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Sacramento Fee Dispute Goes To Arbitration

A third-party arbitrator will decide a dispute between local regulators and Comcast Corp., who have been unable to negotiate the terms of past and future franchise fee payments.

The Sacramento Metropolitan Cable Commission had its directed staff members to continue to negotiate with the cable company over a disagreement as to which fees should be paid on advertising revenue.

That two-week period passed last Monday. Now, the two sides have until May 17 to agree on outside arbitrators to settle the issue.

If regulators and Comcast can’t agree as to the type of arbitrator that will become involved, the issue could go back to the commission, possibly for a declaration Comcast is in breach of contract.

The biggest issue is advertising commissions. Comcast does not pay franchise fees on the estimated 15% earned by agencies for placing an ad on the local cable channels. The operator argues it never receives those funds and shouldn’t be required to pay fees on them. Regulators counter that fees are paid on gross revenues and the commission is part of gross.

Sacramento Metropolitan Cable Commission executive director Rich Esposto said the amount in dispute isn’t a large part of Comcast’s overall system revenue but, by conservative calculations, could mean an estimated $3 million to the city and county over the life of Comcast’s franchise there.

A recent renewal extended the Sacramento franchise into 2023.