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STOTSENBERO. BINDER & CO:.
CERTIFIED PUBLIC ACCOUNTANTS
THEODORE R.SINOER
HENRY I. STOTSENBERG. [�
MENBERS OF THE AMERICAN INSTITUTE OF January 1 J, 1968
CERTIFIED PUBLIC ACCOUNTANTS
To the Honorable City Council of
the City of Newport Beach, California
Re: Pacific Cable Services, Inc.
'IIdl "app
SUITE 202 GRIFFITH BUILDING f
3471 VIA LIDO
NEWPORT BEACH, GALIFORN'A 532BBO
1714] 673-2961
At the request of the City Manager, we have attempted to ascertain
the financial capability of Pacific Cable Services, Inc. with respect to
providing a community antenna television system in the City of Newport
Beach.
We are not satisfied
capable of providing such
Cable Services, Inc. as o
Cash Flow from January 1,
Company is not capable of
support.
that Pacific Cable Services, Inc. is financially
a system. The financial statements of Pacific
f June 30, 1967 and the Schedule of Projected
1968 to December 31, 1969 indicate that the
sustaining itself without outside financial
Mr. John R. Frost, President of the Company, has disclosed to us
that Messrs. Louis H. Peterson and Jon C. Peterson will loan $400,000 to
the Company to finance its operations. However, we are not satisfied
that these funds will be available and used for financing the Newport
Beach CATV system. Moreover, we are not satisfied that the $400,000,
even if available, is sufficient to meet the financial needs of the
Company.
In order to satisfy ourselves as to the financial capability of the
Company it would be necessary for us to review the following:
(1) Current audited financial statements of the Company;
(2) A cash and operating forecast of the Company for a
longer period of time which would include the Mission
Viejo and other CATV systems and which would provide
for debt amortization;
(3) A pro forma balance sheet as of the end of the
forecast period in (2) above;
(4) The Petersons' current financial statements, prepared
by a Certified Public Accountant, with more adequate
and informative disclosures; and
(5) More definite evidence that the Petersons have a
source of cash available and are committed to
advance sufficient funds to meet the financial needs
of the Company.
To the Honorable City Council of
the City of Newport Beach, California
January 19, 1968
Page Two
Our conclusions above are based upon a review which included the
following:
(1) A review of the financial statements of. Pacific Cable
Services, Inc. as of June 30, 1967 and the Schedule of
Projected Cash Flow from January 1, 1968 to December
31, 1969;
(2) A review of Chapter 5.44 of the City of.Newport Beach
Municipal Code pertaining to community antenna tole-
vision;
(3) A review of Ordinance No. 1197 of the City of Newport
Beach granting to Warner Bros. TV Services, Inc. a
nonexclusive franchise to construct, maintain and
operate a community antenna television system within
the City;
(4) A review of a proposed agreement for community antenna
television channels and certain other correspondence
between Pacific Telephone and Telegraph Company and
Pacific Cable Services, Inc.;
(5) A review of the financial statements of Louis H.
Peterson and Jon C. Peterson as of October 1, 1967
and correspondence concerning a loan available to the
Petersons from First National Bank of Norfolk; and
(6) Various discussions and conferences with personnel of
both the City manager's office and of Pacific Cable
Services, Inc.
If we can be of any further assistance to the City Council in this
matter, please contact us.
Very truly yours,
STOTSENBERG, BINDER & CO.
Harold E. Mestyanek
FIRST NATIONAL BANK OF NORFOLK
_a
Monticello at City Hall Avenue f P.O. Box 2300 / Norfolk, Virginia 235G7
,a
7
JOHN I- GIBSON, It, PRESIDENT - '
;I _
January 5, 1968
s
Mr. John R. Frost, President
Pacific Cable Services, Inc.
202 Via Dijon
Newport Beach, California.92660
1 ,
} Dear Mr. Frost:
Confirming our telegram of this date, you are authorized
to assure the•franchising authority for Newport Beach,
California, that this institution will make available to Louis H.
Peterson and Jon C. Peterson during the next two years up to
$400,000.00 if and when needed in order to meet the commitments•
1 of Pacific Cable Services,-Inc. to construct a.CATV system in
Newport Beach, California.
1 •
Sincerely,
Job L. Gibson, II
President
JLG :mjg
AIRMAIL
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r • JON C. AND -Oli15 !}u 1::11'0:\
Analysis of Investment in Pacific Cable Services, lac.
As of January 15, 1968'
19 Shares of Notes Rece rvable
Stock from 27 Shares of from
Pacific Cable Stock from Pacific Cable
Services, Inc.John R, Frost Services, Inc. Total
Cash Invested as of January
15, 1968:
April, 1967 - Cash paid to
Warner Bros.
Pictures., Inc, for 100%
of their Notes
Receivable from Pacific
Cable Services,
Inc.
Cash invested directly in
Pacific Cable
Services, Inc. under Stock Purchase
Agreement:
April, 1967
$
;:0,000.00
ay, 1967
5,000.00
Jj�ue, 1967
15,000.00
August, 1967
5,000.00
September, 1967
10,000.00
October, 1967
10,000.00
November, 1967
10,000.00
.January, 1968
10 000.00
Total Cash Invested
as of
January 15, 1968
$
75,000.00
Additional Cash investment required
under agreements dated December 18,
1968:
Additional Cash Investment directly
in Pacific Cable Services, Inc. 50,000.00
Casa Payment to John R. Frost for 27
shares of Capital Stock of Pacific
Cable Services, Inc. 191,667.00
Total
Less Lmount to be Received from John R.
Frost for 33 1/3% of the Notes
Receivable from Pacific Cable Services,
Irc.
:Ce* investment
$125,000..00 $191,667.00
$125,000,00 v 19'1: 667.00
$150,000,00
$150,000.00
$150,000.00
50,000.00
0
,f PACIFIC CABLE SERVICES, INC,
" Sim mazy of Projected Cash Flow - Phase 1 Newport Beach, Calif.
January 1, 1968 to December 31, 1969
.' J.- Cl date of completion,
klead
End
Area
"A"
Area
"B"
Area
"C" -
- Area
"D"
Area
"E"
Area
"F"
!
7/1/68'
9/1/68*
7/1(68*
11(1(68* -
411/68*
7/1/68*
_
771769*
Cash
Income
Capital
(Out la y)
Cash
Income
Capital
(Outlay)
Cash
Income
Capital
Cash
Ca,ta1
P
Cash
Ca
Capital
Cash
Capital
Cash
Capital
CotaI
(Expense)
Refund
(Expense)
Refund
--(Expense)
(Outlay)
Refund
Income
(Expense)
(Out,ay)
Refsnd
Income
(_Expense)
(Outlay)
Refund
Income
(Expense)
(Outlay)
Refund
Income
(Expense)
(Outlay)
Refund
oe
Mr "-od
C wit,lative
Total
3/31 >`a8
$(
150)
$( .5,520)
$
$
$
$( 15,500.)
$
$
$
$
$
$( 55,900)
$
$
$( 17,070)
$
0 68
(
150)
( 45,020)
( 28,010)
( 73,180)
(1.50,250)
D
9/M/68
(
1,097)
21
( 3,764)
495
( 1,493)
618
(128,770)
( 4.,120)
1,834
(1,.36,276)
(286,526)
1
c2:tr,.ft•3
{
1,097)
21
804
1,474
39
612
( 1,555)
640
( 2,989)
1,817
( 234)
(286,760)
(S f.,9
(
1,097)
20
2,041
1,460
372
606
( 1,733)
952
( 2.,595)
1,800
(108,360)
(106;534)
(393,294)
o
6/'0/69
(
1,097)
20
3,608
1,446
550
600
( 1,597}
943
( 11,627)
4,819
( 2,449)
1,783
3 r01
( ,0 )"
(396,295)
ii t>'39 taro
°
/30/69
(
1,097)
20
4,263
1,432
732
594
( 1,493)
934
1,550
4,774
( 2,300)
1,766
( 4,921)
2,584
8;438
(387,457)
'0/1/69 t;o
12/31/69
(
1,097)
20
4,740
1,418
911
588
( 1.,445;
X925
62023
- 4,728
( 2,153)
.1,749
( 3,335)
2,560
1.5 632
(37i,775)
a1e
a9L 6 882(
$( 5,39 &)
$ 1I,692.J
37. 295
$ 1,111
11,882)
7;823)..23.616
_n_�
45 7.51,...._.2
,56
$( 82
103 21'0
(371/:752
.' J.- Cl date of completion,
11eceriber 20, 1967
Pac "ic: Cable Services , Inc.
Newport National Bark wilding
Newport Beach, California. 92660
Attention: Mr. John R. Frost, President
Gentleman:
In a conversation this date n'ith f'?r. Hal P;�styanak representing the
City's auditing fire.: of Stotsenberg and Binder; the follcA¢ing informa-
tion was deesfaed needed in conjunction with a proper analysis of the
financial condition and capability. of Pacific Cable Services, Inc.
to provide CAW service in Newport Beach.
It is desired that a nrofit ant= Loss Staterent And n Balance Sheet
be furnished, dated as close to Piove?nber 3C,, 1967 as possible,
reflecting the financial condition of Pacific Cable Services, Inc.
These statements sioulu i,-clude appropriate footnotes similar to
these included in the recent financial info=ation submitted to the
City by Pacific. Cable -.
If additional financial support is being provided by persons or
entities outside Pacific Cable, clear statements and appropriate
financial data and camiatnents mist also be submitted by sach
persons or entities.
Furthermore, in order that a proper and complete auditing analysis
can'be made, it will he necessary that we receive cost projections,
including revenues, expenditures, the probable total investment in
equipment, etc. be made on the basis of current assumptions under-
lying the proposed CAP! service+ in Newport Beach for Phase I
(encompassing the delineated areas in the City which is expected
Pacific Cable Services, Inc.
Page 2
December 20, 1967
to be the construction program for the next eighteen months to two
years). it is our understanding that you will submit with this
requested financial information a map delineating the exact areas
to be served in this period of time.
All of this data should be in my hands no later than Wednesday,
December 27, 1967 in order that the auditor will have sufficient
time to prepare a complete evaluation and provide appropriate re-
commendations for Council consideration prior to their January 8,
1968 meeting.
If appropriate, you may shish; to have your Certified Public kccountants
be in contact directly with our auditing firm in order that a flail
understanding of whet is needed can be determined.
If you have any questions as to exactly what is needed, please do
not hesitate `to let me brow.
Sincerely,
3Ah�S P. DE CHAIiW
Assistant City Manager
JPD'ep
cc: ?sir. Hal blestoranelk
Stotsenberg & Binder
Suite .700
1010 North Min Street
Santa Ana, California 92701
THE PACIFIC TELEPHONE AND TELEGRAPH COMPANY
818 WEST SEVENTH STREET, ROOM 850, LOS ANGELES, CALIFORNIA 90017
AREA CODE 213
621.5178
MA
J. B.ODELL November 20, 1967
DISTRICT SALES MANAGER
INTERCITY SERVICES'
Pacific Cable Service's, Inc.
1501 Westcliff Drive
Newport Beach, California
Attn: Mr, JOhn.R. Frost, President
CATV System - Newport Beach
Plus 10 dbmv level
Gentlemen:
Enolosed, as you requested, is a rate sheet for a plus 10 dbmv
CATV system in Newport Beach..
This sheet would replace the Exhibit A previously furnished you.
The contract remains the same with the exception of those portions
dealing with signal levels to be delivered to you which would be
changed to reflect the +10 dbmv signal level.
If you have any questions concerning the foregoing, please do not
hesitate to call the undersigned collect on 213 - 621 - 5178.
Yours very truly,
J. B. Odell
District Sales Manager
JBO:RM•me
Attachment
b
RE�erv�d
tvuv 2z 1967
f Un.[!Craii /gam
IV
,4
M
N
Plus 10 dbmv signal level
EXHIBIT A
CHANNEL SERVICE FOR USE IN
COMMUNITY ANTENNA TELEVISION SYSTEMS
City of Newport Beach, County of Orange
1. Base Capacity
Monthly Installation
Charge* Charge
(a) Distribution
Facilities
Each 4 cable route
mile or fraction
thereof:
(1) Aerial feeder
and distri-
bution ---- - - - - -- 421.75
(2) Underground
feeder and
distribution -
in conduit - - - - -- $63.00
(3) Underground
feeder and
distribution
not in conduit -- $56.00
(b) Channel Terminations
(1) Drops
(a.) Installed at
same time as
serving dis-
tribution chan-
nel facility,
each -- - - - - -- $.50
(b) Installed sub-
sequent to
installation of
serving distri-
bution channel
facility, each- $.50
$10.00
$15.00
Basic
Termination
Charge**
$750.00
02,000.00
$2,400.00
so A • ,
City of Newport Beach; County of Orange: (Cont=d)
1. Base Capacity - (Cont'd)
0
2.
Basic
Monthly Installation Termination
Charge* Charge: Charge **
(c) Reconnected
when all
facilities
are reused
in place,
each --------- $.50 $8.00 -
(d) Move or
change,
each --- - - - - -- - $15.00
(2) Entrance Cable
(a) Entrance
cable, each -- $1.80 $38.00 -
(c) Connecting Arrangement
Per system ----- - - - - -- $15.50 - 0520.00
*Subject to one month's minimum billing for facilities furnished.
* *Reduces 1/120 for each full month the arrangement is retained
in service.
CITY OF NEWPORT BEACH.
November 13, 1967
TO: CITY COUNCIL
FROM: City Manager
SUBJECT: WARNER BROTHERS CATV FRANCHISE AREA
DISCUSSION:
At the October 23rd meeting, the City Council diaried all matters
pertaining to CATV services for November 13th in order that additional time
might be allowed for Data Video Systems to make their presentation and for
the Irvine Company to decide on any proposed adjustments to their franchise
area. During the last three weeks, the CATV situation, particularly with
regard to the Warner Brothers franchise area, has markedly changed. Three
additional and very capable organizations have taken an active interest in
this franchise area and each desire to render CATV service at this time.,
Comments about these three firms, in addition to Data Video Systems and
Pacific Cable Services are noted below.
Nation 'Wide Cablevision Company
Nation Wide Cablevision is owned by the Kaufman and Brood Building
Company, the second largest publicly held builder in the country, They now have
twelve CATV systems in operation in California and are engineering eight other
systems in other California communities. They are proposing to initially del-
iver twelve channels of 'TV programming in Newport Beach, with a capability of
delivering up to twenty channels:. It is the intention of this organization to
offer a $1,000 application fee on Monday, November 13, as prescribed in our
CATV Ordinance,
i
Newport Beach Cablevison, Inc, (Foote, Cone and Belding, Inc,)
/ Newport Beach Cablevision is a newly formed wholly -owned subsidiary
of Foote, Cone and Belding, one of the world's largest and most successful
advertising agencies In recent years they have diversified and now have a
number of operating CATV systems in this country. They are proposing to provide
a twenty channel system in Newport Beach,. An application fee check in the amount
V of $1,000 has been deposited with the City.,
Theta Cable of California
Theta Cable is a CATV company jointly owned by the Hughes Aircraft
Company and the Teleprompter Company„ They presently have approximately forty,
operating CATV systems in the United States with over 80,000 subscribers_ 'The
Cities of Los Angeles and Santa Monica are among their many operating CATV systems,
It is anticipated that their formal proposal, together with a $1,000 application
fee, will be submitted on or before the November 27th Council Meeting. We have
been given 99% assurance that this will be forthcoming,
City Council
Data Video Systems, Inc.
Page 2
This company has also submitted a proposal and
fee will be delivered to the City on Monday, November 13.
any CATV systems in operation at this time, they are now
for numerous franchises throughout California:
Pacific Cable Services, Inc.
November 13, 1967
their $1,000 application
While they do not have
in process of applying
Pacific Cable Services has assumed the indebtedness of Warner Brothers
TV Services, Inc. and is interested in having that franchise transferred to
Pacific Cable. It is well to point out, however, that as recently as Thursday,
November 9th, the Pacific Telephone Company has expressed serious concern and
reservations about Pacific Cable's financial capability to render CATV service
in Newport Beach at this time. However, Mr„ John Frost of Pacific Cable has
submitted confidential statements of net worth of two of the company's financial
backers; which could provide sufficient capitalization for the operation. The
City staff is not in a position to properly evaluate these statements at this
time nor to evaluate the ability of Pacific Cable to perform.
Lebell Consulting Engineers and Scientists
In October, 1966, the firm of Lebell Consulting Engineers and Scientists
provided CATV consulting services for the City in conjunction with the initial
consideration of CATV franchise applications at that tune. They performed an
excellent analysis of the applications submitted and have expressed a willing, -
ness to assist the City with a similar analysis of the most recently submitted
applications if the City so desires. The franchise application fees will more
than offset any consultant costs incurred by such an analysis,
COUNCIL ACTION:
The City Council has three alternatives open to it at this time, They
are as follows:
1. Transfer the Warner Brothers TV Services, Inc. franchise to
Pacific Cable Services as requested by Mr. John Frost;
2. Delay any action on this CATV matter pending further study and
verification. of Pacific Cable Services, Inc, ability to perform under
the franchise as originally awarded to Warner Brothers TV
Services, Inc.,
3, Revoke the non - exclusive franchise awarded to Warner Brothers
TV Services, Inc. and evaluate all applications submitted, util-
izing the services of Lebell Consulting Engineers and Scientists.
City Council Page 3 November 13, 1967
If the latter course of action is chosen, the procedure to be followed
is as outlined below:
to Direct the City Manager to advise Mr,. John Frost in writing
that the City Council will hold a public hearing on December
26th for the purpose of terminating the Warner Brothers TV
Services, Inc, franchise;
2, Set December 26, 1967 as the date for a public hearing to
determine whether the Warner Brothers TV Services franchise
should be revoked;
3, Set December 11th as the final date for new CATV franchise
applications to be submitted for consideration for a non -
exclusive CATV franchise to serve the existing Warner
Brothers CATV franchise area;
4, Authorize the City Manager to negotiate a contract with Lebell
Consulting Engineers and Scientists for the purpose of render-
ing CATV consulting services for all CATV application proposals
to serve the Warner Brothers franchise area.`
If this latter course of action i
9
NEWPORT BEACH CABLEVISION, INC.
433 WEST EIGHTH STREET - SANTA ANA, CALIFORNIA 92701
LOUIS' E. SCOTT
.President
The Honorable Mayor
and
Members of the City Council
Newport Beach, California
Gentlemen and Mrs. Marshall:
0
November 9, 1967
Application and Proposal
of
Newport Beach Cablevision, Inc.
The undersigned being familiar with the Community Antenna Television
Ordinance of the City of Newport Beach authorizing the granting of a
franchise to operate a CATV system in the City of Newport Beach and
providing regulations in connection therewith hereby submits its applica-
tion for afranchise under said ordinance, agrees and covenants that it
will carry out and perform all conditions and requirements contained in
said ordinance and contained in this application.
On Monday afternoon, we will deliver to each member of the City Council
a brochure describing, in some detail, our proposal to provide CATV
service to the citizens of Newport Beach. The purpose of this letter is to
acquaint the City Council with the general organization, ownership, and
financial capability of our company together with an outline of our plans to
provide CATV service to the City of Newport Beach.
I. THE COMPANY
Newport Beach Cablevision is a California corporation. Our head-
quarters are located at 433 West Eighth Street, Santa Ana, California.
We are a wholly owned subsidiary of Foote, Cone & Belding, one of
the world's largest and most successful advertising agencies. The
attached Annual Report for Foote, Cone &, Belding covering the
• •
_Z_
calendar year 1966 describes the company, its operations and
financial resources.
Newport Beach Cablevision is a local company organized by local
men to serve the best interests of the citizens of Newport Beach.
The company has been founded with the objective of providing the
very finest CATV service to the citizens. We will operate a business
the City will be proud of. We will employ local people and carefully
train them to provide the highest standards of CATV service, Our
studio facilities, service trucks and business office will all be in
keeping with the philosophy of efficient and friendly service to the
community. We believe that the people of Newport Beach are en-
titled to the latest and best CATV system and service and we will
pledge the resources of our organization to this end.
II. MANAGEMENT
The officers of Newport Beach Cablevision are:
President - Louis E. Scott
Vice President - Jack E. Riley
Treasurer - Eugene F. Vaslett
Secretary James L. Kelly
The members of the Board of Directors of Newport Beach Cable-
vision are:
Stratford Enright
Donaldson W. Heller
James L. Kelly
Newton Minow
Dick Reineman
Jack E. Riley
Louis E. Scott
Eugene F. Vaslett
Messrs. Enright, Heller, Kelly, Reineman, Riley and Scott are all
long -term residents of Newport Beach. These men are well known
in the community and have been active in business, civic and philan-
thropic activities. The competence of this management group is best
demonstrated by the business and professional records of the individual
members.
- 3 -
III. CATV EXPERTISE
•
Newport Beach Cablevision has retained the services of the
principals of four nationally known companies to assist in the
planning and operation of a CATV system in the City of Newport
Beach. Each of these men is recognized as a leading authority in
CATV and their combined talents will assure the very best CATV
facility.
Mr. William Carr - President of William Carr & Associates, Fort
Worth, Texas.
Mr, Carr is a registered engineer and is recognized as one of
the leading authorities in the design and construction of CATV
systems.
Mr. Lee G. Lovett - Partner of Booth & Lovett, Washington, D. Co
Mr. Lovett specializes in CATV, broadcasting and communica-
tions law. His law firm represents some 200 broadcast stations
and 100 CATV systems.
Mr. Ed Shafer - Partner of Foster Associates, Inc., Washington, D.C.
Mr. Shafer is a management and investment consultant specializ-
ing in CATV.
Mr.; Newton Minow - Partner of Leibman, Williams, Bennett, Baird
and Minow, Chicago', Illinois
Mr. Minow is former Chairman of the Federal Communications
Commission and is regarded as one of the outstanding men in the
entire communications field.
