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HomeMy WebLinkAbout2005-10-03 AFN Options Committee Minutes10/23/24, 10:56 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon Learn about the City's plan to construct and move the water treatment plant -Clean drinking water is an essential right Agendas and Minutes City of Ashland V AFN Options Committee (vieWAll) AFN Options Committee Agenda Monday, October 03, 2005 CALL TO ORDER View Agenda AFN Options Committee Meetin, Minutes October 3, 2005, 7:30am Siskiyou room, CDES Building, 51 Winburn Way Michael Donovan called the AFN Options Committee meeting to order at 7:33 am on October 3, 2005 in the Siskiyou Room of the CDES Building, 51 Winburn Way Ashland, Oregon. ROLL CALL Committee members Barth, Collins, Donovan, Mace, and Mackin were present. Committee member Shultz was absent. Councilor Russ Silbiger was present. STAFF PRESENT: GINO GRIMALDI, CITY ADMINISTRATOR LEE TUNEBERG, ADMINISTRATIVE SERVICES AND FINANCE DIRECTOR https://old.ashland.or.us/Agendas.asp?AMID=2367&Display=Minutes 1/10 10/23/24, 10:56 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon RICHARD HOLBO, TELECOMMUNICATIONS ENGINEER MICHAEL AINSWORTH, CABLE TV MANAGER BRYN MORRISON, ADMINISTRATIVE ASSISTANT REVIEW COMMITTEE MINUTES Approval of minutes dated September 26, 2005 The Committee will approve minutes at the October 10, 2005 meeting. DISCUSSION WITH PROGRAMMING COMMITTEE Ed Perkins, current chair of Programming Committee addressed the Options Committee. He stated that the charge of the Programming Committee is to make recommendations to what programs AFN should carry. Staff tells them what contracts need to be renewed and they usually renew. The have recommended looking at Ashland's demographics for channel selection. They have identified a Jewish channel to possibly add that staff is looking into and are looking at the possibility of adding a gay and lesbian channel. Their concern is that there are big changes coming in this business, specifically high definition. He spoke to analog broadcasting ending by 2009. The push is on in the market to push high definition in television sales. This is a major consideration the Programming Committee has to address. The only station currently broadcasting high definition signal is PBS. The Committee discussed that CBS is also broadcasted in high definition part of the time. Mr. Perkins stated that the Programming Committee doesn't have direction on whether they stay current or need to offer what the Charter line up offers. They need guidance from top management on strategy. They are trying to respond to community input. The Committee questioned what feedback they get on AFN. Mr. Perkins responded very little. They receive maybe 1 email per week and don't get much guidance from the community on what they would like to see. Paul Mace, Committee member asked if the Programming Committees was an advisory committee or if they were able to set policy. Lee Tuneberg, Administrative Services and Finance Director responded that their directive is to select content and staff supports them with what funding is available and they talk about what could be added. Councilor Russ Silbiger added that they have complete authority to select channels and then staff tells them if funding is available. The Committee discussed if the Programming Committee looks at what channels the community wants to see and the expense required. Mr. Perkins responded that the main interest is in Christian channels and some churches are willing to fund part of the https://old.ashland.or.us/Agendas.asp?AMID=2367&Display=Minutes 2/10 10/23/24, 10:56 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon programming cost including the upfront costs. He added that they have not had much pressure from the community on other channels except to carry DIY. The channels that are requested to be added by the Programming Committee are dependent on funding available. The Committee asked if the Programming Committee was responsible for the tiering structure. Mr. Perkins responded that they did initiate one tiering change. Michael Ainsworth, Cable TV Manager responded that the Programming Committee can determine which tier to put channels on, but they have not used a traditional business matrix looking at expenses offset by promotions, equipment fees and carriage fees until a year ago. He added that they need direction on how many channels they can add with the funds available. They do not solicit public input because of a lack of funds available. The Committee discussed if they had received any feedback on what the community wanted to watch and if they deleted channels, if they would be moving channels away from a higher population of viewers. Mr. Ainsworth responded that most of the calls that they get are of a regional request and they are working on a survey to see what the community would like to watch. The Committee asked what staff does to promote channels. Mr. Ainsworth responded that they have a booth at the annual Fourth of July parade, SOU during orientation and had an event at Starbucks to promote the product. The Committee asked Mr. Perkins what specific direction the Programming Committee wanted. Mr. Perkins responded that it would be helpful to know what the long term strategy was; if they should increase market share, just react, or be more aggressive and use programming as one of the tools to build the system. The more clearly they understand the objectives and business model, the easier job the Programming Committee will have. The Committee discussed where the direction would come from. Rick Barth, Committee member stated that Council is not allowed to make programming decisions by federal law. Councilor Silbiger stated that Council has directed the Programming Committee to look into increasing channels and has put off a rate increase until January 2006 so staff and the Programming Committee will have a chance to increase the product. The Committee questioned Mr. Perkins if the Programming Committee received direction to that effect. Mr. Tuneberg responded that the question that he has heard at the meetings he has been to is do we offer a different product or do we compete on channels that Charter offers. The City has made some changes to the product, but it has not changed very much