Los Angeles County Municipal Code Ch. 16.62 Application for Franchise

Any person desiring a franchise for a cable television system shall file an original application and eleven copies with the department in its capacity as staff for the business license commission.

(Ord. 88-0159F § 1 (part), 1988.)

To the extent permitted by law, proprietary information may be kept confidential, if appropriately identified. In the event an applicant believes that the information it must submit in its application should be treated confidentially by the county, it must so advise the department by letter prior to or with its application. If it is determined by the county that such information is not confidential, the applicant will be so notified and the information will be returned to the applicant at applicant's request.

(Ord. 88-0159F § 1 (part), 1988.)

An application for a franchise for a cable television system shall contain the following information where applicable:

Designation of specific area to be served by franchisee:

a.

A street map of the area to be served, including the location of proposed or existing headend site (antenna site), microwave sites, if any, and business office;

b.

The extent, if any, to which the applicant intends to overbuild existing cable operator's facilities;

c.

Inclusion of line extension areas, if any. Line extension areas are those areas which at time of application are not developed sufficiently for provision of cable services within the terms of Section 16.68.010, but are anticipated to reach sufficient

development or density of population during the term of the franchise to support the extension of cable services.

Identification of the applicant:

a.

Indicate corporate or business entity organization of applicant (e.g. partnership, corporation), and submit copies of corporate or business formation papers (e.g., articles of incorporation and by-laws; limited partnership agreement); include the names and addresses of any parent or subsidiary of applicant or any other business entity owning or controlling applicant in whole or in part, or owned or controlled in part by applicant;

b.

Indicate basis for acquiring ownership: whether ownership or the holding was acquired at same per-share costs as other owners, whether services or other in-kind contributions are included as a basis for acquiring ownership;

c.

Indicate whether a buy-out agreement exists, whether written or verbal, giving other stockholders, persons or entities the right to acquire the interest of local stockholders in the future; submit copies of the agreements;

d.

Resume of prior business history of applicant, including the expertise of applicant in the cable television field;

e.

List of all stockholders of applicant owning or controlling five percent or more of the stock of the applicant and the percentage of stock owned or controlled by each;

f.

List of officers of applicant, together with a description of education and business background of each officer;

g.

Provide specific information regarding whether applicant (including parent entity if applicable), any principal, manager or any other cable operator of which any principal or manager of applicant was or is a principal or manager, has ever been:

(1)

Found guilty of a criminal proceeding (felonies or misdemeanors) in which any of the following offenses have been charged: fraud, embezzlement, tax evasions, bribery, extortion, jury tampering, obstruction of justice (or other misconduct affecting public or judicial officers in the performance of their duties), false/misleading advertising, perjury, antitrust violations (state or federal), violations of FCC regulations, or conspiracy to commit any of the foregoing;

(2)

A party to a civil proceeding in which he, she or it was held liable for any of the following, or is now a party to any such proceedings: unfair or anticompetitive business practice, antitrust violations (state or federal) including instances in which consent decrees were entered, violations of securities laws (state or federal), false/misleading advertising, violations of FCC regulations, racketeer influences and corrupt organizations, or contraband forfeitures;

(3)

Subject to any penalty, criminal or civil, involving failure to comply with the requirements of a cable television franchise;

(4)

Involved in instituting legal action against its franchising authorities;

(5)

Involved in revocation/nonrenewal of any other franchises.

Financial information:

a.

Current financial statement of applicant which has been audited by a certified public accountant. Include balance sheet, profit and loss statement for at least the three most recent years, and statement of changes in financial position; if in existence for less than three years, for such period of existence;

a.

Describe in detail the financing plan for the construction and initial operation of the proposed cable television system and provide proof of financial capability.

(1)

Proof of financial capability shall include:

(a)

A showing of sources and amount of equity capital; if equity contribution is borrowed, describe collateral and terms of the loan,

(b)

A showing of sources and amount of debt capital, both primary and secondary,

(c)

Terms of financing;

(2)

(a)

Supply documentation that demonstrates and assures applicant's financial viability, such as letters of commitment from financial institutions which demonstrate the availability of sufficient funds to complete construction of the proposed system. Commitments conditional on the obtaining of the franchise are acceptable,

(b)

If applicant is a multiple system operator, give evidence of the portion of the company's sources of financing which is uncommitted and will be applied to the proposed construction and operation of the system,

(c)

