HomeMy WebLinkAbout4.04 Transfer Control of Viacom TV O503v
CITY OF DUBLIN
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: April 13, 1987
SUBJECT Request to Transfer Control of Viacom Cable Television
Franchise (National Amusements, Inc. )
EXHIBITS ATTACHED Resolution approving the Transfer of Control of Viacom
and Rescinding Resolution No. 134-86
RECOMMENDATION Adopt Resolution
FINANCIAL STATEMENT: The new owners will be assuming all financial
obligations of the existing agreement.
DESCRIPTION In November 1986, the City Council adopted Resolution
No. 134-86 which authorized the assignment of the Cable Television Franchise
to Viacom Cablevision of East Bay, Inc . The request for assignment came
from existing Viacom Management who proposed to purchase the company. Staff
has been advised that this transaction was never completed.
The General Manager of Viacom has advised City Staff of another purchase
proposal which has been accepted by Viacom' s Board of Directors . The offer
involves a merger with a subsidiary of National Amusement, Inc . This firm
is engaged in the local motion-picture theater business and is currently
Viacom' s largest single shareholder. The surviving corporation of the
transaction will be Viacom.
Viacom has presented documentation which supports their request for the
transfer. A letter dated March 13, 1987 from Ms. Jones is shown as an
attachment to the proposed resolution along with Attachments A through E.
The new company has agreed to continue to be bound by the terms and
conditions of the existing franchise. In accordance with Section 4 .10
(3) (f) of, the City of Dublin Cable Television Franchise Ordinance, the new
representatives shall become a signatory to the Franchise Agreement.
Staff recommends that the City Council adopt the proposed resolution which
will approve the transfer of control consistent with current City Ordinances
and rescind Resolution No. 134-86 which is now inapplicable.
COPIES TO: Michal Dittrich, Viacom
ITEM NO. 44 4
• • e,
RESOLUTION NO. - 87 " , ,
' A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN.
**********************.**** .
APPROVING THE TRANSFER OF CONTROL OF VIACOM
AND RESCINDING RESOLUTION NO. 134-86
WHEREAS, Tele-Vue Systems, Inc. , a wholly owned
subsidiary of Viacom International Inc. ("Viacom" ) , is franchised
to provide ,cable television service in Dublin; and
WHEREAS, an -earlier agreement, identified in City .of
Dublin Resolution -No. 134-86 assigned the franchise to Cablevision -
of East Bay, Inc. ; and .
- WHEREAS, the transaction identified in Resolution' No.
134-86 was not completed; and
WHEREAS, Viacom has entered into a merger agreement with .
a subsidiary of National Amusements, Inc. , as fully explained in a
letter dated March 13, 1987; and
. WHEREAS, Tele-Vue Systems, Inc. , has agreed -to continue
to be bound by all applicable cable television franchise terms and
conditions after the merger transaction; and .
WHEREAS, the transfer of control- shall, be - in accordance -
with City of Dublin Ordinance No. 30-85.
• NOW, THEREFORE, BE IT' RESOLVED that the City Council of
the City of Dublin hereby grants its approval to permit . the
transfer of control of Viacom to National Amusements as set forth
in City' Ordinance No. 30-85 in the letter dated March 13, 1987
• _ attached hereto and made a part hereof.
BE IT FURTHER RESOLVED' that the terms and conditions of
Resolution No. 134-86 are hereby rescinded.
PASSED, APPROVED AND ADOPTED this 13th day of April, '
• 1987.
AYES:
' NOES:
ABSENT:
ATTEST: o Mayor
City Clerk _
TIVia-
Cablevision
March 13 , 1987
Mr . Paul Rankin
Cable Administrator
6500 Dublin Boulevard
Dublin, CA 94568
Dear Mr . Rankin:
I am pleased to inform you that Viacom International Inc .
