AGENDA #6
TO: Mayor and Town Council
SUBJECT: Report on Time-Warner/America Online Merger
DATE: May 22, 2000
We conclude that the merger issues will have little or no effect on the Town or local cable customers. However, as part of the process, we recommend that the Council tonight: (1) allow time for public comment on these issues; (2) approve the attached FCC-394 (Attachment 1); (3) adopt the attached report from Robert Sepe of Triangle J Council of Governments (Attachment 2); and (4) approve Resolution A, which grants Town consent to the merger pending Time Warner’s submittal of complete information to the Town Manager.
On January 11, 2000, America Online announced its $166-billion acquisition of Time Warner, the world’s largest media and entertainment company. America Online (AOL) shareholders would own 55 percent of the combined company, to be called AOL Time Warner Inc. Time Warner had previously announced AT&T’s acquisition of MediaOne’s 25% stake in Time Warner Entertainment.
On February 8, Brad Phillips, Time Warner Vice President of Government and Public Affairs, wrote the Town Manager to state that the Time Warner merger would have no adverse impact on Town cable subscribers (Attachment 3). Mr. Phillips stated that the cable franchise would be held by the same entity, and that Time Warner Cable would continue to be solely responsible for day-to-day management of the cable system. He requested that the Council approve a Federal Communications Commission (FCC) Form 394, which conveys the franchise authority’s approval of the merger (Attachment 1).
On April 7, Robert Sepe, consultant with Triangle J Council of Governments (TJCOG) who specializes in cable issues, submitted the attached staff report (Attachment 2), with recommendations for receiving public comment on the matter. He also recommended approval of either of two transfer resolutions (Resolutions B or C). His report is summarized below.
On May 1, TJCOG Attorney David Permar sent the attached transfer resolutions for Council consideration (Attachments 7-8).
On May 11, Mr. Permar transmitted a sample resolution, which he prepared at the Town of Carrboro’s request, that would deny the Town’s consent to the transfer (Attachment 10). This resolution has been reformatted and placed for Council consideration as Resolution F.
Also on May 11, Brad Phillips sent the attached letter to the Town Manager, stating that he had been unable to reach agreement with the TJCOG consultants on a recommended resolution. Time Warner attached its own revised resolutions for Council consideration (Attachments 11-12). Time Warner’s recommended resolution removes a paragraph that states: “Within thirty days, following the adoption of this Resolution, franchisee shall pay the sum of $10,000 to the Franchising Authority to reimburse the Franchising Authority for its expense in connection with this transfer.”
On May 16, Mr. Permar provided an additional “final recommendation,” which he titled “Draft No. 2A” (Attachment 13). We have reformatted this resolution as Resolution E, which contains mandatory open Internet access provisions, but deletes references to nondiscriminatory cable programming.
Section 10-87(a) of the Town Code contains a provision whereby the Grantee (Time Warner) “shall not sell, transfer, lease, assign, sublet, or dispose of, in whole or in part...the Franchise…without the prior consent of the Council.” Section 10-87(b) explains that such a transfer would include: “(ii) the sale, assignment, or other transfer of capital stock or partnership….” Section 10-87(f) states that, for the purpose of the Town’s consent to the merger, the Town “may inquire into the qualifications of the prospective transferee or controlling party, and grantee shall assist grantor in such an inquiry.” Section 6.5(e) of the Town Franchise Ordinance states that Time Warner, “in seeking Grantor’s (Town’s) consent to any change of ownership or control…shall have the responsibility of ensuring that the transferee completes an application on the required FCC form” and “shall include the information required under State and federal law….” (Attachments 14-15)
The consultant and Town staff have reviewed the merger details, as described below:
A. Consultant
1. The Town contracts with TJCOG to review the Town cable franchise agreements to determine how the agreements relate to Cable Television Act requirements. The TJCOG consultant also assists franchising authorities by determining whether or not records required by the franchise agreements are being provided by the cable operator.
2. Robert Sepe, TJCOG consultant, reviewed the merger materials and provided the attached report. Sepe confirmed that the FCC-394 form must be completed by the cable operator and provided to the franchise authority for disclosure purposes. Time Warner must: (a) furnish a copy of the document providing for the transfer of control from Time Warner to AOL; (b) provide information on transfer of ownership from MediaOne to AT&T; (c) address whether the transferees are legally qualified to transact business in North Carolina; (d) address the character of qualifications of the transferees; (e) discuss the transferee’s financial qualifications; and (f) present evidence that the transferee is technically qualified to operate the cable system.
3. Sepe found no material misstatements with either the Time Warner-AOL merger issue or the AT&T acquisition of MediaOne’s 25% stake in Time Warner. He recommends that the Council approve the FCC-394 transfer request, adopt the staff report, allow time for public comment on the merger, and approve a transfer resolution.
B. Town Staff
1. Both the Manager and Town Attorney have reviewed the FCC-394 form and met with Time Warner representatives on February 21 and March 24. The Town Attorney raised a number of issues regarding the federal application form and asked for a response from Time-Warner. Specifically, the Attorney noted a number of issues regarding FCC-394 during the February 21 and March 24 meeting, including the following:
1. Section I, No. 7 on the Federal Form FCC 394 asks the applicant to attach as a schedule any additional information filed that is identified in the franchise as being required by the Town when requesting approval.
The Applicant’s Exhibit 1 states that the “applicable cable franchise does not specify any additional information or material that is required to be provided to the franchising authority in connection with a transfer of control of the franchise.”
The Attorney believes that Section 10-87 of the Franchise Ordinance does specify information required to be provided in addition to FCC-394, including information regarding the qualifications of AOL and its directors.
2. Section II, No. 2 on FCC 394 asks the applicant to list certain information about officers, directors, and stockholders, specifically number of shares, votes and percentage of votes.
The Applicant’s response states some answers which the Attorney has noted do not specifically provide the information requested by the Federal Form. For example, No. 2, part (d) asks for an answer in terms of the number of shares; however the answer is provided as “less than 1%.”
3. Section II, Nos. 3 through 7 ask for a yes or no answer and then, depending on the answer, ask for an explanation in the form of an exhibit.