The knowledge and experience of these men and their respective organ -
izations will enable Newport Beach Cablevision to design, engineer and
construct the optimum CATV system for the City.
IV. CATV SERVICE
We propose to provide a 20- channel system to the citizens of Newport
Beach. The service will include all UHF and VHF channels from Los
Angeles as well as KFMB in 'San Diego. Upon grant of the franchise,
» 4
we will apply to the Federal Communications Commission for per-
mission to bring in the San Diego ABC, NBC and independent stations.
In addition, we will provide 24 -hour news, weather and time, and a
full range of FM radio signals.
It is also our desire to provide a closed circuit channel for the benefit
of the City of Newport Beach thus making it possible, for the first
time, to distribute programs which are of particular interest to the
residents of Newport Beach. We will make the studio facilities avail«
able to the City Council, the Mayor, the Police Department, emergency
alerts, etc. In addition, many events and happenings of local interest
will be originated and carried on this channel. For example, we would
propose to telecast the local high school football games from Davidson
Field, City Council meetings, PTA affairs, etc.
V. CONSTRUCTION
Upon grant of the franchise, Newport Beach Cablevision is prepared to
immediately begin engineering and construction of the CATV system.
Our engineers have made a preliminary survey of the Newport Beach
area and economic projections have been developed. We have been in
contact with the Pacific Telephone and Telegraph Company and have an
assurance from them that they will provide a pole attachment agreement
if we decide to build our own system. At the same time, the Telephone
Company has informed us that they have completed '10 months of detail-
ed engineering studies and are prepared to enter into an immediate con-
tract to provide "leaseback" service. Upon receipt of a franchise,
Newport Beach Cablevision will immediately evaluate the Telephone
Company=s leaseback proposal and then make a determination as to
which approach will provide the best possible service in the shortest
possible time. We are agreeable to building the system by either
method.
Newport Beach Cablevision will guarantee that construction will com-
mence within 90 days, upon receipt of a franchise. We will back this
guarantee by depositing with the City the sum of $10, 000, 00 as advance
payment of franchise fees to the City. In the event that construction
does not begin within 90 days after grant of franchise, we will agree to
forfeiture of the $10,000.00 advance.
! •
- 5 -
VI. SUMMARY
We believe that CATV is long overdue to the citizens of Newport
Beach and that the present franchise holder has not demonstrated
his capability to implement the proposed CATV service.
We offer the City the services of a local company organized by local
men and backed by some of the country2s best engineering, financial
and legal brains in the field of Community Antenna Television.
The organization we have built up, the physical plant we plan to oper-
ate, and the programming we have outlined are all reasons why New-
port Beach should grant its CATV franchise to Newport Beach Cable-
vision.
We enclose our check in the amount of $1, 000, 00 as the application fee in
accordance with the Community Antenna Television Ordinance,
Xdurs very truly
L uis E. scott
F' esident"
LES /mfp
encl.
•
CITY OF NEWPORT BEACH
OFFICE OF THE CITY MANAGER
TO: CITY COUNCIL
FROM: City Manager
October 23, 1967
SUBJECT: COMMUNITY ANTENNA TELEVISION SERVICE IN NEWPORT BEACH
DISCUSSION:
M11 I
On December 27, 1966 the City Council awarded two non - exclusive
CATV franchises; one to Warner Brothers TV Services, Inc. and the other to
Community Cablevision Company (Irvine Company). A number of factors have
evolved pertaining to CATV Service in Newport.Beach since that time. These
are summarized below,
Warner Brothers (Pacific Cable Services)
On May 16; 1967, Mr. John Frost advised the City that Warner
Brothers had "changed its name" to Pacific Cable Services, Inc, and
requested that the City change the name designation on the franchise
documents. The City Council was advised in June, 1967 that it was and
still is the firm opinion of the City Attorney and myself that what is
involved is not a name change but a change of ownership, necessitating a
formal transfer of the franchise rather than merely Council approval of
a change in name. With this exchange of assets, certain changes in the
status of this operation took place, such as financial stability and
possible additional delays in both securing a firm rate structure from
Pacific Telephone and receiving approval by the Federal Communications
Commission, On June 8, Mr. Frost advised the City Council that "con-
struction (in Newport Beach) was expected to commence within 30 days.
The construction and installation of the feeder and distribution system
for Newport Beach should begin within 60 days." Mr. Frost indicated in
June that FCC approval would likely be forthcoming in 30 to 90 days.
On June 26, it was recommended to the Council that any approval
of a franchise transfer to Pacific Cable Services, Inc. be delayed until
the following conditions might be met:
a) That Pacific Cable Services, Inca secure FCC approval.
within 90 days unless the applicant can show sufficient
cause for further extension;
b) That Pacific Cable commit themselves as to whether they
would operate a CATV system in Newport Beach by some
other method than the Channel Service Agreement with
Pacific Telephone in the event all details of such an
agreement cannot be agreed upon to the satisfaction of
both parties and FCC approval received within 90 days;
c) That additional financial information concerning the
ownership and stability of Pacific Cable be provided
0
2
the City to the satisfaction of the City Council within
'30 days; and
d) That within 90 days the
Pacific Cable Services,
Council for approval.
customer rate structure, for
Inc', be submitted to the City
At that tune, the Council decided to take these recommendations
under advisement and defer action on them for 90 days, On September 12., a
letter was received from Mrs John Frost which requested a further 30 day
time extension as he was planning to be out of the state from September 24
to October 16, 1967. . On September 25 the Council agreed to diary this
matter until the October 23 meeting,
To date, Mr,: Frost has furnished the City with only certain data
in response to the June 26 staff recommendations. Referring once again to
these proposed conditions, Pacific Cable has furnished the City with informa-
tion as follows:
a) Securing FCC Approval within 90 days -- This has not
Fe-en obtained to date;
b),j Committing themselves on roviding CATV Service by some
method other than a Channel Service Agreement with
Pacific Telephone within 90 days - The franchise feels
such a commitment i unnecessary and inappropriate but
has informally indicated that the only way they would
provide such service is through the Channel Service
Agreement approach„ Mr. Frost has indicated that the
most recent figures submitted by the Telephone Company
on their costs to be borne by Pacific Cable "are based
on preliminary engineering only and are not firm."
c) Furnishing Financial Information within.30 da s --
Con i entia inancia statements were orwar ed to the
Council, last month The Council must decide whether it
feels the new company is financially stable enough to
support the system proposed; and
d) Submission of Customer Rate Structure within 90 Days --
me City has not received a final or firm customer rate
structure proposal to date;,
Community Cablevision (Irvine Company
Twelve channels of CATV Service are currently being provided by
the Community Cablevision Company in both the Richard B. Smith Tract ( #6113)
and the John D. Lusk Tract ( #6228) in Harbor View Hills Additional service
will be provided to other new and existing homes in the Community Cablevision
franchise area in the near future. All reports on the reception and service
of this system have thus far been favorable,
3.
Community Cablevision has repeatedly expressed concern about the
delay in providing CATV service to some Irvine Ranch properties outside
their franchise area. Because this problem continues to exist, the Company
was planning on submitting a formal request to the City Council to have
their franchise area amended to include certain additional Ranch properties.
However, it has been determined that such an extension of their franchise
would be economically unfeasible at this time.
Other CATV Inquiries
Periodically the City receives expressions of interest from other
CATV firms about, providing CATV service in Newport Beach. At this time,
there is only one other firm that can be considered as being seriously
interested in Newport Beach. This firm is known as Data Video Systems of
San Francisco. While it may not be wise to pre -judge this firm, it is only
fair to point out that it is extremely doubtful that this organization is
capable of providing a good CATV system in Newport Beach. It does not have
an operating CATV system in effect at this time. Furthermore, it appears
that this firm is desperately attempting to break into this business, as
they have apparently submitted a standard CATV franchise application package
to literally dozens of cities in California in hopes of being granted a
few franchises. Newport Beach should not be their first CATV system experi-
ment. Nevertheless, they have made a written request asking that Council
discussion on the Warner Brothers CATV system be postponed until the meeting
of November 13, 1967 (see attached letter from Data Video Systems' President
John B. Prie),
SUMMARY.
It appears as though it is still premature for the Council to take
any action to approve a formal transfer of the Warner Brothers Franchise
to Pacific Cable Services, Inc. Under Section 5.44.080 of the Newport
Beach Municipal Code, the City Council can choose. to revoke the existing,
Warner Brothers Franchise on the basis of nonperformance and dissolution,
If the Council is inclined to approve this franchise transfer, it would be
appropriate to withhold any kind of approval until such time as the informa-
tion discussed above, or answers to other questions you may wish to raise,
have been provided for your consideration.
In addition, by the meeting of November 13, the City Council may
have an official request from Data Video Systems to consider, and this
would likely involve the existing Warner Brothers Franchise area.
RECOMMENDATIONt
It is recommended that all matters pertaining to CATV service be
4i.aried for consideration on November 13, 1967 in order that additional
time can be allowed for Data Video Systems to make their presentation and
the Irvine Company to decide on any proposed adjustments to their franchise
area.
HARVEY L. HURI.BURT
HLH:ep
att.
bj
RECF.JVED n.
NOV 9 1961
�,;;
j) iyy V.�J.Im vJ
—. _ ... -.. � J J � .... -,
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CITY OF NE■PURT BEACH
CALI#0N-IA
Seotelabor 21, 1967
���������\
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�
PACIFIC CABLE SERVICES, IN,
1501 WESTCLIFF DRIVE.
NEWPORT BEACH, CALIFORNIA 92660
(714) 642.3260
JOHN R. FROST 4
PRESIDENT
Lev i
City Council
City of Newport Beach
City Hall
Newport Beach, California
Attn: Laura Lagios, City Clerk
Gentlemen:
cny
rWt1F,`
ti
September 12, 1967
I/ - "'
RE: CATV— Newport Beach
Please accept this letter as our request to appear before the City
Council on 'October 23, 1967 to discuss progress to date on the
subject CATV system, The City Manager has been advised in writing
of certain progress since our last Council appearance of June 26,
1967.
At such meeting before the Council it was agreed that we would, make
a report within "90 days." Certain information and data has been given
for distribution to you which is self - explanatory.
Inasmuch as I will be out of the State from September 24 to October 16,
I will not be able to make an appearance before you during the interim.
I respectfully request an opportunity to appear before you on the October
23rd date.
JRF: gw
Very truly yours,
PACIFIC CABLE SERVICES, INC.
IOFN" FROST
;President
U
a 4b
PACIFIC CABLE SERVICES, INC
1501 WESTCLIFF DRIVE
NEWPORT BEACH. CALIFORNIA' 92660
1714) 642 -3260
JOHN R. FROST
PRESIDENT
City of Newport Beach
City Hall
Newport Beach, California
Attn: Harvey Hurlburt, City Manager
Gentlemen:
September 12, 1967
As discussed today, I am enclosing 15 copies of the following documents:
1. Audited Report and Financial Statements of Pacific Cable Services,
Inc. (formerly known as Warner Bros. TV Services, Inc.) as of
June 30, 1967;
2. Copies of a letter directed to our office from the Pacific Telephone
Company dated September 8, 1967.
Enclosure No. 1; You will note we have marked Enclosure No. 1
.'confidential." We have a pending request for permission to issue stock
before the California Corporation Commission. Item No. 1 is a part of the
application and hence, this information is deemed confidential until all matters
have cleared with the Corporation Commission's office. Upon issuance of the
permit, stock will be issued to certain commited investors. This is discussed
in the Audit Report under Note 6 and 7 of the Financial Statements.
The Financial Statements disclose that approximately $363,000.00 has been
expended from the inception of the operation of this company as a CATV
operator (December 1, 1965). It further shows as of the audit closing period
(June 30, 1967) the company had assets of $121;,034.08 and long -term liabili-
ties of $362,525,56. These liabilities are secured by long -term notes presently
held by Louis H. and Jon C. Peterson.
Upon completion of events stated in "Note 6 and 7" the Petersons' are to
deposit an additional $95,000.00 of working capital into the corporation as
consideration for additional stock. The writer is to purchase a 1 /3rd interest
0
Page Two
0
September 12, 1967
in the aforementioned secured notes and transfer certain of his stocks to the
Petersons. Upon completion of such transactions, the Petersons will hold
66 2 /3rds percent of all outstanding stock and title to the same percentage of
the aforementioned promissory notes, leaving the writer with 1 /3rd of the
outstanding stock and 1 /3rd interest in the notes. It is understood that
holders of notes will subordinate same to any first line credit or borrowed
capital, if deemed advisable. Following this event, Pacific Cable Services,
Inc. will have cash and assets in excess of $220, 000.00 and minor liabilities.
Enclosure No, 2: The writer appeared before the City Council on the
evening of June 26, 1967 at which time he distributed copies of a letter from
Pacific Telephone Company received by the writer on June 24, 1967. While
the letter discussed the problems of engineering a cable TV system for the City
of Newport Beach; it also stated that information would be available within a
matter of days.
Enclosure No. 2 (dated September 8, 1967) is the first data received since
the aforementioned time. At the June 26 Council meeting, the writer commented
on the telephone company's progress and advised that as soon as more informa-
tion was received from the telephone company, it would be reported to the
Council.
It was also stated that as soon as an audited financial statement was
received, it would be submitted to your office.
It was further stated that I would keep you and the Council posted and
probably within "90 days."
May this letter serve as a report to your office since my last appearance
before the Council. As of this date, I have addressed a letter to the Council,
c/o the City Clerk, advising I am leaving the State and will be away from my
office beginning September 24 and do not expect to return before October 16.
By letter I have requested the Council to place us on the agenda for the October
23rd meeting for a further report. During my absence should any matters arise
where answers are needed relative to our progress on the design and installation
of the Newport Beach CATV System, please call Wm,. C. Johnston, Director of
Engineering, at our office.
truly yours,
'IC CABLE SERVICES, INC.
JRF: gw
encls
THE PACIFIC TELEPHONE AND TELEGRAPH COMPANY
919 W. 7TH STREET; LOS ANGELES. CALIFORNIA 90017
September 8, 1967
John Frost
209 Via DiJohn
Newport Beach, California
Dear John:
Enclosed are the estimated costs we have received for
installation of a CATV system in Newport Beach.
As I mentioned to you on the telephone, the costs are
based on preliminary engineering only and are not firm.
If you have any further questions on these rates,
please call me collect on 213 -621 -5406.
Yours very truly,
r
E Ingram, Jr
Marketing CATV Coordinator
RM:ba
Enclosure
NEWPORT BEACH - CATV SYSTEM
TED COSTS BASED ON PRELIMINARY
Subiect "to Commission ARpro
Tentative Rates per 1/4 Mile BTL Per 1/4 Mile
Aerial 417.75 6 a 620.00
Buried $99.00 j $3,800.00
Underground $57.00~ °$1,100.00
Connecting
Arrangement $15.50 mo. $ 529.00
Drops
$ .50 mo.
10.00 1. C.
Mileage
Aerial
26.06 miles
104.24 quarters
Buried
2.12 miles
8.48 quarters
Underground
11.37 miles
45.48 quarters
System Costs
BTL
Connecting
Arrangement
15.50 mo.
$ 520.00
104 Aerial
17.75
$1,846.00 mo.
$ 64,480.00
8 Buried @ 99.00
792.00 mo.
$ 30,400.00
45 Underground
@ 57.00
$2,565.00 mo.
0 49,500.00
Total
$5,218.50 mo.
$144,900.00
+ drops
Average rate per 1/4 mile for the system is $33.50.
�E Based on customer provided trench and backfill.
i
~ MAUTZ, PLOURDE & CO.
ACCOUNTANTS AND AUDITORS
3402 CENTURY BOULEVARD
INGLEWOOD, CALIFORNIA 90303
OREGON B -7255
August 29, 1967
Board of Directors
Pacific Cable Services, Inc.
.(Formerly Warner Bros.. TV Services, Inc.)
1501 Westcliff Drive
Newport Beach,, California.
Gentlemen:
We have prepared, and are'enclosing herewith, the Balance Sheet of Pacific
Cable Services, Inc. as of June 30, 1967, and the related Statement of
Profit and Loss from inception of the corporation to June 30., 1967. . The
Statement Of Profit and Loss includes the corporation's first fiscal year
ended August 31, 1966, . and the periods September 1 to December 31, . 1966,
January 1 to April 30, 1967, and. May 1 to June 30, 1967.
The.terms of our engagement required us to perform a detailed examination
of the books and records of the corporation which were maintained by Warner
Bros. Pictures„ Inc.. through April 30, 1967, and to complete the accounting
records for the period May 1, 1967 through June 30, 1967. During the latter
period., . all accounting determinations were made by our office.. Our examina-
tion was limited to the books, records and documents in the possession of
the company and we were not required to independently verify or confirm any
of the information contained therein.
Because of the nature of our engagement and.the limitations expressed above,
we are unable to express an independent opinion as to the accompanying finan-
cial statements.
RJP /jb
Enclosures
Yours very truly,
Mautz lourde & Co.
PACIFIC CABLE SERVICES, INC.
.(Formerly Warner Bros. T V Services, Inc.)
Statement of Profit and Loss
From Inception to June 30, 1967
Income:
Base Service Fees
Other Service Fees and Extra Outlets
Installation Charges
Total Income
Less Direct Costs and Expenses - CATV Systems
Pre- Wiring Costs - Materials and Supplies
a - Contract Installation Fees
° Installation Costs - Pacific Tel, & Tel, Co.
- Materials and Supplies
o - Contract Installation Fees
Repairs and Maintenance
* Temporary Power Facilities
<
2 Utilities
D Cable Rent - Pacific Telephone & Telegraph
o Co. (Note 8)
0: Rent - Temporary Headend Facilities
Equipment Rental
0 Depreciation - CATV System
U Total Direct Costs and Expenses -
CATV System
w
0 Gross Loss on Operations
0 Less Other Operating Expenses - Schedule B -1:
d Selling Expenses
General and Administrative Expenses
N Total Other Operating Expenses
D
Q Net Loss on Operations
2
Other Income and (Expenses),:
Interest Income
Interest: Expense
Loss on Sale of Equipment
Total Other Income and (Expenses)
Net Loss before Market and Technical
Research Expenditures
Less Market and Technical Research Expenditures -
Schedule B -1
From Inception Septem
to August 31, 1966 to Dece
$ 350,50 $ 1,309.4
5C6.00 661,5
$ 856.50
•
L, 1966 January 1, 1967 May 1, 1967 From IncePtion
31, 1966 to April 30, 1967 to June 30, 1967 to June 30, 1967
$ 1,090.50 $ 1,025.50 $ 3,775.98
88.50 88.50
29.50 - 1,.197,00
1,970,98 $ 1,120.00 $ 1,114.00 $ 5,061,48
$ 2,104.57
$ 2,433,8
$ -
$ - $
4,538,38
940,75
1,031.01
227.50
294.25
2,493,55
313.50
676,5
528.00
572,00
2,090,00
45,07
334,4
700.58
-
1,080,08
271.26
597.2
360,18
36,80
1,265.46
724.46
1,023.2
497.71
156.68
2,402,05
4,566,10
817.3
40.00
490.00
5,913,42
231,78
531.0
197.93
53,98
1,014,78
483.00
1,573.9(
2,524.65
1,610,01
6,191,62
505,00
600.0
280,00
140.00
1,525,00
258,91
319.3 (
319.42
133,37
1,031.00
562.65
829.7
859,98
435.54
2,687.89
11,007,05
10,767.60
6,535,95
3,92'2.63
$(
10,150.55)
8,796.62)
$( 5,415,95)
$( 2,808.63)
$ 1,448,83 $ 115.
70,393,85 24,828,
71,842,68
$( 81,993.23)
$ 98,70 $ 127.7
98.70
$( 8- 1,894.53)
66,915,
Net Loss 148,810,26)
(The accompanying auditor's report and notes are an integral part of this statement)
Exhibit B
$ 388.00
25,693.48
4,943,15
3,739.77)
$ 123.31
( 312.50)
16,95)
127.74
3,612.03)
4,420.84
32,233.23
$( 27,171.75)
$ 471.00 $ 2,422.83
11,155.85 132,071.33
26,081.48 11,626.85 134,494,16
$(31,497.43) $(14,435.48) $(161,665.91)
$ 60.00 $ 409.75
( 350.00) ( 662.50)
( 16.95)
206.14) ( 290.00) ( 269.70)
$(31,703.57)
5,866.03
$(37,568.60)
$(14,725.48)
2,800.00
5(17,525.48)
$(161,935,61)
100,002,60
261 038.21)
PACIFIC CABLE SERVICES, INC.
(Formerly Warner Bros. T V Services, Inc.)
Schedule of Expenses
From Inception to June 30, 1967
Selling Expenses:
Sales Commissions
Advertising
Sales. Promotion and Solicitation
o Total Selling Expenses
a General and Administrative Expenses:
o Salary - Executive
¢' Salaries - Office
F Payroll Taxes and Insurance
FGroup Insurance
z Office Supplies and Postage
Equipment Rent Office
a Equipment Rent Automobile.