( "Viacom" ) , the ultimate parent company of Tele-Vue Systems ,
Inc . , the cable franchisee in Dublin, has agreed to merge with a
subsidiary of National Amusements , Inc . National Amusements is a
major corporation engaged in the local motion-picture theatre
business and is currently the largest single shareholder of
Viacom. Viacom will be the surviving corporation of this merger,
and this transaction will not cause any changes in the operations
or management of the cable system. Tele-Vue Systems , Inc . will
continue to be the franchisee and, as indicated in the attached
certificate (Attachment A) , will continue to be bound by the
terms and conditions of the existing franchise .
As you know, another group, MCV Acquiring. Corp . , previously
sought to acquire Viacom. We sincerely appreciate your diligent
efforts in handling our request to you in connection with that
proposal . However, since then, Viacom' s board of directors has
accepted an offer from National Amusements and has terminated the
prior MCV agreement which was never consummated.
The National Amusements transaction has solid financial
support . As documented by the attached letter from National
Amusements ' President Sumner M. Redstone (Attachment B) , National
Amusements has agreed to contribute $500 million in common equity
to this transaction. In addition, $175 million will be provided
by Merrill Lynch, Pierce, Fenner & Smith and $2 . 315 billion will
be provided by a consortium of bank lenders , led by the Bank of
America .
National Amusements , headquartered in Dedham, Massachusetts ,
is engaged in the business of developing, owning and managing
commercial income-producing entertainment properties , such as
single and multi-screen movie theatres , drive-in movie theatres
and parking facilities adjacent to movie theatres . The company
is a substantial and financially solid operation with theatres in
6640 Sierra Lane, Dublin, CA 94566 • Mail:P.O. Box 13, Pleasanton, CA 94566 • (415)829-1811
Mr . Paul Rankin
• March 13 , 1987
Page 2
14 states and 1986 revenues in excess of $150 million. See
Attachment C . Sumner M. Redstone is the President and Chairman
of the Board of National Amusements and votes all of the
company' s voting stock. As demonstrated by the attached
biographical material (Attachment D) , Mr . Redstone has had a
distinguished career which, in addition to his success in
business , includes valued service to the nation in World War II ,
as well as very extensive activities on behalf of civic and
charitable organizations . Further information concerning Mr .
Redstone ' s and National Amusements ' character, legal and
technical qualifications is set forth in Attachment E.
The purpose of this letter is to advise you of the details of
the transaction and to give you an opportunity to approve the
transfer of control of Viacom if you deem such approval to be .
necessary under the terms of the franchise. I am enclosing a
draft resolution which may be of assistance to you . Because the
parties anticipate completing this transaction in early spring,
it would be most helpful if any required action could be taken by
April 30 , 1987 .
Your prompt attention to this matter will be greatly
appreciated and will assist us in minimizing the transition
period and promoting the stability and continuity of Viacom' s
local cable operations . The National Amusements transaction will
ensure the continued strength of Viacom' s financial position,
will provide for stability and continuity of ownership of the
company, and will guarantee Viacom' s future as a major and secure
force in the communications field. We are enthusiastic about
Viacom' s future in conjunction with National Amusements , and I
look forward to working with you to complete this transaction
expeditiously.
Very truly yours ,
2/4"-/CL-e-a-/
Myra fines
General Manager
•
Attachment A
CERTIFICATE
This will certify that Tele-Vue Systems, Inc. will
continue to be bound by all of the applicable cable franchise
terms and conditions in Dublin following the transaction
involving the merger of Viacom International Inc. and a
wholly-owned subsidiary of National Amusements, Inc.
Date: March 13, 1987 414 LU .v/!
John , . ,Goddard
sident
Tele-Vue Systems, Inc.
1.//4944 -
tuner M. Red$tone -
President and Chairman
of the Board of National
Amusements, Inc.
•
Attachment B . '
_Ira&PnaI , inG.
A ..