to be competitive. He added at the last meeting of the Programming Committee, they discussed bringing in the next pod, 10-12 channels and how competitive that would make AFN. There was discussion of taking some channels off of tier four and moving them to tier three. They are talking about changing the product. They are not guaranteed to improve the bottom line by adding channels. He suggested looking at the programs that AFN offers and if there https://old.ashland.or.us/Agendas.asp?AMID=2367&Display=Minutes 3/10 10/23/24, 10:56 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon was a way to change the tier structure that would cost the same, it may be advantageous. Gino Grimaldi, City Administrator suggested one of the keys to this is having a director in place, someone that can coordinate existing resources and put pieces together, someone who is a risk taker. He thought it was a mistake to put the Programming Committee in that role, which should be the director's role. The Committee discussed the leadership issue of the Programming Committee and staff and if hiring a new director would assist in decision making. Mr. Perkins added that ESPN in high definition is one channel addition that is important. The Committee asked if a channel would have to be removed in order to add one and how many channels are left available. Richard Holbo, Telecommunications Engineer responded that as long as they stick to digital channels, they can fit 8-10 per 6 megahertz, and it is possible to rearrange. Currently they have approximately 80 analog channels and 100 digital channels. They can easily move channels to digital and a longer term goal should be to have everything except local on digital. The Committee asked what it would require to add ESPN in high definition. Mr. Ainsworth responded a $5,000 receiver and the programming fee. They would also have to review the contracts because they may have to offer other channels in high definition if they add ESPN as well. The Committee discussed with staff the role of the Programming Committee. Michael Donovan, Chairman commented that the Programming Committee should operate and decisions should be taken in context on what the overall marketing plan should be. He thought that is not their charge. Councilor Silbiger responded that the Programming Committee is told when they can add channels and that was not the sole intention of the Committee when it was begun. Mr. Mace asked if the City even needed a Programming Committee if they only occasionally pass judgment. Mr. Perkins felt that if they were given the right environment, it could be more active. Mr. Ainsworth suggested that they could reverse the role and have staff expertise that would recommend and change the Programming Committee to more of an approval committee. When the Programming Committee was first started, it was in the driving seat and now they are stagnant. He added that other municipal communities are not committee bound like Ashland is. They are not required to have the committee by federal law. Mr. Holbo addressed the Committee and stated that it would take an administrator that takes risks to change. He felt that staff could not make recommendations to the Programming Committee. Councilor Silbiger responded that was not true. Mr. Holbo responded that staff was told not to recommend to the Programming Committee what to do by the previous director. Councilor Silbiger responded that staff has always been able to recommend but not make decisions. Mr. Perkins responded there has been https://old.ashland.or.us/Agendas.asp?AMID=2367&Display=Minutes 4/10 10/23/24, 10:56 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon some staff recommendation. Anytime staff came to them, they told them to go ahead with their recommendation. He added that the Programming Committee does not know enough to do more of that, they don't know what channels AFN is not carrying that they should be. The Programming Committee has asked staff to get data on national viewer ship of channels and the Committee will rank the ones that AFN is not carrying and address the possibility of including them. Councilor Silbiger added that the Programming Committee does have channels that they have approved already to add but are subject to financial availability. Mr. Holbo asked who makes the call on the motivation of staff on recommending channels. He cautioned against the community seeing it as a personal value rather than a professional one. The Committee discussed the value of AFN to the community and if it could be increased with a new director or more funding for a marketing budget. Spanish Fork and Braintree have value to the community and do not need to do as much advertising as Ashland does. Mr. Grimaldi added that the question comes down to if the City wants AFN to be a utility or what they want and what they are willing to pay for it. The Committee asked about the success comps; how many had competitors in the market. Paul Collins, Committee member responded most of them. Cedar Falls took over their competition and Spanish Fork has Comcast as competition. The Committee discussed that it is important to note that not one city compared is exactly like Ashland. Mr. Ainsworth added that AFN is controversial in the community and has a brand name problem. COMMITTEE DISCUSSION A. Update on assignments Mr. Collins spoke to the matrix presented on success comps. See attached. All of the cities represented expected capital to be returned. Most of the cities felt things were going well monetarily. He stated that he was not sure if 29% for CATV penetration in Ashland was correct. Mr. Holbo responded Ashland HH passed is 10,000. The Committee discussed the empty cells and Mr. Collins will update. Capital return is expected in Glasgow, Spanish Fork, and Ashland. Mr. Collins added that it is not clear what Muscatine is doing with $35 million in debt. The Committee discussed that Glasgow and Coldwater bundled services. Mr. Barth questioned why the penetration is so low in Ashland. Mr. Collins responded Braintree has many customers on all four tiers and Ashland has much less and most are on the lower tier. Mr. Ainsworth added that the communities are different; Braintree is a suburb where Ashland is mostly a retirement community. Ashland has 67% penetration and bundling