The Applicant’s response in some of these is such that an exhibit and explanation is not required and yet an exhibit and explanation is provided.
These issues were brought to the attention of Time Warner representatives at the meetings on February 21 and March 24. Time Warner’s response is provided in its letter to the Attorney dated May 1, 2000, as described below (Attachment 16).
C. Time Warner Response
According to the May 1 letter from Brad Phillips of Time Warner, there would be no assignment or transfer of the franchise. Phillips concludes, therefore, that Section 10-87 of the Town Code does not apply. Phillips stated that, in this instance, the franchisee would not change, nor would its legal, character, technical, and financial qualifications.” Phillips also said that Time Warner provided the Town with more information than was necessary, but erred “on the side of overinclusion.”
D. Time Limit for Town Council Response
1. Time Warner asks that the Council approve a transfer resolution by June 8, and requests approval of Resolution D. We have provided various attachments as provided by both Time Warner and the TJCOG consultants, but recommend Resolution A, which is specific to Chapel Hill.
2. In a May 8 letter to Brad Phillips, TJCOG Attorney David Permar stated that federal law required a local franchise authority’s action on the transfer by June 10. Draft No. 1 (Resolution B) is written in Time Warner’s language; Draft No. 2 (Resolution C) was edited by Mr. Permar to include additional open access and non-discrimination provisions in Sections 9-10. The key difference is in Section 10 of Resolution C. The paragraph stipulates that Time Warner will not discriminate against different programmers. Mr. Permar has recommended Resolution C to those local governments participating in the TJCOG Cable Consortium.
Resolution E: (1) adopts FCC Form 394 and (2) grants Council consent to the transfer of control, with the open access provision, but without the non-discrimination provisions recommended by the TJCOG consultants. It does not contain the staff’s recommended provisions for denial.
1. FCC-394 (without attachments) (p.30).
2. April 7, 2000 Memorandum from Robert F. Sepe (p. 38)
3. February 8, 2000 letter from Brad Phillips to Town Manager (p.53)
4. Time Warner Proposed Resolution (Providing for Change in Control of a Cable Television Franchisee) (p. 55).
5. February 17, 2000 letter from the Town Manager to Randy Fraser (p. 56).
6. February 28, 2000 report from the Town Manager to Mayor and Town Council
7. (p. 57).
8. Sample Resolution Draft No. 1 from David Permar (p. 58).
9. Sample Resolution Draft No. 2 from David Permar (p. 63).
10. May 8 letter from David Permar (p. 68)
11. Sample Resolution Draft No. 3 from David Permar (p. 70).
12. May 11 letter from Brad Phillips to Town Manager (p. 73).
13. Sample Resolution from Time Warner (Granting Consent) (p.76).
14. May 16 Memorandum from David Permar to TJCOG Consortium Members (p. 80).
15. Section 10-87 through 10-93, Town of Chapel Hill Development Ordinance (86)
16. Section 6.5, Town of Chapel Hill Cablevision Franchise Ordinance (p. 90).
17. May 1 letter from Brad Phillips to Ralph Karpinos (p. 93).
RESOLUTION A
A RESOLUTION ADOPTING FCC FORM 394 AND GRANTING THE CONSENT OF THE TOWN OF CHAPEL HILL TO THE TRANSFER OF CONTROL OF A CABLE TELEVISION FRANCHISE FROM TIME WARNER, INC., TO AOL TIME WARNER, INC., AND A TRANSFER OF CONTROL FROM MEDIA ONE GROUP, INC., TO AT&T CORPORATION, CONTINGENT UPON TIME WARNER ENTERTAINMENT-ADVANCE/NEWHOUSE PARTNERSHIP providing by June 6, 2000, complete information as required by the terms of the applicable Franchise and Franchise Ordinance of the Town of Chapel Hill, as identified in the report of the Town Manager and Town Attorney dated May 22, 2000, but denying the requested transfer of control if such information is not provided by june 6, 2000 (2000-05-22/R-9-a)
WHEREAS, Time Warner Entertainment-Advance/Newhouse Partnership (“TWEAN”) holds a valid, non-exclusive franchise to operate a cable television system in Chapel Hill, North Carolina (the “Franchising Authority”); and
WHEREAS, TWEAN is a subsidiary of Time Warner, Inc. (TWI); and
WHEREAS, Media One Group, Inc., (“Media One”) holds a 25.51% interest in Time Warner Entertainment Company, L.P., (“TWE”) which in turn owns a 66.66% interest in TWEAN; and
WHEREAS, a wholly-owned subsidiary of AT&T Corporation (“AT&T”) is acquiring all of the shares of Media One pursuant to an Agreement and Plan of Merger dated May 6, 1999, (“Transaction No. 1”) so that following closing of the transaction, AT&T will control an approximate 17% interest in TWEAN; and
WHEREAS, TWI and America Online, Inc., (“AOL”) have entered into an Agreement and Plan of Merger dated January 10, 2000 (“Transaction No. 2”); and
WHEREAS, the merger agreement will result in a stock to stock merger (“Transaction No. 2”) in which TWI and AOL will merge with subsidiaries of a newly formed holding company; and
WHEREAS, as a result of Transaction No. 2, both TWI and AOL will become wholly owned subsidiaries of the new company, AOL-Time Warner, Inc (“AOL-TW”); and
WHEREAS, the franchisee, TWEAN, and TWI, AOL-TW, Media One, and AT&T, have requested the consent of the Franchising Authority, if it determines consent is necessary, to the aforementioned change of control and Transaction Nos. 1 and 2; and
WHEREAS, on or about February 10, 2000, TWI, as transferor, and AOL-TW, as transferee, filed an FCC Form 394 seeking the consent of the Franchising Authority to Transaction No. 2; and
WHEREAS, on or about February 18, 2000, Media One, transferor, and AT&T, transferee, filed a Form 394 with the Franchising Authority seeking consent to Transaction No. 1; and
WHEREAS, the Franchising Authority has conducted a thorough review of the legal, technical and financial qualifications of the applicants and the transferees to own and operate the cable system; and
WHEREAS, the Franchising Authority has received and reviewed the report of its cable television consultant concerning the legal, technical and financial qualifications of the transferees and provided an opportunity for public comments; and
WHEREAS, AT&T and TWI are the two largest cable television operators in the United States and AOL is the largest and most dominant provider of internet services; and
WHEREAS, the Franchising Authority is concerned that cable television operators, through the use of their broadband platforms, offer a technically superior method of providing internet services to customers and therefore, there is a substantial risk that Transaction Nos. 1 and 2 may have an anti-competitive impact on the provision of internet services and cable programming to the public; and
WHEREAS, following further review and an investigation, the Franchising Authority has concluded that the transferees have established that they meet the technical, legal, and financial criteria to operate the cable system and have satisfied all criteria set forth in and/or under all applicable or required local government and federal documents, laws, rules and regulations, including FCC Form 394 and contingent upon applicants meeting all of the requirements set forth below;
NOW, THEREFORE, BE IT RESOLVED that in consideration of the foregoing and the promises set forth herein, the Franchising Authority and the transferees agree to the following:
1. The Franchising Authority consents to Transaction Nos. 1 and 2, effective immediately upon the closing of the transactions contemplated by the agreements, provided that said closings take place prior to July 1, 2001.
