RCN Files for Bankruptcy
Meanwhile, the cable provider still owes more than a million dollars to public-access station CAN TV

Chicago Journal
Published August 12, 2004
By Haydn Bush, Staff Writer

For CAN TV executive director Barbara Popovic, the news this week that Chicago's RCN cable provider is following its parent company into bankruptcy is just the latest in a string of moves the cable giant has orchestrated to shortchange the cable public access station headquartered in the West Loop.

Over the last two years, Popovic has watched RCN attempt to avoid paying an estimated $1.275 million she says it owes CAN-TV, and she's wary of the latest restructuring via Chapter 11 bankruptcy.

"We're extremely concerned and very disappointed this situation has gone on for so long," Popovic said. "This plan wasn't hatched yesterday It's been in the making for a long time."

RCN Cable TV of Chicago Inc., formally filed for bankruptcy Aug. 5, joining its parent company, New Jersey based RCN, which filed for bankruptcy in May but had until now left its Chicago operations out of its Chapter 11 reorganization.

"We remain committed to our customers and employees in our Chicago market," said Tom McKay, RCN assistant general manager in Chicago. "We are optimistic that the city will help us execute on our strategy to provide choice and competition for our customers."

In a written statement, Norma Reyes, commissioner of the city's Department of Consumer Affairs, called the bankruptcy filing "curious" and said the company "has consistently refused to negotiate in good faith with the city and CAN TV to reach an equitable settlement." She added, "We also want see RCN made to fulfill its financial obligations to CAN TV."

As part of the franchising agreement that had allowed RCN to operate in Chicago, the cable company had agreed in December 1, 2000 to pay a yearly fee of $215,000 to CAN TV for every cable area it operates in; in theory, RCN competes with Comcast in cable areas 1-4. CAN TV survives primarily on franchising fees from cable companies, and needs at least two cable operators to support its operations in all five of the city's franchising areas.

RCN, though, fell behind in 2002 on payments in three of those areas-for a total of $645,000, or 40 percent of CAN TV's budget-excluding the lucrative north lake- front cable area 1 where nearly all of its Chicago customer base is located. RCN later paid up after the city of Chicago threatened to fine the corporation, but now owes $1.275 million, which includes both deferred franchising payments and capital improvements from 2003 as well as its regularly scheduled franchising payments to CAN TV in 2004 in areas 2-4. The company is also due for an additional $300,000 capital improvement payment to CAN TV later this year, Popovic said.

So far this year, Popovic said RCN has paid only $5,000 of the $215,000 it is obligated to pay CAN TV in area 2, which covers portions of the Near West Side. In that area, RCN's customer base is limited to 1,400 subscribers in Presidential Towers, she added.

With nearly 40 percent of CAN TV'S revenue coming from its agreement with RCN, Popovic says the station is, for the moment at least, dependent on the cable company paying up. The only other hope for the station's continued survival, Popovic says, is a plan sponsored by 50th Ward Alderman Bernard Stone to have the city set aside the cable access fees from money it receives each year in cable franchising fees. That would come to about $2.5 million, or 20 percent of what the city reaps in cable franchise fees, and is around the total amount that CAN TV needs to operate each year. That effort passed the City Council Finance Committee in June, and will likely come to a vote before the full council during budget approval proceedings Sept. 1.

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