Office Rent
0 Office Lease Cancellation Penalty
0 Repairs and Maintenance - Office Premises
d Telephone
W Taxes and Licenses
Q Insurance
jAutomobile Expenses
0 Travel, Lodging and Business Conferences
j Legal and Accounting Services
I
Dues and Subscriptions
F Amortization - Newport Beach Franchise
D Miscellaneous. Expenses
Q Total General and Administrative Expenses
f
Market and Technical Research Expenditures
Salaries - Marketing and Forecasting
Salaries - General Engineering
Contract Engineering and Technical Studies
Municipality Fees and Expenses
Legal Services re Applications for CATV Permits
Market Surveys
General Consulting Services
Total Market and Technical Research
Expenditures
From Inception September
to August 31, 1966 to December
i
i
, 1966
January
1,
1967
May 1,
1967
From Inception
31, 1966
to April
30,
1967
to June
30, 1967
to June 30, 1967
$ -
$
70.00
$
388.00
$ 471.00
$ 929.00
45.00
45:00
-
-
90.00
1,403.83
-
-
-
1,403.83
1,448.83
115.00
$ 388.00
$ 471.00
$ 2,422.83
$23,000.00
$
8,700.00
$
7,466.66
$ 4,333.32
$43,499.98
8,701.00
3,314.00
2,211.50
800.00
15,026.50
3,371.46
160.47
673.29
261.74
4,466.96
961.48
713.87
195.38
-
1,870.73
2,774.76
411,28
147.97
306.70
3,640.71
599.45
334.20
-
-
933.65
-
-
133,85
267.70
401.55
2,735.55
3,051.00
3,051.00
493,20
9,330.75
-
-
1,624.80
-
1,624.80
553.19
-
-
-
553.19
5,499.98
1,783.28
1,231.65
546,42
9,061.33
52,76
34.36
70,08
110.84
268.04
247,19
144.00
144,00
151.13
686.32
-
-
98.50
500.33
598.83
12,495.31
2,394,65
1,181.55
303.35
16,374.86
8,646.09
3,539.11
7,056.78-
2,952.65
22,194.63
456,26
95,53
154.00
80.00
785.79
-
-
33.33
22.22
55.55
299.37
152,40
219.14
26.25
697.16
S 70,393,85
24 828.15
$ 25.,693.48
8 11,155.85
$132,071.33
$26,455.84
$
4,844.16
$
-
$ -
$31,300.00
11,380,00
2,240.00
1,250.00
2,500.00
17,370.00
5,192,52
6,032.76
3,361.60
-
14,586.88
2,051.91
1,000.00
-
-
3,051,91
2,500.00
4,080.52
-
-
63580.82
17,902,05
6,223,10
1,254.43
-
25,379.58
1,433,41
-
-
300,00
1,733.41
S 66,915.73
24 420,84
$ 5,866.03
8 21800,00
$100,002.60
(The accompanying auditor's report and notes are an integral part of this statement)
Schedule B -1
i
PACIFIC CABLE SERVICES, INC.
(formerly Warner Bros. T V Services, Inc,)
Balance Sheet
June 30, 1967
A S S E T
Current Assets:
$2,228.00.
$19,032.90
Cash in Bank
178.37
1,584.22
Petty Cash
62.76
$ 5,284.71
Accounts Receivable
-
250.00
Loan Receivable - Stockholder
218.76
761.91
Refundable Deposit - Pacific Telephone and
-
3,000.00
o Telegraph Co. - Note 1
55.55
1,944.45
Accrued Interest Receivable
,$2,743.4
663:.60
o Prepaid Expenses:
29.86
o Performance Bond re Pacific Telephone and
Telegraph Co. - Current Portion
$ 306.67
u Insurance`
1,796.28
Taxers and Licenses
172.62
i Interest
351.12
2,626.69
0 Total Current Assets
U
U
Q
0
U 7ixed and Intangible Assets:
Ld Equipment and Improvements re
W. CATV System - No,te 2:
0 Headend Equipment
D: Tower and Antennas
D
0 Fencing
inventory of Equipment Note
d Other Equipment
N Automobile
F Newport Beach Franchise - Note
Q Total Fixed and
2 Intangible Assets
Allowance for
Depreciation & Net Book
Cost Amortization Value
$21,260,90
$2,228.00.
$19,032.90
1,762,59
178.37
1,584.22
628.00
62.76
565.24
5 45,737.62
-
45,737.62
804.22
218.76
585.46
3,076.00
-
3,076.00
3 2,000.00
55.55
1,944.45
$75.269.
,$2,743.4
Other Assets:
Refundable Deposit - Pacific Telephone and Telegraph Co. -Note
Security Deposit - Pacific Telephone and Telegraph Co. -Note 1
Security Deposits - Other
Performance Pond re Pacific Telephone and Telegraph Co,
Non- Current Portion
Premium on Notes Payable - Note 6
Total Other Assets
Total Assets
1 $ 5,308.80
1,626.00.
294.60
1,560.00
27,147.02
$ 12,571.77
72,525.89
3- -5, 936 -42
1121 03 O8
(The accompanying auditor's report and notes are an integral part of this statement)
Exhibit A
i
LIABiLITTES AND NET WORTH
Current Liabilities:
Accounts Payable Trade
Account Payable - Pacific Telephone and Telegraph Co.-
Note 8
Contract Payable re Automobile Current' Portion
Payroll Taxes Payable
Accrued Interest Payable
Deposits Received from Prospective Customers
Advance Payments Received from Customers
Total Current Liabilities
Long -Term Liabilities;
Contract Payable re Automobile:
Total $3,051.12
Less Amount Shown as Current. Liability 1,525.56
Loan Payable - Norman W. Frost
Notes Payable - Louis H. and Jon C. Peterson - Note 6
Loans Payable - Louis H. and Jon C. Peterson - Note 7
Total Long -Term Liabilities
Jet Worth:
Capital Stock - Authorized 1,000 Shares of
Common. Stock;, No Par Value.;
Issued and Outstanding 50 Shares
Earned Surplus (Deficit) - Note 10:
Net Loss from inception to June 30, 1967 - Exhibit B
Total Net Worth
Total Liabilities and Net Worth
i
$ 5,155.14
2,794.00
1,525.56
1,249.28
662.50
1,306.00
254.25
$ 1,525.56
6,,000.00
325,000.00
30,000.00
$ 7,500,00
(261,938,21)
$ 12,946.73
362,525.56
(254,438.21)
121.034.08
PACIFIC CABLE SERVICES, INC.
(Formerly Warner Bros. T V Services, Inc.)
Notes to Financial Statements
June 30, 1967
NOTE 1:
On November 13, 1965 the corporation deposited $10,000.00 in cash with Pacific
Telephone and Telegraph Company as security for the performance of all the
corporation's obligations under a "Contract for Community Antenna Television
Channels" executed on March 9,, 1966. This contract covers installation and
operation of a CATV System in Mission Viejo Development, Laguna Hills, Cali-
fornia, This deposit was applied by Pacific Telephone and Telegraph Company
as follows:
z Amount applied on current charges by
o the telephone company
$ 1,738.00
o Amount retained by the telephone company
a. as a "Cash Reserve" - non - interest bearing
1,626.00
z." Amount transferred to "Basic Termination
a
F Liability" account
6,636.00
z Total
$_ 000.00
a
z
z
D Paragraph 5.of the contract stipulates that the deposit
balance (Basic Ter -
U mination Liability) shall bear interest at the rate of
six per cent (61) per
< annum. The deposit and accrued interest thereon shall
be returned to the
O corporation at the rate of one one- hundred - twentieth (1/120)
of the deposit
U balance per month. The following is a summary of the "Basic
Termination
(b Liability" deposit account..
W'
Total "Basic Termination Liability "deposit.
$ 6,636.00
Less Payments received thereon from 7 -1 -66
D to 6 -30 -67 - 12 payments @ $55.30
0
663.60
Deposit balance as of June 30, 1967
S 5,972.40
a
N Amount shown as Current Asset
$ 663.60
Amount to be refunded subsequent to
D
Q June 30, 1968 shown as Other Asset
5,308.80
i Total
S 5,972.40
NOTE 2:
The corporation has established and is currently operating a Community Antenna
Television (CATV) System in Mission Viejo Development, Laguna Hills, California_
On January.2:0, 1966, a letter of agreement with the Mission Viejo Company,
developer of Mission Viejo, was executed regarding the CATV System to be pro-
vided.
In March, 1966, the Orange County Supervisors adopted a resolution grantin, the
company a non - exclusive franchise for a term of twenty -five (25) years. The
franchise fee is two per cent (2%) of annual gross receipts beginning in 1971
and annually thereafter.
a
0
a
N
Z
a
z
c
U
U
a
PACIFIC CABLE SERVICES, INC.
(Formerly Warner Bros. T V Services, Inc.)
Notes to Financial Statements
June 30, 1967
NOTE 3:
The .corporation has received a CATV Franchise for the city of Newport Beach,
Orange County, California. This non - exclusive franchise was granted on
December 27, 1966 by the city council and accepted by the company on Jan-
uary 10, 1967. The franchise is for a term of fifteen (15) years beginning
January 27, 1967. An acceptance fee of $2,000.00 was paid to the City of
Newport Beach and the annual franchise fee is three per cent (3%) of the
annual gross receipts derived from operations within the city. The company
expects to commence construction of this system in the fall of 1967.
NOTE 4:
As of June 30, 1967 the corporation was engaged in negotiations for the ex-
clusive right to serve approximately 6,500 apartments at Seal Beach Leisure
World. As of August 25, 1967 the Boards of Directors of Golden Rain Founda-
tion and fifteen mutual companies have accepted in principal the company's
proposal.
NOTE 5:
Inventory of equipment as of June 30, 1967 consisted of the following:
Eight (8) Jerrold "J Series" VHF Antenna's
Channels 2, 4, 5, 6, 7, 9, 11, and 13 $ 374.25
.Forty -seven (47) Jerrold COM, Channel
Commander, Signal Processing Units 38,006.75
Forty -seven (47) Jerrold CCV, Converter
Output Modules for COM Units 7,356.62
Total $4533762
This equipment was acquired for use in future CATV Systems. However, in
August, 1967, the company sold twelve (12) Jerrold COM Channel Commanders
and Converter Output Modules for $9,300.00. These units were considered to
be surplus equipment and would not be required by the company for the CATV
Systems presently comtemplated.
p
PACIFIC CABLE SERVICES, INC.
(Formerly Warner Bros. TV.. Services, Inc.)
Notes to Financial Statements
June 30, 1967
NOTE 6:
On January 5, 1967 the corporation executed two promissory notes to Warner
Bros. Pictures, Inc. totaling $325,000.00. These notes are secured by a
Security Agreement covering . all the assets of the corporation as of January 5,
1967, excluding cash and inventory of equipment (see note 4), consisting
primarily of the assets presently in use in the CATV System located at Mission
Viejo Development, Laguna Hills, California.
The above notes were issued in full and complete satisfaction of cash advances
a to the corporation by Warner Bros. Pictures, Inc. in the amount of $289,600.00
and Inter - Company Charges made by Warner Bros. Pictures, Inc. during the period
to
November 5, 1966 to December 24, 1966 in the amount of $8,252.98. The dif-
ference between the face amount of the notes issued and the liabilities satis-
afied, $27,147.02, represents additional consideration given by the corporation
F in exchange for the deferral of payment of the company's obligations to Warner
a Bros. Pictures, Inc.
r
z
D The terms of these notes are as follows:
U
U
a 1.
$25,000.00 Promissory Note was due and payable on or before
6 February 15, 1967 without interest and if not so paid by said
U date, the note bears interest at the rate of six per cent (6 %)
0 per annum from February 15, 1967 until paid.
W
0 2. $300,000.00 Promissory Note was due and payable on June 30,
1967, without interest. If said note was not paid by June 30,
0
0 1967 then the note bears interest at the rate of six per
(6 %) per annum from June 30, 1967 until paid. Furthermore,
a. the principal and interest on the unpaid balance is payable
Hout of gross income of the corporation computed seperately
D each year, the first year to run from July 1, 1967 to June 30,
Q 1968. The amount'of each payment shall be computed as follows:
f First $300,000 of gross income 6%
$300,001 to $400,000 of gross income 7%
and continuing at the rate of one per cent (1 %) on
each additional $100,000 increment of gross income
to a maximum of fourteen per cent (14 %).
On May 1, 1967 Warner Bros. Pictures, Inc. sold and assigned their entire
interest.in the above notes to Louis H. and Jon C. Peterson.
PACIFIC CABLE SERVICES, INC.
.. (Formerly Warner Bros. TV Services, Inc.).
Notes to Financial Statements
June 30, 1967
NOTE 7`
During the period. April 1, 1967 to June 30, 1967, Louis H. and Jon C. Peterson
advanced $30,000.00 in cash to Pacific Cable Services, Inc. for working capital,
of which $15,000.00 was advanced prior to April 29, 1967. Under an agreement
dated April 29, 1967, between the Petersons and Pacific Cable 'Services, Inc.,
the Petersons are required to purchase from the corporation nineteen (19)
shares of capital stock for the sum of $110,000.00. To become effective, this
agreement requires the corporation to fulfill two principal conditions on or
before September 30, 1967. First, the company is required to successfully
a conclude negotiations for a CATV System at Seal Beach Leisure World (see note 4);
and secondly, the corporation is required to obtain a valid permit from the
California Commissioner of Corporations to issue the above mentioned stock.
a
aIn addition to the $110,000.00 consideration for the nineteen (19) shares of
m capital stock, the Petersons have agreed to contribute to the capital of the
a company the $15,000.00 Cash Advances made prior to the agreement of April 29,
z 1967. The additional $15,000.00 Cash Advances made subsequent to April 29,
D 1967 will be used to satisfy in part the amount the Petersons have agreed to
U pay for the capital stock. Thus, as of June. 30, 1967 there remains an unpaid..
< balance of $95,000.00 under the April 29, 1967 agreement.
0
U NOTE 8:
(j The account payable to Pacific Telephone and Telegraph Company in the amount of
W $2,794.00 is being disputed by Pacific Cable Services, Inc. The amount due the
0 telephone company is based upon statements received from them for CATV charges
cr only. Discussions have been held with the telephone company concerning their
0
0 computation of the number of cable miles, and an agreement has been reached
J that substantial ...discrepancies exist in the billings. The corporation estimates
d that they have been overbilled approximately fifty (50) to sixty (60) per cent
N during the period June 1, 1966 to June 30, 1967. The total amount of cable
D rent billed during this period was $6,191.61 and the company expects to receive
Q a credit from the telephone company of approximately $3,100.00
F
NOTE 9.
From inception to January 5,. 1967 this corporation was wholly —owned sub-
sidiary of Warner Bros. Pictures, Inc. On January 5, 1967, Mr. John R. Frost
acquired one hundred per cent (100 %) of the capital stock from Warner Bros.
Pictures, Inc. and is presently the sole owner of the corporation.
NOTE 10:
This corporation was incorporated on October 1, 1964 under the laws of the
State of Delaware. The.corporation remained .inactive until November, 1965,
at which time it commenced operations in the CATV business. Tne company
adopted a fiscal year ending August 31.
—WARNER BROS CABLE TV • •
City Council Study Session
June 26, 1967
FROST: I'd like to start out by reading to you a letter I received Saturday
from Pacific Telephone F, Telegraph Company after having had a phone conversation with
Mr. DeChaine, I believe, on Wednesday. This letter reads: "Dear John: In connection
with your telephone conversation with Mr. Wells regarding pricing of your proposed
Newport Beach CATV system, I have again discussed this problem with our Engineering
and Tariff people. I am sure that you realize that the system in Newport is very complex.
It will involve nearly all types of facilities which we provide - aerial, underground
buried, conduit, channel crossings, etc. The complexity of the system, therefore,
creates difficulties in establishing our overall cost and pricing. As of this time
all of our pricing engineering is completed_ We know how we will install the system.
Our engineers are coming down from San Francisco the week of June 26 to assist us
in developing our final cost and reconcile their complexity. Following this, these
costs must go to our tariff people for establishing the final quote which we will
make to you. You must also realize that following this a signed contract must be
submitted to the FCC for approval. A minimum time for FCC processing is 33 days.
No detail designing can be done nor equipment ordered until the FCC has approved our
contract. I sincerely wish I could give you a firm time table as to when these costs
will be ready but the complexity of the system makes this impossible at this time.
I assure you I am personally following up on the status of this work to be sure that
we are doing everything possible to assist you in your performance at the earliest
possible date. Sincerely, Jan Odell - who is the District Sales Manager, Intercity
Services for the Southern part of the State.
This letter was in response to, as you will recall, from the opening
remark of the telephone conversation I had with Mr. Wells which was approximately two
weeks ago. John Wells is the General Marketing Manager, south of San Luis Obispo,
for the Pacific Telephone System. So we have been after them for about a year to
begin to develop costs. I might say, not that it's particularly comforting to any-
body, including us, but at Mission Viejo where we had open ground and no water to
• -2-
contend with and no streets and no highways, it was one year after we started construction
before we. got the system actually now furnished. Obviously, we are in the dilemma
of not being able to price or further schedule until we get this back -up data:. To
give you an idea of the magnitude, we had always been talking and had been working
in concepts of cost - buried cable on a mileage basis per month rent to us of around
$91. We have been quoted on the Newport Beach system to cost as high $260 per month
a mile - with one or two customers on a mile cable, we wouldnit have too much of a
chance of existing. So there is this delay and there is this concern that they have
to contend with; and I'm sure such questions as to just exactly how they are going
to cross the jetty down by Bayside is a for instance typeproblem they are concerned
with. I'd be very happy to try and answer any questions T possibly can. There are
certainly no secrets here.
SHELTON: This quote that you just gave for underground leasing..
FROST: That was underground buried cable yes, sir...
SHELTON` Have you any estimate of what proportion of the area you are expecting
to serve would involve the underground versus overhead I take it overhead is the
majority of it. Isn't it?
FROST: No, strange as it may seem, as of a year ago and it may even be a
higher percentage now, 78.6% of the telephone system in the City of Newport Beach
is buried.
SHELTON: Is that true of the area of your franchise?
FROST: Yes, you see - all of the - starting with Linda Isle, I believe, I'm
not too sure right now, on Harbor Island and Beacon Bay. But then when you start
on Jamboree Road and the Coast Highway and go down through the Terraces, you are
buried. I -do not believe you are buried until you get on the far side of Corona
del Mar which, of course, is Cameo Highlands and Cameo Shores and then, of course,
W -3-
•
all of these spots are buried. All of Back Bay is buried. All of Westcliff and
Baycrest, I'm sure is buried. That's about it.
GOOK; Question not heard.
FROST: Our area? I don't know the exact percentage, Dee. We would have a
dead run which has no bearing on this - but I think it will be aerial. It will be
buried, nevertheless, when we come off the far end of town here by the Santa Ana
River - coming on up to Bayside or going the other way. You might say it's taken
us 14 months to negotiate a head end location, which is a long, long time. We've
finally consummated the negotiations on the head end.
SHELTON: In your judgement if the $206 per mile, whatever it is, quoted figure,
sticks and you are not able to negotiate a lower figure, is it economically feasible
for you or anybody else to install a system?
FROST: I` think, .,in a way, Bob, the jury is still out to this extent: that
figure, I am sure, is where they would have to open a street and there wouldn't be,
in other words, existing available conduit. And I don't think they know for sure,
and we certainly don't, what the percentage of that might be... it might be very
minor. We've always been led to believe that it's kind of like looking at a pig
in a poke. That they've had available conduit space in existing conduit in most
of the areas we're talking about,... not at Lido Isle, though for example.
FORGIT: How much time, Jack, do you want to go on this thing? This has come
up so many times now we are losing as much money here as the Telephone Company is.
How much time do you want to put this together and let us know what it's going to
cost? Another year?
FROST: Oh, no, I don't think it's going to take anything like that. I was
going to say something like sixty days to be able to barrel at the Telephone Company
to.., but you can see from this letter - it comes from high up in their organization.
® -4-
0
They are struggling awfully hard to come up with this. Now they are down here this
week. I would say 60 to 90 days we ought to have some report. Although, I'll have
to admit I've sent the progress reports in to the City that based on their estimates
that have proved not to be valid and that's a little embarrassing, too.
MARSHALL: Mr. Frost, as I understand it, there's, well, obviously a change in
ownership as far as the company is concerned and the financial information that the
City has received to date is - well - has not yet been audited and it's not com-
pletely set up as far as the new Corporation is concerned. Can you give us any
idea when this information will be finalized so that it can be evaluated by the City?
FROST: Yes, ma'am.. - I can as of about an hour ago. I know you don't
want to hear our problems but, you know, with the dissolution of Warner Brothers
you can imagine where we've been going for records. You being in the accounting business,
particularly; Mrs. Mayor. I did get , our accountants also had the famous
April 15th extension date of June 15th to even get to us. I was told this morning
that we will have a certified statement as of June 30th by - allow us a couple of
days, July 20th.
MARSHALL: By July 20th?
FROST: Yes, that's right - that's less than a month away. We know that you
are certainly entitled to it and we intend to get it to you. We had to do the best
we could to tell you what we had used for making all our decisions on. On the question
of the name change, I have our attorney here and, believe me, there was never any
intent to do anything other than what was proper and our attorneys had advised us
from the very outset that inasmuch as the entire corporate structure was not involved
at any time that on the outside of the corporate entity, stock did change hands and
I now possess all of it. That no transfer within the meaning of the Corporate
Security Act and the laws at least our council studied - and we have about 40 to 4S
different types of legal obligations - whether they be other franchises, leases,
• -5- i
agreements with the telephone companies (we have agreements with both of them) all
of those types of contracts, insurance policies, bonds, and so forth, always have an
unassignability clause in them without consent and we sent registered and mailed
to all of them, advising them of the name change and to the county, too, on its
franchise and they were all accepted. Now, we are here to do what you wish us to
do.
T. SEYMOUR I'd like to comment at this point. I seem to be taking a minority
position according to Mr. Frost that this is a transfer within the meaning of our
City ordinance and I take this position because the language in our Code is very
broad. It seems to say any type of substantial transfer, and I think if you analyze
this transaction that there has been a complete change of hands of the assets of a
closely owned corporation. They have also changed the name of the corporation and
I think, if you look at the underlying transaction, there has been a very basic change
and shift in the nature of this artificial creation we call a "corporation ". And
it seems to me, too, that keeping in mind the purpose of having this transfer provision
in the Code is to assure the Council that it's doing business with the same basic
organization and that in relying on the statements made at the time of application,
that the Council is not going to find several years later that it is dealing with a
completely different basic organization with perhaps financial weaknesses or other
problems that were not anticipated at the time the application was granted. So it
is my position that the Council is within its proper legal prerogatives in taking the
position that a transfer has occurred; and the Council now has the right to pass upon
that transfer as to whether they wish to continue with the granting of the franchise.
