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William A.. Sc:.I'!alnkllf
....durrnan B:. Broad
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1985
Council.',\Ioman Joan :\U1ke Flores
Honorable of t.1.e Industry
and Economic Development
City Hall
200 Nor!h Spring Street, Room 237
Los Angeles, California 90012
Re: South Cent!'al Cable Television Frane:1ise
Dear Councilwoman Flores:
You have requested that we submi\: final documentation on the availability of
$';6 ::nillion to constr'..lC!, equip and ope!'ate the South Central Cable Tele"'v"1sion
F!'anchise within ninety days following the :vlarch 1, 1985 decision of the Pre
fer!'ed Commu::.ications
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lawsuit by the Nim:h Circuit Court of Appeals. The
decision by the Ninth Circ".li! indicated thE! City of Los Angeles is violating t.'le
Firs\: Amr:1endment througr: its prccedure relative to South Cent!'ci Los Angeles
Cable Tele"isior: Franchise and ser:t the case back to lower court for t!"ial on
factual de:ails.
a careful re',iew of the decision the sur:-ounGing facts associated wi,::
the case by us and our financial :ende::,s. we have concluded that until ttis mat
ter is satisfac!oral:y resolved, it to have an adverse affec! on the
reasonable expectatio!1s voJe had whe!1 we submitted our bid and on the ter::1S a::-.d
cor.ditions of our performar:.ce unGer the Franc::ise. As YOll recall. the Preferred
Commuricatior:.s' lawsu:, was filed af:er our '::lid had bee!1 preparec.. after bid
was submined ar:.d after the Fra..."1chise h4Hi '::lee!1 awarc.ed to ACCESS.
We believe. and have beer:. told by our lende!'s, that the Lawsui: places a cloud
over the Franchise. (Please note the attac:::ed letters from our co-agents. Sec:::.r
ity Pacific Bank and :Ylorgan Guaranty Ba'::l.k). This cloud must be removed '::le
fore we ca-"1 proceed.
In good fait.'1, we have ex;:ended over Sl million toward this Franc::ise si!1ce 1982.
diligently, we have over-:::ome :;:;ury obstacles. For example. afte!" the
Franc::ise was awarded. the Depar":ment ci ',vate!' and Power and Pacific Teiep::'one
Co;npany stated publicly to the Inc.:.:st:::: and Economic Developcer:.t of
City Counc:l that they felt that the costs for the South Cer:tr8..l
c3.ble television plant would excess S13 m:l'!..i.on. This. of course, bea:.::'s no resem
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Ap:r..l 25, 1985
Page T'No
blance to the pro foI"':'nas and rate sC!1edu]e submit:ea In ou:::- bie.. Our num
be!"s we!"e those C"..ls"cma.."";..ly utli::ed by cable com::lar.ies ::"""1 -:...."1e Los Ang:eles
area. Af:e!' in excess of six of me':!tings herseen t:-.e of
Wate!' and Powe!', Pacific Telephone and ourselves, substant.al field
testings and act'..lal st!':mding of cable of desig::.ated cit:, blocks. we !'eac!1.ed
an uncers-canding conce!'::ing the costs. T::e of
Wate!' and Powe!" and Paci:ic Telephone stated publicly that the costs would
not be g!'eate!" than the $:!,500/rnile we had originally bid.
We appreciate the confidence you have demonstrated and your will.ingness to
work with us towards resolution of many difficult issues that have occur:::-ec.
We also undel.'stand your ime!'est in having' the system constructed as quickly
as possible. We recognize our obligation to facilitate the construction and op
e!'ation of the system unde!' the terms of the Franchise agreement. We cont:nue
to have confidence and fai-:..1. in the ultimate success of a cable televi.sion fra:1
cl'.ise system in South Cent!'al Los Angeles and would lL'1{e to continue to par!i
cipate if you believe our involvement would assist rathe!" than r.inde!' the project.
If, howeve!', unde!' the circumstances, ou.r removal from the project is the only
way to fac!litate the system's immediate cans:ruction and ope!'ation. we would be
willing to assist you in such a tra."1sition whatever ways would be helpful to
all parties. We are prepared to step aside in favor of another ope!'ator who
would provide immediate and full pe!'!orrnan.ce unde!' the te!':':lS of the Francl'.ise
ag:-eement from thei!' own funds. We will c:oope!'ate 'rVith you in any way you de
cide provided that you have a cornmit:Tlent to ope!'ate the system acco!'ding to t!::e
cur:::-ent specifications of the Fra.nchise ag:!:":eme:1t. Howeve:::-, fai:-r:ess would be
an issue if aite!' we stepp ed aside you were to adopt :nodi::ed ter:-:1S and
condi::or.s tha: would ou!' fina...."1cir:g had such te:::-::1S been availab:e

Alte::-r:a:i':ely, if based or:. the c::::-:::'..1:-:1stancEs tha: exist today. you would like to
conti:--.ue to work 'Nith us. we would be '.villing to enter into nego'C.a-cions with the
C::v of Los Ang:-::les towards a new ag::-een::ent to orovide limited se!""":i.ce to po:-::'or:.s
of the syste:-n and ou::- ba.nks deem reasonably' p!"'..ldent at :his time, per.di::;.g
the :ir.al outcome of the lawsdt.

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lh.:...:a.."":1 reS1Gent
Sur:. Cable Se:-vices. Inc.
cc: Charles F!::-esi:one. Chai::-ma."1. Telecomm'Jnicat:ons Commission
Susan He:::-man. :'lar.3.g'e!'. TelcQrnmudc::l'c.ons Deoart::1ent
Don Howe!"""], ;.Iar.age!", Depar:ment of Transpor:ation
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FOR IDf.NTl'fICA. nON
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Mor,;;a;'1 ......;sr :"';ri"":Catiy c, .... ew YCrK
Reo,eser:a:",,,, ce
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.\:lorzan
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Bank
Mr. William A.
President
Sun Cable Services, Inc.
11601 Wilshire Boulevard
Los Angeles, CA 90025
Dear Mr.
In response to your inquiry L'le fol1owing sets our pos: tion in
regard to fil1ai.i.cing South Central T'J'
It is our Wlderstanding that any s,ectle!Jlent of the law suit brought by
Prefer:-ed Communications against t..'le City of Los Angeles is still in doubt.
The uncertainty precludes Morgan Gu,aranty from ::laking any financing
ccrmnic:nent at this tii:le particularly as pe:1.ciing litigation could aifec-=. our
nocal sec'Jreci fina..."1cing of cable TV loans.
Slncerelv,
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SECURITY PACIFIC NATIONAL BANK
April 16, 1955
Mr. William A.
Presi:1e:Jt
Sun Cable Se:'ilces, Inc.
11601 WilShire Boulevard
Los Angeles, 90025
Dear Mr.
In res:cnse to your inqulry the llow:ng se:s for::1 our
P:Slt:C:1 rela:lve :0 finafcing S:ut:1 Central CaJ:e Te Ev:sicn
Francnlse. It is uncers:an:ing t:1at any c tne
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""', ,.--.-; 100.\ Or"',.-..:-.,..Y"> .... ,...-- [' '--<it"", ... 1',., .... - r -, r-,';=
elL ... ..J> ..)j ,,::::;::::.,::::"'; . .::. 1..',1_.,", U,
Lcs An;e:es is in eQuct. ThIS unCertaInty preCluces
y as couie our
nOr771cl sec:..:rec Tlna:lC C7 c :: televls!cn loans.
Ycurs very
Vicit: ?res:ce:::
HOH:e:
VIA 1- 3 Messen;e: Se:Vl:e

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