HomeMy WebLinkAbout1985-09-30 City Council Summary MinutesCITY
COUNCIL
MINUTES
ITEM
Ural Communications
CITY
OF
PMtC)
t1LT()
Special Meeting
September 30, 1985
Item #1, Selection of a Cable Franchisee
Item #2, Request of Councilmember Fletcher Re
Request from Trails and Path Committee
PAG E
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ADJOURNMENT: 12:00 a.m. 6 3 3 4
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9/30/85
Regular Meeting -
September 30, 1985
The City Council of the City of Palo Alto met on this date in the Council
Chambers, 250 Hamilton Avenue, at 7:30 p.m.
PRESENT: Bechtel, Cobb, Fletcher, Klein, Levy, Renzel, Sutorius, Woolley
ABSENT: Witherspoon
Mayor Levy announced that Anne Witherspoon would not be present this evening.
Councilmember Witherspoon had been suffering through an extremely serious
illness in -her immediate family. She had been following the cable television
discussions and hearings quite closely and hoped to be here for the remainder
of the hearings.
ORAL COMMUNICATIONS
David Schroer addressed the subject cf street tree management. He recently
received a city staff report dated September 12. Since 1979, he was concerned
about the rate at which the trees of the City of Palo Alto had been planted
along streets. For many years the City had been creeping on the laurels of
prior generations planning. He previously suggested the City embark on a
program of citizen education to make certain people understood the costs and
benefits of public trees in the City and that they find someway to manage the
trees so there was a sustained yield of benefits. Palo Alto should utilize
all the resources available to it, the government staff, and tax money, the
community and the volunteer spirit that Palo Alto is noted for, to maintain
the trees here. In 1983 the Council adopted a management pla^ which set a
very specific measureable objective, which was easily understandable to the
members of the community who were naturally concerned with the management of
the trees. That objective was that on noon on the day of the summer solstice,
the street trees in Palo Alto were to shade 50 percent of the public pavement,
on a block by block basis thi''oughout the City. At that time he noted the plan
that was adopted did not specify planting rates. There was also no provision
in the plan for continuing citizen input in tree management. It concerned him
because the trees were an asset that could be eroded very gradually. There is
an impression that the trees were beig well managed, because many mature large
trees stand in the City. But new trees were constantly being planted to
replace those which die. We could discover sometime in the future a situation
which could not be remedied. The Street Tree Management Plan itself
incorporated a number of 86,000 trees. Earlier this year, a staff report was
submitted which said that such a count MdS going to be taken. Two years ago
that count had been deemed unnecessary and wasteful. Now it was deemed
appropriate. This September, the results of that count were announced.
30,000 trees currently stood along the streets of Palo Alto, as opposed to the
100,000 that was thought to be there only two years ago. When the Street Trett
Management Plan was passed an announcement was made that 7,500 trees were
going to be planted in Palo Alto over the next six years. He cautioned that
this was not likely to happen. In February 1985, astaff report was submitted
docume-.ting the actual plantings and the projected plantings for the next five
years. Actual planting for the past year amounted to 243 trees, Projected
plantings for the next five years totalled along withthe actual for the past
year less than one half what was promised only two years ago. In the report
that was recently submitted to you, the statement was made that the current
and projected plantings would sustain the present density of trees in the
city. This was impossible for several reasons. First, the projected
plantings would take place over a 70 year period in roughly equal numbers each
year. That would prnduce a forest that was made up of trees of roughly the
same number of each age. Today, we had a tree forest that contains many
older, larger trees, so even the same number of trees is evenly distributed
with respect to age would. not produce the same visual or other benefits.
Next, no mention was made in the report of the standard that was set in the
Street Tree Management Plan. He submitted that, today, the current standard
of trees came nowhere near meeting that standard. Unless something
dramatically different was done, the standard would not be met in the future.
Finally those standards were currently being used all through the world and
yet we did not apply them here.
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As Corrected
1/06(86
SELECT:ON OF A CAPE COMMUNICATIONS FfANCHISE (PPE 7-3)
Mayor Levy said the first item on the agenda was the selecton of a cable
communications franchise. He had 69 cards from members of the public,
including about 35 cards that were submitted last week. He would call upon
those people first and then an additional 18 and 16, 34 cards that he had
received so far this evening. He would accept all cards that were submitted
this evening up untie 8:30 p.m. Those wishing to speak, should fill out a
slip available at the podium at the front of the chamber and give it to the
City Clerk. Council had a limit of 5 minutes which was firmly enforced. He
would advise speakers when 4 1/2 minutes expired and at 5 minutes he would ask
speakers to i,mnediately complete their remarks. He asked speakers to please
pay attention to those who have spoken before them and if your remarks have
been stated earlier, please simply associate yourself with remarks that have
already been made. > He hoped Council could, in fact, conclude the speakers
before the end of the evening. Council intended to meet on consecutive days
until it made a decision. He ':could not entertain further comments from those
who did speak last week. Council would end its proceedings on cable at 11:45
p.m. , and there was a second item on the agenda which we would be taken up
after 11:45 p.m. Speakers should begin by giving their name and address and
state if they were affiliated in any way with either of the applicants, by
mentioning that affiliation at the beginning of their comments. The first
group of people to be called were people who submitted their cards last week.
Greg Fassler, 350 Sharon Park Drive, Menlo Park, said many years ago he was
employed by the County of San Mateo. One of his responsibilities there was to
oversee and evaluate for renewal or rate increases foue cable T.Y. franchises
that existed in the unincorporated areas. His responsibility was to analyze
financial and operating stages, expansion projectic^s, results of equipment
testing and inspection and quality of service. In 1979, he represented the
County as a staff member on a task force then comprised of elected officials
and staff members from the jurisdictions making up the JPA before Council
today in order to find a cable T..Y. franchise to serve the area. He was
astonished to see it had taken six years to reach the point in the process.
As a resident of Menlo Park, he was happy to see that they were finally
getting close to a cable franchise. He was concerned with Co-op's low __ratio
of employees to subscribers, especially iii the customer service area and
trouble shooting area. It could only be viered as a way to either cut cost or
leave the quality of the system to chance. As a former regulator of cable
companies, he knew that when subscriber complaints could not be satisfied by
the cable company, subscribers would then turn to city staff members to find
remedies. Day to day subscriber service could best be provided by City Cable
Partners, who were aware and experienced in delivering customer service and
had made the necessary provisions to do that with the proper number of people.
David Chesitan, 131 Cowper Street, Professor of Computer Science at Stanford
University, and a member of the Cable Co-op said he felt a little strange
being there talking about T.Y. since he never got a chance to watch it, though
he had three kids that watch T.Y. His involvement with Cable Co-op dated from
his interest in computer communications and data communications. This is a
major opportunity for Palo Alto to use the cable system as a leap into the
futut*, in terms of the information infastructore of the area, rather than
just viewing it as catching op with other areas in terms of entertainment
T.Y. This area was perhaps in oee of the best positions in the world to make
a cable system usable as an information utility and show the way for the
future. We had enough information based industries in this area to take
advantage of it. One example of this was teleconinuting, where people could
work at home and work for a remote employer. It provided opportunities for
the handicapped and women with families. The recent. study by the
International Organization for Information Processing classes referenced
telecommuting as one of the very''significant social impacts for the future.
He endorsee cable Co-op because they offer him, as a resident of Palo Alto, a
way to provide input and. influence the process; Themajor argument that was
being posed against Cable Co-op was not more imaginative opportunities offered
by the alternative, but simply scare tactics that said "we don't understand
the finances," and so on. In the ten years that he t'ad been involved with
Co-op movements such as credit unions he had also been a stock holder in
companies.' Every time the Co-operative movement had tried to start, the
cepitalist response had almost invariably been scare tactics,, that unless you
were in there for profit for • a small number of peop l e you would not succeed
and you would fail for all your lack of understanding. There were some
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markets, and in that particular case, where there was a lack of competition,
there was really a monopoly , and that was where it was desirable to have the
people involved and a resource such as the people of Palo Alto, Stanford,
Atherton, East Palo Alto, and Menlo Park was not to be ignored. it was one of
the best educated, most saphist .ated, groups of people in the world. With
the companies in the area, the people would be very supportive of an
imaginative approach to an information-infastructure for the future.
Mayor Levy introduced the individuals, Norm Sinell, Arnold & Porter; Woody
Britton, Price Waterhouse; Larry. Moore, Deputy City Manager of the City of
Palo Alto, and who played the leading role in our work on telecommunications;
June Fleming, the Assistant' City Manager; Bill Zaner, the City Manager and
Tony Bennetti, the Senior Assistant City Attorney., At the table to the right
were staff members Jim Harrington, Bill Kubecki and Mark Harris.
Bob Moss, 4010 Orme, member of the Board of Directors of the Cable Co-op, said
earlier in^'the proceeding the City Council asked to have the various bidders
and the staff address eleven specific points. He put the Cable Co-op's
response to those points on the viewgraphs and passed out copies. He pointed
out that Co-op did respond_ to the City Councils' request and -they were
responsive to all Aeleven points. Mr. Moss wanted the Council to get the
ideology of the Cable Co-op "from, the horse's mouth." Co-op's ideology was
simple.- It was to provide the highest possible level of service to
subscribers, users of the cable system, in a responsive and responsible manner
and on a profit -making basis. One of the differences was what Co-op did with
its profits. They were ploughed back into the service, not used to make the
investors rich. That was a major difference. Co-op had a commitment to the
long tern. A City Cable Partnership deal only made sense if the system was
sold in five to seven years, because that was the only way they could get
money from venture capitalists to show that they were going to get an adequate
return on their investment. They were talking about a 25 percent return and
selling the system for as much as $50,000,000 or 2-1,2 times what it -cost to
build. Co-op had absolutely no incentive to sell the system or to skip on
service in order to make our profit:; look better. They were only interested
in high quality service. He disagreed with the staff's comments whore they
said the
difference was primarily in the make-up of --the Boards. There were
some very substantial differences. The table in the staff report of 5-17-85
provided a work sheet. He presented what he thought were the most salient
features where the Co-op was significantly better than City Cable Partners.