2. The Franchising Authority confirms that:
(a) the franchise held by the franchisee is valid and in full force and effect.
(b) the franchisee will be in material compliance with the franchise if the other conditions set forth in this Resolution are met.
3. TWEAN:
(a) agrees to be bound by the franchise and perform all duties and obligations thereunder;
(b) represents and warrants that it is able to provide and agrees to provide all services required under said franchise;
(c) acknowledges and agrees that TWEAN is subject to the regulatory authority of the grantor as provided by state and federal law;
(d) agrees to cooperate fully with the Franchising Authority and to obtain from any governmental agency having jurisdiction, all licenses, permits, and other authority necessary for lawful operation and maintenance of the cable system.
4. The past performance of TWEAN under the control of TWI pursuant to the franchise is not waived by the Franchising Authority consenting to this transfer and adopting this Resolution. TWEAN agrees to be responsible for and bound by the breaches and non-performance, if any, of TWI and its subsidiaries prior to this transfer. The Franchising Authority may, after consummation of the Transaction Nos. 1 and 2, consider in any ongoing renewal proceeding, the past performance of TWEAN and TWI to the extent permitted under 47 U.S.C. §546, as if it were the past performance of TWEAN.
5. TWEAN agrees that the revaluation of the cable system assets, if any, resulting from Transaction Nos. 1 and 2 shall not be the basis for any future rate increases for any regulated cable service, including, but not limited to, basic cable service, equipment rentals and installation costs.
6. This Resolution shall become effective on the date of its passage but shall be automatically rescinded if not accepted by TWEAN, within thirty (30) days of passage.
7. TWEAN agrees that it intends to afford its customers a choice of ISP’s on the cable television system. TWEAN shall report periodically, at the request of the Franchising Authority on its progress towards accomplishing that goal. Notwithstanding anything to the contrary, TWEAN agrees to comply with all lawful federal, state and local requirements with respect to nondiscriminatory access to TWEAN’s cable system for ISPs; provided, however, that prior to the enactment of any such requirement by the Franchising Authority, TWEAN shall be given reasonable opportunity to be heard, including the right to present evidence on any findings made by the Franchising Authority with respect to such a requirement. The Franchising Authority and TWEAN have not waived any rights, obligations, claims, defenses or remedies regarding the Franchising Authority’s authority to impose such conditions.
BE IT FURTHER RESOLVED THAT this Resolution granting the Town of Chapel Hill’s consent is contingent upon TWEAN providing by June 6, 2000, complete information as required by the terms of the applicable Franchise and Franchise Ordinance of the Town of Chapel Hill, as identified in the report of the Town Manager and Town Attorney dated May 22, 2000, and the Town Manager and Town Attorney concluding, based on the information so submitted, that there is no material reason to deny consent.
BE IT FURTHER RESOLVED THAT if said information required by the Franchise and Franchise Ordinance is not submitted by June 6 to allow such a determination, this Resolution shall constitute the Town Council’s denial of its consent to the requested transfer of control.
PASSED, ADOPTED AND APPROVED this ______________ day of _____________________, 2000.
LOCAL GOVERNMENT
By:_____________________________
Title:____________________________
ATTEST:
By:___________________________________
Clerk
WE CONSENT TO AND ACCEPT THE TERMS AND CONDITIONS OF THIS RESOLUTION.
