Buyout clouds cable service

AT&T Broadband’s buyout of the Northland cable TV franchise on Bainbridge Island will require approval by the city.

And before giving that okay, city officials say, they want to resolve some long-standing issues, including a dispute over the 6 percent utilities tax.

“We have not yet discussed that issue with them,” city Administrator Lynn Nordby said, “but I expect it to come up. I do know that there are other communities where AT&T pays both a franchise fee and a utility tax.”

The discussions will begin soon. The sale is contingent upon closing taking place before the end of the year, said Mike Roberge, operations manager for Northland’s western division.

Details of the transaction, first announced last week, are still sketchy – including the type services and programming that the new outfit will provide, and whether the local cable office on High School Road will remain open.

“It’s too early to say what we will and will not be offering,” said Steve Kipp, spokesman for AT&T Broadband. “We are examining the system now, and considering what we will do.”

Roberge said the deal started with an unsolicited offer from AT&T.

“The property was not listed for sale, and we did not have any specific plans to sell it,” he said. “But in the corporate world, everything is in some sense for sale, and when we looked at the deal, we thought it was in the best interests of our customers, employees and shareholders.”

The purchase price for the 6,500-subscriber system was not disclosed.

AT&T’s Kipp said the purchase was a natural part of the process of consolidation.

“We try to cluster properties in geographic areas to provide economies of scale,” he said. “We operate in Bremerton now, and are the largest cable provider in western Washington.”

While Roberge said there were no specific discussions about whether the local office would stay open – the office deals with billing, and is a dispatch point for service trucks – he “anticipates” that most of Northland’s Bainbridge employees would “transition” to the new owners.

While Kipp said that AT&T does offer such services as high-speed cable Internet services and digital cable to some of its subscribers, he did not know whether such options would be offered on Bainbridge.

At one point, Northland offered high-speed Internet through a third-party provider, but that firm went out of business last year and the service was abandoned.

Kipp also declined to comment specifically on whether AT&T would continue local-access Channel 6, where Bainbridge Island Broadcasting shows city council meetings, high-school sports and a variety of other home-grown programming.

“Generally, you honor the existing franchise agreement,” Kipp said. “Just because you have a sale doesn’t mean the franchise requirements go away.”

Tax dispute

In this case, though, Northland and the city have had a long-standing disagreement about what the franchise requirements are.

In late 1999, after voters passed Initiative 695 to kill the value-based Motor Vehicle Excise Tax, the city imposed a 6 percent utility tax.

Northland refused to pay, claiming that the original 1970 franchise agreement between the City of Winslow and local cable TV founder George Gregg called for payment of a franchise fee in lieu of all other taxes. Northland bought the system from Gregg in 1983.

The city, though, claimed that the agreement had expired, and had effectively not been renewed.

Northland collected the disputed tax, but refused to pay the city, saying it would file suit to contest the tax. It promised to refund the money to its customers if it was successful.

No such suit was filed, Roberge said, and the money is still being held. Roberge declined further comment, saying the whole matter is “under negotiation” with the city.

The city had sought an amended franchise agreement that would include such elements as service standards. No amendments were ever actually made, though, and both sides accused the other of ignoring their efforts to reopen discussions.

Approval of the franchise transfer would require a city council resolution. Nordby said the issue will likely be introduced at tonight’s council meeting, and a hearing scheduled in the near future.

“I’m sure the tax dispute and the future of Bainbridge Island Broadcasting are two of the questions we will be asking them,” he said, “and there will no doubt be others.”

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