State the amount of equity contribution, plus the method by which the contribution is paid (i.e., cash, cash plus credit, services, etc.). Include financial commitment documentation for each investor,

(d)

If applicant is a division or subsidiary of a multiple operator, provide the proposed debt instrument describing terms of payment, and/or other documentation showing funds committed to the applicant,

(e)

If capital is to be raised or supplied by a parent company or other entity, provide an annual report for the parent entity, or equivalent information if an annual report is not prepared for the parent entity,

(f)

Describe sources and documentation evidencing debt financing,

(g)

Applicant will be required to authorize release of financial information to county from financial institutions relating to information supplied by applicant in support of the application;

(3)

Provide pro forma financial statements as follows:

(a)

Pro forma financial statements are required for a minimum of five years beginning with the date the franchise agreement is accepted, projected annually through the year the applicant anticipates that all financing obligations and debts will have been retired. Such pro formas shall include income statements supported by realistic levels of subscriber penetration including the source of the information and basis for the projection. Sources and uses of funds, loan amortization information, anticipated capital expenditures, construction costs, depreciation schedules, and operating expenses shall be provided and the basic assumptions relied upon shall be detailed to support its projections. The information and assumptions shall include financial aspects of miles to be built and types of installation (aerial/underground), building schedule, headends, other capital investments and planned coverage; debt, debt equity ratio, debt service costs; depreciation; operating costs in detail; assumed market penetration rate; expected internal rate of return; discuss fixed and variable costs; and such other relevant information as the county deems appropriate.

Provide a construction schedule, describe type and placement of construction, detail phases of construction, and include map correlated to the phases of construction.

a.

Include copies of any agreement with utility companies for the use of any facilities including but not limited to poles, lines and conduits.

Proposed rates and charges to be charged subscribers; indicate extent to which franchisee proposes to utilize bulk rate contracts, promotional considerations, or lock box charges and other charges if any.

Description of system configuration, programming and equipment:

a.

Provide a technical schematic of the system that will be used to provide coverage to the service area.

b.

Itemize the electronic equipment to be used, channels to be provided, pay TV or additional services; indicate channel lineup for basic service and other service tiers (by service tier), and type of converter; include the manufacturer, type and model numbers (aerial and underground, including drops), active electronics including power supplies and standby power systems, and passive electronics; describe the need for and proposed use of converters including an explanation of the conditions under which converters will be furnished.

c.

Describe headend design and reception facilities, including make and model numbers of antennas, signal processors, modulators, demodulators, FM processors and status monitoring systems. Indicate whether signal studies or measurement programs have been undertaken in selecting the headend site(s) and microwave sites, if any.

d.

Describe any other headend and/or subscriber terminal equipment that will be or may be installed for pay-per-view service, other interactive services, text display, home security, etc. Give full details of immediate and long term plans including arrangements actually made.

e.

Furnish a summary spectrum utilization chart.

f.

Provide make and model number of emergency override system, describe how the system will work, how and from where the system will be activated.

g.

Describe equipment for standby power (for headend, transportation and trunk amplifiers); length of time standby power will be provided.

h.

Describe equipment to be used for programming any automated channels, including make and model numbers of the equipment.

i.

Discuss channel expansion capability in respect to both the short-term and long-term, including specific reference to the degree of flexibility available for adapting the system to increasing or changing capacity requirements.

Forecast of number of homes in franchise service area, number of homes to be passed (if different from number of homes in the franchise service area), and projected number of subscribers (market penetration).

Description of technical standards to which the system will conform.

a.

Information shall include, but not be limited to:

(1)

Carrier to noise ratio, composite triple beat, and cross modulation specifications. Provide the calculations supporting these specifications associated with the transmission paths described in (a), (b) and (c) following. All supporting calculations shall be related to full loading of unmodulated television signals. Any enhancements such as HRC channelization, synchronous carriers of FM modulation shall be separately stated.

(a)

Worst-case satellite received signal to the most distant subscriber, including distribution system and super trunk effects.

(b)

Worst-case off-air-signal to most distant subscriber, including distribution and super trunk effects.

(c)

Worst-case most distant institutional originators to most distant subscriber, including upstream path distribution system and longest super trunk effects.

(d)

Amplifier Cascade. Indicate the number of amplifiers, number of miles and type of cable in the longest amplifier cascade in the proposed cable system.

