Brunswick, Ohio -- An Ohio district court handed the cable industry a
setback, ruling that the city was justified in refusing to renew Cablevision
Systems Corp.'s franchise.
It was considered the most significant municipal-court victory since the
mid-1990s, when the city of Sturgis, Ky., prevailed over its local operator by
claiming that the company's plans were not sufficient to meet the community's
future needs.
In the case of Brunswick, city officials rejected Cablevision's renewal
proposal on grounds that the MSO had failed to live up to
local-origination-programming requirements contained in its existing
franchise.
One industry follower said the Dec. 19 district-court decision 'will be cited
just like Sturgis' by other local franchising authorities embroiled in renewal
disputes with local operators.
Complicating the current situation, however, is the recent sale of the
Brunswick system to Adelphia Communications Corp., which inherits the renewal
headache.
As a result, Adelphia may face pressure from fellow operators, which may want
the MSO to appeal rather than leaving the decision 'hanging over the industry,'
said John Mansell, cable analyst for Paul Kagan Associates Inc. 'Or [Adelphia]
might want to settle just so that the subject will die,' he added.
With Cablevision out of the picture, the city might also be eager to reach an
accommodation, he said, adding, 'It might be that the city is happy with
Adelphia and Adelphia may be happy with the city.'
Adelphia vice president and general counsel Randy Fisher said any appeal of
the court's decision will depend on fact-specific review of Cablevision's
operations in Brunswick. 'Right now, we're studying the case and its
implications,' he added.
In a 17-page decision, Judge Ann Aldrich ruled that the evidence in the case
would have led any 'reasonable fact-finder' to conclude that Cablevision had not
complied with franchise terms.
Specifically, Aldrich ruled that Cablevision failed to provide 20 hours per
week of local-origination programming as required by its deal with the city.
Using the company's own figures, she said, the cost of providing the programming
was between $118,000 and $177,000, or 'sufficient to permit a finding that
Cablevision's [franchise] breach was substantial.'
Brunswick officials had lost an earlier round when an independent examiner
ruled that the city's renewal demands did not consider the added cost that would
ultimately be passed along to residents of Brunswick and Brunswick Township.
Ignoring the examiner's ruling, the city proceeded to deny Cablevision a
renewal -- a move that sent the case to the courts.
