CABLE PRIMER: LOCAL AUTHORITY OVER CABLE SYSTEMS
FRANCHISE TRANSFERS
Local franchise authorities normally have broad discretion to approve or disapprove a cable
franchisee request to transfer the franchise. The filing of a transfer request does not entitle a
municipality to renegotiate its franchise. However, it does provide an opportunity to insist that
the community receive the full benefits of its bargain with the existing operator. This usually
takes two forms. The selling operator should bring its system into compliance with existing
ordinance and franchise requirements. And the buying operator should serve the community in a
manner that is fully equivalent to the promises by the first operator.
In the course of the transfer process, the parties are often able to resolve long-standing disputes
either directly or through renegotiation of franchise terms. In cities which receive a transfer
application when the franchise has expired or is about to expire, it may be possible to make
resolution of renewal issues a condition of approving the transfer.
Operator claims about the transfer process are too often based upon canards. Local franchise
authorities are advised to fully apprise themselves of the relevant law. For example, operators
often claim localities are limited by federal law to reviewing a transferee's financial, technical
and legal qualifications. In fact, case law suggests that localities may have broad authority under
federal law to grant or deny a transfer request. Charter Communications, Inc. v. County of Santa
Cruz, 304 F.3d 927 (9th Cir. 2002) (finding, among other things, that "a municipality exercising its
discretion concerning a cable franchise acts legislatively and that, under California law,
legislative acts are within the county's 'regulatory or police power' and are entitled to judicial
deference"). Of course, a locality could limit its review authority by negotiating restrictive
language in its own franchise, and state law might also limit local authority. City of Thousand Oaks
v. Verizon Media Ventures, Inc., 69 Fed.Appx. 826 (9th Cir. 2003 ? not selected for publication)
(finding franchise as drafted did not require approval of sale of cable system assets).
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