. . too :Sow
•
O2O_96
6/7-467--1600
March 12 , 1987
•
To Whom It May Concern: •
Please be advised. that Arsenal Holdings, Inc: , a
wholly owned ,subsidiary of National Amusements, Inc. , .has
received commitments for the financing of its acquisition of
Viacom International . Inc. , subject to certain terms and -
conditions, as follows: -
•
1 . National Amusements, - Inc. will provide .
approximately $500 million in equity capital . .
consisting . of $136 million in cash and
6 ,881 ,800 shares of Viacom stock.
2 . Bank of America NT&SA has agreed to act as
- agent for a senior secured bank credit facility .
in the amount of $2. 29 billion. Bank Of
America will provide $592 million of the amount
itself and has indicated that it is "highly-
confident" of its ability to complete the
syndicated portion of the financing.
Additionally, Bank. of America will provide a
separate $25 million line of credit for the
purpose of financing interest payments which _
may be made to Viacom shareholders .
3 . Merrill Lynch Capital Markets, 'Merrill Lynch,
Pierce, Fenner &Smith Incorporated will
provide $175 million through the placement or
sale of subordinated debt securities .
. Very truly yours,
•
• rI I i t,
•
Sumner M Redstbne
President
•
' t
Attachment C £.
NATIONAL AMUSEMENTS, INC.
FACT SHEET .
1. Description of the Company
National Amusements, Inc. is a Maryland corporation with
corporate headquarters in Dedham, Massachusetts. The
company' s principal business is developing, owning, and
managing single and multi-screen movie theatres, drive-in
movies theatres and parking facilities adjacent to movie
theatres. Its theatres are spread across 14 states in the
east, midwest and southeast . With the exception of its stock
interest in Viacom, it currently has no interest in any cable
system or broadcasting system.
2 . Officers and Directors
The officers and directors of National Amusements are as
follows :
Mr. Sumner M. Redstone
President, CEO and Chairman of the
Board
98 Baldnate Hill Road .
Newton Center, Massachusetts 02159
Mr. Ira A. Korff
Vice President, Assistant to the
President, Board Member
90 Beacon Street
Boston, Massachusetts 02108
Mr. Jerome Magner
Vice President, Treasurer and Board
Member
15 North Avenue .
Providence, Rhode Island- 02906
Mr. Louis Weiner
Board Member
Crown Point, Madrid Building PHJ
400 Paradise Road
Swampscott, Massachusetts 01907
04372
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3 . Corporate Ownership. {
Mr. Redstone votes all of the stock of National Amusements . •
He owns two-thirds of the - stock and votes the balance as the
trustee of two irrevocable trusts for his children (the Shari
Ellin Redstone Trust and the Brent Dale Redstone Trust) , each
of which has a beneficial interest in one-sixth of the
National Amusements stock.
4 . Subsidiary Corporations - Arsenal Holdings , Inc. and Arsenal'
Acquiring Corp.
A wholly owned subsidiary of National Amusements, Arsenal
Holdings, Inc. ("Holdings") , was incorporated in Delaware on
November 10, 1986 for the purpose of acting as the holding
company for Viacom. Holdings has no present operations . Its
officers. are Mr . Redstone, President; Mr. Korff, Vice
President; Mr. Magner, Secretary/Treasurer; and Jonathan ,D.
Tamkin, 200 Elm Street, Dedham, Massachusetts 02026,
Assistant Secretary. Messrs . Redstone and Korff constitute
the board of directors of Arsenal Holdings . Arsenal
Acquiring Corp. ("Acquiring" ) , a wholly owned subsidiary of
Arsenal Holdings, was incorporated in Delaware on January 20,
1987 for the purpose of acquiring Viacom. Acquiring has no
present operations . Its officers and directors are identical -
to those of its parent, Holdings . The proposed National
Amusements/Viacom transaction will be accomplished through a
merger between Viacom and Acquiring. Viacom will survive the
merger and become a wholly owned subsidiary of Holdings . At
the close of the transaction, the present shareholders of
Viacom (other than National Amusement) will ho=ld 17 .4 percent.
of Holdings with the balance held by National Amusements .