First, the Board of Directors was totally involved in eoinunity service,
elected by the members on a one man, one vote basis. City Cable Partners
currently had five members on the Board, their charter allowed them to have as
many as seven. Two or three, depending on the size of the: Board of Directors,
would be selected by the operator Viacom. In Co;-op's case, they selected the
operator. If Heritage did not perform, the Board fired them. City Cable
would not have much chance to fire Viacom if Viacom does not perform, when
forty percent of the Board of Directors was made up of Viacom. Also, City
Cable believed in the golden rule -those that had,a gold rule. Two investors -
own two-thirds of the stock. The individuals who were allowed to buy shares
were not going to_,have much chance to influence the make-up of that Board.
Almost all of you had stock in publically created corporations. He asked if
they had ever seen a' Board of Directors overthrown by a vote of the
stockholders. Co-op's finances were in place today. They had money and the
agreements and they were going to provide a first rate, state of the art
system. A system for the 90's. .Nothing in their bid shows that City Cable
Partners was going to provide anything better than the absolute minimum that
they- can get away with. If you wanted service and you wanted quality, he
urged Council to go with Cable Co-op.
Enid Pearson, 1019 Forest Court,- Palo Alto, said she had -a somewhat unusual
perspective on this issue since she was both a former shareholder in City
Cable Partners and a current mmber of a member of the advisory board of Cable
Co-op. Beyond the $50 investment in Cable Co-op, she had one A share and two
B shares. There was no financial interest in her decision. She also returned
here $150 investment to City Cable sometime ago. Professionally* she was a
certified financial planner and investment advisor. Her company helped people
make decision; that affected their , financial futures. They dealt constantly
with venture_capitalists.°and limited partnerships and often -dealt with cable
T.V. partnerships. Her support of the Cable Co-op was two fold: First its
structure- provided for genunine local control; _secondly, Cable Co-op would
provide superior service to its subscribers. Those two, points were not
unrelated. WhiIp City Coble had a number of investors, some of wilia live in
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Palo Alto, the majority of the shareholders had little or no real influence,
As they went out and got the venture capital and there were more and more
limited partnerships, the shareholders and the limited partners would have
less and less to say in that particular company. City Cable Partner's stock
was controlled by a few people and that was not her idea of local control. If
City Cable was awarded the franchise, the system might be sold to generate
money to repay the investors. Venture capitalists or limited partners wanted
a payoff and way down at the end of the line some write-offs, same income, and
they could only get that by selling the system or by raising the rates. There
was a conflict there in retaining local control. Local control and economic
viability were related. To sum up, she said that she might have made more
money if she had stayed with City Cable Partners Lecause of that potential per
sale of the system, but she felt that the Cable eYstem should benefit the
entire community. For that reason, she urged the Council to award the cable
franchise to Cable Co-op. She added that she thought it was extraordinary to
say the least that the Times Tribune article tonight suggests that a loan from
the Co-op bank, which was friendly to the Co-op system, would be more risky
than financing through the Bank of America as through venture capitalists and
limited partnerships. It was the first time in her career that she had ever
heard venture capitalists and limited partnerships described as less than
risky. Raising money through venture capitalists and unlimited partnerships
is particularly tough today. City Partners would have to go far and wide to
get their venture capitalists and limited partnerships. Congress and the IRS
were trying to change the catch-all through system, and the catch-all through
system, as it was this year was probably the last time it would be that way.
It was going to change so those people who would probably go into a limited
partnership such as this probably would not get a lot of tax write-off out of
it and probably wnuld not get income and they probably would not get capital
payoff at the erd unless that was almost guaranteed to them. She felt that a
friendly bank holding a mortgage for the Cable Co-op was a lot safer than City
Cable's 100 percent debt financing through the Bank of America and venture
capitalists and limited partnerships. She urged Council to vote for the
franch'se for Cable Co-op.
Gary Thompson, resident of East Palo Alto, said he owned a small
communications company in that community. They felt Cable Co-op would be
responsive to the community and would allow the commueity of East Palo Alto to
be a part of the eorld today and be able to intermingle with other areas.
They supported Cable Co-op.
Alan Henderson, 565 Arastradero Road, Palo Alto, a member of the City Cable
Partners Advisory Board said he had no financial interest in the company. In
all his years of involvement with the City, including. Council service, no city
staff recommendation had surprised him or troubled him to the extent of the
issue on cable television. To call staff's recommendation incdequate was to
put it mildly. Staff seemed to conclude time ape.licants were about equal in
the financial area and that the Co-op had a big edge because..of its broad base
local control over the cable company. He had a number of questions he wanted
to ask some of which he could answer himself and others that he hoped they
could answer eventually. Staff spoke of analyzing the :financial information
in collaboration with Price Waterhouse. His questions were whether Price
Waterhouse analyzed or merely met with staff to give them guidelines as to
what to review. Apparentheticaliy, while it might be understandable that one
of Arnold and Porter's clients was the National Co-operative Bank, he woedered
why another of the big eight accounting firms was not choosen rather than
Price Waterhouse, which also had the Co-op Bank as a client. He asked why was
Cable Co-op financing given an edge on $8-1/2 million commitment from the
National Co-operative Bank and reliance on another $11-l/2 million loan in 8
years. City Cable had $13.2 million loa'ed,plus an option for another $5
million from Bank of America, plus $9 million from top rated venture
capitalist firms, pus $2 million minimum from private investors. He asked if
City Cable's diversity of funds meant far greater flexibility and far greater
ability to ride cut tough financial periojs. He suggested the Council
carefully review _Carl Schmidt's letter on the subject. ' City Cable subscriber
rates were lower. He.:wondered how the staff could gloss over the negatives in
their own report and he quoted "Cable .Co-op estimated for an aerial plan cost
that may be at the lower end of the reasonable range". "Cable Co-op has
higher revenue requirements than City Cable due to 1) higher construction and
financing costs and 2) a higher inflation projection." Cable, Cc-op's
projected opera :ing margins might be somewhat optomistic. In July, Staff
blasted the Cable Co-op. Last week they took on City Cable. They presented a
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chart of what they wanted thct was remarkable. He asked if City eable was
being responsible when it said the whole CAO business should be reviewed after
four or five years. He asked if the Council expected hundreds of Co-np
members to make cable television decisions or would it be like the Co-op
markets, hundreds of inactive members and perpetual management by a small
group. He asked if Council looked at the list of City Cable advisors and
stockholders and compared the stature and diversity of those people with the
Cable Co-op member list. The City of Davis had been presented as_ the one
success. He said the Mayor of Davis, who spoke last Monday night, was the
President of California. Co-operative Association and her husband was Vice
President of the National Co-operative Bank. He said if the Council was
sincere about wanting an independent operator who cooperated with the
franchise with the City but who took all the risks and had the stability to
withstand difficult times, then the choice was City Cable Partners.
Alan Larsen, 700 Arbor Road, Menlo Park, hoped the Council would not consider
seriously promises of payments to third parties in their consideration of
which company was the better choice, but would deal instead with some of the
technical issues behind television. He had not heard a word about actual
technical standards either last week or this week. His concerns were the
cable system should eot interfere. The City Council proposals only limited
the cable service to interference from other broadcasts/television. They
provided no protection for police, fire, amateur or any other communication
service. The City merely echoed the current federal standards for signal
leakage. He was very concerned about that since the current federal standards
were under petition by the cable television industry for relaxation and the
current standards were not adequate to protect current amateur or emergency
services. The strongest and most powerful emergency amateur service assisting
the City was probably the Southern Peninsula Emergency Communications system.
They operated a amateur two meter repeater from El Camino Hospital. That
repeater was on a frequency which would be very severely impacted if the cable
system were to implement a normal cable television system and operate on what
was called Channel E of the mid band. This repeater was not without history
of having served the Palo Alto area. Major communication for the fire at 280
and Page Mill Rd. were carried on through the machine. The secondary machine
was on the equally spaced channel en the opposite side of where the video
carrier would be and would be similarly impacted. That repeater functions
from the hill behind Stanford University. The area was also filled with many
technologically advanced personnel, one of whom was still in Mexico City,
operating a satellite communications station to orovide relief
communications. He operated the station normally from the Palo Alto Red
Cross. He was active in the emergency groups. Typical leakage signals as
proposed by the standards of 20 micro volts per meter at 10 feet from the
cable were approximately 10,000 times stronger than the average signal
arriving to the earth from the satellite. That could absolutely destroy the
fairly advanced state of the art communication that many Palo Alto residents
enjoyed in their amateur communications. He had spoken briefly with
representatives rrom the two cable companies but had not received any
satisfactory comments from either.
Tom Upton, 1879 Woodland Avenue, East Palo Alto, a professional photographer
and a garage musician said he wished to comment that he was a part of the two
percent of adult Americans that had never purchased a television, and he
watched T.V. only when it was absolutely necessary. The reason for that could
not be More lucidly expressed than has been in a song written by Frank Zapa.
When he mentioned to a friend that he was going to quote Frank Zapa, he
thought it might be too severe. However, two weeks ago, he testified in front
of the Senate of the U.S. as an expert witness on obsenity. "I am gross and
perverted. I'm obsessed and deranged. I have existed for years, but very
little has changed. I'm a tool of the government and industry too, for I am
destined to rule and regulate you. I may be vile and pernicious but I'm
delicious with the stuff that I say. I'm the best you can get. Have you
guessed me yet? I'm the slime oozing out of your T.V. set.". Mr. Upton said
his comments were that the potential in television was vastly unrealized. The
common network T.V. programming for profit feed a starchy diet of loveable
cops prevailing over crime, hand; guns that could be used with only one hand,
sexy clean soda pop and pictures at eleven. It bothered him. to see T.Y.
promote sex and violenceand shun sex and knowledge. He felt the people in
the Cable Co-op organization were motivated more by humanity and less by
money. He asked the Council to careful y,consider the situation.