DATE OF ACCEPTANCE: TIME WARNER ENTERTAINMENT
ADVANCE NEWHOUSE PARTNERSHIP
_______________________________ By:_________________________________
RESOLUTION B
(WITHOUT OPEN ACCESS AND NONDISCRIMINATION PROVISIONS)
A RESOLUTION ADOPTING FCC FORM 394 AND GRANTING THE CONSENT OF THE TOWN OF CHAPEL HILL TO THE TRANSFER OF CONTROL OF A CABLE TELEVISION FRANCHISE FROM TIME WARNER, INC., TO AOL TIME WARNER, INC., AND A TRANSFER OF CONTROL FROM MEDIA ONE GROUP, INC., TO AT&T CORPORATION (2000-05-22/R-9b)
WHEREAS, Time Warner Entertainment-Advance/Newhouse Partnership (“TWEAN”) holds a valid, non-exclusive franchise to operate a cable television system in Chapel Hill, North Carolina (the “Franchising Authority”); and
WHEREAS, TWEAN is a subsidiary of Time Warner, Inc. (TWI); and
WHEREAS, Media One Group, Inc., (“Media One”) holds a 25.51% interest in Time Warner Entertainment Company, L.P., (“TWE”) which in turn owns a 66.66% interest in TWEAN; and
WHEREAS, a wholly-owned subsidiary of AT&T Corporation (“AT&T”) is acquiring all of the shares of Media One pursuant to an Agreement and Plan of Merger dated May 6, 1999, (“Transaction No. 1”) so that following closing of the transaction, AT&T will control an approximate 17% interest in TWEAN; and
WHEREAS, TWI and America Online, Inc., (“AOL”) have entered into an Agreement and Plan of Merger dated January 10, 2000 (“Transaction No. 2”); and
WHEREAS, the merger agreement will result in a stock to stock merger (“Transaction No. 2”) in which TWI and AOL will merge with subsidiaries of a newly formed holding company; and
WHEREAS, as a result of Transaction No. 2, both TWI and AOL will become wholly owned subsidiaries of the new company, AOL-Time Warner, Inc (“AOL-TW”); and
WHEREAS, the franchisee, TWEAN, and TWI, AOL-TW, Media One, and AT&T, have requested the consent of the Franchising Authority, if it determines consent is necessary, to the aforementioned change of control and Transaction Nos. 1 and 2; and
WHEREAS, on or about February 10, 2000, TWI, as transferor, and AOL-TW, as transferee, filed an FCC Form 394 seeking the consent of the Franchising Authority to Transaction No. 2; and
WHEREAS, on or about February 18, 2000, Media One, transferor, and AT&T, transferee, filed a Form 394 with the Franchising Authority seeking consent to Transaction No. 1; and
WHEREAS, the Franchising Authority has conducted a thorough review of the legal, technical and financial qualifications of the applicants and the transferees to own and operate the cable system; and
WHEREAS, the Franchising Authority has received and reviewed the report of its cable television consultant concerning the legal, technical and financial qualifications of the transferees and provided an opportunity for public comments; and
WHEREAS, AT&T and TWI are the two largest cable television operators in the United States and AOL is the largest and most dominant provider of internet services; and
WHEREAS, the Franchising Authority is concerned that cable television operators, through the use of their broadband platforms, offer a technically superior method of providing internet services to customers and therefore, there is a substantial risk that Transaction Nos. 1 and 2 may have an anti-competitive impact on the provision of internet services and cable programming to the public; and
WHEREAS, following further review and an investigation, the Franchising Authority has concluded that the transferees have established that they meet the technical, legal, and financial criteria to operate the cable system and have satisfied all criteria set forth in and/or under all applicable or required local government and federal documents, laws, rules and regulations, including FCC Form 394 and contingent upon applicants meeting all of the requirements set forth below;
NOW, THEREFORE, BE IT RESOLVED that in consideration of the foregoing and the promises set forth herein, the Franchising Authority and the transferees agree to the following:
1. The Franchising Authority consents to Transaction Nos. 1 and 2, effective immediately upon the closing of the transactions contemplated by the agreements, provided that said closings take place prior to July 1, 2001.
2. The Franchising Authority confirms that:
a. the franchise held by the franchisee is valid and in full force and effect.
b. the franchisee will be in material compliance with the franchise if the other conditions set forth in this Resolution are met.
3. TWEAN:
a. agrees to be bound by the franchise and perform all duties and obligations thereunder;
b. represents and warrants that it is able to provide and agrees to provide all services required under said franchise;
c. acknowledges and agrees that TWEAN is subject to the regulatory authority of the grantor as provided by state and federal law;
d. agrees to cooperate fully with the Franchising Authority and to obtain from any governmental agency having jurisdiction, all licenses, permits, and other authority necessary for lawful operation and maintenance of the cable system.
4. The past performance of TWEAN under the control of TWI pursuant to the franchise is not waived by the Franchising Authority consenting to this transfer and adopting this Resolution. TWEAN and its new parent, AOL-TW, agree to be responsible for and bound by the breaches and non-performance, if any, of TWI and its subsidiaries prior to this transfer. The Franchising Authority may, after consummation of the Transaction Nos. 1 and 2, consider in any ongoing renewal proceeding, the past performance of TWEAN and TWI to the extent permitted under 47 U.S.C. §546, as if it were the past performance of TWEAN and AOL-TW.
5. TWEAN and the franchise shall be subject to the Franchising Authority’s most recently adopted cable standard ordinance.
6. TWEAN and AOL-TW agree that the revaluation of the cable system assets, if any, resulting form Transaction Nos. 1 and 2 shall not be the basis for any future rate increases for any regulated cable service, including, but not limited to, basic cable service, equipment rentals and installation costs.
7. This Resolution shall become effective on the date of its passage but shall be automatically rescinded if not accepted by TWEAN, within thirty (30) days of passage.
8. Within thirty days following the adoption of this Resolution, franchisee shall pay the sum of $10,000 to the Franchising Authority to reimburse the Franchising Authority for its expenses in connection with this transfer.
9. TWEAN agrees that it intends to afford its customers a choice of ISP’s on the cable television system. TWEAN shall report periodically, at the request of the Franchising Authority on its progress towards accomplishing that goal. Notwithstanding anything to the contrary, TWEAN agrees to comply with all lawful federal, state and local requirements with respect to nondiscriminatory access to TWEAN’s cable system for ISPs; provided, however, that prior to the enactment of any such requirement by the Franchising Authority, TWEAN shall be given reasonable opportunity to be heard, including the right to present evidence on any findings made by the Franchising Authority with respect to such a requirement. The Franchising Authority and TWEAN have not waived any rights, obligations, claims, defenses or remedies regarding the Franchising Authority’s authority to impose such conditions.
PASSED, ADOPTED AND APPROVED this _____________ day of _____________________, 2000.
LOCAL GOVERNMENT
By:_____________________________
Title:____________________________
ATTEST:
By:___________________________________
Clerk
WE CONSENT TO AND ACCEPT THE TERMS AND CONDITIONS OF THIS RESOLUTION.
