipalities (MediaOne, Multimedia, Time Warner and Jones
systems are all affected), DuPage Mayors and Managers and the other
Councils of Government formed a consortium to obtain expert
consulting at a very reasonable cost. As a result, Dr. Barry Orton artd
Stuart Chapman were hired to conduct the technical, legal and
financial review for all affected communities. '!
I�
The technical review included, among other things, a physical
inspection of the various head-end sites and an analysis of the cable
type and size that would be used by TCI. The legal review dealt
primarily with TCI's use of subsidiary corporations as transferee !
vehicles, as well as any outstanding claims against the company.
Financial data was reviewed to determine whether TCI had adequate
resources to operate the cable systems.. The review is complete, and
the consultants have concluded that TCI has sufficiently
demonstrated the adequacy of its technical, financial and legal
qualifications within the context of applicable law.
VILLAGE OF OAK BROOK Minutes 9 of'20 ,April 13, 3999
Concerns about changes in terms and conditions of service and
operations, licensing of era^sferees, consolidation of operations and
customer service, and technical management personnel were also
addressed in the consultants' review. TCI has indicated that it will
follow the terms and conditions of local franchise agreements, and
would licer-- its subsidiary corporations prior to the transfer. TCI`s
responses also note that there are no current plans to consolidate or
change operations, and it will handle customer service with the same
personnel who are currently providing the service. The ordinance ;I
incorporates TCI" representations that the transfer is not expected to
I;
have any effect on cable television service,rates or reduce the quality
of customer service or cable service in Oak Brook.
Motion by Trustee Savino, seconded by Trustee Caleel, to pass
Ordinance 99-AG-CB-EXI-S-933,"An Ordinance Of The Village Of
O;.k Brook, Illinois Consenting To The Transfer Of Control Of The
Cable Television Franchisee From Media One Of Northern Illinois,
I
Inc, To TCI TKR Of South bade, Inc,", as presented and waive the
full reading thereof; and authorize execution of the Transfer
Agreement. ROLL CALL VOTE:
Ayes: 5 - Trustees Caleel, Kenny, McInerney, Saving and
Shumate.
Nays: 0 - None.
Absent: I - Tru.:tee Bartecki. Motion carried.
6) ORDINANCE 99-AG-CB-EXI-S-934 AN ORDINANCE OF OR0.99-AG-03=EXI
THE VILLAGE OF OAK BROOK ILLINOIS CONSENTING S-934
TO THE CHANGE OF CONTROL OF THE CABLE CHANGE OF CONTROL,
TELEVISION FRANCHISEE FROM TELE- OF CABLE TELE-
VISION FRANCHISEEI
COMMUNICATIONS,INC.TO AT&T CORP.:
FROM TRt.R-
COMMUNICATIONS,
In mid-1998 white the TCla-4ediaOne exchange was moving to its INC. TO AT&T CQRP'
inevitable conclusion,AT&T began proceedings to acquire TCI. The
consortium consultants and many others affected by the
TCl/MediaOne exchange viewed this as a positive development since
AT&T indicated that it would require TCI to provide high quality
cable infrastructure and service. Additionally, AT&T is believed to
have significantly greater resources to devote to cable television
operations. I.
It appears that the U.S. Department of Justice has approved the II
transaction between TCI and AT&T, and the Village may expect to
receive the official FCC documents in the near future. In any event, II
the consunlium consultants have conducted a technical, legal and
fnanc;a review of AT&T and recommend that communities approve
VILLAGE OF OAK BROOK Minutes 10 of 20 April 13, 1999 II