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HomeMy WebLinkAboutAgenda Report - May 1, 2002 E-09COUNCIL COMMUNICATION AGENDA TITLE: MEETING DATE: PREPARED BY: Adopt Resolution Consenting to Change of Control and Internal Restructuring of AT&T Corporation to AT&T Comcast Corporation May 5, 2002 Janet L. Hamilton, Management Analyst RECOMMENDATION: That the City Council adopt a resolution consenting to change of control and internal restructuring of AT&T Corporation to AT&T Comcast Corporation. BACKGROUND: The parent corporation of the City of Lodi's cable television franchise, AT&T Broadband, has announced its intention to merge with Comcast Corporation to form a new public company, AT&T Comcast Corporation. Under the terms and agreements governing the transaction, AT&T Corporation will spin off its cable system assets and simultaneously merge them with Comcast, forming a new company called AT&T Comcast Corporation. The City's franchise agreement requires that the Corporation obtains the consent of the City for this transaction. FUNDING: None Attachments Respectfully submi • vier �L - Dixon '+ynn City Manager APPROVED: - �� ... _ H Dixon Flynn - City Manager AT&T Broadband February 25, 2002 Mr. H. Dixon Flynn, City Manager City of Lodi 221 West Pine Street Lodi, CA 95240 Re: Merger of AT&T Broadband and Comcast Corporation Request for Consent to Change of Control Dear Mr. Flynn: AT&T Corp., the parent corporation of your franchisee, and Comcast Corporation have announced their intention to combine their cable systems into a new public company, AT&T Comcast Corporation. We are writing to provide you with information regarding this transaction, and to formally request any consent that may be required by franchise or applicable law. AT&T and Comcast are excited about the merger, which we believe will have significant benefits for our customers. The transaction will create the world's leading communications, media and entertainment company. With the combined expertise and initiative of AT&T Broadband and Comcast, we hope to enhance the quality and choice of products and services available to consumers. Under the terms of the agreements governing the transaction, following an internal restructuring, AT&T Corp. will spin off its cable system assets and simultaneously merge them with Comcast, forming a new company to be called AT&T Comcast Corporation. We have attached a description of each step of the process, including "before" and "after" charts, to assist you in understanding the transaction. Subject to the internal restructuring, the transaction will not change the holder of the franchise; the franchise will continue to be held by the same legal entity after the merger is complete. However, the transaction will result in a new indirect parent company for the Franchisee — AT&T Comcast Corporation. Our records indicate that the franchise may require that we obtain your consent to this transaction. To assist you in evaluating our request, we have enclosed the following materials: • FCC FORM 394. Enclosed are three copies of the Federal Communications Commission's (FCC's) Form 394 and any additional copies required by your franchise. According to the FCC, the Form 394 is designed to provide you with the information necessary to assess the financial, legal and technical qualifications of the proposed new controlling entity. As part of that Fomi, we are including any specific additional information required by the franchise. Under the FCC's rules, you have a maximum of 120 days from the date you receive this information to review it and to act upon our request for consent to the merger. This timeframe may be shorter if so specified in your franchise. If you choose not to take any action within this 120 day period, under federal law your consent will be deemed granted. • CONSENT RESOLUTION. For your convenience and consideration, we have also enclosed a draft resolution that addresses your consent to the transaction. We would request that this resolution be placed on your agenda for consideration at your earliest convenience. If at any time you have any questions or concerns about the transaction or would like any additional information, please feel free to call me at 916-858-4905. You can write to me at: AT&T Broadband 2893 Prospect Park Rancho Cordova 95670 Fax: 916-858-4905 If you write to me, please send a copy to: AT&T Broadband 188 Inverness Drive West, Room 6-042 Englewood, CO 80112 Fax: 303-858-3615 Thank you for your assistance in this matter. Sincerely, By: kj( L `� Susan Ritchie Vice