I will admit that this interpretation is certainly open to argument but T think it is
a sound interpretation.
MARSHALL: Thank you, Tully.
Do you want to take issue with that?
6
ATTORNEY: My name is Doug McGrew( ?) and I am an attorney representing Mr. Frost
I'd just like to say a couple of brief things about Mr. Seymour's comments. One is
obviously, there was a change of names. Two, there was a sale of stock by a stock-
holder in the corporation to another stockholder. Your Section 9, as I see it, deals
with the transfer of a franchise and nothing's happened to the franchise. Mr. Seymour
makes reference to the fact that there may be certain financial differences in the
corporation. I don't know of any commitments that Warner Pictures had or any
obligations to supply capital to Warner TV. As far as I know, they are not in the
cable television business now nor have any plans to be in it. I would just like to
say that there are cases in California where they disregard the corporation but they
do it in the context of fraud or unfairness, things like that. A corporation is an
artificial entity in the sense that it is not a person but you do business as a
corporation, you do business with a corporation - normally you just don't regard
the entity. That's all I have to say about those points. We are here just to get
information. I can tell you that we changed the name in Delaware and we can use it
in California. I can't add much other than that.
MARSHALL: Thank you.
MC GREW: There has not been a transfer of the franchise.
T. SEYMOUR: I wonder if I can have a brief rebuttal.
I think it might be well to go over the language in the Code because
that's what we are basically differing on and it provides as follows: Any such franchise
shall be a privilege to be held in trust by the original grantee. It cannot in any
event be sold, transferred, leased, assigned or disposed of in whole or in part, either
by forced or involuntary sale, merger, consolidation or otherwise, without prior
consent of the Council expressed by resolution, and then only under such conditions
as may be therein prescribed. The grantee shall file with the Council within 30 days
after any sale, transfer, assignment or lease or the franchise or any part thereof
-7-
E
or any of the rights or privileges granted thereby, written evidence of the transaction,
certified to by the grantee, or its duly authorized officers. The proposed assignee
must show financial responsibility and must agree to comply with all provisions of
this chapter.
That's the substance of the gransfer provision. And I would submit
that when we use language like "merger" which means more than one corporation going
together to form a: new entity, whether or not they changed the name; consolidation
which would seem to be similar and then the use of the term "or otherwise" - it
seems to me not unreasonable to say that there has been a fundamental transformation
of this corporation that started out as Warner Brothers TV Services, Inc., and is
now Pacific Cable Services.
Mc GREW: May I make another comment?
The Section as I have it in front of me does deal with a certain cor-
porate restructuring. Talk about a merger and you have got two corporations that
are going together, you talk about a consolidation and it's the same thing. Nothing's
happened to this corporation itself except the name's been changed; stock in the
corporation has been changed but I -think you would have a great deal of difficulty
if every time somebody sold stock in a corporation you could invalidate,-the contract
on the basis that there was an assignment. You might have a great deal of difficulty
over the exchange as well. Again, all I can say is that when you talk about merger,
consolidation or otherwise, you are talking about effecting the basic corporate structure
and that hasn't happened. We have not leased it, transferred it or assigned it.
SHELTON: May I ask a question? What disadvantage is it to your client to treat
this situation in the manner that the City Attorney sees it?
MC GREW: I''m not sure what manner he wants to treat it. If it is a matter of
delaying for 60 or 90 days, in order to supply further information, as I understand it,
he's perfectly happy to go along with it. We're not here to fight. However, I am
-8- •
just here answering certain assertions; the assertion is that there is a...
SHELTON: Your fundamental position is that there has been no assignment and the
City Attorney says he thinks there has been.
MC GREW: Right.
SHELTON: And I am wondering if there is any disadvantage to you in going along
with the City Attorney's interpretation provided the conditions the City attaches
are not inimicable to your interests.
MC GREW: I'm sure that Mr. Frost and Pacific Cable are willing to supply the
information they can that's requested. If you mean going along with the City
Attorney that they are going to waive any rights they have under a contract, I don't
think they want to do that. But they are certainly happy to supply information which
I'm sure you want.
SHELTON: Are you talking about waiving rights? Tally?
TULLY SEYMOUR: Well, I think we can explain it this way: that this transfer pro-
vision does give the Council the power to determine that it is not in the best
interests of the City to continue with the new corporation and, of course, that's
what Mr. Frost and his attorney are concerned with. They don't want to concede the
jurisdictional point, which is perfectly understandable. In other words, they
don't want to be understood by the Council as saying we agree that you have authority
to terminate the franchise based on this transaction that has taken place'. They
are willing to supply the financial information but we really haven't crossed that
bridge. They are willing to supply the information, now, if on the basis of the
information, the Council should decide that going forward with this. grantee was a
mistake and that you wanted somebody else to come in, at that point, we would do
battle, I suppose on this question but we may never reach that point, so perhaps,
while allowing them to reserve the issue for later discussion, we could dispose
0 -9-
0.
of the matter by deferring action until the financial returns are in and at that point,
the Council can make a balanced judgement.
MARSHALL: In other words, you are actually not asking to have this franchise
transferred because you don't feel this is legally necessary?
MC GREW: (Could not be heard)
SHELTON: I£ the sense of the Council is on one hand, we are willing to give
these people whether they have represented an assignment or not, an opportunity to
demonstrate that they either can or cannot proceed, then the question of assignment,
I suppose, could be postponed. At that time, it would probably make little difference
if we were satisfied that they were in a position to go ahead. If they were not,
I suppose they can either walk away from it or we can refuse to let them proceed on
various grounds, including the rate structure of things that they still have to submit
and we have to approve. My opinion is that on the basis of what I have heard so far,
maybe we shouldn't give an opinion here yet. How about it, Chairlady, do you want
to wait until tonight for conclusions?
T. SEYMOUR: Oh, I think that this is something that should be thrashed out in the
evening meeting but I think it's a question of whether you want to move on the infor-
mation you have now - and as I say, the section we just looked at stresses financial
responsibility. I think it's pretty clear that you "don't have enough information at
this point to make a judgement to decide that question.
SHELTON: This is one of the keys as to whether or not we approve of the assign-
ment but they can't tell us for reasons that I'm willing to accept yet whether
they are able to proceed. The key to it all being the telephone company - and I
think some of the recommendations in the Manager's report place a burden on them
that maybe is unrealistic at this point. But 60 to 90 days from now, when as
Mr. Frost says, when he knows where he stands with the telephone company, then
everything is on the table and we can get a yes or no.
® -10-
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MARSHALL: I was going to ask the City Attorney - is there any reason why we
couldn't determine at this point at the study session that action would be deferred
until financial information is available and so on?
T. SEYMOUR: No, there's no reason why you can't. I think that since it is an
Agenda item tonight that maybe a brief statement would be in order and continue it
for 90 days. I think this is a worthwhile approach...
SHELTON: ..........which is important to us to the effect that a potential
problem exists here in terms of interpretation which we have to resolve. We can
choose to postpone the resolution of it - this is on our backs - but I would be will-
ing to take that risk. We don't lose any opportunity to litigate this question,
do we, if we have to?
T. SEYMOUR: No. I think it can be clearly stated for the record, both now and
tonight, that the Council is reserving judgement on this point. That there is an
issue here as to whether a transfer has occurred within the meaning of the Code and
the Council at the present time is reserving judgement on this point and will be in
a position to assert this question of transfer at such time as it has the information
and then make an informed judgement.
FORGIT: Right now, I don't think it's the money - I think it's the telephone
company. I don't think he can do anything without them. So I think it's up to us
to wait and see what comes out.
SHELTON: I'm inclined also to think that nobody else can do anything without
the telephone company, that!s why condition number two, this comitment to operate
a system by some other method than the use of the telephone facilities at this time
is putting you on a limb...
FORGIT: Right now I don't think you're talking about money - T think you're
talking about that telephone company because you can't do anything without them.
® -11- •
MC GREW: Maybe the City Attorney can send a.letter to Mr. Frost within the next
few days, asking if there's any other information that he wants besides the financial.
FORGIT: I think we can, just like Doreen said, just pass this off and let it go..
SHELTON:
You said you might know
in
60 days - and we're talking 60 to 90
so maybe we
can solve it in that length
of
time.
FORGIT Let's give him a chance to get a.report from the phone company...
SHELTON: One thing I know - I don't know about the other Councilmen but I'm not
getting demands from citizens in this franchise area for a cable TV service - in
other words, we are not short- changing the public by being parties to a delay in
the commencement of a service with the franchise.
COOK: I would like to say this - that I haven't personal knowledge of
anybody knocking on the doors to pick this up either and I think that 90 days or
sooner, if possible, would be reasonable - as soon as the fiscal responsibilities
question is resolved, why I have no qualms about transferring if that's what it
takes...I don't know...
SHELTON And T would think that when they get their answers on fiscal respon-
sibility and from the telephone company then they will have no objection if we want
to go through the exercise of a formal assignment.
FORGIT: Without the telephone company they can't do anything.
MARSHALL: Any other questions? Thank you very much, Mr. Frost.
FORGIT: Does he have to come back tonight now or have we just kissed him good-
bye?
MARSHALL: Well, I think that's up to him. I' think there's a pretty clear
indication as to what action he can expect.
T. SEYMOUR: I think there is one problem though, you never know who's going
to be in the audience and raise a new point. And it's difficult to guarantee
people that something else won't come up. I think it's Mr. Frost's risk.
SHELTON: There will also be Councilmen here tonight who weren't here for
the discussion this -- afternoon.
MARSHALL: That's right.
SHELTON: Attendance is the better part of discretion in these matters.
WARNER BROS. CABLE TV
City Council Meeting
June 26, 1967
MARSHALL: Item 17
DORIS: Memorandum from the City Manager regarding Warner Bros. CATV Franchise..
FORGIT: I vote we approve on the CATV franchise transfer in principle subject
to Pacific Cable meeting conditions outlined in a report to the City Manager.
TULLY SEYMOUR: Well, sir, that's the way it appears on the agenda but I think that
in the study session the Council decided to defer action. I think in a way you are
working yourselves into a corner if you approve a transfer in principle before you
have the facts... and I don't think you want to do that.
SHELTON: Let's take the report under advisement and defer action on the
recommendations for 90 days.
MARSHALL: Discussion?
On Councilman Forgit's motion - those in favor - opposed - please
signify.
All ayes, carried.
E r, 7 " � r r_
TH P A C I F I C ` EPHOI�E AND ELEGRAPH CONIPANY
818 WEST SEVENTH STREET, Room. 850, Los ANGELES, CALIFORNIA 90017
J. R, OOELL
DISTRICT vq�G.1- : /q!'igG ER
jul-e 23, 1967
AREA CODE 213
621-5178
i o n 2, . J,' r c s t
a--id General '..ana_Ter
ac- Cable Serv_*ces, Inc.
C,S t C 1 ` f f at `Dover D r iv e
�,ewpor-u �cach, California
Lear Job,
In co-nec-,i U-h your te_e -ohone conversation ,-.,it?l `r. `._'Clls,
-oricing of you-,-- pro-oosad ZieT,,T-oort Beach U-11,7 syste:I,
.-,a re apa- r � discussed this -oroble-1 zr our engineering and
peo-ole. 1 ara sure you realize -uhat he s-Ystem Ln >Cvoort
Is VCry com--)!_.. .7
�.ill -r.vo-Lve - -early al- tyres of facility � hi -h we
0-_�ovide; U.nderlfrouud
bl-tied, condui-u, channel c oss-n�-s, e-c.
y. Cic com-ple:,ity o-.:' the system, tl=efore, creates. difficului'as Lin
es j,-ablishi--Z cur Overall cost and
--s cf t i*_s t -_ne, all ol our pr'-oia�
IS c=7)12tled.
r101-V vie 7wi'"Il '"nstall tre syste�,-,. Our ers-l-reers are co::__ C, 0 1,, n
U e 00-4
frcal San Fraacisco tlnie week of Jun;: 26 to a SSjSt U 4 S �n develotinc-
Dur final cost and reconcile una-Lr com-olexity. Folilowing t'flis,
these costs must go to ou-- -ar,�' U _nal
L-f people lor establishing the
cluote i,,,iiich we will m.ake to you.
You :-,-nst also rcallze that th,_s, a si,--ned cont---act -.��s'� be
sabr,,:,itted to the -.��.C.C. for approva-1 , --he minimu-ml tim-e for
-0-20cessing is 31� �_ays. ��o detail desl�:;,_=- can I be done no.- ecuip-
me-ru ordered u_t,nl the P.C.C. 'nas ap roved our contract.
�7
b_ncere_y 1u' -�sn 1 could give you a fr'l ir tl',me sable as t 0 Z he -_- t hese
C0St,-3 oe ready, but -uhe com-ple-xity of the system makes t)._'s
L-aposs'-ble at tnls t-i-,,ie. 7 assure you I am, personally follci�amg UP 0�
U __ Etat-,,>;s of this worlc to be sure zu".-.at we are doing everytnin., possible
to assist; you In your performance at the earliest possible date.
S.L ncel-ely,
<
CITY OF NEWPORT BEACH
OFFICE OF THE CITY MANAGER
June 22, 1967
TO: CITY COUNCIL
FROM: City Manager
SUBJECT: WARNER BROTHERS CATV FRANCHISE
DISCUSSION:
On December 27, 1966 the City Council awarded a non - exclusive franchise for
Community Antenna Television Services to Warner Brothers TV Services, Inc. Since that
date a number of things have occurred which should be brought to the attention of the
City Council.
One recent item of significance has to do with a May 16th communication from
Mr. John R. Frost, advising the City "that the corporate name of Warner Bros. TV Services,
Inc.. has been duly and legally changed to the name of Pacific Cable Services, Inc. ....
we respectfully request you change the name designation on the franchise documents accord-
ingly." In pursuing this matter further, the City Attorney and I are of the opinion that
what is involved is a proposed transfer of the franchise rather than a mere name change.
Mr: Frost, who formerly owned approximately 25% of Warner Brothers TV Services, Inc., now
owns 100% of Pacific Cable Services, Inc. Warner Brothers is out of the TV services
business. Warner Brothers Pictures, Inc. is also now in the process of dissolving its
position in the movie industry.
With the transfer of Warner Brothers stock to John R. Frost (Pacific Cable
Services, Inc.), formal recognition and approval by resolution is needed by the City
Council In this context it would behoove the City to carefully consider the financial
stability and position of the new company, the availability of cable TV service and the
interest on the part of other CATV firms to serve the City at this time.
First, from information contained in the attached June 8th letter from Mr.
Frost; Pacific Cable Services, Inc, has committed to invest over $500,000 in the new busi-
ness. This will more than offset their deficit position of $176,890 as of December 31,
1966. Although this new venture does not have the same stature as did Warner Brothers
TV Services, Inc. with the backing by Warner Brothers, Inc., the firm nonetheless is
prepared to invest sufficient monies to realize a sound CATV business operation.
As to the availability of CATV service, another delay is forecast. When the
Council awarded the franchise to Warner Brothers TV Services, Inc, on December 27, 1966,
Council approval of rates was postponed presumably until contract details could be worked
out with Pacific Telephone and approval received from the Federal Communications Commis -
sion. It was envisioned at that time that a delay of around 90 days or so would be re-
quired before complete Council approval could be realized. On February 28th Mr. Frost
advised the City that "we believe a contract between ourselves (Warner Brothers TV Ser-
vices, Inc.) and PTFT will be filed simultaneously with the Federal Communications,Commis-
sion and California Public Utilities Commission within two weeks. The filing with CPUC
is for information purposes only. We have been advised by staff members of FCC that upon
4P 40
- '2 -
their receipt of the filing, permission to proceed will be granted within approximately
30 days. It is our intention to begin construction immediately thereafter. In the
attached June 8th letter, Mr. Frost states on behalf of Pacific Cable Services, Inc.,
that "construction (in Newport Beach) is expected to commence within 30 days. The con-
struction and installation of the feeder and distribution system for .Newport Beach should
begin within 60 days. Pacific Telephone has advised that they have their material on
hand and the engineering is complete for the first 4 phases of the system." It is again
well to point out, however, that Pacific Cable Services, Inc. has not yet received approval
from the Federal Communications Commission for their Newport Beach system. It will likely
be at least another 30 glue 90 days before such approval is received. The reason for such__,
approval is, of course to the Channel Service Agreement Pacific Cable has been nego -' tiating with Pacific Tphone, whereby the latter owns and maintains the CATV distribution
system and as an interstate carrier comes under FCC jurisdiction. By way of contrast,
the Community Cablevision Company (Irvine Company) owns its own CATV equipment and does
not require the same type of services afforded Pacific Cable TV Services, Inc. by the
Pacific Telephone Company. However, FCC approval is apparently required of all CATV firms
choosing to use either channel service or pole attachment agreements at this time, which
poses a delay problem for any firm that might operate in the Warner Brothers franchise area.
In passing, it is well to mention that in the last two months other firms have
expressed interest in serving the "Warner Brothers" franchise area if the latter is unable
to provide the service. It may not be necessary to pursue this further however, if the
City Council is inclined to approve the franchise transfer to Pacific Cable Services, Inc.
and agree to a further extension of time until this system is approved by the Federal
Communications Commission. On or before that time the Council may wish to reconsider the
Pacific Cable customer rate structure that would apply to the subject franchise area.
RECOfMMMATIONS:
LUnder Section 5.44.080 of the Newport Beach Munic pal,..Code., the City Council can
cheGse to oke the existing Warner Brothers TV Services Franchise on the basis of non-
performancreve and dissolution or consider approving a transfer of this'franehise to Pacific
Cable Services; Inc. along with appropriate time extensions to allowor FCC approval and
commencement of service. If the Council decides to terminate the Warner Brothers Franchise
it would be well to solicit additional applications from CATV firms to serve the existing
Warner Brothers franchise area. However, in doing so the Council should be aware that
other firms may have as great or greater difficulty as Pacific Cable in receiving approval
from all agencies concerned before they are in a position to provide service.
If the Council is inclined to approve a transfer of this franchise to
Pacific Cable Services, Inc., it is recommended that formal approval be delayed until
such time as the following conditions can be met: - -- - " '-
1 l) That Pacific Cable Service, Inc. secure FCC approval within 90 days
unless applicant can show sufficient cause for further extension;
2) That Pacific Cable commit themselves for the record as tG whether
they would operate' a CATV system in Newport Beach by some other
method than the Channel Service Agreement with Pacific Telephone
in the event all details of such an agreement cannot be agreed
4 0
- 3 -
upon to the satisfaction of both parties and FCC approval
received within 90 days;
3) That additional financial information concerning the ownership
and stability of Pacific Cable be furnished the City to the
satisfaction of the City Council within 30 days; and
4) That within 90 days the customer rate structure for Pacific Cable
Services, Inc. be submitted to the City Council for approval.
HLH /JPD /rc
Attachment (1)
PACIFIC CABLE SERVICES, INC.
1501 WESTCLIFF DRIVE
NEWPORT BEACH. CALIFORNIA 92660
1714) 442.3260
JOHN R. FROST
I'MIDENT
June 8, 1967
City of Newport Beach
City Hall
Newport Beach, California
Gentlemen;
On January 5, 1967 I purchased all issued stock in Warner Bros. TV
Services, Inc., a Delaware corporation, from Warner Bros. Pictures,
Inc. Attached marked "Exhibit A, " is a statement of financial
condition of Warner Bros. TV Services, Inc. at the time of the afore-
mentioned stock purchase. All stock was purchased outside the
corporation.
Thereafter a transfer of all documents, records, and books from
the Burbank office of Warner Bros. was completed and on May 31,
1967 were transferred to the Newport, Beach office. The corporation
name was changed to its present name effective April 21, 1967.
During this period of time, a small group of investors„ including
myself, was organized who now control all issued stock. This group has
purchased for cash Promissory Notes due from the former corporation,
Warner Bros. TV Services, Inc., to Warner Bros. Pictures, Inc. in the
amount of $325,000.00. The investment group has agreed to subordinate
such notes to general creditors and has deposited the sum of $20, 000.00
in working capital and are obligated to deposit an additional $130, 000.00
working capital into the corporation within the next 120 days.
There is now in excess of 10 miles of buried feeder and distribution
cable in our CATV system in Mission Viejo and the system will continue
to expand for several years. There are approximately 900 homes installed
with cable at the present time. About 70 percent of these homes are
City of Newport Beach
Page Two June 8, 1967
occupied and approximately 25 percent have subscribed for our service.
The design of the head —end for servicing the Newport Beach area is
complete. All material is purchased and on hand and the construction
is expected to commence within 30 days. The construction and
installation of the feeder and distribution system for Newport Beach
should begin within 60 days. Pacific Telephone has advised they have
their material on hand and the engineering is complete for the first 4
phases of the system.
Negotiations have been completed on another system and contracts
are currently being executed. This system will be under construction
within 15 days. It will serve a cooperative - -type community of 6, 500
apartments in 580 buildings.
It should be understood that our method of operation, namely leasing
the feeder and distribution system from telephone companies, reduces
the necessity of large capital investments. The previous mentioned' cash
conditions and subordination of indebtedness is believed to be adequate
to finance all projects described herein.
Due to the circumstances regarding the transfer and change in stock
ownership outside the corporation and the introduction of the new invest-
ment group. together with the current dissolution now taking place of
Warner Bros. Pictures, Inc., we have been unable to complete an audit of
all books and records. We wish to state, however, that the aforementioned
statement of financial condition dated December 31, 1966' is the statement
upon which all subsequent transactions with Warner Bros. Pictures, Inc.
have been based. There has been a major change in such statement in
that working capital has increased and the corporate indebtedness to
stockholders has been subordinated to all other potential creditors.
Presently the corporation is in the process of reorganizing its capital
structure to eliminate temporary indebtedness to shareholders and convert
the same to equity capital.
