HomeMy WebLinkAboutItem 4.02 ATT ComcastMerger CITY CLERK
File #1050-10
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: April 2, 2002
SUBJECT:
Merger of AT&T Broadband and Comcast Corporatidn - Review of
FCC Form 394
Report Prepared By: Jason Behrmann, Administrative Analyst
ATTACHMENTS:
RECOMMENDATION:
1)
2)
3)
Notification of Merger from AT&T Broadband
Proposal to Review Form 394 frOm Telecommunications
Management Corp..
Budget Change Form
prove budget change in the amount of $2,000.
FINANCIAL STATEMENT: The proposal to review FCC-Form 394 will cost $2,000. The merger '
was not anticipated at the time the budget was apprOved, therefore a budget Change is required in the
amount of $2,000. It is likely that AT&T will reimburse this expense as part of the review process.
DESCRIPTION:
The City recently received notice from AT&T Broadband of its intent to merge with Comcast
Corporation, and form a new public company, AT&T Comcast Corporation. As outlined in the City's
current franchise agreement with AT&T, the City is required to consent to the transaction. In order to
assist in the review of the proposed transaction, AT&T has submitted Federal Communications Form 394.
The form provides information necessary to assess the financial, legal and technical qualifications of the
proposed new corporation.
Telecommunications Management Corporation (TMC) has submitted a proposal to review and comment
on the proposed merger. TMC recently assisted the City in negotiating a new Franchise Agreement with
AT&T. The proposed cost is $2,000, which represents a savings since TMC will be conducting a similar
review for other cities throughout the State. The scope of work will include the following as outlined in
the proposal:
· A review of Form 394 and related documents including sales agreement and the technical,
financial and legal implications of the new corporation.
· An evaluation of the potential impact on subscribers :in such areas as rates and the quality of
service.
· An analysis of policy issues that may be especially relevant to the transaction.
H/cc-forms/agdastmt. doc
COPIES TO:
ITEM NO.
Participation in any relevant meetings and/or public heating on the franchise transfer and
related issues.
Once the review is completed and any outstanding issues resolved, Staff will present the report to Council
and recommend approval of a resolution consenting to the transaction.
The proposed merger was not anticipated at the time the budget w~.: approved, therefore a budget change
is required in the amount of $2,000. The current Franchise A~e,embnt requires AT&T to reimburse the
City for all transfer costs. Although a recent court ruling may make the enforcement of such a requirement
problematic, AT&T has indicated a willingness to discuss reimbursement as part of the review process.
RECOMMENDATION:
Staff recommends that the Council approve a budget change in the amount of $2,000.
AT&T Broadband
February 25, 2002
Ms. Julie Carter, Assistant to the City Manager
City of Dublin
100 Civic Plaza
Dublin,-CA,94568
Re:
Merger of AT&T. Broadband and Comcast Corporation
Request for Consent to Change of Control
. Dear Ms. Carter:
AT&T Corp., the parent corporation of your franchisee, and Comcast Corporation
have announced their intention to combine their cable systems into a new public company,
AT&T Comcast Corporation. We are writing to provide you with information regarding this
transaction, and to formally request any consent that may be required by franchise or
applicable law.
AT&T and Comcast are excited about the merger, which we believe will have
significant benefits for our customers. The transaction will create the world's leading
communications, media and entertainment company. With the combined expertise and
initiative of AT&T Broadband and Comcast, we hope to enhance the quality and choice of
products and services available to consumers.
Under the terms of the agreements governing the transaction, following an
internal restructuring, AT&T Corp. will spin off its cable system assets and simultaneously
merge them with Comcast, forming a new company to be called AT&T Comcast
Corporation. We have attached a description of each step of the process, including "before"
and "after" charts, to assist you in understanding the transaction. Subject to the internal
restructuring, the transaction will not change the holder of the franchise; the franchise will
continue to be held by the same legal entity after the merger is complete. However, the
transaction will result in a new indirect parent company for the Franchisee -AT&T Comcast
Corporation.
Our records indicate that the franchise may require that we obtain your consent to
this transaction. To assist you in evaluating our request, we have enclosed the following
materials:
FCC FORM 394. Enclosed are three copies of the Federal
Communications Commission's (FCC's) Form 394 and any additional
copies required by your franchise. According to the FCC, the Form 394 is
designed to provide you with the information necessary to assess the
financial, legal and technical qualifications of the proposed new controlling
entity. As part of that Form, we are including any specific additional
ATTACHMENT 1
information required by the franchise. Under the FCC's rules, you have a
maximum of 120 days from the date you receive this information to review
it and to act upon our request for consent to the merger. This timeframe
may be shorter if so specified in your franchise. If you Choose not to take
any action within this 120 day period, under federal law your consent will
be deemed granted.
