City of Thousand Oaks v. Verizon Media Ventures, Inc.

MEMORANDUM *

The district court abused its discretion in enjoining the asset purchase transaction. Section 4.1 of the franchise ordinance covers only sale of a “[franchise” or “rights or obligations ... under the [franchise.” A franchise is a permit to operate a cable system. 47 U.S.C. § 522 (9). The term “franchise” in section 4.1 therefore does not encompass cable system assets other than the permit itself. The City and County do not contend that the asset purchase agreement purported to effect a transfer of Verizon’s permit. Had it done so, the district court could have enjoined at most that specific aspect of the transaction.

The transfer of “franchise fees ... arising out of or attributable to the ownership of the Acquired Assets on or after the Closing Date” did not violate section 4.1’s restriction on transfer of “rights or obligations ... under the [franchise.” Franchise fees accruing on or after the closing date necessarily arise under Adelphia’s franchise, not Verizon’s; the provision did not transfer a liability arising under Verizon’s franchise to Adelphia; it merely ensured that Verizon would not be liable for fees arising under Adelphia’s franchise.

The various…

concurring.

I agree that the district court abused its discretion by enjoining the asset purchase transaction. I write separately because the Section 4.2 argument was raised both below and at oral argument, and should be addressed on its merits.

Section 4.2 requires “prior written consent of the City” prior to any transfer of “[o]wnership or control of the Grantee.” In this case, the Grantee is Verizon, and there has been no change in ownership or control of Verizon. At oral argument, Appellees argued that a change in control of a Grantee occurs whenever there has been a change in control over the Grantee’s cable system, citing the Section 4.6 definition of the term “control” as “significant influence with respect to the operations of the Grantee’s cable system.” The remainder of the agreement, however, clarifies that the terms “Grantee” and “cable system” are not interchangeable. E.g., Section 4.11 (discussing a change in control over the operations of the Grantee or the cable system). Thus, the terms of the agreement do not support Appellees’ argument that an asset transfer affecting only the Ventura County cable system effected a “change in ownership or control” of Verizon, a…

Dissenting.

I respectfully dissent.

As the majority acknowledges, § 4.1 of the franchise ordinance prohibits the sale or transfer of a “Franchise and any rights or obligations of the Grantee under the Franchise ... without prior written consent of the city.”

Section 4.2 of the Franchise ordinance prohibits transfer of “[o]wnership or control of the Grantee ... without the prior written consent of the City.”

The district court enjoined Verizon from transferring ownership of Verizon’s cable system to Adelphia. The basis of the district court’s order was its holding that transfer of the cable system violated the governing franchise ordinance.

The majority holds that the district court abused its discretion because “[t]he term franchise ... does not encompass cable system assets other than the permit itself.” However, the majority’s hyper-technical definition of franchise is inconsistent with our precedent.

In Charter Communications, Inc. v. County of Santa Cruz, 304 F.3d 927 (9th Cir.2002), we examined Santa Cruz County’s denial of consent to the transfer of a cable franchise. In considering whether the County reasonably withheld consent to the change in ownership, we expressly…