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3 <br />SUMMARY <br />The franchise documents, cable standazds ordinance and franchise agreement, prohibit the <br />transfer of either control or assets, however accomplished, without the prior consent of the <br />franchise authority. The proposed transaction will not result in the assignment of the franchise to <br />anew entity. The transfer will alter the ownership (stock) and control (management) of Time <br />Warner Inc. (Time Warner). The new company will be AOL-Time Warner. <br />This transaction raises several important public policy questions, which must be considered. The <br />issue centers around "Open Access", a form of common carrier status placed on the cable <br />company's broadband high-speed Internet platform. The arguments suggesting that local <br />governments condition their approval upon a requirement that AOL-TW offer open access to <br />unaffiliated Internet service and e-tailers are presented more fully in the report. <br />Regardless, it is imperative that the franchise authority secure certain assurances from the new <br />management entity that this hypothecation will not adversely impact current and future <br />subscribers, rates, the cable distribution system, Time Warner Cable-Advance Newhouse's <br />(TWEAN) business and customer service policies and practices. <br />The franchise and FCC-394 documents direct Time Wazner to furnish the franchise authority a <br />full set of descriptive identifying particulars about the proposed transaction. Also, by supplying <br />copies of all documents pertaining to the transfer, the Company has complied with the transfer of <br />ownership provisions of the current Franchise Agreement. The material change in the ownership <br />and management structures of Time Warner require the franchise authority to review, weigh and <br />approve the transfer of ownership and control among and between the entities. <br />Although, Time Warner did not submit FCG394 documents to the City regarding the sale of <br />MediaOne's 2S.S 1 % ownership interest in Time Warner Entertainment, it is both necessary and <br />prudent for the City to acknowledge that this transaction is taking place. <br />To evaluate the proposed sale of MediaOne to AT&T and the merger of AOL and Time Warner <br />Inc., the following issues concerns and documents were cazefully analyzed and considered: <br />1. Information gathered during telephone conversations with the parties' <br />representatives and responses to questions about the deal; <br />Franchise Fee U-Tax Auditing & Cable Television Administration <br />101 Pocono Lane, Cary, North Cazolina 27S 13-5316 Voice # 919.467.5392 Fax # 919.460.6868 <br />