We wish to point out that the investment group has obligated itself to
invest in excess of $500,000.00 in the venture. In addition, this corpora-
tion still has available normal commercial borrowing capability.
y..
City of Newport Beach
Page Three
if
June 8, 1967
in order to accomplish the items set forth above, the corporation is
presently in the process of obtaining approval to expand its capital
structure to facilitate the additional investment by our group.
Very truly yours,
PACIFIC CABLE SERVICES, INC.
T HN t'. JFROST L
esident
JRF; gw
attachment
._.. .. .. .. .r .... ....... ............u........ ..........._.u...�.�_..
...
_.. .....,. ... ..
�..
BROS. TV
SERVICES, INC.
STATE ANT Or FINANCIAL
CONDITION
UL iii3ER
1' n
Y
Current Assets
Casla
$ 20,441
Accounts receivable -
Trade $,
851
Other 10,000
10 80 ,1
,
Equipment inventory
45,31;:
Refun(able deposits
Prepaid rent
1,398 _.
Total'Current Assets
$82,105
Current Liabilities
Accounts payable and
accrued expenses
127S2
Total Current Liabilities
1,782
j Net Working Capital
80,323
Fixed Assets
120,953
Account payable to -
Warner Bros. Pictures, Inc.,
},
297,853
Stockholders Ecuity
i
Comprised of -
Capital stock
7,500
Deficit from operations
(184 390 .
($176,$90)
EXHIBIT A
r
i
i
EXECUTIVE OFFICES . • TELEPHONE
WARNER BROS. (714) 642 -3260
BURBANK, CAL.
D D D �0
TV ,
SERVICES, INC.
NEWPORT NATIONAL BANK BLDG.
WESTCLIFF AT DOVER DR. .CL.
JOHN R. FROST NEWPORT BEACH, CALIF'.
VICE PRESIDENT p
AND GENERAL MANAGER February 28, 1967
Mr. Harvey Hurlburt, City Manager
City of Newport Beach
City Hall
Newport Beach, California
Dear Harvey:
To avoid any misunderstanding, we want to keep you posted on the latest develop-
ments of our progress in working together with Pacific Telephone Company for a
CATV system to be installed in Newport Beach.
Please be advised that we have reached a tentative verbal agreement with the new
owners of the building on which we expect to construct our antennas and house the
head -end equipment. As stated to you and representatives of Community Cable -
vision Company last week at your office, we have been negotiating with two pros-
pective site owners for approximately one year. I know you realize that until
January 11, 1967, we were in no position to enter into final negotiations - that
being the earliest date that WBTV8 could accept the franchise from the City of
Newport Beach.
The aforementioned proposed antenna site has just changed hands. It wasn't until
Monday of this week that a building manager was selected and made responsible
for negotiating arrangements of this kind. We must now prepare and submit engi-
neering data and system drawings for final approval of all parties concerned. We
believe this will take approximately four weeks.
As stated at last week's meeting, until this matter has been settled, we cannot
enter into negotiations with PT &T for a final system layout and contract for lease
channel facilities. As you know, the head -end is the hub of the system and without
a clear designation of the location of the antenna site, WBTVS and PT &T cannot
make any final decisions regarding the system layout.
As soon as this has been finalized, we believe a contract between ourselves and
PT &T will be filed simultaneously with Federal Communications Commission and
California Public Utilities Commission within two weeks. The filing with CPUC
I D'
D
Mr. Harvey Hurlburt .
City of Newport Beach
Page Two
• February 28, 1967
is for information purposes only. We have been advised by staff members of FCC
that upon their receipt of the filing, permission to proceed will be granted within
approximately 30 days. It is our intention to begin construction immediately there-
after. According to present plans, this would mean WBTVS could offer service to
Linda Isle by mid- summer. In the interim, we have been advised by PT &T that the
moment trenches are available to them on Linda Isle, they intend to put in conduit
of a sufficient size to not only accommodate telephone lines but CATV cable for our
use as well.
I believe it is self- evident that without decisions on some of the above matters,
no one can make a positive commitment as to precise dates for such events to
happen. Suffice it to say WBTVS has complete faith and confidence in the Telephone
Company and their representatives as well as your office and staff and we have
every intention of living up to our obligations.
Sincerely,
WARNER BROS. TV SERVICES, INC.
O NROS"T`��'
J Ii
Vice President & General Manager
JRP: i c
cc; Mr. James T. Griffin
Mr. Wayne Houser
i
Mr. John Paul Johnson, Assistant Editor
Cable Television Review
P. 0. Box 63992
Gdahcmn City, aclahma 73106
Dear Mr. Johnson:
• 3'14�
Januarxy 11, 1967
f r. -
Each of these franchises is for a fifteen year period. In addition to
the $1,000 application fee and $2,000 acceptance fee paid to the City
by each firm, the City will receive 3% of the gxotas revenUes frrm each
operation, including both service and installation charges.
Should you need any additional information as to the MUM of the two
franchises, please let us know.
Sincerely,
JAMES P. DE CHAINS
Administrative Assistant to the
city manager
JPDlmjc
t7(ECUTIVE OFFICES
WARNER SROS.
GUREIANK. CAL.
JOHN R. FROST
VIDE PRESIDENT
AND GENERAL MANAGER
W M�D
TV
SERVICES, INC.
NEWPORT NATIONAL BANK BLDG.
WESTCLIFF AT DOVER DR.
NEWPORT BEACH. CALIF.
City of Newport Beach
and the Honorable City Council
3300 West Newport Blvd.
Newport Beach, California 92660
Gentlemen:
Please find enclosed the following:
JRF :Jc
Encl.
e44T "e,
•
TELEPHONE
(714) 842.3280;'
January 11, 1967
1. Warner Bros. TV Services, Inc. written acceptance
of CATV franchise dated January 10, 1967, duly
executed as requested;
2. Warner Bros, TV Services, Inc. check in the amount
of $2,000.00 in payment of the acceptance fee as
requested.
Very.truly yours,
W7ER BROS. TV SERVICES, INC.
R. re FROST
ice: President &General Manager
•
ACCEPTANCE OF CATV FRANCHISE
TO THE CITY OF NEWPORT BEACH, CALIFORNIA, AND TO
THE HONORABLE CITY COUNCIL OF .SAID CITY1
Warner Bros. TV Services, Inc., a Delaware corporation,`
being the person identified as the Orantee in Ordinance Not 1197s
duly adopted by the City Council of the City of Newport Beach on
the 27th day of December, 1966,.hereby accepts the CATY franchise
therein granted, together with all of the terms and conditions
thereof, subject to the action of the City Council with reference
thereto at its regularly scheduled meeting on December 27, 1966
and with particular reference to the moratorium .for establish-
ment of rates and eonstruction.sohedul &6m
Dated# Januar
xv 10, 1967
Warner Bros. TV Services, Inc.,
cal of s Delaware corporation,
aorporation7
Bonn x, nrosv
ae President General Manager
CERTIFICATE OF CITY CLERK
I hereby certify that the foregoing Acceptance of
CATV Fran his& was received by ale at the hour of
o'clock . li. an the // L� .day of
.t,96j e
• • 1�7ff ' -
*±4 4
Z ; #'s. *t' ; r : -�� ^�
Warner Bres . TV Ser4cess S=1,9 a Delaware 001"ratA ,
Verner Bros. TV servioOSIF Ina.,,
a Delaware corperaUans
n ° "7
k• f � r � l t
! a
City Clerk
MACK L. WARNER, president, WARNER BROS.
PICTURES, INC. announces Warner Bros.
entrance into community antenna televi-
sion. A new company has been formed for
the express purpose of designing, building
and operating a community antenna tele-
vision system to make available to your
community, a multi - channel, full -color tele-
vision system. This system will allow you
to enjoy highest quality reception from all
television stations in your area, including
some you may not be receiving now.
A "Perfect Picture" brought, to you by
WARNER BROS. TV SYSTEM will be avail-
able soon in your community (at a nominal
cost to you). Only pennies a day will insure
maximum entertainment value and sat-
isfaction.
The WARNER BROS. TV SYSTEM offers home television viewers:
L Elimination of expensive and unsightly rooftop
antennas. Consequently there is no danger from wind
storms, lightning, or roof damage, nor concern for
increased insurance rates.
2. Elimination of problem and fringe areas which pro-
duce "ghosts;' "snow" and other common reception
problems.
3. Better television reception...a strong constant signal
insuring excellent picture quality —both black & white
and color. (Bear in mind, color reception requires a
signal strength of approximately four times more, sig-
nal power than black & white.) Additionally color
requires a special antenna which is considerably more
expensive than the conventional antennas used for
black &. white reception.
4. A greater selection of channels and programs for you
to enjoy.
5. Choice of several UHF stations, alternated during the
day, all programs listed and pre- announced.
6. Clear FM signals with specially recorded background
music.
7. Reliability and dependability through the use of the
most advanced and highest quality_ equipment and
skilled, experienced engineers.,
IN THE FUTURE...
some "NEVER BEFORE AVAILABLE" advantages are possible,
such as special channels for uncut, uninterrupted Warner
Bros. feature films for family enjoyment (programmed and
pre- announced). Additionally, special pre - selected WARNER
BRos. and REPRISE recordings will be offered for your musical
background enjoyment. Also possible are special studio
"sneak" previews for the "at home" television audience.
p WARNER BRos. TV SYSTEM will be available soon in your com-
munity. A "Perfect Picture" can be yours for pennies a day.
The nominal cost to you will assure your family maximum
entertainment, value and satisfaction.
WARNER Bros. TV SERVICES, INC.
Newport National Bank Building
Newport Beach, California
TELEPHONE: (:719) 692 -3260
NEWEST MILESTONE IN TELEVISION
TY OF NEWPORT BEACu
Volume 20 - 160
Index T%- ,.—"— » 1 04
COUNCILMEN
o�rp „i
p O F
'
3. Ordinance No. 1196, being,
AN ORDINANCE OF THE CITY OF NEWPORT
BEACH GRANTING TO COMMUNITY CABLEVISIO
COMPANY A NONEXCLUSIVE FRANCHISE TO
CONSTRUCT, MAINTAIN, AND OPERATE A
COMMUNITY ANTENNA TELEVISION SYSTEM
WITHIN SAID CITY,
was presented for second reading.
CA -179
With the unanimous consent of the Council, Mayor Pro
Tern Marshall stated that the further reading of the
ordinance was waived.
Ordinance No. 1196 was adopted.
Motion
Roll Call:
Ayes
XX
x
x
X
Absent
x
x
4. Ordinance No. 1197, being,
AN ORDINANCE OF THE CITY OF NEWPORT
BEACH GRANTING TO WARNER BROS. TV
SERVICES, INC. A NONEXCLUSIVE FRANCHISE
TO CONSTRUCT, MAINTAIN, AND OPERATE A
COMMUNITY ANTENNA TELEVISION SYSTEM
WITHIN SAID CITY,
was presented for second reading.
CA -179
With the unanimous consent of the Council, Mayor Pro
Tern Marshall stated that the further reading of the
ordinance was waived.
Ordinance No. 1197 was adopted.
Motion
- p�
0
Roll Call:
Ayes
xxx
X
Absent
x
X
CONTINUED BUSINESS:
1. A memorandum was presented from the City Attorney
dated December 21, 1966 regarding Community
Antenna Television Systems documents.
R -6487
Resolution No. 6487, approving the proposed rates
Motion
X
and charges to subscribers of Community Cablevision
Roll Call:
CA -179
Company, was adopted.
Ayes
X
X
x
x
X
Absent
X
X
ATTEST: Mayor Pro Tempre
c
f
Acting City Cl k
Pa" 160 .
THS:aem
12/7/66
ORDINANCE No. 1197
AN ORDINANCE OF THE CITY OF NEWPORT BEACH GRANTING
TO WARNER BROS. TV SERVICES, INC. A NONEXCLUSIVE
FRANCHISE TO CONSTRUCT, MAINTAIN AND OPERATE A
COMMUNITY ANTENNA TELEVISION SYSTEM WITHIN SAID CITY
The City Council of the City of Newport Beach does ordain
as follows:
SECTION 1. Definitions.
Wherever in this ordinance the following words or phrases
are used, they shall have the respective meanings assigned to them
in the following definitions; and words or phrases not defined in
this section which are defined in any franchise document shall have
the same meaning in this ordinance assigned to them in such fran-
chise document, unless the context in which they are used shall
clearly indicate a different meaning:
(a) "City" shall mean the City of Newport Beach in its
present incorporated form or in any later recognized, consolidated,
enlarged or reincorporated form.
(b) "Council" shall mean the present governing body of
the City, or any future board constituting the legislative body of
the City.
(c) "Person" shall mean any individual, firm, partner-
ship, association, corporation, company or organization of any kind.
(d) "Grantee" shall mean Warner Bros. TV Services, Inc.,
a Delaware corporation, its employees, agents, successors and assigns.
(e) "Co:gmunity Antenna Television System" or "CATV
System" shall mean a system of antennae, coaxial cables, wave
guides, poles, wires, underground conduits, manholes and other
conductors, equipment or facilities designed, constructed or used
for the purpose of providing television, radio or other service
by cable or through its facilities as herein contemplated. CATV
shall not mean or include the transmission of any special program
0
or event for which a separate and distinct charge is made to the
subscriber in the manner commonly known and referred to as gay
television,
(f) "Subscribers" shall mean any person or entity
receiving for any purpose the CATV service of the Grantee herein
(g) "Gross Annual Receipts" shall mean any and all com-
pensation in the form of gross rental and/or service receipts,
including initial installation charges, received directly or in-
directly from subscribers or users in payment for CATV services
received within the City.
Gross .annual receipts shall not include any taxes on
services furnished by the Grantee imposed directly on any sub-
scriber or used by any city, state or other governmental unit and
collected by the Grantee for such governmental unit-
(h) "Franchise Area" shall mean the territory within the
City throughout which Grantee shall be authorized to construct,
maintain and operate its system and shall include any enlargements
thereof and additions thereto.
(i) "Franchise Documents" shall mean and shall include
all of the following;
(1) Article XIII of the-Charter of the City of
Newport Beach,
(2) Chapter 5,44 of Title 5 of the Newport Beach.
Municipal Code as the same now exists or as it may hereafter
be amended,
(3) Any and all rules and regulations governing
the operation of CATV Systems within the City of Newport
Beach which are adopted by the City Council,
(4) The written acceptance of CATV franchise
s;
filed with the City by the Grantee,
(j) "Street" shall mean the surface of and the space
above and below any public street, road, highway, freeway, lane,
20
path, alley, court, sidewalk, parkway, or right of way whether or
not improved, now or hereafter existing as such throughout the
City.
SECTION 2. Grant of Franchise..
There is hereby granted to Warner Bros. TV Services, Inc.,
a Delaware corporation, by the City a nonexclusive franchise to con-
struct, erect, operate and maintain, in, upon, along, across, above,
over and under the public streets, alleys, public ways and public
places, now or in the future dedicated for public use in the City,
poles, wires, cables, underground conduits, manholes and other tel:
vision conductors, appurtenances and fixtures necessary or convenient
for the maintenance and operation in the City of a community antenna
television system to transmit television and FM radio signals, within
the franchise area described as follows:
All of the territory within the boundaries of the City of
Newport Beach as such boundaries exist on the effective date
of this ordinance, with the exception of the following ter-
ritory-
That portion of Blocks 51, 55, 56, 57, 92, 93, and 96 of
Irvine's Subdivision in the City of Newport Beach, County
of Orange, State of California, as per map recorded in
Book 1, Page 88 of Miscellaneous Record Maps in the office
of the County Recorder of said County, described as follows:
Beginning at the West corner of said Block 96; thence
Southeasterly along the Southwesterly line of said
Block 96 to the Easterly corner of Tract No. 673 as
per map recorded in Book 20, Pages 17 and 18 of
Miscellaneous Maps, said corner being also an angle
point in the boundary of the Harbor View Annexation
to the City of Newport Beach as established by City
Ordinance No. 896; thence Northeasterly along said
boundary to an angle point in the boundary of Annex-
ation No. 57 to the City of Newport Beach as estab-
lished by Resolution No. 6203, dated August 9, 1965,
of the City of Newport Beach Council and amended by
Resolution No. 6247, dated November 8, 1965, said
point being the Southwesterly terminus of that certain
course described therein as 'North 44 56 20 East
114.30 feet "; thence generally Northeasterly and North -
westerly along said boundary to the Easterly right of
way line of MacArthur Boulevard, 100.00 feet wide
as described in the deed recorded in Book 1047„ Page'
557 of official Records; thence generally Northerly
along said Easterly right of way line being also the
boundary of Annexation No. 50 to the City of Newport
3.
0 0
Beach as established by City Ordinance No. 999 to
the Southeasterly line of said Block 56; thence South-
westerly along said Southeasterly line being also said
boundary of Annexation No. 50 to the Westerly right
of way line of said MacArthur Boulevard; thence
Northerly along said Westerly right of way line being
also the boundary of the Jamboree Road Annexation
to the City of Newport Beach as established by City
Ordinance No. 840 to the center line of Palisades
Road, 80.00 feet wide, as described in the deed re-
corded in Book 1677, Page 98 of Official Records;
thence Westerly and Northwesterly along said center
line to the center line of Jamboree Road, 132.00 feet
wide, as described in the deed recorded in Book 6135,
Page 155 of Official Records, thence generally South-
westerly along said center line of Jamboree Road,to
the center line of State of California Highway Route
ORA. 60 -B, 100.00 feet wide, as described in the
deed recorded in Book 487, Page 3 of Official Records;
thence Easterly along said State Highway center line
to the Southwesterly line of said Block 55; thence
Southeasterly along said Southwesterly line and the
Southwesterly line of said Block 93 to the point of
beginning.
The CATV system herein franchised shall be used and operated solely
and exclusively for the purposes expressly authorized by ordinance
of the City of Newport Beach and no other purposes whatsoever.
SECTION 3. Nonexclusive Grant.
The right to use and occupy said streets, alleys, public
ways and places for the purposes herein set forth shall. not be
exclusive, and the City reserves the right to grant a similar use
of said streets, alleys, public ways and places to any person.at
any time during the term of this franchise.
SECTION 4. Term of Franchise.
The term of this franchise shall be fifteen (15) years
and shall commence at 12°01 P.M. on the effective date of this
ordinance, provided that the Grantee has filed written notice
Of acceptance in accordance with the requirement of Section 10
of this ordinance.
SECTION 5. Inclusion of Franchise Documents.
All of the franchise documents applicable to this fran-
chise are hereby incorporated by reference and made a part of
this ordinance. By acceptance of this franchise Grantee agrees
4.
to be bound by all of the terms, provisions and conditions contained
in said franchise documents..
SECTION 6, Indemnification of the City.
Grantee agrees that it shall indemnify and hold harmless
the City, its officers, boards, commissions, agents and employees
against and from any and all claims, demands, actions, suits,
liabilities and judgments of every kind and nature and regardless
of the merit of the same, arising out of or related to the
exercise or enjoyment of this franchise by Grantee, including
claims, demands, actions, suits, liabilities and ;judgments based
upon copyright infringement, Grantee further agrees that it
will reimburse City for any costs and expenses incurred by City
in defending against any such claim or claims, including attor-
neys' fees, accountant fees, expert witness or consultant fees,
court costs, per diem expense, travel and hiving expense, Grantee
further agrees that upon demand of the City it will appear in and
defend any and all suits, actions, or other legal proceedings
whether judicial, quasi - judicial, administrative, legislative; or
otherwise, brought by third persons or duly constituted authori-
ties.against or affecting the City, its officers, boards, commis-
sions, agents or employees and arising out of or pertaining to
the exercise or enjoyment of such franchise, or the granting
thereof by the City, the foregoing obligations shall exist and
continue without reference to or limitation by the amount of any
bond, policy of insurance, deposit, undertaking or other security
required hereunder; provided that neither Grantee nor City shall
make or enter into any compromise or settlement of any claim,
demand, action or suit for monetary damages without first giving
the other ten (10) days' prior written notice of its intention
to do so.
SECTION 74 Right of City to Adopt Additional Rules and
Re &ulationsa
The right is hereby reserved to the City to adopt, in
Sa
addition to the provisions contained in this ordinance and in any
other applicable ordinances and resolutions, such additional regu-
lations as it shall determine to be necessary or convenient in
the exercise of the police power.
SECTION 8. Prohibited Activities of Grantee.
Grantee shall be prohibited from directly or indirectly
doing any of the following:
(a) Engaging in the business of selling at retail,
leasing, renting, repairing or servicing of television sets, radios
or other receiving apparatus, or any part or component thereof.
(b) Providing any repair service to its subscribers,
for a fee or otherwise, which extends beyond the connection of its
service and the determination by Grantee of the quality of its
signal to its subscribers.
(c) Soliciting; referring, or causing or permitting the
solicitation or referral of any subscriber to any specific named
persons, firms or corporations engaged in any business *.which
Grantee is prohibited from engaging in by the provisions hereof.
(d) Transmitting or presenting any programs or events
for which a separate and distinct charge is made to the subscribers
in the manner commonly known and referred tows "pay television ",
and the Grantee shall not maintain or operate on any television
set a coin box or any other device or means for the collection of
money for individual programs.
SECTION 9, Transfer of Franchise.
This franchise shall not be sold, transferred, assigned,
leased or otherwise disposed of in whole or in part by voluntary
or involuntary sale, merger, consolidation, or otherwise, without
the prior consent of the City Council expressed by resolution,
and then upon such terms and conditions as the Council may pre-
scribe,. No sale, transfer or assignment shall be effective until
60
• i
the vendee, assignee or lessee has filed in the office of the City
Clerk an instrument, duly executed and approved as to form and
content by the City Attorney, reciting the fact of such transfer,
sale, assignment or lease, accepting the terms of the franchise,
and agreeing to perform all the conditions thereof, including any
additional conditions required by the City Council.
SECTION 10. Acceptance of Franchise.