0437Z
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•
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Attachment D
BIOGRAPHY OF SUMNER M. REDSTONE
•
Sumner .M. Redstone graduated first in his class from Boston
Latin School . He is a graduate of Harvard University and Harvard
Law School . After graduation from law school , he served as Law
Secretary with the U. S. Court of Appeals and then as a Special
Assistant to the U. S. Attorney General . Subsequently, he '
• practiced law in Washington, D.C. He served with the', Military
Intelligence Division during the second World War where he was
one of the members of the "ultra" secret group which succeeded in
breaking the high-level_ military and diplomati-c codes of Japan .
• Mr . Redstone was one of the few students at Harvard selected by
the then Associate- Professor Edwin Reischauer ( later United -
States Ambassador to Japan) to form what became the world center
of crypt-analysis . In connection with these activities , Mr .
Redstone was directly commissioned by. the Secretary of War and
received among other honors , two- commendations from' the Military
Intelligence Division in recognition of his service, contribution
and devotion to duty: He is also the holder of the Army
Commendation Award.
Some thirty years ago, Mr . Redstone -became -heavily involved
in the theatre industry, and has since played a continuing and
significant role in the affairs of that industry. In addition - to -
owning -theatres , he served as President of. the Theatre Owners of
America, which was then the major trade association representing
motion picture theatre exhibitors . He then became the- first .
• Chairman of the Board of the National Association of Theatre
Owners, which is today the major trade association in the motion
picture . industry. -
• ' A large portion of Mr . Redstone' s time and -energy ' has been, .
and continues to be, devoted to civic and community affairs . For
several years , Mr . Redstone served as Chairman of the Jimmy Fund
(Children' s Cancer Research Foundation) . He' was a member of the
Corporation of the New England Medical Center . He is a member. of
the Board of Overseers of the Dana-Farber Cancer Institute. He
is a Vice- President and on the Executive- Committee of - the Will
Rogers Memorial Fund. -Mr . Redstone has also served as State
Crusade Chairman for the American Cancer Society 1984-1986 . He
• is a former Chairman of the Metropolitan Division of the Combined
Jewish Philanthropies . • During President Carter ' s tenure,- he was
appointed a member of the Presidential advisory Committee on the
Arts for the John F. Kennedy Center for the Performing Arts and
was recently appointed a Director of the Kennedy Presidential
Library Foundation.
•
•
•
•
He has received various forms of community recognition for
his activities . For example, he was selected .as one of the then
outstanding young men in New England, and recently was one of
three men selected by the Boston Chamber of Commerce as deserving
of special recognition from among those who had been previously
designated as one of New England' s Outstanding Young Men. In
1980, Mr . Redstone was selected as "Communicator of the Year, "
and in 1977 was the recipient of the William J. German Human
Relations Award. He is also actively involved in the affairs of
the Museum of Science of the City of Boston and the Boston Arts.
Festival .
In 1982 , Mr . Redstone joined the faculty of the Boston
University Law School where he continues to lecture and teach
"The Law of the Entertainment Industries . " Recently, he was
awarded the prestigious Silver Shingle by the Boston University
Law School.
•
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Attachment E
QUALIFICATIONS OF SUMNER M. REDSTONE
AND NATIONAL AMUSEMENTS
Legal and Character
Neither National Amusements nor Mr . Redstone has any
ownership interests prohibited by the Cable Communications
Policy Act of 1984 . Furthermore, neither holds any ownership
interest that would create a prohibited combination under the
FCC ' s cross-ownership rules and policies .
The good character of . Mr . Redstone is reflected in the
biographical material set forth in Attachment D. In addition,
• both Mr . Redstone and National Amusements have certified to the
Federal Communications Commission that neither of them has been
the subject of an adverse civil or criminal action by any court
or administrative body relating to any felony or to any
antitrust , unfair competition, fraud, unfair labor practices or
discrimination charge.
Technical and Operational
Viacom will continue its commitment to the provision of
quality cable television service . This commitment will be
assured by adherence 'to the existing operational and technical
standards and by reliance on the same local managers and
employees .
•