At the last minute, CAN TV plugged in
City, aldermen agree to compromise ordinance that will cover most of CAN TV’s budget shortfall

Chicago Journal
Published October 7, 2004
By Haydn Bush, Staff Writer

For much of the last year, the operators of CAN TV have fretted while beleaguered cable provider RCN, in the midst of bankruptcy proceedings, has ducked out of agreed-upon payments to the cable access station, cutting into its roughly $2.4 million annual budget. Barbara Popovic, CAN TV's executive director, has mulled massive staff cuts with her board of directors while considering losing up to 40 percent of her annual funding.

With the news that a compromise agreement had been reached between Mayor Daley and Chicago City Council divert 5 percent of the city's cable franchise fees to CAN TV-roughly covering the cost of RCN's defaulted payments- Popovic sounded positively thrilled this to week to put aside the prospect of layoffs with a deal that should keep the station afloat for the time being. The agreement is expected to be approved by the City Council in November.

"We've got a ways to go yet," Popovic said last week, adding, "it really does show the city has stepped up and said we're going to make sure we take care of our city in the future."

Initially, aldermen led by 50th Ward Alderman Bernard Stone had supported giving CAN TV a 20 percent cut of the city's tax on cable operators and ending the current arrangement whereby the cable station supports itself primarily on separate payments from companies such as RCN and Comcast. Under the terms of last week's agreement, CAN TV will continue to receive payments from Comcast and the far South Side cable firm Monster-around $1.7 million annually-while hauling in 5 percent of the city's cable franchise tax, or $665,000, roughly the amount bankrupt RCN has neglected to pay this year in agreed-upon payments. CAN TV's annual budget is in the area of $2.4 million.

"Sure it's less," Stone said this week, but added, "It will make up the budget deficit of CAN TV ... If Barbara's satisfied then I'm satisfied."

Stone added that RCN, which owes the city $9 million and CAN TV hundreds of thousands of dollars, is in negotiations currently to repay a large portion of its debts with both entities.

"I have the feeling that the RCN claim with the city will be settled very shortly," Stone said.

As part of the franchising agreement that had allowed RCN to operate in Chicago, the cable company had agreed in December 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 lakefront cable area 1 where nearly all of its Chicago customer base is located.

The new city ordinance would likely ease RCN out of service agreements outside of cable area 1, which is the only area where RCN offers consis-tent service, save for 1,400 cus-tomers in Presidential Towers in area 2. While CAN TV is still short on monies promised by RCN to cover capital expenditures, Popovic is willing to call victory when she sees it.

"The annual amount of cash... we've lost this year is close to a million," Popovic said. "What the ordinance does is help close that gap."

Of some $1.2 million earmarked for the cable station this year, RCN has only forked over around $100,000 while neglecting to pay another $645,000 for operating expenditures, Popovic said.

The ordinance, Popovic said "acknowledges we have a failed funding structure.

"Our board was facing the not very happy prospect of trying to plan a 2005 budget without knowing what funding" was available, Popovic added. While the capital funding issues are still unresolved, "this helps right the ship and gets us started" in the right direction, she said.

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