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Mayor Levy said they were trying to do the job carefully but hoped they were
not doing it so carefully that they were almee paralyzed. ..., .. �.,rnvay fewi 0►�I.�6s• He touted the
comment of the famous entertainer, Gypsy Rose Lee, who said anything worth
doing was worth doing slowly. He hed remaining cards from seventy-three
people. That was six nours worth of testimony and he hoped each person would
be guided by that.
Gerri McKeown, 846 University Avenue, Palo Alto, was not a shareholder or a
member of either company, but had followed the cable process over the past
years. As a CPA he was amazed the staff report had apparently not evaluated
the significance of- the difference between the plats. For example, the staff
report noted Co-op's plan was highly leveraged. They required higher
subscribe- rates in order to break even and to avoid financial difficulties.
The staff report did not draw any conclusions. His calculations showed that a
short fall of only 10 percent in revenue, which would be about $29 to
subscribers, would cause a cash short fall which would far exceed any
contingency financing available to the Cable Co-op, An independent coesultant
had been quoted in the newspaper as saying that by depending solely on debt
financing, the Co-op's financial plan appeared risky and likely to fail.
Since the Co-op had an insignificant amount of equity, the possibility had to
be factored into the decision. The financing costs of the Pac Bell lease was
$22,000,000 and when added to the $10,000,000 in bank debts the total interest
came to $32,000,000. it compared to the City Cable's financing costs of
$11,000,000. The $20,000,000 difference between the companies was not minor
and to him was not reasonable. The costs would have to be passed on to the
subscriber which could add as much as $6 to the monthly rate. The staff
report did not evaluate the economics of the Pac Bell lease. The additional
borrowing required to service the lease particularly in year nine, would
severely affect Co-op's ability to make good on all the premises it made. The
issue of local control was the overriding factor in staffs' decision. But
again, staff neglected to mention the supporters and investors of City Cable
were also a very broad eased group of local people who had done much for the
community in the past and intended to continue in the future. City Cable
would be financially able to respond to the wishes of the community but he was
afraid the Co-op'e response spas more likely to be "Sorry, we don't have the
money."
Alison Lee, 1241 Harker Avenue, one of the founding members of the Cable Co-op
was also a member of the Standing Committee on the. Arts and was, part of the
decision of the Standing Committee to support the Cable Co-op. She expressed
pride in the quality of the effort that was being put forth by the Cable
Co-op. The reason for the Co-op financing was because a year ago, Council
told Co-op to talk to Pac Bell. He believed the Council should chose Cable
Co-op.
Tom French, 631 Coleridge Avenue, Palo Alto, an attorney with the firm of
Ware, Fletcher and Freidenrich, City Cable`sattorneys, worked extensively on
City Cable's response to the draft franchise agreement. Since June 1, he had
been on a sabbatical leave from his firm and was speaking tonight as a private
citizen. It appeared the city staff and the City Council had focused on two
issues. Which of the two bidders presented the stronger financial plan, and
which of the two bidders was likely. to be more responsive to the community.
Council had heard the term "leverage" used, particularly in connection with
Cable Co-op's financial plan. In his high school physics classes they were
taught that leverage meant getting help from another object so that by using a
comparatively smell, amount of their own effort, they could generate a much
greater amount ef force. When it comes to leverage le financial matters
however, that other ob4er' was credit. Cable Co-op proposed to finance the
business using 100 percent leverage. That was risky to the Co-op, but was
even riskier to the joint powers communities who would be faced with the cost,
inconvenience and embarassment of rescuing or even taking over the Co-op
system if its projections were not met. The City Cable Partner's financial
plans on the other hand depended on debt for only 40 percent, of its total
capital budget. The remainder of its capital needs would be met by investor
equity. funds. which could be returned to investors only if the systems
obligations were met and cash flow permits. City Cable's owners and backers
we -e already known for their track record of success and for their ability to
access- large sums of money when necessary. Regarding the community
responsiveness issue, he asked Council not to be taken in by the .,surface
appeal of the Cable Co-op concept. City Cable Partners ensured the community
financial security- and comity. responsiveness and a franchise they -
deserved. He urged the Council not to seetle for second best.
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Bob Arcul rius, _ 640 Fairig=ede Avenue, Palo Alter, spoke as a member of the
amateur radio community of the Southern Peninsula: He displayed the one that
he used and said they were concerned with the possibility of signal leakage of
CATV channels into the radio frequencies that had been authorized by the FCC
for use by amateur radio operations and research. Their radio equipment was
individually and collectively owned and used in strict compliance with the FCC
regulations. They used very low power for their individual radios with which
they could communicate over many miles. Many ham operators had volunteered to
use their radio to back up communications ordinarily used by the Police/Fire
departments, the Pclo Alto schools, the Red Cross, State Forestry Service and
cities and counties. In cases of an emergency the telephone service could go
out or be overloaded. They were happy to be' of help in the event of an
emergency using their own portable communications equipment. They wished to
express their concern with the construction and maintenance of whichever
franchiser was awarded the contract by the city. In order to use their small
hand held
J
hand he and red os they need inter i erwiee free radio frequencies within a small
band (144-148 mega hertz). That was very close to one of the channels which
CATV might want to utilize, Channel E. They recommended that the CATV company
awarded the contract be constrained from use of that channel or the
frequencies 144-148 mega hertz and that the CATV company be instructed to
quickly and completely clean-up their at in the event of leakage detected by
local amateur radio operators so that it would not interfere with their
ability to help agencies during an emergency.
George Richardson, 1322 Martin Avenue, a resident of Palo Alto for over 16
years said he was not David Kinley, He read to the Council Mr. Kinley's
communication to the Council (which is on file in the City Clerk's office).
He said he concurred with Mr. Kinley's concerns and hoped the Cnuncil would
select City Cable Partners.
Jim Brody of Davis, Ca., said he -was general manager of the cable system in
Davis. He was not affiliated wijh either candidate and supported neither.
candidate. He was here to answer Council's questions ateeelt Davis' system. He
said Councilmember Renzel asked several questions - "What has been the
penetration rate achieved in Davis by your firm?" Mr. Brody responded they
were currently at 37 percent. "And how was your system financed?" He
answered through the limited partnership originally a half limited partnership
and half through the National Consumer Bank. Another question was "Have you
been` meeting you own projections that were put forth at the time you
franchised?" He answered no, the original penetrations called for 43 percent,
the demographics in Davis were not at all like the demographics in Palo Alto.
They were totally different cities. What we were experiencing ,n Davis is a
short fall of subscribers. They had a student population in their 'community,
and that meant there was a very strong turn factor that had to be dealt with.
The system was very ,.table at this point, it was earning approeimately $20.50
per subscriber and the students were just coming back into town now.
Councilmember Woolley asked, "Have you in the recent past been experiencing
soma short falls in cash flow?" Mr. Brody responded their second set of
projections that were done in February called for a rather large down turn
during time summer because of the student exidus out of Davis. They found that
was not true and the. had actually stabilized and increased their income and
were currently making more money than they were spending on a month to month
basis and to his knowledge they were servicing their debt. "You have not
actually found it necessary then to find new sources of capital?." No, the
newspaper articles were of more of a planning stage than anything elese, if
the system needed money. He said in today's market financing it was very a
very creative situation. They would explore all avenues of potential
investors if they needed it. They did not need it at this point. Mr. leody
said he would like to make one final comment that Davis, unlike the Palo Alto
proposal, was a partnership throught the limited partners and the managing
general ' partner :is the Co-operative Bank itself, so it was different than the
proposals that Palo' Alto was looking at.
Councilmember Bechtel asked "What's the number of channels that you have
operating presently?" Mr. Brody replied, "43." "And you have an
institutional link?" They had an institutional network inthe year that was
not activated. He said Councilmember Klein asked, "Could you speak further on
the financial arrangement between the Co-op and the limited partnership. How
are the profits divided and thingsof that nature? Is . it possible for limited
partners to receive distributions with regard to the profits and things of
that nature?" Mr. -Brody replied, currently the first $3-1/2 million into the
6 3 2 0
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system was through a limited partnership and $2-•+/2 million from the National
Conrumer Bank., The Co-op -owned approximately 10 percent. With the amount of
equity that had been paid in, the situation would revent anu the Co-op would
become 90 percent owners and the limited partners would still be: in for the
next seven years for to percent until they were totally paid Off.
Councilmember Klein asked what percentage of their subscribers were members.
Mr. body responded 70 percent and they pay $10 each, $4.65 a month to a total
of $199.95, $4.65 a month. The $29 a month that was your average revenue did
that, include the $4.65?" Yes it did. "if you had the limited partners, the
ones who put up the capital for the system itself,- the limited partners
together with the bank put up all the_ funds that were required by the
system?" That was correct. "If you had borrowed all of the money required
for the system, would you at this time have a positive cash flow?" There
would not be any difference at that_point. "In other words, they would pay
out- to the limited partners s the same amount of Honey they would pay in
interest if you had borrowed the funds rather than gotten it through a limited
partnership."
David Harris, 455 Margarita Avenue, Palo Alto, said he was not a member or
shareholder of either applicant. He was the chairman of a group called the
South Apple Computer Enthusiasts which was one of the computer user groups in
the .area. The group had existed since 1978. He had also done work as a
comunication consultant and earned quite a few thousand dollars at $40 an
hour. He had talked with and had a great respect for people on boards of both
applicants, but was testifying tonight in favor of the Cable Co-op because of
the difference in interactive data capabilities in the two systems. The
reports\say that it was not clear at this point how significant the difference
in the two systems would be. The difference was the City Partner's proposal
would have the first party that wanted to send a message send it up to the
heed -end and then it would go down stream to the second party. The problem
was that it would be slow going to the head -end. The Co-op's proposal would
have the up -stream. ar°2lifiers in place so the technical capacity would be
there for rapid communication, quickly up and quickly down .from the
beginning. The City Cable Partners would allow the 50 mile area but that did
not cover mist of the homes in the City. There was talk the City Partners
could not provide the upstream amplifiers as they became economially viable.
