CAN TV in Financial Trouble, City to Determine Station's Future

Medill News Service

Published May 26, 2004

By Anna Christine Gorski

Several Chicago aldermen hope to save the city's cable access television station by using city funds to support it.

An ordinance that would provide Chicago Access Network Television -- better known as CAN TV -- with $2 million is pending before the City Council's finance committee. The money would come from the fees that Chicago cable franchisees are required to pay the city.

CAN TV is currently funded directly by the three city cable franchisees. But when one cable provider, RCN, filed for bankruptcy earlier this year, it put CAN-TV's future in jeopardy. If the proposed ordinance is passed, it would secure CAN-TV’s future and perhaps allow it to do something it hasn’t done in years -- expand.

"Basically, it changes the rules of the game as far as how CAN TV is funded," said Mitchell Szczepanczyk (pronounced shchih-PINE-chick), of Chicago Media Action, an organization that supports independent media groups.

He is cautiously optimistic about the ordinance's chances, noting that the Chicago Cable Commission passed several resolutions demanding RCN make good on payments it owes to CAN TV. The station has been battling to collect money from RCN for nearly three years.

"There’s some momentum behind this ordinance," Szczepanczyk said.

CAN TV started in 1981 as the city's public access cable station. Its programming is noncommercial, and more than 90 percent focuses on local issues.

"CAN TV really does embody the local public voice," said Barbara Popovic, the station's executive director.

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The aldermen use CAN TV's five channels to talk to their constituents through call-in shows. Citizens also can book air time to voice their views or provide entertainment.

The value of CAN TV, according to Szczepanczyk, is that audiences can get local and off-beat programming that is too financially risky for profit-driven companies to produce.

Jake Austen has been the producer of "Chic-a-go-go," a dance show for kids of all ages, since it first aired in 1996. He has produced more than 360 episodes.

The show, which is broadcast twice a week, features diverse Chicagoans dancing to an equally diverse range of music. Grandparents boogey with their grandchildren to punk rock. African Americans polka with Polish Americans.

The value of public access TV, Austen said, is that the station's programs are not pressured by having to produce financial results.

"It’s really key that [CAN TV] does not judge what kind of show you’re doing," Austen said. "In a live television show, there are a lot of mistakes. But it doesn’t matter. It captures the energy . . . that’s what’s important about TV . . . having spirit and sincerity."

Popovic said because cable competition is fading in Chicago, her station’s income is threatened. Currently, there are only three cable providers in Chicago -- WideOpenWest, Comcast and RCN. The city is divided into five geographic service areas, and the companies can bid on contracts to run cable in any, or all, of the areas. Often, the cable companies serve customers in more than area.

CAN TV's budget depends on cable competition. Each company pays CAN TV $215,000 a year for each area they serve. The more the cable companies compete for customers in overlapping areas, the more money CAN TV gets.

But one company, RCN, has defaulted on several payments and now owes CAN TV $1.2 million, according to Popovic. The city funding would guarantee CAN TV financial security.

Under the proposed ordinance, the cable companies would still be required to pay the $215,000 fees to CAN TV, but the city would supplement that money with additional funding that comes from the franchise fees paid to the city. Unlike the $215,000 flat fees, the franchise fees cable provides pay the city grows proportionately with the companies’ profits.

Popovic said about 75 percent of the nation’s public access stations are funded through city budgets.

Supporters of the ordinance point to the notorious relationship CAN TV has had with RCN as an example of why the flat fee funding formula is flawed.

In late 2000, RCN was awarded a contract to lay 676 miles of cable throughout Chicago's West Side over five years. But within a year, RCN asked for more time. Then they began defaulting on payments to CAN TV.

After eight months of negotiations, the Chicago Cable Commission, RCN and CAN TV agreed to collect RCN payments in two cable areas and suspend payments in two other areas for another year. On Sept. 3, 2002, RCN paid CAN TV $645,000 plus interest, just one day before the City Council was expected to begin fining the company $750 per violation area.

But by last December, RCN had built less than five miles of cable and was trying to get out of its contracts. The deferred payments that came due to CAN TV in January -- along with another $215,000 payment -- were not paid.

Representatives of RCN could not be reached for comment.

So far, CAN TV has not taken any legal action to recover the money RCN owes. But Popovic said CAN TV's board of directors has not ruled out a lawsuit as an option.

If the ordinance does not pass, CAN-TV stands to lose at least 40 percent of its operating budget. Popovic said CAN TV operates on an "already rather modest" annual budget of $2.4 million a year.

For its part, the Chicago Cable Commission, which oversees the city's cable contracts, has fined RCN more than $1 million a day for its contractual violations. If the city lets RCN out of its contracts, four-fifths of the city's cable television customers would have not a choice but to use Comcast.

According to Popovic, CAN TV hasn’t received any of the fine money the city has collected from RCN.

Chicago Media Action began urging people two weeks ago to call Mayor Richard M. Daley and the aldermen and ask them to support the ordinance.

Austen said because of CAN TV's financial crisis, many employees are nervous about job security. He said although no services have been cut yet, the cable access station hasn't been able to expand, either.

"CAN TV might wither on the vine and perhaps die," Szczepanczyk said. "You could call this a do or die moment."

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