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SUM C"Ole $-.;I" 'IIC!'S. :nc. 116(;1 1 1 1 ! ~ s ~ r r e BOWlevarQ ( (Les AnCe!S C,aJ.fcrr:a : ; . o C 2 5 ~ 7.!8 '" '(213):11-2-5::::0

William A.. Sc:.I'!alnkllf....durrnan B:. Broad

\

1985

Council.',\Ioman Joan :\U1ke FloresHonorable C ~ a i r p e r s o n of t.1.e Industryan d Economic Development C o m m i t ~ E e City Hall200 Nor!h Spring Street, Room 237Los Angeles, California 90012Re: South Cent!'al Cable Television Frane:1iseDear Councilwoman Flores:You have requested that we submi\: final documentation on the availability of$';6 ::nillion to constr'..lC!, equip and ope!'ate the South Central Cable Tele"'v"1sionF!'anchise within ninety days following the :vlarch 1, 1985 decision of the Prefer!'ed Commu::.ications ' lawsuit by the Nim:h Circuit Court of Appeals. Thedecision by the Ninth Circ".li! indicated thE! City of Los Angeles is violating t.'leFirs\: Amr:1endment througr: its prccedure relative to South Cent!'ci Los AngelesCable Tele"isior: Franchise and ser:t the case back to lower court fo r t!"ial onfactual de:ails.A f ~ e : : , a careful re',iew of the decision a . . ~ . d th e sur:-ounGing facts associated wi,::the case by us and our financial :ende::,s. we have concluded that until t t is matter is satisfac!oral:y resolved, it c o n t i n u l ~ s to have an adverse affec! on thereasonable expectatio!1s voJe had whe!1 we submitted our bid and on the ter::1S a::-.dcor.ditions of our performar:.ce unGer the Franc::ise. As YOll recall. the PreferredCommuricatior:.s' lawsu:, was filed af:er our '::lid had bee!1 preparec.. after t ~ e bidwas submined ar:.d after the Fra..."1chise h4Hi '::lee!1 awarc.ed to ACCESS.We believe. and have beer:. told by our lende!'s, that the Lawsui: places a cloudover the Franchise. (Please note the attac:::ed letters from our co-agents. Sec:::.rity Pacific Bank and :Ylorgan Guaranty Ba'::l.k). This cloud must be removed '::lefore we ca-"1 proceed.In good fait.'1, we have ex;:ended over Sl million toward this Franc::ise si!1ce 1982.W o r ~ - { : n g diligently, we have over-:::ome :;:;ury obstacles. For example. afte!" theFranc::ise was awarded. the Depar":ment ci ',vate!' and Power and Pacific Teiep::'oneCo;npany stated publicly to the Inc.:.:st:::: and Economic Developcer:.t C o m r . ; i ! ~ e e ofCity Counc:l that they felt that the " m a J { i ~ - r e a d y ' ! costs for th e South Cer:tr8..lc3.ble television plant would excess S13 m:l'!..i.on. This. of course, bea:.::'s no resem

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C9unc i1'."oman "Toan .l. e ....... -" ; : ' 1 0 ~ o S (-' " Ap:r..l 25, 1985Page T'Noblance to the pro foI"':'nas and rate sC!1edu]e submit:ea In ou:::- bie.. Our numbe!"s we!"e those C"..ls"cma.."";..ly utli::ed by cable com::lar.ies ::"""1 -:...."1e Los Ang:elesarea. Af:e!' in excess of six m o n ~ h s of me':!tings herseen t:-.e D e p a r : : : : 1 ~ n t ofWate!' and Powe!', Pacific Telephone and ourselves, i n c ~ ' . . 1 d i n g substant.al fieldtestings and act'..lal st!':mding of cable of desig::.ated cit:, blocks. we !'eac!1.edan uncers-canding conce!'::ing the " m a k e - ! ' ~ a d y " costs. T::e D e p ~ t : - : : : l e n t ofWate!' and Powe!" and Paci:ic Telephone stated publicly that the costs wouldnot be g!'eate!" than the $:!,500/rnile we had originally bid.We appreciate the confidence you have demonstrated and your will.ingness towork with us towards resolution of many difficult issues that have occur:::-ec.We also undel.'stand your ime!'est in having' the system constructed as quicklyas possible. We recognize our obligation to facilitate th e construction and ope!'ation of the system unde!' the terms of th e Franchise agreement. We cont:nueto have confidence and fai-:..1. in the ultimate success of a cable televi.sion fra:1cl'.ise system in South Cent!'al Los Angeles and would lL'1{e to continue to par!icipate if you believe our involvement would assist rathe!" than r.inde!' the project.I f , howeve!', un de!' the circumstances, ou.r removal from the project is the onlyway to fac!litate the system's immediate cans:ruction and ope!'ation. we would bewilling to assist you in such a tra."1sition i ~ n whatever ways would be helpful toall parties. We are prepared to step aside in favor of another ope!'ator whowould provide immediate and full pe!'!orrnan.ce unde!' the te!':':lS of the Francl'.iseag:-eement from thei!' own funds. We will c:oope!'ate 'rVith you in any way you decide provided that you have a cornmit:Tlent to ope!'ate the system acco!'ding to t!::ecur:::-ent specifications of the Fra.nchise ag:!:":eme:1t. Howeve:::-, fai: -r :ess would bean issue if aite!' we stepp ed aside you were a s ~ e d to adopt :nodi::ed ter:-:1S andcondi::or.s tha: would h a ~ : e f a c : : : t a ~ e d ou!' fina...."1cir:g had such te:::-::1S been availab:ee a . r . : . . i e ~ Alte::-r:a:i':ely, if based or:. the c::::-:::'..1:-:1stancEs tha: exist today. you would like toconti:--.ue to work 'Nith us. we would be '.villing to enter into nego'C.a-cions with theC::v of Los Ang:-::les towards a new ag::-een::ent to orovide limited se!""":i.ce to po:-::'or:.sof th e syste:-n \ ~ e and ou::- ba.nks deem reasonably' p!"'..ldent at :his time, per.di::;.gthe :ir.al outcome of th e lawsdt.