Technically, they were now. He thought a little bit about some of the
brsinesses that could occur that would need communication and two came to
mind. One was the idea of selling equipment, mimeographed student notes of
courses. Another idea would be a travel service for public transit. He
recommended the Cable,Co-op's proposal.
Diarmiud McGuire, 327 Waverley St., a member of the Cable Co-op, salt; he had
respect for individuals who were associated with both the groups and at one
point some months ago, he had the hope that they might join forces and work to
the mutual benefit of the comity. That hope turned out to be incredibly
naive. The behavior of the two groups also turned out to be very different
and in his opinion the behavior of City Cable Partners was unacceptable. He
was in the marketing business and had very strong feelings about the ethics of
the marketing profession. In connection with competition for the cable
franchise, he was distressed about%a consistent pattern of misinformation nd
misuse of the press. Specifically, he referred to an article that appeared in
the Peninsula Times Tribune last Thursday under the headline "Cable Co-op's
Financing Plan Worrying Independent Analyst." Now, ostensibly it was
objectivereporting and both sides were, quoted. In reality the article had a
definite smell of a cynical political hit piece. The most important element
in a newspaper article was the headline, most people did not read beyond that
point. The headline in this case was clearly designed to show doubt about the
financial plan of the Cable Co-op. The second most important element was the
lead _ paragraph, which began "A local Co-operative could., be headed for
financial trouble, etc." People have tried to communicate with the
independent analyst since the article appeared, but she had not responded to
any of the telephone messages left for her. . He expected that someone who was
called an independent analyst would refrain from speaking until that person
had.a chance to study the data available: He urged the Council to. choose the
applicant that had already demonstrated integrity in marketing, Cable Co-op.
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Lon i acQu Ivey, 743 Galen Avenue, a member of both the Co-op and City Cable
said two subjects were involved: the competition on the franchise and how the
Council's action could be separated to decide what was Most important now.
Competition on the cables was_ important because the Federal law passed last
Uctober denied cities the right to regulate cable charges. Consequently, a
single franchisee could not increa.4e charges. In 1946, he represented the
State Department in Washington on an intergovernmental committee to consider
merger and elimination of competiton among the U.S. International
Communication Carriers. He suggested Council consider the effect of meeopoly
ownership, _suppose_ the phone company were -to ,install and own the cable system
as suggested by the Co-op. If the Co-op wanted to provide its own telephone
service on its leased channels to accompany long distance use. of home
computers, could they do it. The FCC in a recent decision said they could.
The cable operator could bypass and compete with the local phone company. He
asked if there was any way the City could hire the phone compan,- to not
provide more channels than the cable company to
cable needs lease. Suppose it
wanted to extend the cellular telephone service. That service required cable
to transfer the low powered mobile radio power signal from one cell to the
next as the vehicles move. It- was now a very expensive service. Co-ops had
traditionally sought to compete when some commodity seemed overpriced, If the
channels were owned jointly, access to them would be much easier than leasing
them from a competitor. Council's decision to choose one franchise from the
two bidders was taken before the recent federal actions. He urged them now to
reconsider that decision in the light of the actions and arrange to install a
cable separately. Competition could then develop easily. Such action did not
need to delay start in the building of the system. The: combined resources in
place from both bidders were much more than were needed for an immediate first
class cable system. It might even be fiber -optics and would relieve the
interference problem that was mentioned earlier. In conclusion he said it was
most important to make the decision now to combine resources and tO get on
with construction of the use of the cables themselves. The cables were like
`.the satellites. The channels in them would be needed anyway.
John Barry, 1952 Silverwood Avenue, Mountain View, said he was a subscriber to
Viacom cablevision. He started in 1983. Having had Y#.acorn cablevision for
two years, there hadbeen some times when they had reception problems. Thyi
same day or the following morning they had called up and each time, that same
day, a repairman had come from Viacom cablevision and had switched cable boxes
and repaired it. Also, he was a producer of television programs. A couple of
years ago he had the opportunity to take the Portafact Workshop at Viacom and
he had produced his own television program with a grant from the city -of
Mountain View. It war about small businesses in Mountain View. He not only
took the Portafact Workhop, he had taken many other courses from lighting
programs, shooting, editing, characte generation. He was very pleased with
how much improvement he had made, from not knowing anything about television
production to seeing the improvements episode by episode of his program.
Greg Franklin, 672 Hamilton Avenue, Palo Alto, said he was on the Board of
Directors of the Cable Co-op. The Cable Co-op existed for one reason, because
of the major problems experienced by the cable television industry over recent
years. That was the single reason and the Co-op which was the result of the
problems had a singular objective, The objective was to insure that Palo Alto
in the service area had the finest economically viable cable television
system. The Board of Directors of the Cable Co-op were a dedicated and highly
'Motivated group. Thermembers held three Ph.D.s, seven masters degrees, 3
bachelors degrees and a law degree. The Ph.D.s were in telecommunications,
eegineering and education`. As f*r as experience of the Board of Directors was
concerned, they represent over 2b years of working experience. The Board of
Directors had raised about $200,000 and assembled a blue chip professionale
each of which was a _ leader in their own' functional discipline, He was
referring to Heritage, whom they selected over two. The selection of
Heritage, their performance in the past l'=1/2 years, had been a testimonial
for the Boards judgment.. Cable Co-op had been able to use all their resources
to deliver to Palo Alto -a first rate community system.
Joyce Leonard, 4107 BriarWood Way, spoke on behalf of the Ameri can .Association
of University Women. AAUW had not taken a position on which company should be
awarded the franchise. However, ' `they did , do a . rather thorough study of the
Cable T.Y. system and _they had case up. with some statements. Council should
consider in_ making -the final decision. Wilber 1, the primary purpose of
installing a cable system in Palo -Alto should be facilitate communications.
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Since entertainment services provided by Cable T.V. could be obtained from
s
other sources, this objective should be kept in mind as a technical system afid
a governing structure are deeigned. Number 2, the cable service should be
available to every home, business and institution of the service area, on a
volu�4i...,-1.asis - �- eaw na - Number
-3 -a two-way
TVINI!bYl, basis, �{r a reasonable -rate. Hurn rr J, f. VAa-iiuy data communication
should be possible from any point ors the system, with the purchase or rental
of appropriate equipment by the subscriber. Number 4, the cable system must
also be reliable, efficient and adaptable. Number 5, the subscriber/consumer
needs protection. First amendment protections were needed and proper
maintenance and .epprovement must be guaranteed. The contract with the
management company most be specific, yet flexible, in order to accomodate
changing needs and technology. Number 7, a Board of Community Members
including representatives from all groups that use the cable system would best
be able to judge whether or'not the system was continuing to meet 6ommunity
needs. Number 8, and last, the system should provide for decentralizing
programming control by reserving channels for leasing to independent
commercial entities and for the use by the community. Community channels
commonly included Public Access, Education and Governmental channels.
John Schaeffer said as he looked back over the decision -making process, it was
clear to him the efforts of the staff and the City Council in improving the
two proposals, had borne fruit. Tine two proposals had been very good and in
some respects indistinguishable in terms of the service they would bring to
the community. There was one major difference between the two groups which
was cenership and therefor control. It seemed to him that everyone who spoke
in favor of the Cable Co-op had come as a volunteer with no expectation of
profit, their only motive being, they would like to see an excellent cable
T.V. system installed in Palo Alto. That was the spirit that had made Palo
Alto the lovely place it was to live in and he hoped they would continue in
that spirit and select the Cable Co-op.
Thomas Carter said he could not say anything that had nut been said before,
except, he personally was in favor of Cable Co-op. It offered all the
advantages that were offered by City Cable Partners, plus a broad base within
the community. He urged them' to vote for Cable Co-op,
Hal Hudson, 535 Everett, Palo Alto, an 18 year resident of Palo Alto, said he
had total empathy with the Council. The reason he originally accepted the
invitation to become a member of the City Cable Board of Advisors was that he
too was on the Palo Alto Advisory Committee on Cable Television. He did not
consider membership in the community to be clear evidence of. Cable expertise.
He believed there were four sensible areas that they would want to examine in
making their decision. First, to be sure of the validity of each bidders
financial foundation, critical and tro'bling subject. He had no financial
interest in the City Cable Partners but he believed that Cable Partners was
the right organization because as Cable Co-ops plan did not ensure management
skills. He presumed there must be many residents of Palo Alto -an.d the other
cities who were eager to have paid cable television.
Betty McCroskey, 4158 Oak Hill, Palo Alto, a member of AAUW study committee on
Cable Television, said it seemed important to focus on the issues and after
comparing the two proposals she felt Cable Co-op offered a much better plan.
Cable Co-op began as the idea of a few people. Now they had' a sophisticated
plan and a highlyprofessional team to put it into effect. Many of them were
interested in cable television because of the importance oi' accountability of
a cable franchise. The history of cable television was one of frustrated
subscribers trying to deal with a system that was not accoentable. The Cable
Co-op format provided sufficient accountability, the, other did not. Another
was financing. Cable Co-op's financing had been attacked by City Partners.
It was difficult to compare the two systems because City Partners' financing
did not seem to be. a firm commitment. They have the Cable Co-op, and Pacific
Bell, working together for a common cause.
Bob Hummer, -2150 Park Blvd., spoke in favor of Cable Co-op. He was impressed;
with the way things get, done in Palo Alto and he was happy to support Cable
Co-op.