DATE OF ACCEPTANCE: TIME WARNER ENTERTAINMENT
ADVANCE NEWHOUSE PARTNERSHIP
_______________________________ By:_________________________________
RESOLUTION C
(WITH OPEN ACCESS AND NONDISCRIMINATION PROVISIONS)
A RESOLUTION ADOPTING FCC FORM 394 AND GRANTING THE CONSENT OF THE TOWN OF CHAPEL HILL TO THE TRANSFER OF CONTROL OF A CABLE TELEVISION FRANCHISE FROM TIME WARNER, INC., TO AOL TIME WARNER, INC., AND A TRANSFER OF CONTROL FROM MEDIA ONE GROUP, INC., TO AT&T CORPORATION (2000-05-22/R-9c)
WHEREAS, Time Warner Entertainment-Advance/Newhouse Partnership (“TWEAN”) holds a valid, non-exclusive franchise to operate a cable television system in Chapel Hill, North Carolina (the “Franchising Authority”); and
WHEREAS, TWEAN is a subsidiary of Time Warner, Inc. (“TWI”); and
WHEREAS, Media One Group, Inc., (“Media One”) holds a 25.51% interest in Time Warner Entertainment Company, L.P., (“TWE”) which in turn owns a 66.66% interest in TWEAN; and
WHEREAS, a wholly-owned subsidiary of AT&T Corporation (“AT&T”) is acquiring all of the shares of Media One pursuant to an Agreement and Plan of Merger dated May 6, 1999, (“Transaction No. 1”) so that following closing of the transaction, AT&T will control an approximate 17% interest in TWEAN; and
WHEREAS, TWI and America Online, Inc., (“AOL”) have entered into an Agreement and Plan of Merger dated January 10, 2000 (“Transaction No. 2”); and
WHEREAS, the merger agreement will result in a stock to stock merger (“Transaction No. 2”) in which TWI and AOL will merge with subsidiaries of a newly formed holding company; and
WHEREAS, as a result of Transaction No. 2, both TWI and AOL will become wholly owned subsidiaries of the new company, AOL-Time Warner, Inc (“AOL-TW”); and
WHEREAS, the franchisee, TWEAN, and TWI, AOL-TW, Media One, and AT&T, have requested the consent of the Franchising Authority, if it determines consent is necessary, to the aforementioned change of control and Transaction Nos. 1 and 2; and
WHEREAS, on or about February 10, 2000, TWI, as transferor, and AOL-TW, as transferee, filed an FCC Form 394 seeking the consent of the Franchising Authority to Transaction No. 2; and
WHEREAS, on or about February 18, 2000, Media One, transferor, and AT&T, transferee, filed a Form 394 with the Franchising Authority seeking consent to Transaction No. 1; and
WHEREAS, the Franchising Authority has conducted a thorough review of the legal, technical and financial qualifications of the applicants and the transferees to own and operate the cable system; and
WHEREAS, the Franchising Authority has received and reviewed the report of its cable television consultant concerning the legal, technical and financial qualifications of the transferees and provided an opportunity for public comments; and
WHEREAS, AT&T and TWI are the two largest cable television operators in the United States and AOL is the largest and most dominant provider of internet services; and
WHEREAS, the Franchising Authority is concerned that cable television operators, through the use of their broadband platforms, offer a technically superior method of providing internet services to customers and therefore, there is a substantial risk that Transaction Nos. 1 and 2 may have an anti-competitive impact on the provision of internet services and cable programming to the public; and
WHEREAS, following further review and an investigation, the Franchising Authority has concluded that the transferees have established that they meet the technical, legal, and financial criteria to operate the cable system and have satisfied all criteria set forth in and/or under all applicable or required local government and federal documents, laws, rules and regulations, including FCC Form 394 and contingent upon applicants meeting all of the requirements set forth below;
NOW, THEREFORE, BE IT RESOLVED that in consideration of the foregoing and the promises set forth herein, the Franchising Authority and the transferees agree to the following:
1. The Franchising Authority consents to Transaction Nos. 1 and 2, effective immediately upon the closing of the transactions contemplated by the agreements, provided that said closings take place prior to July 1, 2001.
2. The Franchising Authority confirms that:
a. the franchise held by the franchisee is valid and in full force and effect.
b. the franchisee will be in material compliance with the franchise if the other conditions set forth in this Resolution are met.
3. TWEAN:
a. agrees to be bound by the franchise and perform all duties and obligations thereunder;
b. represents and warrants that it is able to provide and agrees to provide all services required under said franchise;
c. acknowledges and agrees that TWEAN is subject to the regulatory authority of the grantor as provided by state and federal law;
d. agrees to cooperate fully with the Franchising Authority and to obtain from any governmental agency having jurisdiction, all licenses, permits, and other authority necessary for lawful operation and maintenance of the cable system.
4. The past performance of TWEAN under the control of TWI pursuant to the franchise is not waived by the Franchising Authority consenting to this transfer and adopting this Resolution. TWEAN and its new parent, AOL-TW, agree to be responsible for and bound by the breaches and non-performance, if any, of TWI and its subsidiaries prior to this transfer. The Franchising Authority may, after consummation of the Transaction Nos. 1 and 2, consider in any ongoing renewal proceeding, the past performance of TWEAN and TWI to the extent permitted under 47 U.S.C. §546, as if it were the past performance of TWEAN and AOL-TW.
5. TWEAN and the franchise shall be subject to the Franchising Authority’s most recently adopted cable standard ordinance.
6. TWEAN and AOL-TW agree that the revaluation of the cable system assets, if any, resulting form Transaction Nos. 1 and 2 shall not be the basis for any future rate increases for any regulated cable service, including, but not limited to, basic cable service, equipment rentals and installation costs.
7. This Resolution shall become effective on the date of its passage but shall be automatically rescinded if not accepted by TWEAN, within thirty (30) days of passage.
8. Within thirty days following the adoption of this Resolution, franchisee shall pay the sum of $10,000 to the Franchising Authority to reimburse the Franchising Authority for its expenses in connection with this transfer.
9. TWEAN and AOL-TW shall provide nondiscriminatory access to the franchisee’s cable modem (digital) platform for providers of internet, online services, and other video and digital services, whether or not such providers are affiliated with TWEAN or AOL-TW.
10. TWEAN and AOL-TW shall make video programming on its cable system available to subscribers on reasonable terms and conditions for program providers and without discriminating among program providers based upon their affiliation or nonaffiliation with TWEAN or AOL-TW.
PASSED, ADOPTED AND APPROVED this ______________ day of _____________________, 2000.
LOCAL GOVERNMENT
By:_____________________________
Title:____________________________
ATTEST:
By:___________________________________
Clerk
WE CONSENT TO AND ACCEPT THE TERMS AND CONDITIONS OF THIS RESOLUTION.