President, Franchising an Local Government Affairs Attachment and Enclosures CURRENT STRUCTURE Public Shareholders AT&T Corp. AT&T Broadband LLC Existing Cable Franchise Holders (direct and indirect) Media One Group, Inc. Existing Cable Franchise Holders (direct and indirect) AT&T Broadband of Southern Cal, Inc. AT&T CSC, Inc. District Cablevision, Inc. Novato Cable Company South Chicago Cable, Inc. Existing Cable Franchise Holders (direct and indirect) FINAL STRUCTURE Public Shareholders AT&T Comcast Corporation AT&T Broadband Holdings, L.L.C. AT&T Broadband Corp. Comcast Corporation AT&T Broadband LLC Existing Cable Franchise Holders (direct and indirect) Media One Group, Inc. Existing Cable Franchise Holders (direct and indirect) AT&T Broadband of Southern Cal, Inc. AT&T CSC, Inc. District Cablevision, Inc. Novato Cable Company South Chicago Cable, Inc. Existing Cable Franchise Holders (direct and indirect) Federal Communications Commission Washinbnon, D. C. 20554 FCC 394 APPLICATION FOR FRANCHISE AUTHORITY CONSENT TO ASSIGNMENT OR TRANSFER OF CONTROL OF CABLE TELEVISION FRANCHISE DATE: February 25, 2002 2. Application for: Approsed b. UbII FOR FRANCAISE AUTHORITY USE ONLY I. Community Unit Identification Number: CA0155 Assignment of Franchise Transfer of Control 3. Franchising authority: CITY OF LODI 4. Identify community where the system/franchise that is the subject of the assignment or transfer of control is located: CITY OF LODI 5. Date system was acquired or (tor system's constructed by the transferor/assignor) the date on which service was provided to the first subscriber in the franchise area: N/A 6. Proposed effective date of closing of the transaction assigning or transferring ownership (tithe system to transfcrec/assignee: As soon as all closing conditions have been satisfied 7. Attach as an Exhibit a schedule of any and all additional information or material filed with this application that is identified in the franchise as required to be provided to the franchising authority when requesting its approval of the type of transaction that is the subject of this application PART 1 - TRANSFEROR/ASSIGNOR I. Indicate the name, mailing address, and telephone number of the transferor/assignor. Gshlblt No. Legal name of Transferor/Assignor (if individual. list last name first) AT&T Corp. Assumed name used for doing business (if any) Mailing street address or P.O. Box c/o AT&T Broadband. LLC, 188 Inverness Drive West, Room 6-042 City Englewood State CO ZIP Code 80112 Telephone No. (include area code) (303) 858-5417 2.(a) Attach as an Exhibit a copy of the contract or agreement that provides for the assignment or transfer of control (including any exhibits or schedules thereto necessary in order to understand the terms thereof). If there is only an oral agreement. reduce the terms to writing and attach. (Confidential trade, business, pricing or marketing information, or other information not otherwise publicly available, may be redacted). (b) Does the contract submitted in response to (a) above embody the full and complete agreement between the transferor/assignor and the transtcrce/assignee? Exhibit No. 2 ❑ Yes ® No Exhibit No. See Exhibit 2 4pumh.r 1976 PART II - TRANSFEREE/ASSIGNEE I.(a) Indicate the name, mailing address, and telephone number of the transferee/assignee. 1 Legal name of Transferee/Assignee (if individual, list last name first) AT&T Comcast Corporation Assumed name used for doing business (if any) Mailing street address or P.O. Box 1500 Market Street, 28'h Floor - West Tower City Philadelphia State PA ZIP Code 19102 Telephone No. (include area code) (215) 320-8618 (b) Indicate the name, mailing address, and telephone number of person to contact, if other than transferee/assignee. Name of contact person (list last name first) Arias, Maria Firm or company name (if any) AT&T Broadband Mailing street address or P.O. Box 188 Inverness Drive West, Room 6-042 Fax Number: 303-858-3615 City Englewood Statc CO ZIP Code 80112 Telephone No. (include area code) 303-858-5417 (c) Attach as a. Exhibit the name, mailing address, and telephone number of each additional person who should be contacted, Many. (d) Indicate the address where the system's records will be maintained. Exhibit No. See attachment to this page Street address 1500 Market Street City Philadelphia State PA ZIP Code 19102 2. Indicate on a attached exhibit any plans to change the current terms and conditions of service and operations of the system as a consequence of the transaction for whicapproval is sought. FCC 094 )Page 