This franchise shall not become effective for any pur-
pose unless and until written acceptance thereof shall have been
filed with.the City Clerk, and such written acceptance shall be
in form and substance as shall be prescribed by the City Attorney
and shall be and operate as an acceptance of each and every term,
condition and limitation contained herein, or otherwise specified
by ordinance or resolution of the City Council. Said written
acceptance shall be filed by the Grantee not later than 12:01
P.M. of the fifteenth (15th) day next following the date of the
adoption by the Council of this ordinance; and, in default of
the filing of such written acceptance as Herein required, Grantee
shall be deemed to have rejected and repudiated the same-, and
thereafter, the acceptance of any such Grantee shall not be re-
ceived by the City Clerk, and such Grantee shall have no rights,
remedies, or redress in the premises, unless and until the City
Council shall, by resolution,, determine that such acceptance be
received or filed, and then upon such terms and conditions as
the Council may impose. - --
SECTION 11. Acceptance Fee.
The Grantee shall, upon the acceptance of this franchise,
pay to the City, in consideration of the granting of this franm
the sum of $2,000.
SEC,.71ON 12. Annual Franchise Fee.
The Grantee shall pay annually to the City during the
7.
life of this franchise for the privilege of operating a CATV
system under this franchise a sum equivalent to three per cent
(3%) of the annual gross receipts derived from its operations
within the City.
SECTION 13, Effective Date,.
This ordinance shall become effective 30 days from and
after the date of its adoption; provided, however, that the fran-
chise hereby granted shall not become effective unless and until
the Grantee files written acceptance thereof in the manner
specified in Section 10 of this ordinance and delivers to the
City all bonds and insurance policies required to be furnished in
accordance with the requirements of Chapter 5044 of Title 5 of
the Newport Beach Municipal Code.
SECTION 14. Publication.
This ordinance shall be published once in the official
newspaper of the City.
This ordinance was introduced at a regular meeting of
the
City
Council of
the City of Newport Beach held on the
12'f"
day
of
December
1.966, and was
adopted on the
z7tn
day
of
December',
1966 1 by the
following vote,,
to
wit:
ATTEST:
ity C er
AYES, COUNCILMEN; Parsons; Rogers, Marshall
F 'orp_ *, Shelro *=
NOES, COUNCILMEN° Nine
ABSENT COUNCILMEN - Crub,_2`
s
Mayor
At'tention: John R. Frost. Vice President
A copy of Ordinance No. 11979 being An ordinance of the
City of Newport Beach Or to Warner Bros, TV Services,
11 Mt::gto construct, MR
Inc. a M=excluaive rramb, intain:-and
Operate a Community Antem-ta, Television System Within Said
aty*
If you have any questions 4 !"le:tba matters discussed
Bros. ple"a feel frie to contact the man signed,
Yours truly,
cc - Ift. Bryan S. bbore,, Director
Warner
X41 w_.
oCalifrnia
THSoaem •
-12/21t/66
ACCEPTANCE. OF CATV FRANCHISE
TO THE CITY OF NEWPORT BEACH:, CALIFORNIA, AND TO
THE HONORABLE CITY COUNCIL OF SAID CITY.
Warner Bros. TV Services, Inc., a Delaware corporation,
being the person identified as the Grantee in Ordinance No. 1197,
duly adopted by the City Council of the City of Newport Beach on
the day of , 196 , hereby accepts the
CATV— zanchise therein grante , together with all of the terms
and conditions thereof.
Dated-
[Seal of
corporation]
Warner Bros. TV Services, Inc.,
a Delaware corporation,,
By.
Title.
By.
Title.
CERTIFICATE OF CITY CLERK
I hereby certify that the foregoing Acceptance of
CATV Franchise was received by me at the hour of
o °clock �. M. on the day of
19670
City Clerk
r 4x' f#
In
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dommou"
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U 71
+n a
`'#
EM
•
a.
A&
f CITY OF NEWPORT BEACH
CALIFORNIA
5r
4
ti a .
November 1. a 1966
v
Dear Mr. Moores
As t: W not have available any additional
of the consultant's report, you
only one o of
k k ii
s tT
a
e 4
Warner Y f ;: Prt Services Inc.
Ile tk T !
Newport Beach, ;
•u
GABLE ADDRESS
"WANEWAR'
9
TELEPHONE
469.1251
September 1, 1966
Mr. John R. Frost, 'Vice President
and General Manager
Warner Brothers TV Services, Inc.
Newport National Bank Bldg.
Westciif,f at Dover Drive
Newport Beach, California
Dear John:
Attached you will find two copies each of the Notice Inviting Proposals
to Provide Community Antenna Television Service in the City of Newport
Beach and the recently amended CATV Ordinance No. 1198.
Please again review both the Notice and the Ordinance very carefully
and make all attempts to insure that your proposal conforms exactly
to the requirements of these documents.
We will be happy to receive your proposal any time between now and Sep-
tember 30, at which time all proposals received will be opened in our
office, and will subsequently be analyzed by our CATV consultant. If
I can be of any further assistance, and if you should need any additional
information relative to this procedure, please do not hesitate to let
me know. We look forward to receiving your proposal to provide CATV
service in the City of Newport Beach.
Sincerely,
JAMES P. DE CHAINE
Administrative Assistant to the
City Manager
JPD /mj'c
Encl.
CONFIDENTIAL
-
WARNER
BROS. TV SERVICES, INC.
Franchise Fee 3% of Gross$
1,357
$ 3,010
$ 4,666
1501 We
§tcliff Drive, Newport Beach
$ 8,624
$ 9,274
$' 9,825
FIVE YEAR PROTECTION
- NEWPORT BEACH
Office Overhead
25,76.2
28,517
31,277
34,034
36,036
(18,850
DWELLINGS)
39,875
40,794
41,712
Rent - Head' -end Site
900
CUSTOMERS: %
PER YEAR - 15,
15, 10, 5,
5 For 50.3o
Total in Five
Years
900
900
900
Maintenance - Head -end
1,200
1,200
1,200
1967
1,200
1968
1969
1970
1971
1,200
1st Half
2nd Half
1st Half
2nd Half
1st Half
2nd Half
1st Half
2nd Half
1st Half 2nd Half
Estimated Installations:
1st yr., $1,000 mo. after
12,000
12,000
6,000
6,000
6,000
6,000
6,000
New
1,414
1,414
1,414
1,414
942
942
471
471
471 471
® Previous
1,414
2,828
4,242
5,656
6,598
7,540
8,011
8,482 8,953'
Cumulative
1,414
2,828
4.,24.2
5,656
6,598
7,540
8,011
8,482
8,953 9,424
INCOME:
22,855
21,735
20,090
17,780
14,805
Bond Expense
1,505
3,010
4,515
Installation- $12.50 ea.
$ 1 7,675 $
17,675
$ 17,675
$ 17,675
$ 11;775
$ 11,775
$ 5,888
$ 5,888
$ 5,888 $ 5,868'
Monthly Service - $6.50
27,573
82,719
137,865
193,011
238,953
275,691
303,245
321,614
339,983 358,352
Total Gross Income $ 45,248 $100,349 $155,540 $210,686 $250,728 $287,466 $309,133 $327,502 $345,871 $364,240
EXPENSE:
Franchise Fee 3% of Gross$
1,357
$ 3,010
$ 4,666
$ 6,321
$ 7,522
$ 8,624
$ 9,274
$' 9,825
$ 10,376
$ 10,927'
Office Overhead
25,76.2
28,517
31,277
34,034
36,036
37,873
38,957
39,875
40,794
41,712
Rent - Head' -end Site
900
900
900
900
900
900
900
900
900
900
Maintenance - Head -end
1,200
1,200
1,200
1,200
1,200
1,200
1,200
1,200
1,200
1,200
Advertising - $2 , 000 mo.
1st yr., $1,000 mo. after
12,000
12,000
6,000
6,000
6,000
6,000
6,000
6,000
6,000
6,000
Other Promotional &
Sales Expense
16,898
16,898
16,898
16,898
13,594
13,594
10,297
10,297
10,297
10,297
Interest Expense
8,050
12,880
17,745
21,108
22,540
22,855
21,735
20,090
17,780
14,805
Bond Expense
1,505
3,010
4,515
4,515
4,515
4,515
4,515
4,515
4,515
4,515
Installation Cost - $40.00
56,560
56,560
56,560
56.560
37,680
37,680
18,840
18,840
18,840
18,840
**Backbone Cable
48,000
96,000
144,000
144,000
144,000
144 „000
144,000
144,000
144,000
144,000
House Drop Cable
1,485
4,455
7,424
10,393'
12,867
14,845
16,329
17,318
18,307
18,801
Depreciation
1,366
3,098
3,830
4,562
5,176
5,672
6,050
6,310
6,570
6,830
Total Expense $175-083'
$238,528
$295,015
$306,488
$292,030
$297,758
$278,097
$279,170
$279,579
$278,827
*`GROSS PROFIT OR (LOSS) ($129 835)
($138,179)
($139,475)
('$ 95,802) ($
41,302)
($ 10,292)
$ 31,036
$ 48,332
$ 66,292
$ 85,413
*CUMULATIVE PROFIT OR
i
(LOSS)
($268,014)
($407,489)
($503,291)
($544,593)
1$554,885)
($523,849)
($475,517)
($ 409,225)
($323,8121
* Profit or Loss Computed' Before
Taxes.
** 150 miles @ $160 per
mile, per
month.
CONFIDENTIAL
CAPITAL EXPENDITURES & DEPRECIATION
NEWPORT BEACH
1967 1968 1969
lst Half 2nd Half 1st Half 2nd Half lst Half 2nd Half
Capital Expenditures:
Antenna
In House Gear
($10 per subscriber)
Miscellaneous
TOTAL CAPITAL
EXPENDITURES
Depreciation (10 yrs.):
(Head -End Equipment'
& In House Gear)
First Year Expenditure
Second Year Expenditure
Third Year Expenditure
Fourth Year Expenditure
• Fifth Year Expenditure
Sixth Year Expenditure
Seventh Year Expenditure
Eighth Year Expenditure
Ninth Year Expenditure
Tenth Year Expenditure
TOTAL. DEPRECIATION
$40,000
WARNER BROS; TV SERVICES, INC -. • .. -
1501 Westcliff Drive, Newport Beach
1970 1971
1st Half 2nd Half Ist Half 2nd Reff
14,140
$14,140
$14,140
$14,140
$9,420
$9,420
$4,710
$4,710
$4,710
$4,710
500
500
500
500
500
500
500
500
500
500
$54,640
$14,640
$14,640
$14,640
$9,920
$9,920
$5,210
$5,210
$54210
15,210
$1,366 $2,732 $2,732 $2,732
$2,732
$2,732
$2,732
$2,732
$2,732
$2,732
366 732 732
732
732
732
732
732
732
366 732
732
732
732
732
732
732
366
732
732
732
732
732
732
248
496
496
496
496
496
248
496
496
496
496
130
260
260
260
130
260
260
130
260
130
$1,3'66 $3,098 $3,830 $4,562 $5,176 $5,672 $6,050 $6,310 $6,570 $6,839
j•.
MEMD FPM CATV FILIE
WARMER:,*TMS, CATV a
'.
July' 2,..196$ ..;
v a�
At x,Meeting July'1"3th representatives fr6q, Warner Brothers TV Ser
i
4 -ices, indicated, that the T<elepl6Ae Company has imposed .'.fi�6a costs on, a; Warner '
BxlthOrs system in Miasibn Viejb, 4- 64ollows $U per month per; -mile far aver
S
head service, $il' per ,tiacnth, Per `mile, fqz Undergrauttd service and 35 cents per
house drop: Furthermote; Weiner Ia.q eP ink Bated that'. the cable they,'upuld
h stng;tti 1$ewport Beach,'purchased in,; urge quanfitres,:cost, them aft ,the
- neighbothoad of 2''dents .per .fragt k
3
The tnicravolt outtput to De used lay the idartcer ,$rtkt @as system wti�t7d
o ' iop4 q,tandariis as s t faith in.'eeetiott'6064 of the enabl g 'z
ordinaace..?' ht =ena4Ling ,btd ttanCe "A�is fox a .sigKtai level 'of :2,000 .t+ticrovolts `
at the zn -put terlmilala of`each TV receive , and "Warner Brothers
indicates thUx
system• would carry162 microvolts across 75 "okisas (equivalent
1.
to 10 dacibele):;'.,
or ,b3 ?4' decibels ^acres 300 ahms :>. This, suo edmy calls for an,average of
4500 t;ar7,m�,l5microvolts �1 .:�fx $e¢ps 2:65 mic!xaV "Ara' p'er.'each seta.-
y=
a.a.: general ` seYV ce xeement warner Brot aers liar with. she Telephone
v.
' Company requires that they begin constructipdi of their, system within six
months or be aubj ected to haNiiig, their contraet terminated It apps �y f
takss Wetween; one and thfee manihs fare the Public Utilities Comm ss$ot
ecknowaedg '.approV.al bf, thisrya xegment, aad`this can only be dgne a €fir= Ci
franchise his bee irwOkded; �
n it "should be' noted•.that Pacific TYephofrmpany
' doesonot lease the. full ^itse of the gable, <to' Wart ez Brotkieta; rather channe3s
r
'14 .
two "ta thirteen only.- This ii:,in "conformance with Amer3Can Telephone
-graph Cbmpany. policy which Padif'ic Telephti ne' Company' inus.t abide` isy Et ki ERxr uo ,
z .#
the coat¢ial cable used'_in.the WV system is'•single directional',and d aa,nbt'
-.
lend itself -to two directional use.
P!}e Telephone Compaxi y. is, iai' fhe coffituunications business to provide"tgany i
,of add`itioni,l, electronic • seervices discussed- racetitlp. and will lie, .happy to
enter into. an agreement:d €rectly;'with the. City 'fo pravitie some'af these.service8
to the 'City, at nominal cast,: i.e: - dlarm'systems� ;`: closed;. Fiscasit- V fast tscaific <
control.; .'sud pq1 ce harbor surveillance system wheat av4f, :4 1a. co mterC ilp.)
W. G (Bill) Platnsr, c =n +rations cans�ltat 'for Pacii ?t one
and Telegraph,Ot1_ South Mann Street, &aom $141,'Oratxge t(541�T237} will'te
haFPY to-discuss any of tfiese services with the, City. •Fie has .indicat�tk {
"W 242 cable is used by Pacifi4- xe1ephone. for
tmd -way ccttmn} ttica Yfns rfcea ' • ,
and has -a capar3:ty of one' TY ciaaniael per cable..
% Arty other taioayr c iatians ,
would, neeesaitate;,rut2zaing',a dusk set of cables u#iere*er
^servi'ees :xvould, be''.neede& "
:.
Mr' Wi1%isut Clar%,of the_ielephate Company (772 =0006) will b warlc3n
wdtja tits Citp on the =GATE ingtaYlstt on meter arty; Ai 'franghis is wa de4,i ',
r`
,.
r John' Tibet. of'WarnitAkothar"sLTV 'serVices; has suggested #fat a Mr
Dick Connprsaand /oi -Mr.-Nielsen! ,iif the Test and..lnstrutent Division
Si'e ler Zti¢R. gl6etioni t;lpstrnaentatian tPivision..on rodkhurst &s egt.t>a ttei?i}
utigh be;availabl'e. a$ x verg ethical; unbiased,- 'indep ndeut expert n
i #iz4eide tf'Cit}* with iytlfordtati "an' relative tb the_ quality of eith8x op iutia
Proppsed'A#? sy$tems
parently both Connors and Nielsen are farmer =JPL men attd have " ?et�n
sine et&perience in, land line communications
ii
Please complete and return to License Div. City of Newport Beach.
Enclose your check in the t of $25.00 to cover License Fee. Thank You.
07MVV OF NEWPORT BEACA
BUSINESS U E SE AND PE V411T APPLICATION
DATE TIME
FEE
LICENSE NUMBER .
January 12, 1966
s25.00 PERFis, Yr.
TYPE APPLICATION o uszness
-
GATV
�' NEW OCCUPANT
CHANGE OF
❑OCCll PAMC(
BUSINESS NAME I
BUSINESS ADDRESS 1{
PHONE
Warner Bros. T.V. Service, Inc.
�
.,Testcliff at Dover H N.Bch.
642 -3260
NUMBER STREET
OWNERS NAME
RESIDENCE ADDRESS
PHONE
Corporation
LAST FIRST MIDDLE
NUMBER. STREET CITY
APPLICANT NAME
RESIDENCE ADDRESS
PHONE'
John
Frost John
Via Dijon, NEwport Bch.
673 -8263
MIDDLE
NUMBER
APPLICANT'S TITLE X.. OF BUSINESS OWNED
SPOUSE NAME
APPLICA T GIRTy�.PLACE
Salt ake City,
x Vice Pres. & Gen. M 'F. 0%
X Mildred G. Frost
Utah
FORMER OWNERSHIP OR MANAGEMENT LOCATION Subsidiary of:
FORMER LIC. OR PERMIT NO.
4000 Warner Blvd. , Burbank, Calif. (Warner Bros. Pictures Inc,)
NIA
WHEN WILL PREMISES BE AVAILABLE FOR INSPECTION
WHEN WILL THE APPLICANT RE AVAILABLE FOR INTERVIEW
Anytime
Anytime (Bus. Hrs.)
T LOCK MUST BE COMPLETED WHEN THIS APPLICATION IS SUBJECT TO POLICE REVIEW, ANY FALSE, OR THE WITHOLDING OF
INFORM. N MAY SUBJECT THE APPLICANT TO CRIMINAL PROSECUTION,
U.S. CITIZEN?
DATE OF BIRTH.
DESCENT
SEX
AGE
HEIGHT
❑ YES ❑ NO
WEIGHT
HAIR COLOR
EYE COLOR
BUILD
MARKS. SCARS @ TATTOOS
SOCIAL. SECURITY NUMBER
DRIVE DENSE NUMBER
LIQUOR LICENSE NUMBER
ARREST &..CRIMINAL INFORMATION: HAVE YOU EVER BEEN ARRESTED O 1° OOKED" BY A LAW ENFORCEMENT OFFICIAL, OR HELD FOR
INVESTIGATION, OR INDICTED BY A GRAND JURY. OR APPEARED IN COURT ON.. RRANT. EITHER AS A JUVENILE OR ADULT, OR AS A
CIVILIAN OR A MEMBER OF THE ARMED FORCES? IF THE ANSWER IS YES TO ANY' O ABOVE, YOU MUST LIST EACH BELOW AS FOLLOWS:
DATE
PLACE
CHARGE
DISPOSITION
I CERTIFY THAT 1 AM AWARE OF THE PROVISIONS OF THE NEWPORT BEACH MUNICIPAL CODE GOVERNING THIS APPLICATION. AND THAT THE
INFORMATION SUBMITTED. ON THIS APPLICATION IS TRUE AND COMPLETE. 1 REALIZE THAT ANY FALSE, OR THE WITHHOLDING OF INFORMA-
TION MAY SUBJECT ME TO CRIMINAL PROSECUTION AND IS GROUNDS TO DENY OR REVOKE MY BUSINESS LICENSE OR PERMIT. I UNDERSTAND
THAT I CANNOT OPERATE THIS BUSINESS OR CONDUCT THE ACTIVITY FOR WHICH A PERMIT IS REQUIR NTIL A LICENSE OR PERMIT HAS
BEEN ISSUED, 1 UNDERSTAND THAT i AND MY EMPLOYEES MAY BE REQUIRED TO BE F GERPRINTEO AS NOITIONAOF OBTAINING OR RE-
TAINING LICENSE OR PERMIT.
DATE AND SIGNED x
January 12. 1966, 11:5.5 a.m.
TIME SIGNED
- '.APPLICANTS LAWFUL: GNAT E
WITNESSED
FINANCE DIRECTOR OR AGENT
❑APPROVED E] DISAPPROVED
CLEARANCE REQUIRED
REMARKS OR CONDITIONS: ❑ YES ❑ NO ❑ YES. ❑ NO ❑ OYES ❑ NO
❑ ❑
BUILDING MANAGER LICENSE
❑ ❑YES ONO ❑ OYES ONO ❑ ❑YES ONO
ATTORNEY FIRE PLANNING
❑ ❑ YES ❑ NO❑ ❑ YES ❑ NO ❑ ❑ YES ❑ NO
COUNCIL HEALTH POLICE
DATE & TIME OF
DISPOSITION.
SIGNED
APPROVING AUTHORITY .
9
CITY OF NEWPORT BEACH
OFFICE OF THE CITY MANAGER
June 27, 1966
TO: CITY MANAGER
FROM: Administrative Assistant to the City Manager
SUBJECT: CATV FRANCHISE APPLICATIONS FROM WARNER BROTHERS TV SERVICES,
INC., AND COMMUNITY CABLEVISION (IRVINE) COMPANY
RECOMMENDATION:
It is recommended that a non - exclusive City -wide CATV franchise be
awarded to each of the above mentioned applicants. The Attorney's office has
prepared a resolution of intention to accomplish this end, and July 11 may be
set for the public hearing on this matter, if this be the desire of the City
Council. There will thus be no need for open discussion of this matter at the
June 27th Council meeting.
DISCUSSION
I have carefully examined each franchise application and the facil-
ities of each applicant. Both CATV systems, as proposed, would be of excep-
tionally high 'quality. Each system and the equipment to be used would meet
or exceed all standards and conditions required by the CATV Ordinance, Num-
ber 1153, approved by the City Council on April 11, 1966.
Each proposed system has many unique and desirable features. Pref-
erence for one system over the other will largely be a matter of individual
taste. Bearing in mind that no one is required to connect to either system
and anyone may discontinue service from either system at any time, the citizens
and their community associations are perhaps in the best position to determine
which service they would prefer.