DATE OF ACCEPTANCE: TIME WARNER ENTERTAINMENT
ADVANCE NEWHOUSE PARTNERSHIP
_______________________________ By:_________________________________
RESOLUTION D
(WITHOUT PROVISIONS REQUIRING SUBMITTAL OF CORRECT REPORTS)
A RESOLUTION ADOPTING FCC FORM 394 AND GRANTING THE CONSENT OF THE TOWN OF CHAPEL HILL TO THE TRANSFER OF CONTROL OF A CABLE TELEVISION FRANCHISE FROM TIME WARNER, INC., TO AOL TIME WARNER, INC., AND A TRANSFER OF CONTROL FROM MEDIA ONE GROUP, INC., TO AT&T CORPORATION (2000-05-22/R-9-d)
WHEREAS, Time Warner Entertainment-Advance/Newhouse Partnership (“TWEAN”) holds a valid, non-exclusive franchise to operate a cable television system in _______________________, North Carolina (the “Franchising Authority”); and
WHEREAS, TWEAN is a subsidiary of Time Warner, Inc. (TWI); and
WHEREAS, Media One Group, Inc., (“Media One”) holds a 25.51% interest in Time Warner Entertainment Company, L.P., (“TWE”) which in turn owns a 66.66% interest in TWEAN; and
WHEREAS, a wholly-owned subsidiary of AT&T Corporation (“AT&T”) is acquiring all of the shares of Media One pursuant to an Agreement and Plan of Merger dated May 6, 1999, (“Transaction No. 1”) so that following closing of the transaction, AT&T will control an approximate 17% interest in TWEAN; and
WHEREAS, TWI and America Online, Inc., (“AOL”) have entered into an Agreement and Plan of Merger dated January 10, 2000 (“Transaction No. 2”); and
WHEREAS, the merger agreement will result in a stock to stock merger (“Transaction No. 2”) in which TWI and AOL will merge with subsidiaries of a newly formed holding company; and
WHEREAS, as a result of Transaction No. 2, both TWI and AOL will become wholly owned subsidiaries of the new company, AOL-Time Warner, Inc (“AOL-TW”); and
WHEREAS, the franchisee, TWEAN, and TWI, AOL-TW, Media One, and AT&T, have requested the consent of the Franchising Authority, if it determines consent is necessary, to the aforementioned change of control and Transaction Nos. 1 and 2; and
WHEREAS, on or about February 10, 2000, TWI, as transferor, and AOL-TW, as transferee, filed an FCC Form 394 seeking the consent of the Franchising Authority to Transaction No. 2; and
WHEREAS, on or about February 18, 2000, Media One, transferor, and AT&T, transferee, filed a Form 394 with the Franchising Authority seeking consent to Transaction No. 1; and
WHEREAS, the Franchising Authority has conducted a thorough review of the legal, technical and financial qualifications of the applicants and the transferees to own and operate the cable system; and
WHEREAS, the Franchising Authority has received and reviewed the report of its cable television consultant concerning the legal, technical and financial qualifications of the transferees and provided an opportunity for public comments; and
WHEREAS, AT&T and TWI are the two largest cable television operators in the United States and AOL is the largest and most dominant provider of internet services; and
WHEREAS, the Franchising Authority is concerned that cable television operators, through the use of their broadband platforms, offer a technically superior method of providing internet services to customers and therefore, there is a substantial risk that Transaction Nos. 1 and 2 may have an anti-competitive impact on the provision of internet services and cable programming to the public; and
WHEREAS, following further review and an investigation, the Franchising Authority has concluded that the transferees have established that they meet the technical, legal, and financial criteria to operate the cable system and have satisfied all criteria set forth in and/or under all applicable or required local government and federal documents, laws, rules and regulations, including FCC Form 394 and contingent upon applicants meeting all of the requirements set forth below;
NOW, THEREFORE, BE IT RESOLVED that in consideration of the foregoing and the promises set forth herein, the Franchising Authority and the transferees agree to the following:
1. The Franchising Authority consents to Transaction Nos. 1 and 2, effective immediately upon the closing of the transactions contemplated by the agreements, provided that said closings take place prior to July 1, 2001.
2. The Franchising Authority confirms that:
a. the franchise held by the franchisee is valid and in full force and effect.
b. the franchisee will be in material compliance with the franchise if the other conditions set forth in this Resolution are met.
3. TWEAN:
a. agrees to be bound by the franchise and perform all duties and obligations thereunder;
b. represents and warrants that it is able to provide and agrees to provide all services required under said franchise;
c. acknowledges and agrees that TWEAN is subject to the regulatory authority of the grantor as provided by state and federal law;
d. agrees to cooperate fully with the Franchising Authority and to obtain from any governmental agency having jurisdiction, all licenses, permits, and other authority necessary for lawful operation and maintenance of the cable system.
4. The past performance of TWEAN under the control of TWI pursuant to the franchise is not waived by the Franchising Authority consenting to this transfer and adopting this Resolution. TWEAN agrees to be responsible for and bound by the breaches and non-performance, if any, of TWI and its subsidiaries prior to this transfer. The Franchising Authority may, after consummation of the Transaction Nos. 1 and 2, consider in any ongoing renewal proceeding, the past performance of TWEAN and TWI to the extent permitted under 47 U.S.C. §546, as if it were the past performance of TWEAN.
5. TWEAN agrees that the revaluation of the cable system assets, if any, resulting from Transaction Nos. 1 and 2 shall not be the basis for any future rate increases for any regulated cable service, including, but not limited to, basic cable service, equipment rentals and installation costs.
6. This Resolution shall become effective on the date of its passage but shall be automatically rescinded if not accepted by TWEAN, within thirty (30) days of passage.
7. TWEAN agrees that it intends to afford its customers a choice of ISP’s on the cable television system. TWEAN shall report periodically, at the request of the Franchising Authority on its progress towards accomplishing that goal. Notwithstanding anything to the contrary, TWEAN agrees to comply with all lawful federal, state and local requirements with respect to nondiscriminatory access to TWEAN’s cable system for ISPs; provided, however, that prior to the enactment of any such requirement by the Franchising Authority, TWEAN shall be given reasonable opportunity to be heard, including the right to present evidence on any findings made by the Franchising Authority with respect to such a requirement. The Franchising Authority and TWEAN have not waived any rights, obligations, claims, defenses or remedies regarding the Franchising Authority’s authority to impose such conditions.