2) February 20, 2002 Exhibit No. 3. If the applicant is a corporation or a limitedartnershi is the transferee/assignee formed under the laws of, 0 Yes ® No or duly qualified to transact business in, the State or other jurisdiction in which the system operates? If the answer is No, explain in an Exhibit. Exhibit No. 4 4. Has the transferee/assignee had any interest in or in connection with an application which has been dismissed 0 Yes ® No or denied by any franchise authority? If the answer is Yes, describe circumstances in an Exhibit. Exhibit No. 5 5. Has an adverse finding been made or an adverse final action been taken by any court or administrative body 0 Yes ® No with respect to the transferee/assignee in a civil, criminal or administrative proceeding, brought under the provisions of any law or regulation related to the following: any felony; revocation, suspension or involuntary transfer of any authorization (including cable franchises) to provide video programming services; mass media related antitrust or unfair competition; fraudulent statements to another governmental unit; or employment discrimination? If the answer is Yes, attach as an Exhibit a full description of theersons and matter(s) involved, including an identification of any court or administrative body and any proceeding (by dates and file numbers, ifapplicable), and the disposition of such proceeding. Exhibit No. 6 6. Are there any documents, instruments, contracts or understandings relating to ownership or future ownership Yes rights with respect to any attributable interest as described in Question 2 (including, but not limited to, non- voting stock interests, beneficial stock ownership interests, options, warrants, debentures)? If Yes, provide particulars in an Exhibit. 0 No Exhibit No. 7 7. Do documents, instruments, agreements or understandings for the pledge of stock of the transferee/assignee, 0 Yes ® No as security for loans or contractual performance, provide that: (a) voting rights will remain with the applicant, even in the event of default on the obligation; (b) in the event of default, there will be either a private or public sale of the stock; and (c) prior to the exercise of any ownership rights bya purchaser at a sale described in (b) any prior consent of the FCC and/or of the franchising authority, if required pursuant to federal, state or local law or pursuant to the terms of the franchise agreement will be obtained? If No, attach as an Exhibit a full explanation. SECTION III - TRANSFEREE'S/ASSIGNEE'S FINANCIAL QUALIFICATIONS Exhibit No. 8 1. The transferee/assignee certifies that it has sufficient net liquid assets on hand or available from committed Yes ❑ No resources to consummate the transaction and operate the facilities for three months. 2. Attach as an Exhibit the most recent financial statements, prepared in accordance with generally accepted accounting principles, including a balance sheet and income statement for at least one full year, for the transferee/assignee or parent entity that has been prepared in the ordinary course of business, if any such financial statements are routinely prepared. Such statements, if not otherwise publicly available, may be marked CONFIDENTIAL and will be maintained as confidential by the franchise authority and its agents to the extent permissible under local law. SECTION IV - TRANSFEREE'S/ASSIGNEE'S TECHNICAL QUALIFICATIONS Set forth in an Exhibit a narrative account of the transferee's/assignee's technical qualifications, experience and expertise regarding cable television systems, including, but not limited to, summary information about appropriate management personnel that will be involved in the system's management and operations. The transferee/assignee may, but need not, list a representative sample of cable systems currently or formerly owned or operated. FCC 394 (Page 4) February 25. 2002 Exhibit No. 9 Exhibit No. 10 SECTION V - CERTIFICATIONS Part l - Transferor/Assignor All the statements made in the application and attached exhibits arc considered material representations, and all the Exhibits arc a material part hereof and arc incorporated herein as if set out in full in the application. I CERTIFY that the statements in this application are true, complete and correct to the best of niy knowledge and belief and are made in good faith. Signature: AT&T CORP. By: WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE PUNISHABLE BY FINE AND/OR IMPRISONMENT. U.S. CODE, TITLE 18, SECTION 1001. Date February 25, 2002 Print full name Rick D. Bailey Check appropriate