Disclosure of whether applicant is in process of acquiring other cable systems or businesses which could impact its resources (management and financial) available to construct, upgrade, maintain and operate the franchise. Indicate any plans for future acquisition(s) within the next two years which could impact applicant's ability to furnish service.

If limited partnership, indicate if there are any plans to sell/dissolve partnership within term of the franchise.

a.

Indicate provisions for PEG programming. At the minimum, the franchisee shall make available as of the date of initiation of cable services, the capability of broadcasting a tape which a PEG user provides to the franchisee for showing on the system, subject to legislative guidelines dealing with copyright clearances, obscenity provisions and other appropriate areas concerning acceptance of programming for viewing, and within 12 months of initiation of cable services, provide videotaping and editing capabilities for PEG users.

b.

To the extent feasible at time of application, describe the facilities, equipment, training for residents, funding and staffing which franchisee will ensure are available for residents of the franchise service area. The program plan should provide for a comprehensive and well-balanced production capability which will enable the user to produce programming in a studio and to videotape productions at remote locations.

c.

The program plan shall address, but not be limited to, the following areas:

(1)

Establishment of a citizens group reflecting the community needs and interests to advise the franchisee and the franchising authority on the utilization of the community access resources;

(2)

Description of training opportunities for the residents of the area and the staff of the franchising authority;

(3)

Description of funding sources and available grants for the support of community access programming;

(4)

Description of an information outreach program for the community regarding community programming opportunities;

(5)

Description of franchisee's capital financial obligation to support the plan described in this section;

(6)

Description of facilities, equipment and materials franchisee will ensure are available for use of the residents. Plan may include several phases of commitment and implementation;

(7)

Provision for a periodic reassessment of community needs and interests, to be conducted within a minimum of three years and a maximum of five years, which will determine whether additional facilities, equipment, materials and/or training opportunities are needed to meet changing community needs and interests during the term of the franchise.

Any other details, statements, information or references pertinent to the subject matter of such application which shall be required or requested by the county or by any provision of law.

(Ord. 88-0159F § 1 (part), 1988.)

A.

Upon submission of an application, the applicant/franchisee shall pay to the county a nonrefundable franchise processing fee as follows:

Initial grant of franchise or renewal of existing franchise:

a.

Franchise area containing less than 1,000 homes: $1,000.00;*

b.

Franchise area containing 1,000 to 5,000 homes: $2,500.00;

c.

Franchise area containing 5,001 to 10,000 homes: $5,000.00;

d.

Franchise area containing 10,001 or more homes: $7,500.00.

* If the franchise area contains less than 100 homes, franchisee may receive credit for all or a portion of the processing fee. Said credit shall be applied to franchise fee payments required by Section 16.64.010. Granting the credit shall be at the sole discretion of the board and shall be based upon economic and/or technological considerations specific to the franchise area.

Consent to sale, transfer, transfer of stock, assignment, lease, hypothecation or trust of franchise, not requiring modification of the franchise by adoption of an amending ordinance: $1,000.00.

Modification of franchise requested by franchisee requiring the adoption of an amending ordinance: $2,500.00.

Consent to sale, transfer, transfer of stock, assignment or lease, or any other action requiring modification of franchise by adoption of an amending ordinance: $2,500.00.

Modification of franchise resulting from noncompliance with one or more provisions of the franchise which requires the adoption of an amending ordinance: $2,500.00.

B.

Applicant may be required to pay any additional costs incurred by county in the processing of applicant's request for franchise, renewal, modification, consent to sale, transfer, transfer of stock, assignment, lease, hypothecation or trust of franchise. Such costs may include the costs incurred for hiring consultants to assist in evaluating the application. Such costs shall be paid by the applicant prior to final consideration of the request by the director or the board, as applicable.

(Ord. 88-0159F § 1 (part), 1988.)

Upon receipt of an application for franchise, the department shall transmit one copy each thereof to the appropriate county departments.

(Ord. 88-0159F § 1 (part), 1988.)

Upon receipt of an application for franchise, the commission shall estimate the cost of publication and posting of the notice of hearing, as provided herein, and shall notify the applicant of the amount thereof. No further action will be taken on the application until the estimated cost of publication and posting has been deposited with the commission by the applicant.

(Ord. 88-0159F § 1 (part), 1988.)

Upon receipt of the required deposit, the commission shall set the application for a hearing at a time and date approved by the director. Notwithstanding the foregoing, no application for franchise shall be set for hearing unless it contains the information required by Section 16.62.020.

