1995-046
o
o
o
STATE OF l\fiNNESOTA
CITY OF HOPKINS
RESOLUTION NO. 95-46
APPROVING THE TRANSFER OF CONTROL OF KBL
CABLESYSTEMS OF THE SOUTHWEST, INC. D/B/A PARAGON
CABLE
WHEREAS, on orabout 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
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 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
WHEREAS, 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
WHEREAS, 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
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
- 1 -
o
o
o
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, 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
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, 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
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; 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
reviewing the legal, technical and fmancial 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 fmancial 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, Inc. d/b/a Paragon Cable to Time Warner
- 2 -
o
o
o
constitutes a transaction which will cause the Relief Ordinance to expire, at the City's option;
and
WHEREAS, representatives of Time Warner Inc. have represented to the Southwest
Suburban Cable Commission that the transfer of control of the cable system will not change
previous representations by representatives ofKBL Cablesystems of the Southwest, Inc. d/b/a
Paragon Cable that upon negotiation of an acceptable early renewal they intend to upgrade
the channel capacity:
NOW, THEREFORE, the City of Hopkins resolves as follows:
1. The City of Hopkins acknowledges that it has the right to purchase the
cable system pursuant to Article XI of the cable franchise ordinance for
the City of Hopkins. The City has examined this right and determined
that exercise of the right to purchase, given the nature of the
transaction (which does not change the local grantee and management),
is not warranted. The City will waive this right for this transfer
between Houston Industries Incorporated and Time Warner Inc. The
City does not waive this - right for any future transfer or sale.
2.
The City, with the assistance of the Southwest Suburban Cable
Commission, has reviewed the legal, technical and fmancial
qualifications of Time Warner Inc. to control the franchisee which
operates the cable system and has determined that Time Warner Ipc.
has the legal, technical and fmancial qualifications to operate the
system.
3.
The City, with the assistance of the Southwest Suburban Cable
Commission, has reviewed the - effect of the proposed transfer on its
residents. Based upon the assertions of Time Warner Inc. that such a
transfer will not affect the plans to upgrade the channel capacity upon
negotiation of an acceptable early renewal, the City of Hopkins has
determined that the proposed transfer will not negatively impact its
residents.
4.
The City approves the transfer of control of KBLCOM, Inc. from
Houston Industries Incorporated to Time Warner Inc. as set forth in the
Stock Purchase Agreement, under the franchise, based upon Time
Warner Inc.'s execution of the Acceptance Agreement which is attached
hereto as Exhibit 1 within thirty (30) days of the adoption of this
Resolution or within thirty (30) days after the closing of the transfer of
control, whichever is later.
5.
The City, with the assistance of the Southwest Suburban Cable
Commission, has reviewed the Relief Ordinance and KBL Cablesystems
- 3 -
o
o
o.
of the Southwest, Inc. d/b/a Paragon Cable's Acceptance of Ordinance
Relief Ordinance dated July 17, 1992 and determined that it has the
option to terminate those documents as a result of this transfer. The
City will extend the terms of that Ordinance and Agreement until
December 31, 1995. At that time the City will have the right to
exercise its right to terminate that Ordinance and Agreement and any
action taken - at that time will be retroactive to the date that this
Resolution is entered.
6.
The City grants the authority to the Southwest Suburban Cable
Commission to evaluate the City's legal rights to terminate the relief
agreement and the impact of termination of the Relief Ordinance
including - its applicability to discussion regarding an early renewal and
a system upgrade -to increase channel- capacity.
7.
The City grants the Southwest Suburban Cable Commission the
authority to enter into negotiations with KBL Cablesystems of the
Southwest, Inc. d/b/a Paragon Cable that may lead to an early renewal
of the franchise and an upgrade and/or rebuild of the cable system.
8.
KBLCOM, Inc. and KBL Cable, Inc. must execute a Reaffirmation of
their Consent Agreement and Guaranty of Performance which is
attached hereto as Exhibit 2 within thirty (30) days of the adoption of
this Resolution or within thirty (30) days after the closing of the
transfer of control, whichever is later.
9. KBL Cablesystems of the Southwest, Inc. d/b/a Paragon Cable must
execute a Reaffmnation of Acceptance of a Franchise for a Cable
Television System which is attached hereto as Exhibit 3 within thirty
(30) days of the adoption of this Resolution or within thirty (30) days
- after the closing of the transfer of control, whichever is later.
10. The Southwest Suburban Cable Commission, the City, KBLCOM, Inc.
and Time Warner disagree regarding reimbursement of consultant's fees
for the review of the transfer of control. The City accepts the
settlement reached - by the Southwest Suburban Cable Commission and
KBLCOM, Inc. in which KBLCOM, Inc. will pay fmy (50) percent of
the consultant's fees and the Southwest Suburban Cable Commission
will pay fIfty (50) percent.
BE IT FURTHER RESOLVED, that the City Clerk is directed to send a copy of this
Resolution to KBL Cablesystems of the Southwest, Inc. d/b/a Paragon Cable, Time Warner
Inc., KBL Cable, Inc. and KBLCOM, Inc.
- 4 -
o
o
o
A motion to approve the foregoing Resolution No. 95-46 , was made by
Council Member Anderso ii. and duly seconded by Council Member
Kritzler
The following Council Members voted in the affmnative:
Mayor Redepening Councilmember Kritzler
Councilmember Anderson Councilmember Maxv7ell
C04J1cJ-lmemb~ Hes..ch_ _. .
The tOllowIng LOUnCl1 Members voted m the negatIve:
Passed and adopted this
6th day of
, 1995.
June
"')
ATTEST:
ii, 4. .~, Jvf;A~--~
Title: ~flp~~ ~-7 /lIf/~
~Cj~~~~~,
Tit e: Mayor ~ .~
420987
- 5 -