PASSED, ADOPTED AND APPROVED this _____________ day of _____________________, 2000.
LOCAL GOVERNMENT
By:_____________________________
Title:____________________________
ATTEST:
By:___________________________________
Clerk
WE CONSENT TO AND ACCEPT THE TERMS AND CONDITIONS OF THIS RESOLUTION.
DATE OF ACCEPTANCE: TIME WARNER ENTERTAINMENT
ADVANCE NEWHOUSE PARTNERSHIP
_______________________________ By:_________________________________
RESOLUTION E
(WITH OPEN ACCESS BUT WITHOUT NONDISCRIMINATION CABLE PROVISIONS)
A RESOLUTION ADOPTING FCC FORM 394 AND GRANTING THE CONSENT OF THE TOWN OF CHAPEL HILL TO THE TRANSFER OF CONTROL OF A CABLE TELEVISION FRANCHISE FROM TIME WARNER, INC., TO AOL TIME WARNER, INC., AND A TRANSFER OF CONTROL FROM MEDIA ONE GROUP, INC., TO AT&T CORPORATION (2000-05-22/R-9-e)
WHEREAS, Time Warner Entertainment-Advance/Newhouse Partnership (“TWEAN”) holds a valid, non-exclusive franchise to operate a cable television system in Chapel Hill, North Carolina (the “Franchising Authority”); and
WHEREAS, TWEAN is a subsidiary of Time Warner, Inc. (“TWI”); and
WHEREAS, Media One Group, Inc., (“Media One”) holds a 25.51% interest in Time Warner Entertainment Company, L.P., (“TWE”) which in turn owns a 66.66% interest in TWEAN; and
WHEREAS, a wholly-owned subsidiary of AT&T Corporation (“AT&T”) is acquiring all of the shares of Media One pursuant to an Agreement and Plan of Merger dated May 6, 1999, (“Transaction No. 1”) so that following closing of the transaction, AT&T will control an approximate 17% interest in TWEAN; and
WHEREAS, TWI and America Online, Inc., (“AOL”) have entered into an Agreement and Plan of Merger dated January 10, 2000 (“Transaction No. 2”); and
WHEREAS, the merger agreement will result in a stock to stock merger (“Transaction No. 2”) in which TWI and AOL will merge with subsidiaries of a newly formed holding company; and
WHEREAS, as a result of Transaction No. 2, both TWI and AOL will become wholly owned subsidiaries of the new company, AOL-Time Warner, Inc (“AOL-TW”); and
WHEREAS, the franchisee, TWEAN, and TWI, AOL-TW, Media One, and AT&T, have requested the consent of the Franchising Authority, if it determines consent is necessary, to the aforementioned change of control and Transaction Nos. 1 and 2; and
WHEREAS, on or about February 10, 2000, TWI, as transferor, and AOL-TW, as transferee, filed an FCC Form 394 seeking the consent of the Franchising Authority to Transaction No. 2; and
WHEREAS, on or about February 18, 2000, Media One, transferor, and AT&T, transferee, filed a Form 394 with the Franchising Authority seeking consent to Transaction No. 1; and
WHEREAS, the Franchising Authority has conducted a thorough review of the legal, technical and financial qualifications of the applicants and the transferees to own and operate the cable system; and
WHEREAS, the Franchising Authority has received and reviewed the report of its cable television consultant concerning the legal, technical and financial qualifications of the transferees and provided an opportunity for public comments; and
WHEREAS, AT&T and TWI are the two largest cable television operators in the United States and AOL is the largest and most dominant provider of internet services; and
WHEREAS, the Franchising Authority is concerned that cable television operators, through the use of their broadband platforms, offer a technically superior method of providing internet services to customers and therefore, there is a substantial risk that Transaction Nos. 1 and 2 may have an anti-competitive impact on the provision of internet services and cable programming to the public; and
WHEREAS, following further review and an investigation, the Franchising Authority has concluded that the transferees have established that they meet the technical, legal, and financial criteria to operate the cable system and have satisfied all criteria set forth in and/or under all applicable or required local government and federal documents, laws, rules and regulations, including FCC Form 394 and contingent upon applicants meeting all of the requirements set forth below;
NOW, THEREFORE, BE IT RESOLVED that in consideration of the foregoing and the promises set forth herein, the Franchising Authority and the transferees agree to the following:
1. The Franchising Authority consents to Transaction Nos. 1 and 2, effective immediately upon the closing of the transactions contemplated by the agreements, provided that said closings take place prior to July 1, 2001.
2. The Franchising Authority confirms that:
a. the franchise held by the franchisee is valid and in full force and effect.
b. the franchisee will be in material compliance with the franchise if the other conditions set forth in this Resolution are met.
3. TWEAN:
a. agrees to be bound by the franchise and perform all duties and obligations thereunder;
b. represents and warrants that it is able to provide and agrees to provide all services required under said franchise;
c. acknowledges and agrees that TWEAN is subject to the regulatory authority of the grantor as provided by state and federal law;
d. agrees to cooperate fully with the Franchising Authority and to obtain from any governmental agency having jurisdiction, all licenses, permits, and other authority necessary for lawful operation and maintenance of the cable system.
4. The past performance of TWEAN under the control of TWI pursuant to the franchise is not waived by the Franchising Authority consenting to this transfer and adopting this Resolution. TWEAN (under the control of its new parent, AOL-TW) agrees to be responsible for and bound by the breaches and non-performance, if any, of TWEAN (under the control of TWI) prior to this transfer. The Franchising Authority may, after consummation of the Transaction Nos. 1 and 2, consider in any ongoing renewal proceeding, the past performance of TWEAN (under the control of TWI) to the extent permitted under 47 U.S.C. §546, as if it were the past performance of TWEAN (under the control of AOL-TW).
5. TWEAN and the franchise shall be subject to the Franchising Authority’s most recently adopted cable standard ordinance.