(Ord. 88-0159F § 1 (part), 1988.)

Not less than 10 days before the hearing, the commission shall give notice in writing of the time, date and place of hearing to the director, the auditor-controller, and the applicant. The commission shall serve such notice upon the applicant by first class

mail, postage prepaid.

(Ord. 88-0159F § 1 (part), 1988.)

A.

The posted notice of hearing shall state that an application has been made for a cable television franchise for (specify area or areas to be served) and shall contain the following statement:

"Any person having objections to the granting of the franchise for which application is made, or wishing to suggest any other terms and conditions which should be included in such franchise, may, at any time prior to the date above named, file with the Commission in writing, objections or suggestions, or both, giving the reasons therefor, and may appear at the time and place of the hearing to be heard relative thereto."

B.

The notice shall also indicate the address and telephone number of the commission.

(Ord. 88-0159F § 1 (part), 1988.)

In those places (minimum of two places, up to and including a maximum of 10 places) within the proposed franchise service area to be served which the commission finds will most adequately notify the inhabitants thereof, the commission, not less than five days prior to the hearing, shall post notice of the time, date and place of hearing at each of the selected locations.

(Ord. 88-0159F § 1 (part), 1988.)

Not less than five days before the hearing, the commission shall publish in a newspaper of general circulation circulated within the area to be served, and pursuant to Section 6061.3 of the Government Code, the same notice as is required to be posted.

(Ord. 88-0159F § 1 (part), 1988.)

If the cost of publication and posting of notice of hearing exceeds the amount deposited by the applicant, the commission shall bill applicant for the deficiency. The applicant shall pay the whole of such bill within 30 days after receipt thereof. If the amount of the deposit exceeds the cost of publication and posting, the county shall refund the difference to the applicant.

(Ord. 88-0159F § 1 (part), 1988.)

Any person interested, at any time after the filing of an application as provided in this chapter and prior to the hearing thereon, may file with the commission written protests or suggestions, or both, either against the granting of the franchise or to suggest any terms and conditions which should be included in the franchise. The commission, in considering the application, shall give consideration to all of such protests and suggestions.

(Ord. 88-0159F § 1 (part), 1988.)

At the time and place set for the hearing or at the time and place to which the hearing may be continued by the commission, the commission shall hear the applicant, who may present any evidence to show why the franchise should be granted, why

certain terms or conditions should be imposed or not imposed on such franchise if granted, and also shall hear testimony or statements of other persons who may attend the hearing and present reasons why the application should be denied, or why, if granted, the franchise should or should not be subject to certain conditions.

(Ord. 88-0159F § 1 (part), 1988.)

Within 30 days after the close of the hearing, and based upon the evidence received at the hearing and other matters which the commission is required to consider, the commission shall file with the board its recommendations as to whether or not the application should be granted and, if granted, subject to what conditions. The commission shall send a copy of its recommendations to the applicant, the director, the auditor-controller, and the director of public works.

(Ord. 88-0159F § 1 (part), 1988.)

Upon receipt of the recommendations of the commission, the board may take any one of the following actions:

A.

The action recommended by the commission;

B.

Refer the matter back to the commission with or without instructions;

C.

Require a transcript of the testimony and any other evidence received by the commission and take such action as in its opinion is indicated by the evidence;

D.

Set the matter for public hearing before itself. Such public hearing shall be held de novo as if no hearing previously had been held.

(Ord. 88-0159F § 1 (part), 1988.)

In the case of an application for a license agreement to construct and maintain a portion of a cable television system along, over, across or under public rights of way to extend cable television services to a franchise granted by one or more franchising authorities, the applicant shall pay a license agreement processing fee of $1,000.00.

A.

A license agreement is required for a cable television system operating within a city, whose franchise service areas are divided by county unincorporated area(s), in order to pass through the county unincorporated area(s) as necessary to serve city residents; the execution of a license agreement does not grant any authority to serve residents in county unincorporated area(s).

B.

Applicant may be required to pay any additional costs incurred by county in the processing of applicant's request for a license agreement. Such costs may include the costs incurred for hiring consultants to assist in evaluating the application for a license agreement.

(Ord. 88-0159F § 1 (part), 1988.)

The director may execute license agreements for the use of county roads and county easements by cable television systems operating within a city which do not exceed 15 years in term.

(Ord. 88-0159F § 1 (part), 1988.)

A.