WARNER BROTHERS
The CATV'system proposed by 'Warner Brothers 'TV Services, Inc., would
serve the entire City. A five phase program would be followed, whereby the
first section of the City to receive CATV would be West Newport and Balboa
Peninsula. The second phase would include Balboa Island, Bayshores, Corona
del Mar and the existing Harbor View Hills development. Other portions of the
City would subsequently be serviced in such a phasing program as rapidly as
time and conditions would allow.
This system would offer the viewer twelve full color channels for a
basic monthly service charge of $6.50, or $8.25 per month for two TV set con-
nections. The subscriber, of course, has the option of canceling this service
at any time without penalty if he is dissatisfied.
• •
-z-
As the Warner Brothers system would be utilizing a distribution and
amplification system whJ.ch will be owned and maintained by the Pacific Tele-
phone any Telegrt.ph Co:' any, and since the latter company has fixed charges
and rates as approved by the California Public Utilities Commission, it is
uncertain at this time to what extent Warner Brothers must comply with our
ordinance. One of the primary areas of concern is the ordinance provision
which yields the City 3% of the gross revenues from CATV systems. Even if
the state or federal governments at some later date claim they have pre-
empted the field of local CATV systems using Public Utility property and
equipment, and thus rule illegal any payment of revenues to cities where
these systems exist, Warner Brothers has nevertheless consented to enter
into a separate agreement with the City which would assure a continuation
of such revenue payments should any such state or federal controls be imposed
at some later date. Because of the legal implications involved in such an
agreement, this has not been incorporated into their CATV franchise application.
Nevertheless; I strongly recommend that such an agreement be required.
Warner Brothers has further indicated that they will provide and main-
tain this CATV service free of charge to most of the public facilities in the
City'. This likewise has been omitted from the application because of the ob-
vious implications it could have in the City at some future date, like possibly
requiring connections to be installed and maintained on a gratis basis at all
City facilities, including such structures as lifeguard towers. This offer
is a free public service which is often extended to public facilities in com-
munities by CATV,companies.
Exhibit 7, which was omitted from the Warner Brothers proposal pre-
viously submitted to the City Council, is attached and should be made a part
of this proposal.
COMMUNITY CABLEVISION
The Irvine CATV system, as proposed, would basically be oriented to
serve the existing and future residential developments on Irvine ranch property.
However, as their proposal has been amended, they may desire to serve non - Irvine
ranch properties as well. They also contemplate a phasing program, to commence
with the new Harbor View Hills, Cameo Shores, and Cameo Highlands developments.
The balance of the Irvine.system would be installed as rapidly as time and con-
ditions would permit, the phasing to be on a priority basis according to the
needs for service and the economic feasibility of readily serving particular
residential neighborhoods.
This system would have the capability of carrying twelve full color
channels. The original proposal provided for initially serving the subscriber
with ten TV channels plus six studio quality stereo FM radio channels. How-
ever, the amended proposal now calls for twelve full color channels, plus the
stereo FM to be provided immediately. The basic monthly cost for this service
would be $5.00 for either one or two TV set connections. If this service is
subscribed to on a Community Association Plan, the cost is reduced to $4.00'
per month. Again, the subscriber on the individual subscription rate plan has
the same service cancellation privilege at all times.
The Irvine system would be underground where feasible and would be
completely installed and maintained by its Community Cablevision Division.
They would not be tied to the Telephone Company arrangement_ and the various
implications and 'impact which that system may have on the City of Newport
Beach.
Attached is a copy of their amended proposal. In addition to the
changes noted above, this supplemental material includes additional informa-
tion on CATV systems and equipment in general, a simplified explanation of
FCC requirements as these relate to their system, and information on the tech-
nical capabil'<ties and intended uses of their equipment. They have further
indicated informally their intentions of providing gratis public service con -
nections and coverage as indicated in the Warner Brothers- proposal as discussed
above.
OTHER PROPOSALS
The only other proposal having much merit has been submitted on a
rather informal basis by the H & B American Corporation. This is one of
the largest CATV organizations in the nation and has a good reputation in
the industry. However, their interest in serving Newport Beach as an inde-
pendent operation appears to be rather slight at this time, and it would be
well to give first preference to the two competent organizations which have
already submitted formal CATV franchise applications.
CONCLUSIONS
Although it might appear that there would be some possibility of
service duplication by awarding two non - exclusive City -.wide franchises, as
a practical matter there would likely be no such duplication between the two
proposed systems. Each system would commence to provide CATV service at
opposite ends of the City, and would not reach certain areas of common interest
for some time. By then, the citizens and the two companies will have resolved
which system will service any given area and the choice as to who serves where
can be made between the parties concerned at that time. All areas will be
assured of an excellent system, .regardless of which of the two companies pro-
vides the. service. This is certainly one of the most important and overriding
considerations w th which the City must concern itself in awarding such CATV
franchises. Economic factors and the spirit of competition will then deter -
mine which areas of the City will be served by whom.
Yne..� .II any bsie�
JAMES P. DE CHAINE
JPD /mjc
• •
WARNER BROS. TV SERVICES,, INC.
APPLICATION
TO
THE CITY OF NEWPORT BEACH
0
FOR A
FRANCHISE
UNDER CHAPTER 5.44 OF TITLE 5
OF THE NEWPORT BEACH MUNICIPAL CODE
RELATING TO COMMUNITY ANTENNA TELEVISION SYSTEMS
0
•
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CONTENTS
(1)
Applicant's Name and Address
1 -2
(2)
Applicant's Proposed CATV Operation
2 -6
(3)
Subscriber Rates and Agreement
6 -7
(4)
Franchise Payments. .
7 -8
(5)
Public Utility Agreement
8
(6)
Applicant's Organization, Officers, etc.
8 -10
(7)
Applicant's Financial Statement
11
Conclusion
11 -12
• Exhibits:
"l'.'
Map of The City of Newport Beach
112"
System Equipment List and Specifications
"3"
Operational Procedures and Standards
114"
Sales Aid Brochure.
°5"
Proposed Rates and Charges
116"
CATV Rental Agreement (subscriber contract)
"7"
PT &T Letter of Intent
118.01"
Resume of John R. Frost
"8.02"
Resume of William C. Johnston
"8.03"
Resume of Robert E. Bowman
118.04"
Resume of Arnold N. Broyles
118.05"
Resume of H. Donald Howell
"9"
Warner Bros. Pictures, Inc. Annual Report to
Stockholders
1110"
•
Warner Bros. Pictures, 'Inc. CATV Announcement
Card
• •
BEFORE THE CITY COUNCIL OF
THE CITY OF NEWPORT BEACH
In the matter of
WARNER BROS. TV. SERVICES, INC.
Applicant
APPLICATION FOR FRANCHISE
TO CONSTRUCT, OPERATE AND
MAINTAIN A CATV SYSTEM
(Under Chapter 5.44 of
Title 5 of the Newport
Beach Municipal Code)
WARNER BROS. TV SERVICES, INC. (herein called
"Applicant "), wholly -owned by WARNER BROS. PICTURES, INC.
(herein called "the parent company "), hereby makes appli-
cation to the CITY COUNCIL OF THE CITY OF NEWPORT BEACH
for a franchise (to the extent such franchise may be
required) to construct, operate and maintain a community
antenna television (CATV) system in the CITY OF NEWPORT
BEACH and in support of such application, submits the
following information:
(1) Applicant's Name and Address
1.01 Applicant's name is WARNER BROS. TV
SERVICES, INC. Applicant is a Delaware corporation with
its principal office at No. 100 West Tenth Street,
Wilmington 99, Delaware. Applicant is a wholly -owned
subsidiary of the parent company which is also a Delaware
corporation.
•
1.02 Applicant °s principal office in The
City of Newport Beach (and its main operations office)
is in the Newport National Bank Building (Suite 216),
1501 Westcliff Drive, Newport Beach, California,
(Telephone: Area Code 714: 642 - 3260).
1.03. Applicant's head office for corporate
affairs is in New York City, c/o Warner Bros. Pictures,
Inc., 666 Fifth Avenue, New York, New York 10019
(Telephone: Area Code 212: CIrcle 6- 1000), and it
also has certain facilities and personnel of the parent
company's Burbank, California, studios and offices
available to it at 4000 Warner Boulevard, Burbank,
California 91503 (Telephones: Area Code 213: 469 -1251
and 848- 6621).
(2) Applicant's Proposed CATV Operation
• 2.01 Applicant's proposed CATV system in
the City of Newport Beach is, for the purpose of this
application and particularly for the purpose of estab-
lishing construction, completion and "in service" dates
and particularly for the purpose of fixing raters, not
only installation char es but monthly service charges
as well, really two (2) separate systems: The first
(and the one upon which A plicant's dates and rates
herein proposed are based) is for those areas which
will be served entirely by an aerial system. The
second, as to which dates and rates must necessarily
be fixed later (with, of course, the approval of the
City Council) is that which serves subscribers, in
whole or in part, with underground facilities. The
rates and dates with regard to the underground portion
of the system will require additional engineering
studies not only by Applicant but by the PT &T and,
upon completion of those,studies, Applicant will sub-
mit the findings and the proposed dates and rates f6r
the City's approval.
2.02 Subject to 2.01 hereof, Applicant
proposes to furnish its CATV service to the entire
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•
City of Newport Beach, making it available in six
separate phases as installation progresses. The first
phase will be undertaken promptly and, depending upon
the availability of equipment and services and the
processing of necessary permits and the obtaining of
necessary authorizations, subject, of course, to the
intervention of occurrences (such as strike, fire,
storm, etc.) over which Applicant has no control,
should proceed as follows (with reference to the date
the franchise award is accepted);
(a -1) Antenna and head -end equipment
installations will be completed
within 60 days.
(a -2) Construction (by the Pacific Tele-
phone and Telegraph Company --
'PT &T °) of the amplification and
distribution system, including the
feeder lines and the distribution
lines to permit home connections
for the first 200 or more sub -
scribers, will be completed within
60 days.
(b) Testing for 15 days after (a), to
permit service to start after 75
days.
(c) Construction of the entire amplifi-
cation- distribution system and the
making of home connections would
continue with reasonable diligence
to completion.
At the same time as construction, etc., is proceeding
in phase 1, the construction of the amplification and
distribution systems for phases 2, 3, 4, 5 and 6 would be
undertaken, on a staggered date basis, to the end that
home connections would be made and service commenced
within a reasonable period of time thereafter. A map,
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showing the areas encompassed by each of the six separate
phases, is attached marked Exhibit "1." The foregoing
pertains to the aerial ortion of the system only
(as noted in 2.01 above and will necessarily be
subject to unknown or unforeseen contingencies, some
of which contingencies, at least, are matters which
may, as construction of the system progresses,
require the combined attention of the PT &T, the
City Engineering Department and Applicant. The
time schedule for the amplification and distri-
bution system, to be designed, installed and main-
tained by the PT &T (see 2.04 below), will of course
be within the control of the PT &T. Applicant has
been assured, however, that the PT &T can and will
(subject to the contingencies above noted and sub -
ject to 2.01 above) meet the schedule requirements
herein set forth.
• 2.03 Applicant's facilities will be
designed to furnish to each private, home television
set connected to the system, twelve (12) full -color
channels. A copy of Applicant's System Equipment List
and Specifications is attached marked Exhibit "2" and
will in every respect conform with or exceed the
requirements of Section 5.44.150 of the Municipal
Code. A copy of Applicant's Operational Procedures
and Standards is attached marked Exhibit "3,"
2.04 Applicant's proposed system is unique
in that it will be comprised of Applicant owned and
operated antennae and head -end facilities and home con-
nections but the distribution and amplification system
(including feeder and distribution lines) will be owned
and maintained by the PT &T. The use of the distribution
part of the system will be made available to Applicant
under a so- called "channel service agreement" referred
to in more detail in section (5) of this application.
Applicant, upon the authority of qualified engineering
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•
studies and opinions, believes that its system, although
costly to install and to operate, will assure sub-
scribers in The City of Newport Beach of',the least
inconvenience in the matter of installation, the best
competence in the matters of design, installation:,
maintenance and operation and the best possible results
in television reception. (See also paragraph 2.07
hereof.) The PT &T's record and experience in land
line communications for over 90 years, its high per -
formance standards and its exacting specifications for
equipment and materiel, combined with Applicant's valued
reputation in the entertainment business assure the City
of the very best quality of performance and service
available. As a matter of fact, after extended tech-
nical studies in the light of problems peculiar to The
City of Newport Beach, Applicant is convinced and, based
upon such convictions represents, that the only practical
means by which the entire City can be adequately served
is by a distribution system designed, installed and
maintained by the PT &T.
2.05 Because of Applicant's channel serv-
ice method of operation, it,Wll not, itself, use any
® poles, wires or conduits, public ways or public property
except to the limited extent that may be necessary
between Applicant's antenna tower and its head -end equip-
ment site. Indeed Applicant's agreement with the PT &T
will not permit Applicant to use the poles, wires, con-
duits, etc. of the distribution part of the system, for
which, of course, the PT &T already has authority under
its so- called "Statewide franchise,"
2.06 A general description of Applicant's
proposed service and methods of operation, including
questions and answers on subjects of interest in con -
nection with a CATV system installation and operation,
in the form of a printed sales aid brochure is attached
marked Exhibit "4,"
2.07 Outside consulting engineers and
contractors (other than those on Applicant's staff
mentioned in paragraph 6.04 hereof and other than
those available through Applicant's relations with
the PT &T) whose services and capabilities are used
by Applicant in designing, constructing and installing
and in subsequently maintaining its CATV systems
include San Diego Engineering Company of San Diego,
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0
• •
California; Kaiser -Cox Corporation of Phoenix,
Arizona; Graham Sound Company of Costa Mesa, Cali -
fornia, and Dike & Colgrove, general contractor,
also of Costa Mesa. As already mentioned, the
facilities and services of the PT &T'will also be
utilized in.the design, construction, installation,
operation and maintenance of Applicant's system.
2.08 Applicant's parent company will
furnish the legal and accounting services incidental
to Applicant's proposed system for The City of New-
port Beach and, through the parent company, Applicant
will have access to information and specialized serv-
ices (relating to, for example, subjects such as
copyrights, Federal Communications Commission reg-
ulations, State Public Utilities Commission regulations
and the like) in New York, Washington, Sacramento, and
at other points,which services are not generally or
readily available to most CATV operators.
(3) Subscriber Rates and Agreement
3.01 A copy of Applicant's proposed
rates and charges to subscribers for installation
and services is attached marked Exhibit "5•" The
rates and charges set forth in Exhibit "5" are appli-
cable only to that portion of Applicant's system
that is wholly aerial'as set forth in -2.01 hereof.
Rates with respect to areas serviced, in whole or in
part, by underground facilities, subject to the City's
approval, will be fixed after completion of detailed
engineering studies. For extraordinary circumstances,
however, such as underground cable requirements, or
more than 150 feet of distance from trunk line to
connection of service to subscribers, or other diffi-
culties in making installation or maintaining service,
Applicant would make additional charges. All of
Applicant's installation charges are and will be
based upon PT &T's charges to Applicant which, in turn,
are governed by California State Public Utilities Com-
mission requirements. It should be noted here that
M
• •
Applicant's proposed charges, therefore,, because they
are related to PT &T's charges to Applicant, may vary
depending upon the PT &T °s final cost figures, so should
be considered as estimates only, subject to adjustment.
However, Applicant's installation charges in every
Instance will be at or below its actual cost and.its
overall charges are fair and reasonable and designed
to meet all necessary costs of the service.
3.02 A copy of Applicant's form of sub-
scriber agreement (captioned "CATV RENTAL AGREEMENT ")
is attached marked Exhibit 116." The rates specified in
Exhibit 116" will be effective only as to those portions
of Applicant's system serviced entirely by aerial facil-
ities. Rates in areas serviced by underground facilities,
subject to the City's approval, will be established upon
completion of detailed engineering studies. (See 2,01
hereof.)
3.03 If granted a franchise, Applicant's
installation charges and monthly service charges to
subscribers would not vary, whether the term of the
franchise is for 15 or 20 years, although Applicant
advocates and requests that the term of the franchise
be for 20 years. (The Orange County franchise granted
Applicant runs for 25 years.)
(4) Franchise Payments
4.01 Applicant proposes to pay, as an accept-
ance fee to The City of Newport Beach, if it is granted
and accepts the franchise, the sum of Five Thousand
Dollars ($5,000.00), payable upon acceptance of such
franchise, said acceptance fee, however, to be an advance
against (and recoverable by Applicant only out of) annual
franchise fees first coming due. Applicant has had a series
of discussions with :PT &T representatives as to engineering
problems, costs and rates, and, although (as already indi-
cated -in paragraph 2.01 and other paragraphs herein cost
analyses are not yet complete, it is now apparent that the
heavy capital requirements for Applicant's proposed CATV
system will make it financially inadvisable to pay an
acceptance fee not recoverable out of annual franchise fees.
4.02 Applicant, if it is granted and
accepts the franchise, will pay annually to The City
of Newport Beach during the life of such franchise
an annual franchise fee equivalent to three per
(3 %) of'Applicant's gross receipts derived from sub -
scribers within the City, payable as provided in
-7-
E
Section 5.44.050(b) of the Newport Beach Municipal
Code.
4.03 If granted a franchise, the amount
of Applicant's acceptance fee proposed in 4.01 above
and the amount of Applicant's annual franchise fee
proposed in 4.02 above would not vary whether the germ
of the franchise is for 15 or 20 years, although
Applicant advocates and requests that the term of the
franchise be for 20 years.
(5) Public Utility Agreement
5.01 Applicant has concluded arrangements
with the PT &T for a channel service agreement for the
main distribution system (see 2.04 hereof) which PT &T
will, upon the granting of a franchise to Applicant,
install in accordance with the specifications of
Exhibit "2" attached, which specifications Applicant
has worked out in consultation with, among others,
PT &T's engineers. PT &T has already entered into a
similar agreement with Applicant which was approved
by the California Public Utilities Commission on
April 26, 1966 for a CATV system in the Mission Viejo
(Laguna Hills) area of Orange County, which system is
in operation under Applicant's 25 -year franchise from
Orange County, Ordinance No. 2046.
5.02 Applicant's channel service agree-
ment with PT &T for Applicant's CATV system for The City
of Newport Beach is presently in preparation by attorneys
for the PT &T based, in principle, upon Applicant's sim-
ilar contract as to the Mission Viejo system noted in
5.01 above. A copy of PT &T °'s letter of intent to
Applicant in this regard is attached marked Exhibit
(6) Applicant's Organization, Officers, etc.
6.01 Applicant is a wholly - owned subsidiary
corporation of Warner Bros. Pictures, Inc. The parent
E
11
company has been engaged in the business of pro-
ducing and distributing feature motion pictures,
television films and (through another subsidiary
corporation) phonograph records for many years.
6.02 Applicant, a Delaware corporation,
on December 1, 1965, qualified to do business in
the State of California as evidenced by the Certificate.
of Qualification of the Secretary of said State, exe-
cuted on said date.
6.03 The names and addresses of Applicant's
principal officers and directors are:
JOHN R. FROST
Vice President &
c/o Warner Bros.
Newport National
Suite 216
General Manager and Director
TV Services, Inc.
Bank Building
1501 Westcliff Drive
Newport Beach, California
P. D. KNECHT
Secretary and Director
c/o Warner Bros. Pictures, Inc.
4000 Warner Boulevard
Burbank, California
H. E. HOLMAN
Treasurer and Director
c/o Warner Bros. Pictures, Inc.
4000 Warner Boulevard
Burbank, California
BRYAN S. MOORE
Director
c/o Warner Bros. Pictures, Inc.
4000 Warner Boulevard
Burbank, California
The office of President of Applicant is presently
vacated due to the recent death of Applicant's President,
Mr. E. L. DePatie.
0
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6.04 Mr. John R. Frost, Applicant's
General Manager, will directly supervise Applicant's
Newport Beach CATV system, if this application is
granted. A brief outline of Mr. Frost's professional
experience and qualifications is attached marked
Exhibit 118.01". Applicant's Director of Engineering,
Mr. William C. Johnston, will supervise, working
closely with consulting engineers and with engineer-
ing personnel of the PT &T, the design, installation,
ope- ration and maintenance of Applicant's CATV system
for The City of Newport Beach, if this application
is granted. A copy of a resume of Mr. Johnston's
professional and personal background and experience
is attached marked.Fxhibit 118.02 ". Mr. Robert E.
Bowman, Applicant's Director of Marketing and Adver-
tising, will be in charge of Applicant's subscriber
solicitations, advertising and publicity in the fran-
chised area and a copy of his resume of experience
and qualifications is attached marked.Exhibit "8.03 ".
Other members of Applicant's organization who will
take an active part in the establishment, develop-
ment and operations of Applicant's CATV system in
this area if Applicant is granted a franchise are
its Systems Analysts, Mr, Arnold N. Broyles and
Mr. H. Donald Howell. Copies of outlines of their
experience and qualifications are attached marked
Exhibits 118.04" and 118.05," respectively. In
addition to the foregoing, if this application is
granted, Applicant will engage the exclusive, full
time services of a qualified individual as Systems
Manager who, also, will be headquartered at Appli-
cant's Newport Beach head office and who will have
the direct, day -to -day responsibility for the
operation of the system.
6.05 Applicant will, with the PT &T, as
noted, design, install and maintain the CATV system...
Applicant is not acting or posing as a front or rep-
resentative for any other person, firm, group or
corporation.
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• •
(7} Applicant's Financial Statement
7.01 Applicant, as noted in 6.02 above,
has recently been qualified to conduct the business
of furnishing CATV and related services,, has in
operation a CATV system in the Mission Viejo area
(as noted in 5.01 above) pursuant to a county -wide
franchise granted Applicant in Orange County by
Ordinance No. 2046, and, as noted in 6.01 above, is
a wholly -owned subsidiary of Warner Bros. Pictures,
Inc. Applicant's expenses in installing, maintain-
ing and operating its CATV systems, including that
for The City of Newport Beach (if this application
is granted) will be furnished by the parent company.
