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CR 95-50 Transfer Of Ownership Of Paragon Cable March 16, 1995 ~ Council Report 95-050 e PUBLIC HEARING REGARDING TRANSFER OF OWNERSHIP OF PARAGON CABLE Proposed Action Staff recommends that the Council approve the following motion: Move that the Hopkins City Council order a public hearing for April 18. 1995 concerning the transfer of ownership of Paragon Cable, Adoption of this motion will begin the process of reviewing the sale and transfer of the ownership of Paragon Cable, Overview Houston Industries owns KBLCOM which owns Paragon Cable, Houston Industries is proposing to sell KBLCOM to Time Warner, Inc. The Southwest Suburban Cable Commission (SWSCC) is recommending that each of the five cities hold a public hearing regarding this sale and transfer. A representative of the law firm of Fredrikson & Byron, the SWSCC's administrators, will be at the public hearing to answer questions. . Primary Issues to Consider · What is the purpose of the public hearing? A public hearing allows the City to assess whether such a sale or transfer may adversely affect the subscribers. It will also allow the City to determine the legal, technical, financial qualifications of Time Warner, Inc, and to consider an ordinance amendment relating to the change in ownership interest of the cable television franchise granted to Paragon Cable, The hearing is not intended for the purpose of giving consideration to other changes or modifications of the terms of the franchise. . What are the likely effects of this sale? One of the purposes of the public hearing is to answer this question. It is staffs opinion, however, that in the short run there will be no discernible effect on cable. Since it is a parent company of Paragon that is being sold, and not Paragon itself, the management and practices of Paragon Cable will likely continue. Long term there may well be significant changes as the cable industry continues to consolidate. The City's current franchise is scheduled to expire in 1999, Paragon's plans for the future will probably be influenced by the new ownership. Supportine Information . Resolution #95-21 Yls. f!efr7 . Notice of public hearing Gu7 . 6e lic- e . f:;. ~ c cJ)f J e' 11. /-- C(! ertc/cr ~ STATE OF MINNESOTA . CITY OF HOPKINS RESOLUTION NO. 95-21 REQUIRING A PUBLIC HEARING REGARDING THE PROPOSED lRANSFER OF OWNERSHIP OF PARAGON CABLE WHEREAS, on or about February 21, 1995, the Southwest Suburban Cable Commission of which the City of Hopkins is a member, received a letter and Form 394 from Paragon Cable, the current franchisee of the cable system in Hopkins, stating that KBLCOM Incorporated which is a wholly-owned subsidiary of Houston Industries and which owns 100 percent of Nortel Cable Corporation and Countryside Investments, Inc. which own Paragon Cable, would become a wholly-owned subsidiary of Time Warner, Inc.; and WHEREAS, the federal Cable Communications Policy Act of 1984, as amended by the Cable Television Consumer Protection and Competition Act of 1992, states that: 1) a cable operator cannot transfer a cable system unless it has held the system at least thirty-six (36) months; and e 2) if a cable transfer or sale requires franchising authority approval, the franchising authority has 120 days from receipt of the Form 394 to approve the sale; and WHEREAS, the Minnesota Cable Communications Act and Article XII, Section 1, Subsection B of the cable franchise ordinance for the City of Hopkins state that a franchising authority which receives a written request for approval of a sale or transfer shall answer in writing within thirty (30) days of the request and shall state whether it approves the request or whether it determines that a public hearing is necessary because the sale or transfer may adversely affect the subscribers; and WHEREAS, the Minnesota Cable Communications Act and the cable franchise ordinance for the City of Hopkins state that if a public hearing is deemed necessary, such hearing shall be conducted within thirty (30) days of such determination and notice of such a hearing shall be given fourteen (14) days before such hearing by publishing notice once in a newspaper of general circulation in the area served by the franchise; and WHEREAS, Article XII, Section 1, Subsection G of the cable franchise ordinance for the City of Hopkins states that the City of Hopkins may inquire into the qualifications of the prospective controlling party, and the Grantee shall assist the City in such an inquiry and pay . 393980 - 1 - e all costs incurred by the City in so inquiring, including City staff time at a value determined by the City; and WHEREAS, pursuant to Article XI of the cable franchise ordinance for the City of Hopkins, the Minnesota Cable Communications Act and the federal Cable Communications Policy Act of 1984, as amended by the Cable Television Consumer Protection and Competition Act of 1992, the City of Hopkins has up to 120 days to exercise its right to purchase the system at the bona fide purchase price in the offer. NOW, THEREFORE, the City of Hopkins resolves as follows: 1. The City hereby states that Paragon Cable was held by KBLCOM for at least thirty-six (36) months. 2. The City hereby states that it must approve a sale or transfer of the cable system and it is reviewing the Form 394 provided by Paragon Cable and Time Warner, Inc. to determine the effect of the proposed transfer on Hopkins subscribers. Accordingly, a public hearing is necessary because the effect of the sale or transfer is currently unknown and the effect on the subscribers may be adverse. Such a hearing will be held on April 18, 1995 at 7:30 p.m. 3. The City of Hopkins acknowledges that it has the right to purchase the e cable system pursuant to Article XI of the cable franchise ordinance for the City of Hopkins and it is determining whether to exercise that right. BE IT FURTHER RESOLVED, that the City Clerk is directed to send a copy of this Resolution to Paragon Cable and Time Warner, Inc. A motion to approve the foregoing Resolution No. 95-21 , was made by Council Member and duly seconded by Council Member e 393980 - 2 - The following Council Members voted in the affirmative: . The following Council Members voted in the negative: Passed and adopted this day of , 1995. ATTEST: Title: Title: Mayor Title: Clerk . . 393980 - 3 - NOTICE OF PUBLIC HEARING REGARDING THE SALE AND TRANSFER . OF THE OWNERSHIP INTEREST IN THE CABLE TELEVISION SYSTEM OWNED AND OPERATED BY KBL CABLESYSTEMS OF THE SOUTIlWEST, INC., d/b/a PARAGON CABLE, "WHOSE OWNERSHIP IS HELD BY HOUSTON INDUSTRIES INCORPORATED (npARAGON CABLEn) TO TIME WARNER, INC., AND TO CONSIDER ANY REQUIRED AMENDMENT TO CHANGE mE CABLE TELEVISION FRANCmSE ORDINANCE. Notice is hereby given that on the 18th day of April, 1995, at 7:30 p.m. or as soon thereafter as it may be heard, before the City Council of Hopkins in the City's Council Chambers located in the City Hall at 1010 South First Street, Hopkins, Minnesota, the City Council will conduct a public hearing as required under Minnesota law and the ordinances of the City of Hopkins to consider a transfer and sale and transfer of the ownership interest in the cable television system including the franchise held by Paragon Cable to Time Warner, Inc. The purpose of the public hearing is to consider whether cable television subscribers will be adversely affected as a result of the sale and transfer, to determine the legal, technical, financial qualifications of Time Warner, Inc., and to consider an ordinance amendment relating to the change in ownership interest of the cable television franchise granted to Paragon Cable. It The public will have an opportunity to be heard and to address the City Council of the City of Hopkins and to ask any questions relating to the proposed sale or transfer of the cable television franchise. The public hearing is not intended for the purpose of giving consideration to other changes or modifications of the terms of the franchise and is not intended as a public hearing relating to renewal of conditions regarding the cable television servIces. The public may review a copy of the application requesting approval of the transfer. The application is on file with the City Clerk at the above address. Date , 1995 By The City Clerk of the City of Hopkins 394432 . -