CONSENT RESOLUTION. For your convenience and consideration, we
have also enclosed a draft resolution' that addresses your consent to the
transaction. We would request that this resolution be placed on your
agenda for consideration at your earliest convenience.
If at any time you have an y questions or concerns about the transaction or would like
any additional information, please feel free to call me at 925-973-7026. You can write to me
at:
AT&T Broadband
P.O. Box 5147
San Ramon, CA 94583
Fax: 925-973-7119
If you write to me, please send a copyto:
AT&T Broadband
188 Inverness Drive West, Room 6-042
Englewood, CO 80112
Fax: 303-858-3615
Thank you for your assistance in this matter.
Sincerely,
By: )~~
Kent Leacock
Vice President, Franchising and Local
Government Affairs
Attachment and Enclosures
INTEROFFICE MEMORANDUM
TO: CLIENT CITIES SERVED BY AT&T BROADBAND OR COMCAST
FROM: CARL PILNICK, TELECOMMUNICATIONS MANAGEMENT CORP.
SUBJECT: AT&T/COMCAST REQUEST FOR CHANGE OF CONTROL
DATE: MARCH 5, 2002
A number of our client municipalities served by AT&T Broadband or by Comcast Cable
Communications have indicated a desire for Telecommunications Management Corp.
(TMC) to perform a review of the FCC Form 394 submitted by the current cable
franchise holder. The Form 394 requests approval for a change in control of the
franchise to a new merged entity, AT&T Comcast Corporation.
If your community does not have any franchise non-compliance issues, or if you prefer a
review only of the Form 394 materials, TMC is prepared to provide a written review of
these materials at a significant cost savings. This cost saving is possible since the
review will be substantially the same for most communities.
For franchising authorities in this category, TMC proposes a cost of $2,000 per
community. Additionally, if attendance at meetings is required, TMC shall charge its
standard hourly rate for the person attending, plus reimbursement of non-local (to TMC's
Los Angeles office) travel costs.
The scope of work will include:
(1)
A review of the application (Federal Communications Commission Form 394)
and related documents submitted to each community, including, but not
necessarily limited to, transferor/transferee sales agreement and the technical,
financial and legal qualifications of the transfereeD
(2)
An evaluation of the potential impact on subscribers in such areas as rates and
the quality of service.
(3) An analysis of policy issues that may be especially relevant to the transaction.
(4)
Participation in any relevant meetings and/or public hearings on the franchise
transfer and related issues.
If your community knows (or believes) that substantial franchise non-compliance issues
exist, TMC would be pleased to provide additional consultant assistance relative to those
issues. It may be possible to resolve these issues either prior to, or concurrent with, the
proposed change of control of the franchise. If your community is in this category,
please contact us so that we can tailor a proposal to meet your specific needs.
A1-FACHMENT 2
AT&T COMCAST CHANGE OF CONTROL
FEBRUARY5,2002
PAGE 2
Many of your franchises require reimbursement of transfer costs. Although a recent
court ruling may make the enforcement of such a requirement problematic, AT&T has
indicated a willingness to discuss reimbursement as part of the local review process.
Please let us know if this proposal is acceptable. We expect to submit our evaluation
reports no later than ~45 days after receipt of authorization to proceed.
Thank you for the opportunity to offer our services.
We can be reached at:
Telecommunications Management Corp.
5757 Wilshire Blvd., Suite 635
Los Angeles, CA 90036
Phone: 323.931.2600
Fax: 323.931.7355
Michael J. Friedman, Vice President
Carl Pilnick, President
CITY OF DUBLIN
BUDGET CHANGE FORM
CHANGE FORM #
New Appropriations (City Council Approval Required):
Budget Transfers:
__x__ From Unappropriated Reserves From Budgeted Contingent Reserve (1080-799.000)
Within Same Department Activity
From New Revenues Between Departments (City Council Approval Required)
Other
Name: Name: Cable Television $2,000
Account #: Account #:001.80300.740.000
Name: Name:
Account #: Account #:
Name: Name:
Account #: Account #:
Name: Name: :
Account #: Account #:
Name: Name:"
Account #: Account #:
Fin Mgr/ASD: F~'~.~.~oK..~'7'_~ ~ Date:
Signature
REASON FOR BUDGET CHANGE ENTRY: Review of FCC form 394 required as a result of AT&T -
Comcast merger
City Manager: Date:
Signature
.p~:~ppro~ecl~i~ the' City'.'Co~cil Meeting on:. 'D~ite:
Mayor: Date:
Signature
Posted By: Date:
Signature
formslbudgahng
A1-FACH M ENT 3