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06-09-14-R
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06-09-14-R
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8 <br /> <br />as part of the formal renewal process. The financial statements sent to the IRS reflecting the <br />NSAC as a non‐profit organization is not relevant to the financial qualifications of Comcast to <br />hold a franchise in the member cities. <br /> <br />Comcast’s proposal also relies on an assertion by Mr. Elson on page 22 of his report that <br />the NSCC and NSAC held $2.1 million in cash and cash equivalents in reserves and demands that <br />half of this “reserve fund” be distributed to the member cities and counted toward the capital <br />grants to the cities proposed by Comcast. Mr. Elson and Comcast apparently fail to recognize <br />that the various NSCC and NSAC checking and money market accounts are not static. While <br />there may have been $2.1 million collectively at one point in time in these accounts, that is not <br />the case at this point in time. Two of the accounts, one for NSCC and one for NSAC, were <br />checking accounts used for daily operations. They will ebb and flow as funds go in and funds <br />are expended. One of the money market accounts is a $250,000 letter of credit required by our <br />lease because of the uncertainties of the franchise renewal process. Another account included <br />in the “reserves” is a deferred revenue account that holds the PEG funds to be used in the next <br />calendar quarter. <br /> <br />In addition, Comcast and Mr. Elson fail to consider the value of having reserves available <br />to cover large capital expenses that are not annual, such as the over $500,000 in capital <br />improvements required when CTV North Suburbs had to move out of its former location and <br />lease space in a new office building, or when it has to replace 10 cameras in two mobile <br />production trucks and five cameras in the studio, or purchase new servers for video and office <br />storage. In short, having financial reserves to cover extraordinary or unexpected expenses is, in <br />fact, a good thing, and it is inappropriate for Comcast to suggest how much those reserves <br />should be and how the funds should be distributed. Those are NSCC and NSAC board decisions. <br />The proposal is for future cable related needs and interests. The use of the current PEG <br />obligations is under the current franchise agreement, and they are not required to be used to <br />offset any future cable related needs and interests. This is a practice that is entirely reasonable <br />and under the control of the Board of Directors. <br /> <br />Recommendation <br /> <br />The NSCC/NSAC recommends that the NSCC Renewal Committee and the NSCC Board <br />recommend to the Member Cities that the Member Cities make a preliminary assessment that <br />the Comcast Franchises should not be renewed based on this supplemental staff report <br />including the additional consultant’s reports, because the Comcast proposal does not meet the <br />future cable‐related community needs and interests, taking into account the cost of meeting <br />such needs and interests. Further, staff is very concerned that, by adopting the Comcast <br />Proposal, the NSCC and the member cities will be under franchise terms that will unfairly <br />benefit Comcast. Many of the Comcast proposed franchise terms will limit enforcement by the <br />NSCC and the member cities or will reduce the financial penalties for Comcast’s failure to
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