s i r ' 4 ~ f ' ' ' l ~ . . P "lh.:...:a.."":1 . ~ . ~ c r : . a l : - - _ \ ( e ! ' . reS1GentSur:. Cable Se:-vices. Inc.

cc: Charles F!::-esi:one. Chai::-ma."1. Telecomm'Jnicat:ons Commission Susan He:::-man. :'lar.3.g'e!'. TelcQrnmudc::l'c.ons Deoart::1ent Don Howe!"""], G ~ n e : : - a . c ;.Iar.age!", Depar:ment of Transpor:ation

I:.}..: .....FOR IDf.NTl'fICA.nON-

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- " , - - , - H,'Mor,;;a;'1 ' ~ : . . . 4 ......;sr :"';ri"":Catiy c, .... ew YCrKReo,eser:a:",,,, ceJ, !-'aYWocC :aVi$Vice p ~ S j c e n r

The., .pr:'l .... -+,.\:lorzan.....Bank

Mr. William A. S ~ ~ i n k e r President Sun Cable Services, Inc. 11601 Wilshire Boulevard Los Angeles, CA 90025 Dear Mr. S ~ ~ a i n k e r :

In response to your inquiry L'le fol1owing sets f o r ~ ' 1 our pos: t ion inregard to fil1ai.i.cing t . . ~ e South Central C a b l l ~ T'J' f r a n c . . ~ . i s e .

I t is our Wlderstanding that any s,ectle!Jlent of the law suit brought byPrefer:-ed Communications against t..'le City of Los Angeles is s t i l l in doubt.The uncertainty precludes Morgan Gu,aranty from ::laking any financingccrmnic:nent at this tii:le part icularly as pe:1.ciing l i t igat ion could aifec-=. ournocal sec'Jreci fina..."1cing of cable TV loans.

Slncerelv,i: / '!: ' !// \ { ~ , 1 ' ~ / '

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SECURITY PACIFIC NATIONAL BANK

April 16, 1955

Mr. William A. S c ~ a i n k e r Presi:1e:JtSun Cable Se:'ilces, Inc.11601 WilShire BoulevardLos Angeles, C a l i f : ~ ~ i a 90025Dear Mr. S c ~ a i n k e r :

In res:cnse to your inqulry the llow:ng se:s for::1 ourP:Slt:C:1 rela:lve :0 finafcing S:ut:1 Central CaJ:e Te Ev:sicnFrancnlse. I t is : ~ r uncers:an:ing t:1at any s e : : ! e ~ e n : c tne1""', C : : : : i ' ~ - ~ . , . . - . , . - - . - ; 100.\ Or"',.-..:-.,..Y"> ... ,...-- [' '-- v U ' : : " ~ ..)j ,,::::;::::.,::::"'; I . . l , . , l i . r : L . . l n I C ' : : ' ~ . l , . , n s . .::. , , ; ; ; ~ 1.. ' ,1_.," , U ,Lcs An;e:es is s : ~ ! : in eQuct. ThIS unCertaInty preClucest ~ l S : : ~ e , p a r : i : ~ l a r y as ~ e n c i n g l i : i ~ a : i c n couie a ~ f e c : ournOr771cl sec:..:rec Tlna:lC C7 c : : televls!cn loans.

Ycurs very

Vicit: ?res:ce:::HOH:e:VIA 1- 3 Messen;e: Se:Vl:e

- - - F - O - R - I D - E - N - : : ' T l ~ ~ ~ ~ ; o r ~ lY .___

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