7;02 A copy of the parent company's most
recent Annual Report to the Stockholders (containing
a financial statement of the parent company) is
attached hereto marked Exhibit "9.11
® 7.03 As a further indication of the
parent company's active interest, financial as well
as otherwise, in Applicant's affairs, there is
attached marked Exhibit "10," the parent company's
announcement card of its entry, through Applicant,
into the CATV business.
Applicant believes it is qualified to
render proper and efficient CATV service in accord-
ance with the system proposed in this application
to television viewers and subscribers in The City
of Newport Beach and requests favorable consideration
of this application. Tn the event "new developments
come to Applicant's attention after the date of this
application, Applicant respectfully reserves the
right to supplement this application accordingly.
Should the Council desire any additional facts or
have any questions, the Applicant would be pleased
to submit supplemental information either in writing:
or orally, as the Council may prefer, and, in that
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connection, requests the opportunity to attend and,
if appropriate, to be heard at the hearing on this
application. If Applicant is granted a franchise,
it will promptly reimburse the City for expenses
incurred by it in publishing legal notice and ordi-
nances in connection with the granting of such a
franchise, in accordance with the provisions of
Section 5.44.160(c) of the Newport Beach Municipal
Code.
Dated: September 29, 1966.
Respectfully submitted,
WARNER BROS. TV SERVICES, INC..
By
. D. Knecht
Secretary
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WARNER BROS. TV SERVICES, INC.
SYSTEM EQUIPMENT LIST
The following list represents the equipment used in a typical Warner Bros.
TV Services, Inc. CATV System. Until complete system design has been
accomplished, specific units of the system cannot be specified. Those
items identified by an asterisk ( *) are the major units of equipment required
and previously used in other Warner Bros. Systems.
Tower and Antenna Equipment
1 Rohn #SS type, 80' galvanized self- supporting tower
1 Rohn #FGH -A2 antenna support tube
3 Cross arm assemblies
* 10 Jerrold "J series" VHF antennas
* 2 Jerrold #J -3'065 B -72 UHF antennas
Head -End Equipment - Twelve Channels
3 California Chassis equipment cabinet complete with exhaust
blowers, AC wiring strips, blank panels, raceways, etc.
3 Jerrold #PEP - 1000, power entrance panel
* 12 Jerrold #COM, Channel Commander units
* 12 Bud Chassis slides for #COM units
* 2 Jerrold #504ST, crystal controlled UHF to VHF convertors
* 1 Jerrold #PPS -8A pre - amplifier power supply
* 3 Jerrold #TPR, pre- amplifiers
Distribution System (Pacific Telephone and Telegraph Company)
Jerrold Starline Amplifiers
(Note: Spaced throughout system, number unknown at this time)
Western Electric Coaxial Cable, CA -3002H
(Note: Proprietary to telephone company)
SKL Multi -taps
EXHIBIT 2
•
6 -1 =66
L-1
WARNER BROS. TV SERVICES, INC.
OPERATIONAL PROCEDURES
As is evident from the System Equipment List and Specifications
(Exhibit 2 ), a WARNER BROS. TV SERVICES, INC. CATV SYSTEM utilizes
the highest quality materials and equipment available. Not only is the
functional capability of this equipment excellent, the equipment is
designed and constructed to provide long -term, trouble -free service.
Basically, these procedures discuss how Warner Bros. TV Services,
Inc. will handle service problems when they do arise and outlines the
extensive preventative maintenance program in effect on our systems.
The amplification and distribution system is designed, installed'
and maintained by Pacific Telephone and Telegraph Company. The same
operating policies, philosophies and maintenance procedures so success-
fully used on your telephone system apply to our distribution system.
All troubles in this portion of our CATV system receive the same prompt
and efficient attention we have all learned to expect and get on our tele-
phone service. As an example, the distribution system, being pressurized,
allows for automatic warning signals to be transmitted directly to the
telephone company's emergency repair center.
Warner Bros. TV Services, Inc. has adopted, wherever applicable,
the telephone company procedures for operation and maintenance of our
portion of the system_. Because the subscriber does have his own tele-
vision receiver, which is, as you know, subject to periodic trouble,
Warner Bros. TV Services, Inc. thoroughly indoctrinates the subscriber
how to report reception problems and provides trained personnel to
analyze from such report wherein the trouble lies. The National Com-
munity Television Association states in excel =s of 98% of service calls
on TV cable systems are the result of TV receiver trouble rather than
trouble with the cable serving the receiver. When it is determined the
trouble is with the subscriber's receiver, the subscriber is so informed
and advised to call his TV repairman.
EXHIBIT ..3_,
Warner Bros. TV Services, Inc.
• Operational Procedures
Page Two
1]
May 18, 1966
Since Warner Bros. TV Services, Inc. has no intent or desire
to enter into the television set repair business and in fact is prohibited
by law to engage in this business, no attempt will ever be made to
influence the subscriber's choice of TV repair service.
Our preventative maintenance program follows the practices well
established over the past several years by the electronics industry
in the fields of communications (PT &T), computers, aerospace and
automation systems. In accordance with the equipment manufacturers'
recommendations, the system equipment will receive scheduled,
periodic inspections and tests. In addition, the system performance
will be verified every three months at the outlet of a specified sample
of the system subscribers. Test equipment and instruments for these
tests will be calibrated and certified to by a licensed certified test
laboratory. Warner Bros. TV Services, Inc, will submit these test
results to the City Engineer or other designated city agency for approval.
Every six months the system will be verified by an outside, independent
certified laboratory of the city's choice. Costs of these verifications
to be paid by Warner Bros. TV Services, Inc.
The head -end electronics system is monitored continuously 24
hours a day, seven days a week to insure proper function. This is
accomplished by 'utilizing telephone circuitry provided by Pacific Tele-
phone Co. Automatic trouble indicators produce signals which are
transmitted directly to our master control center. The nature and loca-
tion of any trouble is immediately identified by this warning system.
Warner Bros. TV Services, Inc. has a complete operational spares
inventory which assures expeditious handling of any system problems.
The inventory includes complete major assemblies such as, channel
commanders, amplifiers, pre - amplifiers, converters (UHF to VHF),
etc. Spare vacuum tubes, resistors, capacitors, transformers and
other detailed parts are always in stock.
Warner Bros, TV Services, Inc. maintenance personnel are
highly trained technicians. All maintenance will be done according to
established written procedures. Only top quality tools, instruments
and rolling stock will be used by our maintenance crews. These crews
will operate under rules and policies established by the Public Utilities
Commission.
EXHIBIT 3
U
6 -24 -66
0 0
Warner Bros. TV Services, Inc.
Operational Procedures
Page Three
A definition of responsibility for interconnection of facilities
between Warner Bros. TV Services, Inc. and PT &T as set forth in
the contract between the parties for Mission Viejo is quoted hereafter.
Same or similar provision will be in the contract between PT &T and
Applicant if it is successful in obtaining the franchise. The above
mentioned contract has been approved by the California Public
Utilities Commission and accepted for filing by the Federal Communi-
cations Commission.
The provision reads as follows:
"6. Interconnection of facilities. Interconnection of facilities
of Telephone Company with facilities of Warner Bros. or its subscribers
shall be made as follows:
(a) At the studio of Warner Bros. or other agreed upon location,
where Warner Bros.' input shall be (1) standard television (or FM)
broadcast signals received off the air, in which case connection
between the Telephone Company combiner and the equipment of Warner
Bros. shall be made by Telephone, Company, or (2) baseband signals
(video and audio or audio only ), in which case the equipment to
modulate video or audio signals on a broadcast carrier frequency for
transmission, will be provided by Telephone Company at customer
option for additional charges to be, specified when furnished.
(b) At each drop termination on a grounded terminal block
furnished by Telephone Company on the outside of the premises of subscri-
bers of Warner Bros, where connection between the drop. of Telephone
Company and the equipment of Warner Bros. or its subscribers shall be
made by Warner Bros., Warner Bros. shall provide, without charge,
space in its studio or other input location, and electrical wiring,
power and power outlets for the equipment of Telephone Company.
Warner Bros, or its subscribers shall furnish, install and
maintain a matching transformer and all other equipment and facilities
beyond the drop termination of Telephone Company at the premises of
subscribers of Warner Bros.
EXHIBIT 3
• 9 -1 -66
® WARNER BROS. TV SERVICES, INC.
OPERATIONAL STANDARDS
The CATV System shall be designed, installed and maintained in a manner
to provide subscribers with high grade television service. In determining
the satisfactory extent of such standards, the following system specifi-
cations among others shall be considered:
(a) The system shall be capable of del- ivering all NTSC color
and monochrome signals to standard EIA television receivers,
both monochrome and color and FM receivers without modi-
fications or other attachments. The signals shall be distri-
buted to individual subscriber's television sets without
noticeable degradation of color fidelity, picture information,
audio distortion or cross channel interference.
{b) The system shall be designed and rated for continuous 24 hour
day operation under temperature and environmental conditions
encountered in the area.
(c) The system shall be designed to provide a 3162 microvolt
• (as measured across 75 ohms) level input to the subscriber's
house drop, and shall provide a nominal 4500 microvolt
(as measured across 300 ohms) level input to the terminals
of the subscriber's television set.
•
(d) A system signal -to -noise ratio shall be not less than 46 db
as measured on any of the VHF television channels.
(e) The hum modulation of the picture signal observed at any
point throughout the system shall be less than 5 %.
(f) The voltage standing wave ratio (VSWR) shall be no greater
than 1.4 to 1. Echoes or ghosts shall be down 40 db from
incident signals on all trunk and feeder cables.
(g) Cross modulation components shall be down 57 db minimum
and no visible components of video shall appear on a blank
white screen on any channel of the system with all other
channels operating with modulation at their rated levels.
EXHIBIT 3
9 -1 -66
Warner Bros. TV Services, Inc.
Operational Standards
® Page Two
(h) The frequency response of the system shall be flat plus or
minus 3 db from 54 to 216 megacycles on all -band systems
and from S4 to 108 megacycles on low -band systems: The
amplitude variation of the signals shall not deviate in excess
of plus or minus 2 db over any 6 megacycle bandwidth of any
television channel.
(i) Radiation from the coaxial cable or electronic equipment
shall not exceed the limitation imposed by the Federal
Communications Rules and Regulations. Properly installed
coaxial cable and electronic equipment .shall have. a radiation
level of less than 10 microvolts per meter at 10 feet as
measured across 75 ohms.
(j) The audio carrier level of each television channel shall be
adjusted for a minimum of 17 db below the level of any
adjacent video carrier.
REFERENCE MATERIAL AND INDUSTRY STANDARDS relied upon by Applicant
for the aforementioned "Operational Standards" are in part based upon the
is following excerpt from Applicant's contract with PT &T for Mission Viejo.
The contract, including such standards, has been approved by the California
Public Utilities Commission and accepted for filing with the Federal Com-
munications Commission. Same or similar provision will be in the contract
between PT &T and Applicant if it is successful in obtaining the franchise.
It reads as follows:
0
"7. Frequencies and levels of signals. Channels and drops furnished
by the Telephone Company as specified in Exhibit A shall be suitable
for transmitting RF television signals and FM broadcast signals, to
substantially reproduce Warner Bros.' input sound and picture quality
at Telephone Company's drop terminations. Telephone Company faci-
lities shall furnish a nominal 3162 microvolts across 75 ohms ( +10
dbmv) at the.grounded terminal block on the premises of subscribers
of Warner Bros.
The levels referred to above are to be measured at the video
carrier frequency of the weakest VHF channel. The remaining channels
shall have the level of their video carrier no more than 7 db above this
specified level.
EXHIBIT 3
® 6 -24 -66
Warner Bros. TV Services, Inc.
Operational Standards
® Page Three
Unless otherwise specified, signals shall be transmitted to
Telephone Company facilities by Warner Bros. at the following levels:
0
(a) Standard broadcast television signals, nominal +45
dbmv at Channel 13 picture carrier frequency, (211.25 mc)
with other picture carrier outputs adjusted by Warner Bros.
to the same or lower, levels as required by the Telephone
Company. The sound carrier on each channel shall be at
least 12 db below the video carrier. Once established,
these levels shall be maintained within plus or minus 0.'5
db by the automatic gain control in the signal processing
equipment. Mixing networks shall be provided to combine
signals for proper transmission.
(b) FM broadcast signals, nominal +15 dbmv;
(c) Baseband video television signals, one volt peak to
peak; and
(d) Baseband audio signals, zero dbm."
EXHIBIT 3
•
WARNER BROS. TV SERVICES, INC.
NEWPORT NATIONAL BANK BUILDING
1501 WESTCLIFF DRIVE
NEWPORT BEACH, CALIFORNIA 92660
TELEPHONE: (714) 642 -6880
RENTAL & RATE SCHEDULE FOR TV SERVICES*
INSTALLATION (ONE TIME ONLY CHARGE): MONTHLY SERVICE RENTAL CHARGES:
Installation Charge for First
Outlet Connection
Installation of Each New or
Additional Outlet
Reconnection Charge (Applicable
if Service is Suspended)
Service Rental Charge
$12.50 for One Set $6.50
Service Rental Charge
8.50 for Each Additional Set 1.75
* Please Note: The installation costs
10.00 and charges may vary, depending upon
location, construction, installation and
individual servicing circumstances.
FM service, providing excellent reception of more than 20 stations, is also available for
®customers who enjoy FM multi -plex and stereo entertainment. Rates quoted upon request.
Payment for services is set up on a bi- monthly basis, payable in advance.
Service will be connected upon payment of installation costs and the first two months
service charge,
REMEMBER.... THE INSTALLATION CHARGE IS A ONE TIME ONLY COST!
A minimum installation charge is $12.50. This amount would cover installation of service
for one TV set. If you had a second set that you wished to have hooked up, there would
be an additional charge of $8.50 for installation. Therefore, total installation charges
for two sets would be $21.'00. Monthly service rental for one set is $6.50. Rental service
for two sets is $8.25 per month.
NO LONG TERM COMMITMENTS! .... WARNER BROS. TV SERVICES, INC. believes that it
must, provide excellent television service to assure continued customer satisfaction.
There is no requirement that you, the equipment renter, must stay on the WARNER BROS.
TV SYSTEM if dissatisfied for any reason. Therefore, you may feel free to accept or reject
the service at any time without worrying about continuing rental obligations. The only
agreement you are required to sign authorizes Warner Bros. TV Services, Inc. to install the
service, acknowledges the installation has been made, and explains the details of main-
tenance and operation of the system.
•
EXHIBIT 5
•
• i
D�I
DATE
1ST INITIAL 2H
CITY
DATE SERVICE BEC
INSTALLATION DAl
ACCESS ADDRESS:
APPROVED By
INSTALLED BY:
( "Warn
Cal !for
Somath
receivi
has the
month.
of the e
days' v
THE "
i
E- XHIBIT 6
icn Cir n�P 4P yfRY 1C GVIt'a. 1
1 o9cn I etiaR herellrl Ni a ile athel
rr ri 'tan cue +cell: er hall ba u
c1 4 nC
CO3 4x"2,1 f or ot(, -rw Se alter
I: s 4 IYT7P WILL. NOT ANT, MLL
r' rE ep repair, adE,gs a�aec' o.
-r —H be =aie'y to sP r --ib,e #or a1
I +ester, ss "cal „p ar3YSOers and tba sn
.,t_ n'erfemnces, otc.,. #sere c
e ., k'¢i- ^ter e,d Sts avihl
st,�i3arien, it @{sect i. n; tepai
.redo fmm oil clams whia#t .Fe: c
'm `.?sation efc. on tatsr.irtntio,
,. r e1 7 3ze,t3te Chy of CEi C
-, crem. es fur .s.a h p p,,,• e.
r th i'c the Ijr' d" i
=r a. It -rreo F. 14 I.-er mu
: ny s?, „ft
,r the sy%tm, iI whole or par
e .-I
•se dhereof k, del t ;d 'bYuvngr
1 d dc� rt �n gaainst :oat filird P071y or p.
'Wome v.,al YlOtb
tc -,itf' ✓r,r �r,� ,ar.t'e of Its O. e1 s i`igk
s:.r ,E a£'N:xrrtt is re'iettca. rrr 'my
non first a: -y third Gc: *iris
or nti;eet3'y from arr ac; ar irmi
"d oa` pe,mif nikees'.o %a_e toce;vers it
8 a r-r,. =.ar,.s or far any pvfp. =e wha§sc
INSTRUCTIONS:
HOUSE DROP INSTA
APPROVED By
INSTALLED BY:
( "Warn
Cal !for
Somath
receivi
has the
month.
of the e
days' v
THE "
i
E- XHIBIT 6
icn Cir n�P 4P yfRY 1C GVIt'a. 1
1 o9cn I etiaR herellrl Ni a ile athel
rr ri 'tan cue +cell: er hall ba u
c1 4 nC
CO3 4x"2,1 f or ot(, -rw Se alter
I: s 4 IYT7P WILL. NOT ANT, MLL
r' rE ep repair, adE,gs a�aec' o.
-r —H be =aie'y to sP r --ib,e #or a1
I +ester, ss "cal „p ar3YSOers and tba sn
.,t_ n'erfemnces, otc.,. #sere c
e ., k'¢i- ^ter e,d Sts avihl
st,�i3arien, it @{sect i. n; tepai
.redo fmm oil clams whia#t .Fe: c
'm `.?sation efc. on tatsr.irtntio,
,. r e1 7 3ze,t3te Chy of CEi C
-, crem. es fur .s.a h p p,,,• e.
r th i'c the Ijr' d" i
=r a. It -rreo F. 14 I.-er mu
: ny s?, „ft
,r the sy%tm, iI whole or par
e .-I
•se dhereof k, del t ;d 'bYuvngr
1 d dc� rt �n gaainst :oat filird P071y or p.
'Wome v.,al YlOtb
tc -,itf' ✓r,r �r,� ,ar.t'e of Its O. e1 s i`igk
s:.r ,E a£'N:xrrtt is re'iettca. rrr 'my
non first a: -y third Gc: *iris
or nti;eet3'y from arr ac; ar irmi
"d oa` pe,mif nikees'.o %a_e toce;vers it
8 a r-r,. =.ar,.s or far any pvfp. =e wha§sc
•
THE PACIFIC TELEPHONE AND TELEGRAPH COMPANY
June 9, 1966
Warner Bros. TV Services, Inc.
Newport National Bank Building,
Westcliff and Dover Drive, Suite 216
Newport Beach, California
Attention Mr. Bryan S. Moore
Gentlemen:
This will acknowledge receipt of your order for channel services
for a community antenna television system in the City of Newport
Beach.
• Subject to the availability of services and facilities, and our
final agreement as to the terms and conditions covering the
furnishing of these services, and subject to prior approval of
the regulatory body having jurisdiction.in the matter, we shall
be pleased to furnish these services to you.
RECE[VEO
JUN 10 1966
Wanw Bra.
•
�Sincerely,
W. G. Plainer
Communications Consultant
EXHIBIT 7
t ���
.,.w
EXECUTIVE OFFICES •
WARNER BROS.
BURBANK, GAL.
P �D�
TV ,
SERVICES, INC.
NEWPORT NATIONAL BANK BLDG.
WESTGLIFF AT DOVER. DR.
JOHN R. FROST NEWPORT BEACH, CALIF.
VICE PRESIDENT
AND GENERAL MANAGER June 10, 1966
Mr. James P. DeChaine
Assistant City Manager
City of Newport Beach
3300 Newport Blvd.
Newport Beach, California
Dear Jim:
Confirming our telephone conversation of this date, I am
enclosing 10 copies of Pacific Telephone Company's Letter
of Intent dated June 9, 1966. This letter states Pacific
Telephone Company's agreement to furnish Warner Bros.
TV Services, Inc. with channel services for the Newport
Beach area.
Will you please make this Letter of Intent part of our
formal, application to the City of Newport Beach (Exhibit 7) .
Best regards.
JRP:jc
cc: Bryan S. Moore,.Esq.
Encl.
Very truly yours,
TELEPHONE
(914') 642 -3260
V ER BROS. TVIERVICES, I
f 1
r 4
TgI-Il*Ft:V2 "T�..
Vice President & General Manager
E'l
EXECUTIVE OFFICES
WARNER BROS.
BURBANK;. CAL.
TV
SERVICES,. INC.
NEWPORT NATIONAL BANK BLDG.
WESTCLIFF AT DOVER DR.
JOHN R. FROST NEWPORT BEACH. CALIF.
VILE PRESIDENT
AND GENERAL MANAGER May 19, 1966
Mr. James DeChaine
Assistant City Manager
City of Newport Beach
City Hall
Newport Beach, California
RE: Warner Bros. TV Services, Inc. -
Application for CATV Franchise
Dear Jim:
TELEPHONE
(]I4) 642 -3260
Enclosed herewith for submittal to the Newport Beach City Council are 15 copies
of Warner Bros. TV Services, Inc. application for a CATV franchise in the City of
Newport . Beach under Ordinance No. 1153. There are some incompletions in our
application which are noted below.
Additional Warner Bros. Pictures, Inc. Annual Reports (Exhibit 9) are presently en-
route from New York. We hope to have them available for you no later than Monday.
Also, our Letter of Intent (Exhibit 7) from the Pacific Telephone Company is in the
midst of preparation and will be submitted to you as soon as possible. In that
regard; Pacific Telephone Company's attorney has been on vacation and will be back
in his office on Monday. Therefore, it might be as late as Wednesday when the
Letter of Intent can be submitted to you.
For your information, Pacific Telephone Company takes the position that contracts
of this nature with people such as Warner Bros. are deemed to be confidential.
However, their Letter of Intent to Warner Bros. will be a statement of fact.
If any further information is deemed necessary, please let us know immediately.
If you have any questions, please do not hesitate to call on us.
Sincerely,
WARNER BROS. TV SERVICES, INC.
i
v J¢HU R. FROST
IV ice President & General Manager
4f�
JRF: j c
Encl.