6. TWEAN and AOL-TW agree that the revaluation of the cable system assets, if any, resulting form Transaction Nos. 1 and 2 shall not be the basis for any future rate increases for any regulated cable service, including, but not limited to, basic cable service, equipment rentals and installation costs.
7. This Resolution shall become effective on the date of its passage but shall be automatically rescinded and the transfer of control denied (1) if not accepted in writing by TWEAN within thirty (30) days of passage; or (2) if any of the conditions of this consent resolution are determined to be invalid in a final judgment by a court of competent jurisdiction.
8. Within thirty days following the adoption of this Resolution, franchisee shall pay the sum of $10,000 to the Franchising Authority to reimburse the Franchising Authority for its expenses in connection with this transfer.
9. TWEAN and AOL-TW shall provide nondiscriminatory access to the franchisee’s cable modem (digital) platform for providers of internet, online services, and other video and digital services, whether or not such providers are affiliated with TWEAN or AOL-TW.
10. TWEAN and AOL-TW shall make video programming on its cable system available to subscribers on reasonable terms and conditions for program providers and without discriminating among program providers based upon their affiliation or nonaffiliation with TWEAN or AOL-TW.
PASSED, ADOPTED AND APPROVED this ______________ day of _____________________, 2000.
LOCAL GOVERNMENT
By:_____________________________
Title:____________________________
ATTEST:
By:___________________________________
Clerk
WE CONSENT TO AND ACCEPT THE TERMS AND CONDITIONS OF THIS RESOLUTION.
DATE OF ACCEPTANCE: TIME WARNER ENTERTAINMENT
ADVANCE NEWHOUSE PARTNERSHIP
_______________________________ By:_________________________________
RESOLUTION F
(DENIAL)
A RESOLUTION DENYING THE CONSENT OF THE TOWN OF CHAPEL HILL TO THE TRANSFER OF CONTROL OF A CABLE TELEVISION FRANCHISE FROM TIME WARNER, INC., TO AOL TIME WARNER, INC., AND A TRANSFER OF CONTROL FROM MEDIA ONE GROUP, INC., TO AT&T CORPORATION (2000-05-22/R-9f)
WHEREAS, Time Warner Entertainment-Advance/Newhouse Partnership (“TWEAN”) holds a valid, non-exclusive franchise to operate a cable television system in Chapel Hill, North Carolina (the “Franchising Authority”); and
WHEREAS, TWEAN is a subsidiary of Time Warner, Inc. (“TWI”); and
WHEREAS, Media One Group, Inc., (“Media One”) holds a 25.51% interest in Time Warner Entertainment Company, L.P., (“TWE”) which in turn owns a 66.66% interest in TWEAN; and
WHEREAS, a wholly-owned subsidiary of AT&T Corporation (“AT&T”) is acquiring all of the shares of Media One pursuant to an Agreement and Plan of Merger dated May 6, 1999, (“Transaction No. 1”) so that following closing of the transaction, AT&T will control an approximate 17% interest in TWEAN; and
WHEREAS, TWI and America Online, Inc., (“AOL”) have entered into an Agreement and Plan of Merger dated January 10, 2000 (“Transaction No. 2”); and
WHEREAS, the merger agreement will result in a stock to stock merger (“Transaction No. 2”) in which TWI and AOL will merge with subsidiaries of a newly formed holding company; and
WHEREAS, as a result of Transaction No. 2, both TWI and AOL will become wholly owned subsidiaries of the new company, AOL-Time Warner, Inc (“AOL-TW”); and
WHEREAS, the franchisee, TWEAN, and TWI, AOL-TW, Media One, and AT&T, have requested the consent of the Franchising Authority, if it determines consent is necessary, to the aforementioned change of control and Transaction Nos. 1 and 2; and
WHEREAS, on or about February 10, 2000, TWI, as transferor, and AOL-TW, as transferee, filed an FCC Form 394 seeking the consent of the Franchising Authority to Transaction No. 2; and
WHEREAS, on or about February 18, 2000, Media One, transferor, and AT&T, transferee, filed a Form 394 with the Franchising Authority seeking consent to Transaction No. 1; and
WHEREAS, the Franchising Authority has conducted a thorough review of the legal, technical and financial qualifications of the applicants and the transferees to own and operate the cable system; and
WHEREAS, the Franchising Authority has received and reviewed the report of its cable television consultant concerning the legal, technical and financial qualifications of the transferees and provided an opportunity for public comments; and
WHEREAS, AT&T and TWI are the two largest cable television operators in the United States and AOL is the largest and most dominant provider of internet services; and
WHEREAS, TWI is a major provider of news, entertainment, and sports programming for cable systems, and AOL is a major provider of programming and services on the Internet; and
WHEREAS, Roadrunner, a high speed internet service provider, is jointly owned by Media One and TWI, and AT&T has a majority interest in Excite At Home Corp., another high speed internet service provider; and
WHEREAS, cable television operators through the use of their broadband platforms offer a technically superior method of providing internet services to customers and is therefore and “essential facility” that competing internet service providers cannot practically duplicate; and
WHEREAS, there are many Internet service providers and cable programming providers who are not affiliated with any cable operator; and
WHEREAS, TWEAN, as a franchise holder under N.C.G.S. §160A-311 et seq., is a “public enterprise” obligated to provide service to all persons without discrimination; and
WHEREAS, in a recent settlement agreement with the Federal Trade Commission, TWI agreed to stop pressure tactics that have added millions of dollars to compact disc prices since 1997 and end anti-competitive policies and discontinue coercive agreements requiring record stores to charge specific minimum advertised prices for CDs; and
WHEREAS, Transaction Nos. 1 and 2 will eliminate or reduce competition in the provision of Internet services and cable programming to the public.
NOW, THEREFORE, BE IT RESOLVED that in consideration of the foregoing, the Franchising Authority denies the application for transfer of control as embodied in the applications referred-to-above seeking the consent of the Franchising Authority to Transaction Nos. 1 and 2.
PASSED, ADOPTED AND APPROVED this _____________ day of _____________________, 2000.
LOCAL GOVERNMENT
By:_____________________________
Title:____________________________
ATTEST:
By:___________________________________
Clerk