Memorandum

City of Lawrence

Legal Services Department

 

TO: 

David L. Corliss, City Manager

 

FROM:

Toni Ramirez Wheeler, Director of Legal Services

John Jay Miller,  Staff Attorney

 

 

Date:

September 3, 2010

 

RE:

Transfer of Cable Franchise from The World Company to Knology Of Kansas, Inc.

 

 

 

 

The World Company, d/b/a Sunflower Broadband, (Sunflower) has entered into an agreement with Knology of Kansas, Inc., d/b/a Knology (Knology) to transfer its cable systems, including its cable franchise agreement with the City.  On August 23, 2010, Sunflower and Knology provided the City Manager’s Office written notice of this transaction and requested the transfer of the cable franchise agreement.  The expected closing date of the transaction is November 30, 2010.  After providing a brief overview of the City’s franchise agreement with the World Company, this memorandum will outline the process to assign the cable franchise to Knology of Kansas, Inc. pursuant to federal, state and local law.

 

Franchise Agreement with The World Company   

A cable contract franchise ordinance is a non-exclusive right to construct use and maintain cables, lines and other facilities in the public right-of-way to provide cable services to residents of the city.  The authority to enter into the contract franchise ordinance is pursuant to K.S.A. 12-2001 et seq. and K.S.A. 12-2006 et seq.   

 

The City has had a cable franchise with the World Company since 1969.  The most recent franchise was entered into in December 1998 with Ordinance 7055. The length of the franchise agreement is fifteen years.  The franchise was amended in 2006 with Ordinance 8059 to increase the franchise fee to five percent (5%) of gross revenue derived from the operation of the World Company’s cable system.  

 

Transfer of Franchise Agreement to Knology, Inc.

Federal law does not set substantive standards for accepting or rejecting a transfer; however, it does establish several mandatory procedures that a franchising authority (City) must follow.  First, federal law requires the City to act within 120 days of receipt of a completed transfer application on FCC Form 394.  The City received FCC Form 394:  Application for Franchise Authority Consent to Assignment of Cable Television Franchise, with exhibits on August 23, 2010.  Legal staff is in the process of determining whether the application is complete.  If it is complete, the City must act before December 22, 2010.  The City’s failure to act by that date may serve as an approval of the transfer request.  Second, if the City questions the accuracy of the information provided, it must notify the cable operator within 30 days of the filing of such information. That date is September 22, 2010. 

 

State law relating to the City’s franchise authority does not establish procedural requirements for the City to assign the cable franchise from Sunflower to Knology.   Because the City is not granting or extending a franchise agreement and Ordinance 7055 only requires the written permission of the City to assign the franchise, no public hearing is required to transfer the franchise.  Knology became a valid Kansas corporation on August 4, 2010.

 

Ordinance 7055, and amendments thereto, granted the cable system franchise to the World Company and prescribes the method for assigning the cable system franchise.  Section 15 of the ordinance states:

 

  1. The Grantee shall seek approval from the City to transfer the franchise.

 

  1. The Grantee shall notify the City in writing of its request to assign the franchise. 

 

  1. The franchise cannot be assigned until:
    1. The City approves of the assignment in writing, and
    2. FCC form 394, Application for Franchise Authority Consent to Assignment or Transfer of Control of Cable Television Franchise, is submitted to the City. 
  2. The franchise can only be assignable if it complies with federal, state and local law. 

 

The applicants are requesting that the City Commission adopt an ordinance to approve the transfer of the cable franchise.  The ordinance will constitute the written permission of the cable franchise transfer.  The proposed ordinance submitted in the August 23 application is currently under review by legal staff.  Staff may recommend revisions to the draft ordinance.   

 

Action Requested:  Direct staff to review the submitted request to transfer the cable franchise to Knology and prepare the appropriate ordinance for the City Commission to consider on a future agenda.