CR 95-099 Approval Of The Transfer Of Paragon Cable
June 1, 1995 ~ Council Report 95-099
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APPROVAL OF THE TRANSFER
OF OWNERSHIP OF PARAGON CABLE
Pro Dosed Action
Staff recommends that the Council approve the following motion: Move that the Hopkins City Council
approve Resolution #95-46 approving the transfer of control of KBL Cablesystems of the Southwest. Inc.
DIBI A Paragon Cable.
Adoption of this motion will approve the sale and transfer of the ownership of Paragon Cable.
Overview
Houston Industries owns KBLCOM, Inc. which owns Paragon Cable. Houston Industries is proposing to sell
KBLCOM, Inc. to Time Warner, Inc. A public hearing was held at the April 18, 1995 City Council meeting.
The public hearing was continued to give the Southwest Suburban Cable Commission (SWSCC) an
opportunity to review the proposed transfer of ownership. The SWSCC met on May 17, 1995 and voted to
recommend that its member cities approve the transfer of ownership.
. Primary Issues to Consider
. Should the City approve this transfer?
The SWSCC and its law firm, Fredrikson & Byron, have reviewed the proposed transfer and have
determined that Time Warner has the technical and financial wherewithal to operate the cable system
in the southwest. City staff agrees with this recommendation.
SUDDortine: Information
. Resolution #95-46
. Transfer of Ownership Report for the Southwest Suburban Cable Commission, Section I and V.
The complete report and supporting documents are available from the City Clerk.
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STATE OF l\1lNNESOTA
e CITY OF HOPKINS
RESOLUTION NO. 95-46
APPROVING THE TRANSFER OF CONTROL OF KBL
CABLESYSTEMS OF TIlE SOUTIIWEST, INC. D/B/A PARAGON
CABLE
\VHEREAS, 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
KBL Cablesystems of the Southwest, Inc. d/b/a Paragon Cable, the current franchisee of the
cable system in Hopkins, stating that Houston Industries Incorporated which wholly owns
KBLCOM, Inc. which holds KBL Cable, Inc. which holds KBL Cablesystems of the
Southwest, Inc. d/b/a Paragon Cable, proposes to transfer control of KBLCOM, Inc. to Time
Warner Inc. ("Time Warner"); and
\VHEREAS, 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 unless the transfer meets a stated exception; and
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
VlHEREAS, the City of Hopkins with the assistance of the Southwest Suburban Cable
Commission has determined that the cable system was held for at least thirty-six (36)
months; and
Vv'HEREAS, the federal Cable Communications Policy Act of 1984, as amended by
the Cable Television Consumer Protection and Competition Act of 1992 allows the City to
review the legal, technical and fmancial qualifications of the transferee; and
\VHEREAS, 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 thiny (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
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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 e
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
\VHEREAS, the City of Hopkins passed a Resolution on March 21, 1995 stating that
it is examining the dfect of the proposed transfer on its residents and a public hearing is
necessary; and
WHEREAS, the City of Hopkins gave appropriate notice and held such a public
hearing on April 18, 1995 and concluded such hearing on June 6, 1995 and received no
express opposition to the transfer: and
WHEREAS. Anic1e XU, Section 1, Subsection G of the cable franchise ordinance for
tbe City of Hopkins states that the City of Hopkins may inquire into the qualifications of the
prospective controlling pany. and the Grantee shall assist the City in such an inquiry and pay
all costs incurred by the City in so inquiring, including City staff time at a value detennined
by the City: and
WHEREAS. Time Vv'arner. KBLCO!v1. Inc. and the City disagree regarding the
responsibility for reimbursement of consultant's fees for the review of the transfer of
ownership; and
WHEREAS, pursuant to Artick 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 1 992, the City of Hopkins has up to 120 days to exercise its right to
purcbase the system at the bona fide purchase price in the offer; and
WHEREAS, the City of Hopkins has examined its right to purchase the system: and
WHEREAS, the Southwest Suburban Cable Commission has assisted the City in
revie\ving the legal. technical and fInancial qualifications of the prospective transferee as well
as the franchisee's compliance with the current franchise, and has provided a
recommendation regarding the approval of the proposed transfer of ownership; and
"VHEREAS. during the review of the legal. technical and financial qualifications of
Time ,Warner and KBL Cablesystems of the Southwest. Inc, d/b/a Paragon Cable's current
compliance with the franchise ordinance, the Southwest Suburban Cable Commission noted
that the City's Relief Ordinance No. 91-701, will expire, at the City's option, with the
proposed transfer or sale of the cable system: and
'\VREREAS. Time Warner has indicated that it does not believe that the transfer of
control of KBL Cablesystems of the Southwest. Inc. d/b/a Paragon Cable to Time Warner
e
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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
e 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
\VHEREAS, the City of Hopkins passed a Resolution on March 21, 1995 stating that
it is examining the effect of the proposed transfer on its residents and a public hearing is
necessary; and
\VHEREAS, the City of Hopkins gave appropriate notice and held such a public
hearing on April 18, 1995 and concluded such hearing on June 6, 1995 and received no
express opposition to the transfer; and
\VHEREAS, 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
all costs incurred by the City in so inquiring, including City staff time at a value determined
by the City; and
WHEREAS, Time Warner, KBLCOM, Inc. and the City disagree regarding the
responsibility for reimbursement of consultant's fees for the review of the transfer of
ownership; and
. \VHEREAS, pursuant to Article Xl 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; and
WHEREAS, the City of Hopkins has examined its right to purchase the system; and
\VHEREAS, the Southwest Suburban Cable Commission has assisted the City in
reviewing the legal, technical and [mancial qualifications of the prospective transferee as well
as the franchisee's compliance with the current franchise, and has provided a
recommendation regarding the approval of the proposed transfer of ownership; and
WHEREAS, during the review of the legal, technical and financial qualifications of
Time Warner and KBL Cablesystems of the Southwest, Inc. d/b/a Paragon Cable's current
compliance with the franchise ordinance, the Southwest Suburban Cable Commission noted
that the City's Relief Ordinance No. 91-701, will expire, at the City's option, with the
proposed transfer or sale of the cable system; and
WHEREAS, Time Warner has indicated that it does not believe that the transfer of
control of KBL Cablesystems of the Southwest. Ine. d/b/a Paragon Cable to Time Warner
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