Debbie Mytels spoke as a resident, and, -a member of the -Palo Alto Cable Co-op.
As a graduate student in common ; r;ati ons 15 years ago, she was excited about
the opportunity that -cable T.V. presented for access to the market -place of,
ideas. As she watched the industry develop over the past 15 years she had
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beco,,ie disappointed in what was available, because basically cable was only
dishieg out the standard T.V. fare. They had such a wealth of resources
available in education, arts, music, politics and public affairs. The Cable
Co-op proposal was the one that could provide the services, because of its
ownership structure and flexibility. The ownership structure of the Cable
Co-oo was based upon serving the needs of member subscribers, rather than
serving the needs of the investors in the system. The Co-op could put its
profit into providing innovative services. In terms of flexibility, the Cable
Co-op had developed its proposals to meet the needs defined by the City and
others, and the most recent example, was the agreement they've reached with
the CAO, In addition, the Cable Co-op had developed its proposals over the
past few years;, had demonstrated its flexibility, and had found ways to
utilize the various resources in the community. They also would hire good
consultants and other people to put together an interactive system. There
were a lot of excited people about the possibility of the program. She hoped.
Councilmembers would keep that in mind, as they were looking towards setting
up a really unique and Palo Alto -like system for the town.
Jane 8avelas: 1314 College, a member of Cable Co-op and an investor in Cable
Co-op, said she was pleased the Cable Co-op plan offered over $1,000,000 in
additional local investment opportunities. While Cable Co-op's financial plan
did not depend upon the success of the local offering, it would reduce the
total amount of bank debt required and would provide local residents with
another opportunity to share in the success of the cable systems. She hoped
Council would vote for Cable Co-op.
George Gold, 377 Creekside Drive and a Cable Co-op member urged the Council to
approve the staff's recommendation. A few months ago he visited friends in
Fallas, Texas. While there, he found Dallas was having difficulties with its
cable television. After going through the records of companies throughout the
United States, he was told that Dallas found Heritage to be the most prominent
concern for straightening out things that had gone badly. From what he had -
heard about some of the experiences of Mountain View, he did not think that
Palo Alto residents and those of the surrounding communities would want to
have anything to do with any of the Mountain View operations.
Mike Cobb, Community Programming Director, Viacom said one issue they wre
being asked to decide was that of commitment to community. Viacom encouraged
all of it's employees to become involved and his involvement in Mountain View
organizations included the Rotary Club, Chamber of Commerce, El Camino
Hospital Foundation Associates Group, the Board of Directors from United Way
aad Co -Chairman of the Art and Wine Festival in downtown Mountain View, It
was their intent to produce quality programs. Their facility was large enough
and sophisticated enough to do just about every project, the studio, playback
and portapack. They had taught classes in video production in school
districts, worked with teachers in both Mountain View and Wiseman School,
produced programs using high school students as on -camera talent and
production crews, and they had ongoing intern programs with College of San
Mateo, Stanford, Santa Clara, City College of San Francisco, and Foothill
College. Since he `first come to Viacom they had been actively involved in
both the outreach programs and education. The staff of the Community
Programming Department, and indeed the entire Viacom operation, was responsive
to the community' needs. As individuals and as a company they were involved
in and committed to their community.
Alice Barlow, 3379 Bryant Street, said she was a member of Public Access
Theater (PAT) and they had produced nine productions, four of them dramas,
which they liked to do. The staff at Viacom had been more than responsive as
far as PAT were concerned. She knew that when they awared the franchise to
City Cable Partners that Viacom would be more than responsive to them.
Steve Player, 18)4 Guenda Street, said his officewas a holder of threeshares
in City Cable Partners and he was speaking on behalf of City Cable Partners.
In listening to the speakers and reviewing the staff report and the
information that is being presented, it seemedlike the issues boiled down to
financial responsibility, financial soundness and community involvement and
iesponsivelaess., Many people here . tonight had spoken about the financial
soundness of the City Cable organization, but he urged the Council to look at
the people who were involved in City Cable in making their consideration and
understand that City Cable represented community involvement in its history of
responsiveness to the community, to the officers, to directors, to the
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advisory committee, and to the shareholders of City Cable. Many of the people
had been very much involved in giving of their time and their interests and
their many resources to make the entire service area that was going to be
served a better place in which to live. They had a proven record of service,
they would continue to be responsive to what this community wanted: In
addition to that, City Cable would be going out and selling approximately
$1,000,000 worth of shares to the general public as soon as the decision was
made as to award the franchise. That proved that City Cable was interested in
what the public wanted and was interested in getting a broad base of public
support.
Ann Niehaus, 534 Pope Street, Menlo Park, said she was eager to have a cable
system that was really responsive to the needs of citizens of a diverse
community. She wanted to encourage the selection of Cable Co-op. Tie
community was filled with such a diversity of strongly held opinions by people
who were very busy. They have the luxury of being atle to block out whole
evenings to come and sit and wait for a few minutes to be able to
communicate. S:se hoped Council would award the franchise to the Cable Co-op.
It would be owned by people who were using the system. She also felt Cable
Co-op, because of the people involved, would use the state of the art
technology, as it was developed.
Elie Abel, 1590 Dana Avenue said he lived in Palo Alto for seven years since
Joining the Stanford_ Faculty as a professor of communications. As a previous
resident of New York City some years ago, he had an excellent opportunity to
see how the producion of cable can be handled and mishandled. He would hate
to see the city go through the disenchanting experience they had in New York,
where a cable company made the terrible mistake of promising much more than it
was capable of delivering and eventually going out of business. He had
studied both proposals. He had been a member of the advisory board of Cable
City Partners and he favored their bid. It seemed to be a far more realistic
approach, one,that had been carefully crafted by knowledgeable people in whom
he had great `confidence. People knowledgeable enough to know that two-way
cable communication did not exist in the fashion in which they had been
promising it. There was exactly one cable company in America, Warner
Communication, in one City, Columbus, Ohio, He had known and worked with Ed
Parker, the Chairman of City Cable Partners for a good many years. He was one
of the first in the country to take a serious scholarly interest in various
new communication technologies. Michel Guite had been the spark plug of the
effort by City Cable Partners to put together a system that mode sense in
terms of finance as well as technology. Isreal Switzer another member of the
board, was widely acknowledged as one of the wisest and most experienced cable
planners in North America. He wanted Palo Alto to have a first rate system
that could meet their needs without having to go back to the subscribers to
pass the hat because the numbers did not check out. He asked the Council not
to be misled by claims that one bidder had a monopoly on city virture. That
seemed to be the fatal flaw of the staff report. It was clearly biased in
that direction.'. Ed Parker, Michel Guite and Walter Hewlett did not risk a
great deal of time and money to inflict upon the people of Palo Alto,
Menlo -Atherton, East Palo Alto and Stanford, a system that would be
unresponsive to the needs of those communities. The time had come for the
Council to make a decision in full knowleA'}e of the facts and those facts no
matter how they were juggled, left little room .:for doubt as to the right
decision. He asked them not to be swayed by the sound of the word Co-op.
Lon aerquist, 2321 Harvard Street, said he was Community Access Director for
Viacom of Mountain. View. He pointed out that Palo Alto would have its own
television production facilities serving- the Joint Power ;'Service Area no
matter who was awarded the franchise. Public access would be managed by the
community access organization. Viacom would however offer advice and
assistance if needed. From his experience, he had found the success of public
access came from many sources. First and foremost, it wascommunity interest
and involvement. In addition, support from both the City and the cable
operator was essential. No matter what the management structure, there must
be a financially committed cable system. Many systems despite good intentions
had failed to reach their expectations, including Portland, Alameda, even
Davis. The desires for the best Studio facilities and the Most access
channels must be balanced with the realities of today's cable market. The
goal of the GAO should be to achieve a multiplicity of voices'on the access
channel not merely a multiplicity of Channels. Filling just one'public access.
channel was a challenge. Public access was certainly an important aspect of
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cable television. It was a partnership between the access organization, in
this case the CAO, the cable operator, the City, and most importantly, the
community at Barge. A fancy studio did not guarantee successful public
access. Public access was not simply making or playing television, it was
important extension of our first amendment rights and self-expression.
Peter McCl. ;key said he had been retained by the City Cable Partners to give
an opinion on the Co-op Bank. He had reviewed the history of the bank with
specific respect to a letter written on September 10 by City Cable Partners,
Inc., which had been challenged for its voracity. That letter, in his
judgment, was accurate with perhaps one qualification. The record of the
Co-op Bank which was created by Congress and which he served was intended to
be a bank which would ,Hake loans to Co-ops across the country that could not
be obtained from ordinary banking sources. By 1981, the bank had considerably
disappointed the founders both in Congress and elsewhere. It had a terrible
record as to the quality of the loans that it had made. The. Reagan
administration tried to abolish the Co-op Bank for philosophical reason- among
others. They were c'nsuccessful and since 1983 the Bank has made tremendoes
strides. First;, it was no longer subject to the appropriation process in
Congress. Secondly, it was independent of the administration end thirdly,
while it was still bound by the philosophy of trying to help Co-ops, it had
materially increased the quality of the loans that it had outstanding. He
quoted from Mr. Guite's letter of September 10, "far from offering Palo Alto a
low risk alternative, we feel the National Co-operative Bank itself presents a
risk to Palo Alto that is unjustifiable and unnecessary," was not to indicate
that the Bank itself was unstable. But the risk of the situation with $20
million in financing, with no capital money being put up by those that were
going to manage the operation, clearly showed that there was a greater risk
with a Co-op financing. If they were able to raise that 45 percent capital
financing, then clearly in an uncertain business, in an uncertain market for
all banks, it was much riskier to hat_ a $20 million financing, with only
perhaps $19 million of it or more debt financing and no capital incentive on
the managers to make the company work. He thought that Mr. Guite's statement
was absolutely accurate, that the Co-op Bank itself, that system of financing
solely by debt financing, was far riskier for this city; because without
capital financing, without the incentive of capital ownership, anybody could
walk away from what essentially must be a money making proposition. He
thought there were distinguished citizens on both sides. But if the City
Cale could raise the money for that initial financing, it was far less
riskier to the city.