The board may grant a limited franchise to a municipal cable operator to serve unincorporated areas which are not practically serviceable by a county franchised cable operator. An application for a limited franchise shall be submitted to the director. Said application shall comply with the provisions of Section 16.62.020, and shall be accompanied by the appropriate fee set forth in Section 16.62.025.

B.

Prior to awarding such a limited franchise, the county franchised cable operators shall be given notice of the proposed limited franchise by the director and shall be given an opportunity to make application to serve the area. If no franchised cable operator responds within 60 days of the date of the notice, then the department shall process the application for a limited franchise. The director shall submit his recommendation to the board.

C.

The term of the limited franchise shall run concurrently with the municipal ordinance, except that the term of the limited franchise shall not exceed 15 years in length. In accordance with Chapter 16.69, the holder of the municipal franchise may make application to the director for renewal of the limited franchise to run concurrently with the renewal of the municipal franchise up to a maximum of 15 years.

(Ord. 88-0159F § 1 (part), 1988.)

A.

When franchisee makes application for a franchise or renewal of a franchise, and there exists an area or areas adjacent to the requested franchise service area(s), which at time of application have not reached sufficient development or density of population to require the provision of cable services within three years of the granting of the franchise or renewal, but for which it is anticipated that such development or density will occur within the term of the franchise, franchisee may include in the application a request for such area(s) to be included as "line extension areas." The application shall include a map on which the line extension area(s) are indicated.

B.

The director shall have the authority to grant one or more line extensions during the term of the franchise. As a condition to the granting of the extension of cable service to the line extension area(s), the director may impose additional terms and conditions upon the franchise which the director may deem to be in the public interest.

C.

At such time as the franchisee determines that the line extension area or areas have developed sufficiently to warrant the extension of cable services, franchisee shall apply to the director for approval to extend cable services. The application shall include, but not be limited to, a map of the area(s) to be constructed, a construction schedule, an estimate of construction costs, a copy of the complaint record as identified in Section 16.68.120(D), and other applicable information required by the director.

D.

After approval to proceed with the line extension(s), and upon notification by franchisee that construction of said area(s) has been completed, said area(s) shall be considered a part of the franchise service area(s), as if originally granted in the ordinance granting the franchise, and the term of the franchise for such extension area(s) shall expire when the term of the original franchise area(s) expires. The director shall issue written notice to the franchisee that said area(s) shall thereafter be considered as if a part of the original franchise service area. A copy of said notice shall also be filed with the board for its records.

E.

Franchisee shall provide to any area(s) constructed under the line extension policy the same services at the same rates by the franchisee as franchisee provides to those service area(s) in the original franchise service area(s) as set forth in Section 16.68.010.

(Ord. 88-0159F § 1 (part), 1988.)

A.

During the life of the franchise, should franchisee determine that any undeveloped areas not included in the original franchise application as line extension areas reach sufficient development to warrant the extension of cable services, franchisee shall apply to the director for approval to extend cable services to such new extension areas. At director's sole option, the director may elect to refer the application to the board or the commission for action on the request.

B.

An application shall be submitted to the director which shall include, but not be limited to, map(s) of the area(s) to be constructed, an estimate of the number of homes in the area(s), a construction schedule, an estimate of construction costs, a copy of the complaint record as identified in Section 16.68.120(D), and other applicable information required by the director.

The application shall be accompanied by a processing fee, in an amount determined according to the requirements of Section 16.62.025, based on the homes contained in the newly requested area(s).

C.

As a condition to the granting of the extension of cable service to the requested extension area(s), the director or board or commission, as applicable, may impose additional terms and conditions upon the franchise which the director or board or commission, as applicable, may deem to be in the public interest.

D.

Upon the director's or commission's or board's determination to consent to the request to add new extension area(s) to the franchise, the director shall issue written notice to the franchisee. Said written notice shall include map(s) and legal description(s) of the new extension area(s). A copy of said notice shall also be filed with the board for its records.

E.

Any such new extension areas shall be considered a part of the franchise service area(s) as if originally granted in the ordinance granting the franchise, and the term of such new extension area(s) shall expire when the term of the original franchise area(s) expires.

F.

Franchisee shall provide to any area(s) constructed under this section the same services at the same rates as franchisee provides to those service area(s) in the original franchise area(s) as set forth in Section 16.68.010.

G.

The director shall advise the board and the commission on a semiannual basis of the status of all new extensions granted during the preceding period.

(Ord. 88-0159F § 1 (part), 1988.)