classification: ❑ Individual ❑ General Partner ® Corporate Officer (Indicate Title) Vice President ❑ Other, Explain: Part II - Transferee/Assignee All the statements made in the application and attached Exhibits arc considered material representations, and all the Exhibits arc a material part hereof and arc incorporated herein as if set out in full in the application. The transferee/assignee certifies that he/she: (a) Has a current copy of the FCC's Rules governing cable television systems. (b) Has a current copy of the franchise that is the subject of this application, and of any applicable state laws or local ordinances and related regulations., (c) Will use its best efforts to comply with the terms of the franchise and applicable state laws or local ordinances and related regulations, and to effect changes, as promptly as practicable, in the operation of the system, if any changes arc necessary to cure any violations thereof or defaults thereunder presently in effect or ongoing. I CERTIFY that the statements in this application arc true, complete and correct to the best of my knowledge and belief and arc made in good faith. Signature: AT&T Comcast Corporation By: WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE PUNISHABLE BY FINE AND/OR IMPRISONMENT. U.S. CODE, TITLE 18, SECTION 1001. Date February 25, 2002 Print full name Brian L. Roberts Check appropriate classification: ❑ Individual ❑ General Partner ® Corporate Officer (Indicate Title) President and Chief Executive Officer ❑ Other, Explain: Pec 194 ) Pag< 5) Feb-uary 25. 2002 RESOLUTION NO. 2002-85 A RESOLUTION OF THE LODI CITY COUNCIL APPROVING THE CONSENT TO CHANGE OF CONTROL AND INTERNAL RESTRUCTURING PERTAINING TO THE AT&T AND COMCAST MERGER WHEREAS, the cable franchise holder ("Franchisee") in the City of Lodi ("Franchise Authority") is an indirect subsidiary of AT&T Corp. ("AT&T"), and AT&T intends to merge with Comcast Corporation ("Comcast") to create a new company to be known as AT&T Comcast Corporation ("AT&T Comcast") pursuant to the terms of an Agreement and Plan of Merger dated December 19, 2001 by and among AT&T Corp., AT&T Broadband Corp., Comcast Corporation and certain of their respective affiliates, and a Separation and Distribution Agreement dated December 19, 2001 by and between AT&T Corp. and AT&T Broadband Corp. (the "Merger"); and WHEREAS, prior to the Merger, pursuant to an internal corporate restructuring, the cable franchise or stock of the Franchisee, or indirect ownership of the Franchisee, may be transferred through one or more internal transfers or mergers to another direct or indirect subsidiary of AT&T, or Franchisee may elect as permitted by law to convert or reorganize its legal form to a limited liability company (together with the Merger, the "Transactions"); and WHEREAS, following the Transactions, the resulting entity will be controlled by AT&T Comcast but will continue to operate the System and continue to hold and be responsible for performance of the cable franchise; and WHEREAS, Franchisee and AT&T Comcast have requested that Franchise Authority consent to the Transactions in accordance with the requirements of the cable franchise and have filed an FCC Form 394 ("Transfer Application") with the Franchise Authority requesting such consent Transactions; and WHEREAS, the Franchise Authority has reviewed the Transfer Application, examined the legal, financial and technical qualifications of AT&T Comcast, followed all required procedures in order to consider and act upon the Transfer Application, and considered the comments of all interested parties; and WHEREAS, the Franchise Authority is willing to consent to the Transactions. NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS: SECTION 1. The Franchise Authority hereby consents to the Transactions in accordance with the terms of the cable franchise and applicable law. SECTION 2. This resolution shall be deemed effective upon adoption. SECTION 3. This resolution shall have the force of a continuing agreement with Franchisee and AT&T Comcast, and Franchise Authority shall not amend or otherwise alter this Resolution without the consent of Franchisee and AT&T Comcast. Dated: May 1, 2002 I hereby certify that Resolution No. 2002-85 was passed and adopted by the Lodi City Council in a regular meeting held May 1, 2002 by the following vote: AYES: COUNCIL MEMBERS — Hitchcock, Howard, Land, Nakanishi, and Mayor Pennino NOES: COUNCIL MEMBERS — None ABSENT: COUNCIL MEMBERS — None ABSTAIN: COUNCIL MEMBERS — None SUSAN J. BLACKSTON City Clerk 2002-85