Frank Patitucci, 1437 Dana said people indicated that basically, the
technical proposal, the management proposal, and the financing were all
equal. The decision was coming down to a philosophical preference between a
private corporation running the system or a Co-op running the system. As a
result, he thought the parties in question responded by trying to turn it into
a political popularity contest. The applause and the buttons that people were
wearing concerned him. His concern was that the City Council make the
decision. He did not want to deal with it if he was fortunate enough to be
elected. Secondly, he hoped that they would make a decision that would have
the least number of potential repercussions for those who were on the Council
after them. He supported City Cable partners and had come to the conclusion
by answering the following questions which ,he hoped the Council would 'a-.
themselves. First of all, was it a popularity contest. Frankly, he did not
think it was. He thought it was a very tough business decision that the
Council had to make based on what they believe would be the longest term
quality of service, financial viability, and hopefully, the least number of
problems that this .community will face with cable. He hoped the buttons and
the applause either one way or the other were not swaying the Council.
Secondly, he asked if all else was equal. He did not believe it was. He
really believed that 100 percent financing in a non equity finance
organization created very serious risk. That risk was not in the first few
years, when everyone was enthusiastic and the energy level was high. The
worst case situation was a low number of subscribers, people interested only
in entertainment not interested in communications. He asked if there would be
motivation to continue to provide cost effective, da to day service. The
Co-op proposal did not represent to him the long term ability to provide that
kind of service. He really believed, that having independent investors gave
the, CPuncil a potentially arms length ,relationship with investors, so that one
could make specific demands and deal with them not as another political body
but, as a body interested in profit, someth i ng he thought most of them
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understood. Filially, he asked if the Palo Alto service area was the same as
Davis. He thought that question was already answered by the manager of the
Davis system. The combination of Palo Alto, East Palo Alto, Atherton,
Stanford was not Davis. He thought some investigation of that comparison was
necessary. The thing that concerned him most was what kind of decisions were
the groups going to make based on the decision they had already made.
Unfortunately, making lots of promises early en was an easy way to gain
popular support and political support. As a result, he hoped they would make
the decision quickly and if he was fortunate enough to be a Councilmember that
they would not have to hear about cable again for years to come.
Carroll Harrington, 830 Melville, Director of Special Projects for the City
Cable Partners, as an independent consulter)* said the following people called
her today and expressed an interest in speaking tonight but because of other
commitments were unable to do so. They asked that she enter their names in
support of City Cable Partners. Margaret Price, 165 Alma Street, Dr. Esther
B. Clark, 980 Old Case Road, Palo Alto, Armando Valdez, Center for Chicano
Research , Stanford University, Stanford California, Henry McMicking, 90
Almendral Ave., Atherton, California, former Mayor of Atherton, and William B
Reagon, 1280 Arbor Menlo Park.
Michael Flicker, 702 Tennyson, Palo Alto, said one time his law firm
represented Viacom Cable Television, when they were interested in bidding
directly for the Palo Alto franchise. His firm no longer represented them and
he had no interest at all in either bidder. He supported the City Cable
Partners and he did so because, after being involved .:ith the cable franchise
bidding in Mountain View, and following what was going on here, he came to his
own conclusion -that City Cable Partner's proposal was much more financially
sound, and much more likely to be followed through and provide a good system
for Palo Alto. He thought that was really the critical issue. He thought the
financing issue needed to be looked at very carefully. People talked about
the financing, not because they did not care about the human quality or the
system, but If the financing failed there would not be a system. The human
qualities of the system would not be able to be supported. Another major
issue was the community involvement and he cited one example, the decision
whether to two -wee cable, which was not a decision that should be decided by a
group of people who were subscribers and elected in that fashion. there were
usually many computer enthusiasts- on the Co-op Board who influenced them,.
His observation was that the number of channels and the equipment was not what
is was going to make for quality community access. Both applicants seemed to
propose a good number of channels, access and equipment. The quality of the
staff would be critical. People like Mike Cobb whom they heard speak were
experienced, high quality,peopie, who were both committed and able to transmit
their experience and their expertise to the average citizen. That was what
was needed to have good community programming..
Charles Hayden, Immediate Past President of the !Mountain View Chamber of
Commerce and the current President of the Mountain Kiwanis Club said he had no
•profits to be made or monies to be lost. During his law school days in
'ee:eley, he was an act've member of the Co-op. He enjoyed his participation
and the Co-op experience. He was a current Viacom subscriber in the City of
Mountain View. He recalled scything that he learned in college and that was
when you throw dirt you only lose ground and he thought that enough stones had
been thrown tonight. He wanted to speak of Viacom.s commitment to the City of
Mountain View. He was on the Board of the Chambers and they were very active
in the criteria, and in the decisions which too'= place several years ago when
Viacom was given the franchise in Mountain View. The Viacom system, from top
to bottom, from the General Manager, John Dolan, down to the installers to the
telephone pole climbers, was more responsive to community and individual
needs. If there was a problem, they were there. He had not heard one
complaint here tonight and he believed that 'f very many existed they would
have been brought out by one group or another. He had not heard one complaint
of the quality that Viacom had given to Mountain View. They were involved in
the Kiwanis and the Rotary. ,He suggested there was absolutely no continuity
between the various Co-ops. By the City of Davis' own admission, they were
running 20. percent, less than their projections somewhere in that range from
40, 47 percent down to 32 percent. Approximately a 20 percent drop in their
expectations. He suggested that a study be done to find out what percentage
of the total people in the viewing, area they were talking about, East Palo
Alto, Palo Alto, = Menlo Atherton. He would suggest that those dembers eiith a
$10 - $30 investment probably represent a relatively low percentage o: the
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total number of people, and he would say that they could be just as apt as
owners of the system to jack the price up for everybody, because afterall the
profits came back to the Co-op. He dtd not think that would happen, but that
argument could be made. Large scale investors tied a lot more to lose if the
system went sour than -does somebody with a $10 - $30 investment. He believed
a commitment of involvement and commitment to the community had already been'
demonstrated by Viacom, not just in Mountain View, in San Francisco, and in
several other cities across the country. they had shown they could do it,
they were financially sound, they had the where with all, the technical
knowlege and most of all the people who care to make the system work for you.
Timothy Enos, 21)0 Columbia Street, Palo Alto, said he was a resident of Palo
Alto for 13 years. He suggested they narrow down their choice to Palo Alto
Cable Co-op and congratulated the City Council on the pain that it had taken
to narrow the decision down to the two fine candidates. He mentioned his
infactuation with a book that was now three years old, namely "Megatrends" by
John Nesbitt which spoke to the future and especially to the lorry term
future. He was delighted to have Representative McCloskey and Candidate
Patitucci speak about the long term because that was what he was in it for.
He intended to be here for much longer and if he bought shares in any cable
organization, he intended to hold them and pass them on to his kids. He read
a paragraph from Nesbitt's "Megatrends" which spoke to the matter of America
moving from a money economy to an information economy through a matter of
electronics organizations. It was a shift "from money to electronics which was
as important as the earlier shift from barter to money. He thought there was
a log of money to be made her_.
John Betts, 855 Forest Avenue said he had submitted a letter to Coencii. The
Cable`Co--op people were interested in something more than just making a pile
of money. They Were interested in. delivering to the community an elegant,
beautiful, and durable cultural service. He was an old time member and former
director of the Palo Co-op. He was for Cable Co-op.
John Mock, 136 Barron Avenue, said he was not affiliated with any of the
organizations either financially or in terms of membership. As of the last
meeting he was basically undecided and trying to remain that way as much as
possible. As to the long letter which they probably had already seen, he felt
he had to take a position, based on reading the documentation provided by. the
applicants and by the city staff. He highlighted some of the points. As far
as additional channels were concerned, they were looking at not only Foothill
and College of San Mateo, the public schools and non-traditional services as
he had outlined, they also had --Stanford University, which justified their own
cable system. They might have quite a number of programs that they might wish
to provide if they were able to cooperate with them. Regarding B Cable
originally, they were talking about having three cables, now they were looking
at two, and with City Cable, even that one was in doubt. He quoted The
institutional. cable, i.e., the B Cable will be activated and inserted under
the following circumstances. At least a 50 -mile loop connecting the major
institutional governmental sec shall be activated on the third.annieersary en
the date of the agreement. In the event that the company reasonably believes
Oat all user needs for .the system are being met on the subscriber channel,
that is the A Channel, and the additional capacity on the initial loop is
unnecessary, the company shall have the right during the period commencing 10
months before the institutional cable activation and in the 7 months before
the institutional cable activation date, to demonstrate to the City Manager
that such capacity is not needed," and sail it sounded to him like they would
simply not do the/6 Cable at all. Co-op, on the other hand, was committed to
at least the. fi*tt 50 miles and from its channel allocations he would assume
they were also going to provide the servtceeto residential subscribers., City
Cable made nomention of residential subscribers to.B Cable that he coutd find
and the use of the B Cable was rather seriously qualified as he had indicated
in the quote in the note. Whereas Cable Co-op was establishing the Advance
Services Development Committee which would not only work with the community
but would be represented by the CAO and the City, as well as the.memmbership of
the Co-op.
as Samelson, 841 Esplanade way, Stanford Campus, said she thought as a
number of the Cable Co-op and as a member of the larger co ns ty they were
serving, that they had:a chance to do the kind of innovative' thing that they
had done so often. -in. -the past, When she went out to the recycling center
recently her guest from Berlin imm diately picked up the little green buMper
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sticker to take back to Berlin with them. It said recycling was the Palo Alto
ways. They had cultural resources here that could be expanded and developed
by having Palo Alto' own cable system that was responsive to the Palo Alto
community's needs. There would not be anything like it in the world, and Palo
Alto would be the leader if they selected Cable Co-op,
Jean Dawes, 350 Santa Rita, a member of the Advisory Board and a share -holder
of the City Cable Partners said for her there was a strong need to ass ee a
stable operation whi,.h would have the resources to make good on the commitment
to the community access. In regard to education in particular, she was
satisfied that City Cable Partners would meet the need of the educational
community. She referred them to both the letters of City Cable, one written
on September 20th to Joann Crocker and Tom Clements, and the 'one in regard to
Viacom written by Betsy Ccllard. Second was the need that the' company be
accessible to all segments of the community. Her involvement on the broad
based multi -interest advisory board assured her of that. She felt the issue
of ownership had taken on a special aura in the discussions. partners, like
Co-op would offer shares to the public at large. Partners like Co-op would
have a Board of Directors. The responsiveness of each group depended as much
on its leadership as its ownership. For her, Partners offered a more stable
option in a high risk venture. That stability and depth was what they
deserved.