has a great impact. Mr. Grimaldi suggested looking at net income pre debt. Councilor Silbiger added that https://old.ashland.or.us/Agendas.asp?AMID=2367&Display=Minutes 5/10 10/23/24, 10:56 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon Ashland's revenue per subscriber is less. Mr. Collins added these other cities make more on internet customers, have more business accounts and all are their own ISP. The Committee discussed the importance of looking at their management form. Braintree is part of the Electric department and a regulated utility. Mr. Barth questioned if a City Council makes policy for these directly. Councilor Silbiger responded Spanish Fork has a director that reports to City Council. Mr. Holbo questioned if they capitalized their personnel costs. Mr. Collins responded that Braintree got some money upfront and this matrix only represents what was borrowed. The Committee discussed conference calling one of the cities that the Committee felt was most similar to Ashland. They also discussed that Council had recommended sending a member of Council to Spanish Fork. The decision was made to conference call Spanish Fork at the next meeting. A determination will be made after that if anyone should travel to Spanish Fork to speak with them. Mr. Grimaldi recommended going to Spanish Fork because we don't know what we don't know is a good reason for going. The Committee will ask how we should deal with the debt, what operational structure would solve the decision making problem, and how they developed community support. Mr. Collins added that they should ask if the city makes policy. Mr. Ainsworth added that before Spanish Fork built out they came and spoke to AFN. He suggested asking them about the decisions they made, and which ones turned out to be mistakes by AFN, that they did not follow. Collins/Mace m/s to have a teleconference on October 10 with Spanish Fork. Mr. Collins stated that he will try to set up a video conference with Spanish Fork. Mr. Tuneberg reminded the Committee that he will be absent from the meeting but will provide questions that he would like asked in his absence. He suggested the Committee should prepare their questions prior to the meeting and notify Spanish Fork so they can have the appropriate people in the room to answer those questions. The Committee discussed looking at their financial statements before the conference and Mr. Collins will provide. The Committee will discuss with Spanish Fork, along with other items identified, their management structure, their debt, the history, and community relationship to their product. Mr. Mace gave a report on what assignment he was working on with Rick Barth. He and Rick Barth have contacted Tom Reid, Mark Marchetti and Ken Mickelson to discuss nonprofit and spin off options. They will be contacting Paul Nicholson, Don Robertson, Jim Watson, and Brian Almquist as well. They have seen how the other agencies came to be and how positive it was that they could structure a relationship with the former city owned entity. He added that each of these began debt free. If the organizations fail or begin losing money or declares bankruptcy, the City would get back possession of the entity. Mr. Barth asked staff for an agreement between the City and the hospital. https://old.ashland.or.us/Agendas.asp?AMID=2367&Display=Minutes 6/10 10/23/24, 10:56 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon Staff will provide. Mr. Mace and Mr. Barth will create a matrix on their discussions for the next meeting. The Committee asked for the definition of the failure aspect to be provided on that matrix as well. Mr. Mace gave a report on a discussion with Mr. Tuneberg on the $15.5 million debt. Mr. Tuneberg will provide a breakout to the Committee. Mr. Mace asked for more detail on the personnel costs on the build out. He added the costs were hard, equipment cost was substantial. He does not see looking at historical equipment purchases as beneficial. He felt looking at personnel costs would be more telling. Mr. Mackin explained that he and Mr. Shultz had met with Mr. Grimaldi and will meet again regarding the valuation of AFN. The work session will be pushed off until October 171 2005. Mr. Mace suggested looking at what pieces they are missing at the next meeting. Mr. Barth would like to look at what form they will give to Council. The Committee discussed tentatively planning on presenting their report to the City Council on November 1, 2005. Mr. Grimaldi will have it included to the agenda. He asked if someone is preparing internal costs that would have to be absorbed if spun off. Mr. Mace has spoken to some regarding it and will identify what it would cost. NEXT M E ET I N G (S), Next scheduled meeting October 10, 2005 at 7:30 AM PUBLIC INPUT John Jory, 188 Sunnyview- Mr. Jory stated that if AFN spun off the TV or internet, they would lose him as a customer for both. The way that the wires go into his house does not make it impossible but an unpleasant option to change. He believes that many in Ashland feel the same. He added in the newspaper it stated there are 1,700 Charter customers in Ashland. He figure at $35 per month, that would equal about $700,000 per year if AFN were to obtain those customers. He feels that an electric surcharge would not be needed if AFN were able to capture those customers. He added that AFN must change the market perception to be positive. He feels that the City would not be able to sell AFN for very much because the hardware would not be worth very much to whoever bought it unless they had the same hardware. He asked if anyone had taken flyers out to new construction on the advantages of AFN. He suggested learning from other cities how they can market against competition. https://old.ashland.or.us/Agendas.asp?AMID=2367&Display=Minutes 7/10 10/23/24, 10:56 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon ADJOURNMENT The meeting was adjourned at 9:25 am. Respectfully Submitted, Bryn Morrison Administrative Assistant Administrative Services Department Online City Services https://old.ashland.or.us/Agendas.asp?AMID=2367&Display=Minutes 8/10 10/23/24, 10:56 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon Email Updates Sign up to receive local important News & Events. 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