SPECIAL MEETING
November 6, 1979
A Special Meeting of Council, to discuss the transfer of ownership regarding the Delaware Teleservice Franchise Agreement, was held on November 6, 1979 at 7:30 p.m. with Mayor Legates presiding. Councilmen present were Messrs. McDonough, Weyandt, Hardcastle, Carey, Witt, Carson and Bewick. Mr. Muir was absent.
Mayor Legates announced the purpose of the meeting and stated that everyone present would have an opportunity to speak and ask questions although the meeting was not a public hearing. He noted the presence of Mr. Lloyd Smith, an owner of Delaware Teleservice, and Mr. James Faucette, a representative, and representatives of Storer Broadcasting Company, who is a perspective buyer.
Attorney Max Terry Jr. recognized the provisions of the Franchise Agreement, under paragraph 10 (b) which provides that City Council must approve any change of ownership that provides cable service to the Dover area. He added that Delaware Teleservice Inc. will be merged with a company known as General Television Inc., a wholly owned subsidiary of Storer’s Broadcasting Company. General Television Inc. now serves Rehobeth, Georgetown and Milford areas. Noting the presence of representatives of Storer Broadcasting Company, Mr. Terry said that they would attempt to demonstrate that Storer Broadcasting Company is qualified to exercise the franchise for the City of Dover.
Mr. Terry introduced Mr. James Hall, Vice-President and General Manager of Storer Broadcasting Company, to communicate some background information on the organization and answer any questions that members of Council might have.
Mayor Legates reminded members of Council of their opportunity at this time to air any questions that they might have on the ability of Storer Broadcasting Company to service the area and at the same time, meet the provisions of the Franchise Agreement. A public hearing will be held on November 12, 1979 for a final decision.
Mr. Hall informed Council that Storer Broadcasting Company is a 50 year old communication’s organization, serving 16 states with 325,000 subscribers. At the present time, the company is undertaking a $250,000,000 expansion program with their cable television division. Mr. Hall distributed letters from various cities where their company operates with press releases attached.
Questioned by Mr. Weyandt concerning a television service company, involved in an overcharge to customers in Sussex County, Mr. Hall stated that his company was not involved.
Alluding to problems encountered with a privately owned company, Mr. McDonough asked what type of information is submitted to municipalities to justify a rate increase.
Mr. Hall stated that the information varies according to the municipality. Some times it is on a State or local basis and sometimes on a corporate basis. There is no set standard.
Mr. McDonough said that Council is concerned only with the City of Dover, which is a part of Kent County. He asked if the company submitted a breakdown of costs and percentage of profits when a rate increase is being considered. He referred to the problem of allocation of cost between the City of Dover and Kent County.
Mr. Hall stated that he knows this problem well and in some instances has submitted reports based on miles of cable, subscribers and revenues. The company has not addressed the question of how they will submit this information to the City of Dover. That would necessitate separating cost and revenues from areas outside of the City limits. He added that the City would be required to approve any rate increase; therefore, their judgement would be based on the information submitted by his company.
Mr. McDonough asked if the company had any intentions concerning the present level of subscriber rates in the City.
Mr. Hall replied that the company would do nothing until such time as a track record is established. In the meantime, the level of service will be maintained and rates will not change.
Mr. Bewick asked if Mr. Hall’s company could furnish information that would reflect the cost and revenues of the City of Dover only.
Mr. Hall stated that the company could give information based on the Dover system although it is difficult to break out the City of Dover because you will run into the problem of allocation of man-hours. His company breaks down this information based on profit centers and a center is a system. He added that expenses and revenues are recognizable in one profit and loss statement. Therefore, the company could furnish facts that would reflect the actual cost and revenues for this area.
Mr. Bewick inquired if the company planned to change the operation or programming of the system.
Mr. Hall stated that the company’s engineers had been in to make a survey and study the system. However, it is too early to make that determination. He was sure that additional services would be added.
Mr. Witt asked if there were any modifications or changes in the present franchise contract that the company would require and if the company contemplates any rate increases or reductions.
Mr. Hall stated that the company is perfectly satisfied with the present franchise agreement and no changes are planned in the rate schedule. He added that perhaps the company could realize additional revenue through added services which would negate the necessity of a rate increase.
Mr. Witt reminded Mr. Hall that the present agreement requires that the company maintain an internal 24 hour answering service and wondered if the company had any plans in this area.
Mr. Hall replied that the service varies according to the demands of the system. In some areas, his company has personnel on dispatch until 11:00 or 12:00 at night. In other areas they utilize automatic recording devices that will alert someone that a problem exists. The company also utilizes the answering service. He felt that this would have to be investigated to determine what this area requires. However, if the agreement stipulates a 24 hour answering service, the company would abide by these requirements.
Noting that Councilman Witt will attend the National League of Cities Convention, Mayor Legates stated that body will consider a resolution to defeat a bill before Congress that puts cable television under federal regulation only. This would mean that local governmental bodies would lose all control. He suggested that this be an item of interest for Mr. Witt’s investigation during his stay in Las Vegas.
Recognized by Mayor Legates, Mr. Hardcastle stated that he would have questions that he will hold for the November 12th public hearing.
Mr. Weyandt emphasized that he would like to see all complaint calls cease at City Hall concerning cable television. He did not feel that this was a municipal responsibility.
Mr. Hall stated that his company maintains a log of all complaints that incorporates an explanation concerning the procedure utilized to resolved same. His company handles these complaints on a day to day basis no matter what time is involved.
Mr. McDonough reiterated the question of the company’s willingness to furnish cost and revenue allocations if a rate increase request is initiated.
Mr. Hall stated that he would probably like to convince the City that all rates should be uniform according to the cost and revenues based on the entire system. If this cannot be accomplished, the company would be glad to sit down across the table and discuss the City’s requirements.
Meeting Adjourned at 8:07 P.M.
WILLIAM H. WILLIS
CITY CLERK
All orders, ordinances and resolutions adopted by City Council in their meeting of November 6, 1979, are hereby approved.
CHARLES A. LEGATES, JR.
MAYOR
November 9, 1979
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