Wednesday, Sept. 2, 1998 | 10:44 a.m.
Cox Communications Inc. has agreed to pay higher fees and provide more community-interest channels between the new owner of the local cable television company and local governments in Clark County.
Today's tentative deal -- the first-ever master franchise agreement between the cable company and local governments -- is likely to result in higher prices for cable television as higher franchise fees are passed on to consumers.
Negotiations between Atlanta-based Cox and the cities of Las Vegas, North Las Vegas, Henderson and Boulder City and the county are near completion. But the most controversial issues -- finances and public channel access -- have been resolved, a Cox official said.
Cox is acquiring the Las Vegas cable television operation for $1.325 billion from Prime Cable, jointly owned by the Greenspun family and Austin, Texas-based Prime. Today's deal approved the transfer of the system from Prime Cable of Las Vegas to Cox.
Members of the Greenspun family also own the Las Vegas Sun and associated media properties.
Negotiators worked today to resolve a few remaining issues, attempting to complete everything by today so that the first drafts of the proposal could be on the desks of local elected officials.
Approval of the new cable deal -- a 10-year pact with 10 option years worth more than $7.5 million a year -- could occur by the end of the month.
John Dyer, vice president of financial planning for Cox, said the key points of the agreement are the fees to be paid to the county and the municipalities and channel access.
For Clark County and the cities of Las Vegas and North Las Vegas, franchise fees would increase from 3 percent to 4 percent of Cox's gross revenues for two years, then increase to 5 percent. Five percent is the maximum allowed by federal law and a state law says franchise holders cannot increase fees by more than 1 percent every two years.
Henderson and Boulder City already are at 5 percent and would stay there.
Last year, Prime Cable paid about $2.8 million to the five entities, but based on growth of the system, anticipated revenues and the increase in the franchise fees, the deal is worth closer to a combined $7.5 million a year to the governments.
Federal law mandates that franchise fees be passed through to consumers, so when fees go up, rates are expected to increase by the 1 percent increments.
Money from the franchise fees usually is dedicated to sidewalk and street repairs when cable is installed. County officials say the amount generated in fees doesn't cover the costs of all infrastructure repair.
The other major sticking point on the negotiations was cable access. Presently, the only community access is Clark County's Channel 4. But under the new agreement, government, education and community access could increase to six channels within two years and even more in the long run.
Dyer said Clark County would continue to have access to Channel 4. A second government channel would be made available to the City of Las Vegas. The cities of North Las Vegas, Henderson and Boulder City would share a third.
Still another channel would be dedicated to education. Dyer said that channel, to be produced from UNLV's Greenspun School of Communication, would be shared by UNLV, the Community College of Southern Nevada and the Clark County School District. A board consisting of representatives from those three institutions, Cox and the five government entities would set policy for the channel.
The effort would be financed by matching funds from Cox and the local government entities up to $300,000 total. Dyer said if the education channel were to reach capacity, a second would be made available.
The sixth channel available would be allocated to the county if a need for community access is demonstrated. Local community activists have sought a community access channel, but county officials, so far, say they've been a vocal minority lobbying for the channel. The activists counter that the public isn't informed about the benefits of community access because the county fails to explain and publicize it.
County officials say a task force would be formed to work out details of how a community access channel would be administered. Proponents have said a nonprofit group should establish policies and some have said the channel should be available on a first-come, first-served basis.
No funding source has been determined for community access TV.
Tina Schafer, director of Citizens for Public Access Television Vegas, said she was pleased that community access issues were raised, but is still skeptical of how a board would be set up and how a channel would be financed.
"I want it (a community access channel) to be inclusive and I want it to be free," Schafer said.
Schafer said a portion of the franchise fee should be dedicated to funding community access, which she said is how channels nationwide are financed.
All the additional channels would not be made available until the completion of a system expansion currently under way. Cox has promised to continue the buildout begun by Prime more than two years ago and completion is expected by Jan. 1, 2000.
A few other issues have been resolved by the parties, mostly involving customer service concerns like the handling of deposits, credits for service outages and better billing statements.
Cox also agreed to resolve financial claims against the cable system that have accumulated over the past three years with a $4.5 million settlement to the five entities. That amount would not be passed on to customers.
Jim Spinello, the lead negotiator from Clark County, said he didn't want to talk about specifics of the agreement until it had been completed.
"We're very hopeful that this agreement will win approval," Spinello said. "In the closing hours, we expect to put together a few more details, and unless some bubble bursts somewhere, I think we have a document most of the parties are happy with."
"Where we are right now, we feel we got as much as we could possibly get from the current contract," said David Roark, who negotiated on behalf of the City of Las Vegas.
"There still are about 10 issues that have to be rectified," he said Tuesday afternoon.
Betsy Fretwell, intergovernmental relations director for the City of Henderson, said it was too early to determine how the agreement would play to council members.
"Generally, things have been pretty positive," Fretwell said. "It's been interesting to work on a long-term plan when technology changes so rapidly in this field."
Steve Schorr, a spokesman for Prime Cable, said the most remarkable aspect of the negotiations was that each entity agreed to treat each other as an equal.
"The documents we are coming forward with mark the first time that all the local communities in our hometown have worked together on a franchise agreement," Schorr said.
"One of the long-time needs of our community was for the expansion of educational television, a place where the schools could offer English as a second language or GED classes. The agreement includes a provision to meet some of those education needs."
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