Don Newmark, Community Access Producer for Viacom, lived at 1882 Camino a Los
Cerros, in unincorporated South San Mateo County. He asked what were the most
important issues that they were facing - it was community involvement, no.
Was it innovative programming, no. He felt, first of all, as far as loyal
involvement, he was not going to repeat a lot of testimony that had been
given, he thought they had all heard from staff members to the degree of local
involvement and community access programming, which was of a very high
caliber. He submitted that it was the financial capabilities, because without
the financial capability which had been demonstrated in reports submitted to
them, there would be no cable, no innovative programing and no local
community involvement. Local involvement would be meaningless without the
financial capabilities. By innovative what they meant was qualified
innovative programming, that was ' programming that would be within capabilities
and the interests of the community. They were not just talking about Palo
Alto, they were talking about communitica that had a very wide social economic
spectrum, from East Palo Alto to Atherton. He asked them to give very serious
consideration to the application of Cable City Partners.
Dr. Genevieve Cory said she lived at 1181 Hamilton Avenue for 23 years. She
was a specialist in the use of television for adult education and community
access. She had been involved in educational television and instructional
television for 15 years in various capacities. She had a Ph.D. from Berkeley
in the administration of higher education with emphasis on community
communications and educational television. She was a scholar at Stanford in
the Institute of Communication Research corking under Dr. Schram. For six
years she produced a television community consumer education series that was
funded by Vocational Education and later by HEW out of Washington. For five
years she taugnt T.Y. production for Canada College, using the cable T.V.
studios in Sao Carlos to teach fireman, policeman, teachers, volunteers and
businessmen how to use television. She also was one of the organizers and the
co -chairperson for the Peninsula Community Access Television Association, an
organization that gave seminars to raise awareness of issues and dispense
information about cable T.V. experience. Currently, she was an instructor at
Canada College and she now spoke as a representative. Canada College was
concerned that educational access be protected and the franchise be- awarded to
the entity that would be sensitive to educational needs. Now she wanted to
change hats and speak as a resident of Palo Alto, deeply concerned about
securing a cable system that would protect community access and protect the
rights of education. She had long been interested in the Co-op ideal of
community involvement and she had also been and was still, deeply concerned
about /oral control. She spoke as one who still carried bruises that were
handed to her by Cable T.V.'s ruthless decisions, made by those at a distance
who only looked at the financial state ot. In her intensive study of
successful and unsuccessful educational programming, she had concluded that
the following conditions must be present for success. First, sound and
continuous financial support. It took money -to produce community access and
educational television. She believed that City Cable Partners could furnish
that necessary condition. Second, technical excellence.- She believed that
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they must have s first rate system but it also must be a system that could be
updated by people who were out on the cutting edge and who were experts. They
had that expert in Ed Parker. There were few people in the world who could
match Ed Parker. Third, they must have a technical staff that n» st not only
be willing to help on a higher level, but must be a teaching staff and that
requires experience. City Cable Partners had that and its affiliates had the
experience. Fourth, they must have adequate facilities and they must not only
be state-of-the-art but the .management must be capable of keeping them up to
date. The fifth condition was policies that define clearly, community
rights. Local control was vital, but local control was assured only the
policies established by Council in cooperation with citizens' committees. She
was sure that there were representatives who would protect the citizens of
Palo Alto to insure local control. Enthesiasm and even dedication were not
enough to produce the community programming and educational programming. She
believed that of the two, only City Cable Partners could give Palo Alto a
successful cable T.Y. system.
Vince Dorn, 488 University Avenue was proud to say he was the 300th member of
the Cable Co-operative. He had established a small business called Laser
Item, engaged in laser printing for Macintosh and I8M computers. As a
businessman entrepreneur, he was excited about the access to all the household
and businesses of the community which would enable his laser printing
operation to serve as an instantaneous publishing resource to the households
and businesses in the mid -peninsula area. He was a small businessman today
but he was not interested in staying small for long. He saw Pac Bell's high
quality high-speed two-way d=ta communication system that Cable Co-op was
offering as a wonderful opportunity for the future success of his company. He
requested that the Council award the cable franchise to Cable Co-op.
Mari Speyer, 698 Kendall, a teacher at the Peninsula School in Menlo Park and
the President of the West Bay Opera Club said she was here tonight to speak, in
favor of Cable Partnees. She was one of the original members of the
Briarpatch Co-operative Market in Menlo Park and was one of the few members
who stayed active and worked in the store until the bitter end, wnich was just
this year. When the. 8riarpatch finally closed, she lost her original
membership fee which was $100.00. In the early years, they would all have
been assured they would get that money back if ever they wanted to cancel
their membership, but it turned out in the small print that there was a
provision if the Co-op closed its doors, they would not get that money back.
In the early years of the Sriarpatch, people were as fervent as many of the
people speaking in behalf of the Co-op. But as the complexityof running a
grocery store became more apparent and the difficulty of operating emerged,
more and more of the .idealistic early members drifted away and finally the
very essence of the Co-op changed. .They tried many different financial
approaches, but finally the Co-op closed its doors. She could not imagine
running something as complex as a cable T.V. franchise on a mom and pop basis,
so she hopped they would choose City Cable Partners.
Phil Sih, worked at 1300 Embarcadero Rd., at a firm called Regis McKenna,
Inc., where he was a marketing consultant and he was speaking on behalf of the
Cable Co-op. He was on the Co -cps Board of Advisors. He had worked for Regis
McKenna for about two and one half years now as a marketing consultant. One
of the things he had not heard mentioned was what really made for success in a
firm's bid in a new marketplace. One could read the MG and Newsletter over
the years and could look at the industry and read what Forest had to write
about it but what he believed was that it would take something; different in
the way of marketing, The thing that was going to make a difference for the
City of Palo Alta and for the Cable Co-op was their approach to marketing the
services. He had seen a lot. of companies that represented good opportunities
both for investment and for success in the marketplace and the fable Co-op
opportunity was an opportunity to bank on some people who were ,going to do
some "innovative and different things in the marketplace. He asked Council to
consider Cable Co-op on that_ basis.
Clarence Heller, 98 Faxon Road. Atherton, a director and shareholder in the
City Cable Partners said he was involved and had been '`involved and would
continue to be involved in a wide range of organizations including fair
Musing. Fair Abusing Counsel, Violence fund, Palo Alto Medfcal Foundation,
The Consumer Co-op Management, and Finance Committee. Friends Outside. Santa
Clara County Service League, San Mateo County Community Childrens Center,
etc.. To say that City Cable ,was not . a community -based organization was quite`
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incorrect. He did riot want to be critical of the other side because he was.
"Co -open" as he had indicated, but he did feel City Cable Partners was not
only a strong and viable group. but was very community based.
Hersh Brown, chief engineer for Catholic T.V. Network, resident of Mountain
View for the last three years, said for several years he worked with ? Father
Michael Rice on cable. Father Rice came up with an idea several years ago to
form a cable network called Bay Area Religious Channel and he worked with him
from an engineering standpoint on that channel for the last several years and
in doing that he had contact with almost all of the cable companies in the Bay
Area, One of those companies, Viacom, they found to be extremely
cooperative. Three years ago the only thin they knew about cable was they
could get a lot offhomes and they wanted to be on that cable. They approached
Viacom ii Mountain View and shortly thereafter they .had the Bay Area Religious
Cannel on cable. His point was their experience with the Bay Area Religious
Channel found Viacom to be a very responsible cable company, which really
helped them out and enabled them to provide Bay Area Religious Channel service
throughout the Bay Area. As a subscriber for the last three years to Viacom
in Mountain View, he wanted to sum it up very simply, he did not think it
could get any better.
Richard Crewdson, 438 Ventura Avenue said he was one of the silent majority
members in the Cable Co-op. As the leading city in the silicon valley, for
Palo Alto to be considering the adoption of a cable system with a two-way
computer communications capability was remarkable to say the least. He was
disturbed by the recent smoke screen of criticism of the Cable Co-op's plan to
finance the new cable system. The Co-op plan was in place. The criticism
they were taking about was coming from a group that had yet to put together
an alternative plan. Co-op'e was ready to go. As president of a local Palo
Alto company of about one hundred people, he had some experience of raising
about 2 million dollars or so in the past few years. Before that, he helped
to found anouther company which was today a $4 million company based in
Chicago. That. was 100 percent debt financed, incidently. Today it was a very
stable venture. He was no stronger to a business plan and had looked over the
Co-op plan. It looked reasoHable and business -like to him. He expected there
were other cable companies out there and, together with Heritage, the Co-op
had an excellent idea of the financial demand to be made over the coming
years. In his experience the important thing was just getting the money and
getting started with people that could make projections come trice. Without
the right people, yesterday's projection could be as dead and irrelevant as
yesterday's Times Tribune. He asked which company had shown the initiative to
;let the package put together. Which one had ceTe to terms with Pac Bell and
the CAO. Which group was ready to dig. The studies had been done, the
consultants had been consulted and they recommended Co-op. The Co-op had a
good plan and was read/ to go. In his opinion, the Council should make a
decision for the Co-op and let them get started.
