The city of Buffalo, N.Y., has unearthed another $151,812
in alleged unpaid franchise fees by Tele-Communications Inc., bringing the MSO's
running tab with the city to more than $600,000.
A 1996 audit by the Buffalo Comptrollers Office for 1992
through 1995 revealed the discrepancy, which has been tacked on to the $449,531 in unpaid
compensation turned up recently by the New York Department of Public Service.
"The comptroller's office discovered the unpaid
amount in 1996, but it didn't have a collection mechanism in place at that
time," said Thomas Tarapacki, director of the Buffalo Office of Telecommunications.
City officials have forwarded an invoice to TCI
headquarters in Denver, demanding that the MSO pay the combined $610,343 within 30 days or
face interest penalties of 5 percent per month.
Tarapacki said the city decided to forego collecting back
interest on the debt because TCI had never officially received an invoice.
Meanwhile, another audit is planned for 1997 and the first
six months of 1998 -- the period before the Buffalo franchise was transferred to a joint
venture controlled by Adelphia Communications Corp. -- said James W. Pitts, president of
the Buffalo Common Council.
However, TCI remains liable for the unpaid fees.
"We told them that if there are any questions on this
issue that they would like to discuss, we're open to that," Pitts said.
"But aside from that, we want our money."
The city has also contacted Adelphia concerning the matter.
"We want to check Adelphia's methodology to make
sure that they're not making the same mistakes," Tarapacki said.
"We've talked to Adelphia, and they've indicated that they're
reviewing the situation, and that they will get back to us shortly."
TCI spokesman David Capo said the company could not comment
because it had not seen the latest audit.
The MSO hoped to deliver its response to the findings
contained in the initial DPS audit by late last week, Capo added.
However, TCI has previously indicated that $197,303 of the
amount turned up by the DPS represented payments legitimately withheld under a 1995
Federal Communications Commission order that allowed cable operators to deduct franchise
fees from gross-revenue calculations. An appeals court has since overturned that order.
Moreover, if paid, the MSO could legally recover those fees
from its 81,000 Buffalo subscribers.
TCI has also claimed that the first audit included income
that should not have been incorporated into gross revenues, including miscellaneous
equipment adjustments, unrecovered converter fees, pay-television-license credits and ad
revenues from an interconnection agreement with other area systems.
As of last month, the city was still seeking to negotiate a
solution that would not sock local cable viewers with an expected increase in their
monthly bills, Pitts said.
"It's our view that a pass-through is
unacceptable," Pitts added.
The second round of unpaid franchise fee marked the latest
fight in an ongoing battle between Buffalo and TCI. The two sides have been at odds since
early 1996, when the company announced that it was shutting down a local telemarketing
center just a few weeks after it received a new 10-year franchise.
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