Ted Stephens, 3869 Corina Way, said he had no interest in either
organization. He had .looked at both proposals submitted by the Co --op and by
City Cable. As a casual observer, he found that: he could support the proposal
by City Cable Partners and he urged the City Council to do the same.
Dick Wilmuth said he was on the Mountain View Cciuncii when the Viacom
franchise was awarded and he hoped that they would join the club of those City
Councilmembers that had been indoctrinated into voting and awarding a
franchise. It seemed to him there were basically three major differences in
the proposals. First they had the Co-op, which was a citizens' committee -type
of atmosphere, versus a private corporation, or, partnership run for a profit
motive corporation. They had the financing differences, virtually 100 percent
debt financing versus equity financing approach and they had in the City Cable
agreement? as opposed to the Co-op agreement, a relationship with the Mountain
View head -end and service arrangemflt. Those were the three major differences
that he saw in the proposals that were of significance. There had been a lot
of discussion about the risk of 1200 percent financing and he did not think he
needed ko go into that anymore. He thought they were all aware of the issues
of buying a house at 100 percent financing and so on. It ca a into play when
the marketing circumstances and the .very rapid technology :change began to.
occur and one started to miss the market forecast. Cable T.V. was more in
doubt today than it was four or five years ago when they were considering the
issues. VCRs were strongly upon them and the issue of two-way communication
with Cable T.V. was in doubt. There were many other competitive services
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being developed. He said the Council had certainly discussed the
accountability of the two organizations. However, he asked, were they going
to enforce "the franchise if something want wrong. In one case, there was
private corporation and the management was very clear. In another case it was
the community of Palo Alto. He asked how the City could levy fines against
their own citizens. He thought the private investment in an equity way was
where they could place an enforcement. Lastly, be wanted to address the
agreement City Cable had with Viacom. There was an opportunity that he hoped
Council would seriously conside„. Under that agreement, the City would
definitely have a link to Mountan View from the system. It was not clear
whether that link would exist with Cable Co-op. He hoped it would if they
ultimately were awarded the franchise. It would increase the local
programming subscriber base of the Palo Alto, Menlo Fark, Atherton, East Palo
Alto system by a significant amount and would significantly help local
programming, educational programming, and programming out of Stanford
University. It would also dramatically help to minimize the cost problems
that weld be associated with the cable system. He thought that on the Co-op
and on the City Cable side were extremely well intentioned people. He pointed
out having been through the process himself, that the decision the City
Council had to make was an extremely tough decision.
Rafael Diaz, 387 Roble Avenue, Redwood City, said he was a stockholder in City
Cable. He invested in City Cable not because of a high rate of return but
because he respected the active participants in that group. He was not
insensitive nor adverse to Co-op. He had belonged to the Co-op and enjoyed
participating in Briarpatch and a number of_ other Co-ops. He had enjoyed
financial benefits from them but as a business person, the only vote that
counted was whether you subscribed to a service or not.
Donna Krepick, 1458 Meadow Lane, Mountain View, said she had a Masters Degree
in Community Health Nursing but tonight she was acting as a Community Access
Producer from Viacom 1p Mountain View. She passed out letters to the editor
of both the Times Trib ne and the Town Cryer in Los Altos dated September 17,
1 85. What they did not see in the credits were the names of people who
guided, supported and encouraged and supervised the making of the scouting
trail. The Community Programming Department at Viacom under the direction of
Counciime:iber Cobb had been instrumental in assisting her not only with the
program but also with four other groups which included AYSO Soccer, the Los
Altos School District and Mountain View Recreation. She thanked Public Access
Director Lon 8erquist. -She strongly supported community programming at Viacom
and encouraged the City Council of Palo Alto to think beyone the nuts and
bolts, dollars and cents and miles of cable, and to concentrate on community
programs. She urged the Council to choose a cable company with experience, a
track record and the kind of commitment that .Viacom had given to Mountain
View. That company was City Cable Partners.
Paul Saffo, 789 Roble Avenue, Menlo Park, a member of the Cable Co-op, said by
profession he was a research fellow and studied the legal and regulatory
implications of new technologies. Prior to his current position, he was an
attorney with a major law firm. One of his clients with that firm was the
Cable Co -op. - :In the course of working with the Co-op he was continually
impressed by the teams ability to meet each new challenge with sophistication
and business judgment appropriate to the occasion. Ultimately, ,their
professional judgment and effectiveness came to exceed what he saw in other
clients with significantly greater initial resources and longer operational
track records. He was ,deeply convinced they were uniquely qualified to
successfully and profitably operate the proposed cable system.
Roy Avondet, a resident of Saratoga, said he was a partner with the accounting
firm of. Deloitte, Haskins, & Sells. THey were the accountants for the Cable
Co-op. He would speak on the nature of venture, capital financing.. It was
noted that the Cable Co-op had a 100 percent debt financing whereas City Cable
Partners had equity financing. There had been many comparisons of the amount
of interest to be paid by_ the Co-op as opposed to City Cable Partners.
Because _of the accounting convention, the accountants did not accrue the
econooic cost of equity capital. However, in the forecast of City Cable they
showed a buy-out, a projected: buy-out of the limited partner investors in year
six through eight. The size of the purchase price was determined based on
operating cash flows generated ,by the partnership ' 'or by the limited
partnership. Venturecapital investors ei►pected between_ 25 percent and 30
percent return or, their money. That meant for the $9.2 million that was
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invested, if a buy-out occurred in year eight, in order tc achieve the 26
percent return, City Cable projectedthe purchase price to be approximately
$53 million. The money would ,n to the investors. Also, the $53 million was
usually not just handed over, usually, the purchaser tried to leverage the
acquisition of the citizen as much as possible: Five to -six times the
operating cash flow was generally Considered to be a reasonable amount of
debt. The long-term financing costs of the Co-op was 15 1/2- percent on a
lease. To be fair, the lease was mot a capital lease and would not be
reflected as debt on the balance sheet of.- the Co-op uecause it was an
operating lease. Therefore, if they were to make a fair comparison, they
would not include that as debt either. However, it was clear that it
represented a cash commitment. There had been a lot of talk about price but
not much about penetration. The penetration rates drove the level of revenues
to be expected by a cable enterprise. The Co-op projection figures were very
reasonable. If thare were a short -fall on the penetrations projected by City
Cable Partners, it would take a substantial decline before they reach the
level projected by the Co-op. Both of the organizations were going to be in a
business to make a- profit and among the Fortune 500 there were eleven
co-operatives and of the top 50 co-operatives in the United States, the lowest
sales figure was $237 million. Those were not just mom and pop operations
that could be operated for a profit.
Robert Smith, 2291 Greer Raod, Pals; Alto, said he was a compeer scientist by
profession and a video fan by allocation. He supported the City Cable
Partners because they showed the attributes of being able to survive in the
cable business. He heard very little from Cable Co-op on how they were going
to ascertain what their paying customers were going to want. When he read tha
report, it was surprising to look at the pricing because the Co-op was going
to charge $12 per premium channel. City Cable indicated $6.95 to $9.95, a
kind of sliding scale for different services per channel. If you look around
the country, $12 was a very high price for each channel, making it rather
difficult for people to make some decisions. He said they talked about
control and he asked if they were really going to have the control of the
cable system if the Cable Co-op operated it. He did not think that Cable
Co-op was realistic and could do the job.
Ed Lazar, 2125 Oberlin Street, said he was a member of the Cable Co-op and
President of the Consumer Co-operative Society of Palo Alto. Their Board of
Directors last month reaffirmed their full support for the Cable Co-op. he
was very impressed with the total package put together by Cable Co-op, Cable
Co-op had a solid arrangement with Heritage Communications which had one of
the best management records in cable in the country, It had a solid
relationship with Pac Bell and the National Co-op Bank. He was personally
very impressed with the total package that Cable Co-op had come up with. With
Cable Co-op, there was a structure for the membership to be able to provide
input. That structure did not exist within City Cable. The essence of the
Cable Co-op was to provide a service to the wider .community$ Palo Alto and the
surrounding communities which would be served by the system. It was to make a
profit but to use that profit to improve the quality of the system. It seemed
to him that they had a tremendous winner in the Cable Co-op system and one
which reflected the history of Palo Alto. He urged the Council to vote for
Cable Co-op.
Dan Mahoney 3i5 Iris Way, said he belonged to neither of the organizations
that were bidding for the franchise. He referred to the community -owned Co-op
and said he personally felt there was more community ownership in City Cable
Partners than the Co-op. He did -not know what community -controlled really
meant. However, in reading 5oth of the proposals he noticed that in fact, the
City staff said the services of both of the organizations were very much the
same so he did not know who was controlling more than the other. He said they
had all heard a lot from Viacom Cable and the people who subscribed to
Viacom. It was a good orgAnizatiors and a proven organization in the area.
Carlo Piccione, 710 Colorado, 636 Partridge Avenue,_ asked the Council to do a
fine job and take a look , at - all the different aspects of having a company that
would succeed.
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ITEM #2 Nulut __t F COUNCILMEMO€R FLETCHER RE REQUEST FROM TRAILS AND PATH
CUF Iiif C (PWK2-2)
MOTH*: Councilmomher Fletcher moved, seconded-hy-Ceancilmember Rerizel. that
rounCil refer the q : t for bike path along Arastradero Road in the vicinity
of -Arastradero Preserve to staff and to the Palo Alto Bicycle Advisory
Committee (PABAC) for a recommendation to Council.
MOTION PASSED unanimously, Councilmember Witherspoon absent.
ADJOURNMENT
Council adjourned at 12:00 a.m,
ATTEST:
APPROVED:
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