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File how2ftp (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** I.$//ORDER, Joppa Associates, L.P., DA 95-1941//$ $/1.45 Pleadings; filing periods/$ $/1.80 Forfeiture proceedings/$ $/76.922 Rates for the basic service tier/$ $/76.944 Commission Review of Franchising Authority Decisions/$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of: ) DA 95-1941 ) JOPPA ASSOCIATES, L.P., d/b/a ) CONSOLIDATED CABLEVISION ) ) Appeals of Local Rate Orders ) of the following Cities: ) Benton Charter Township, Michigan MI0200 ) St. Joseph, Michigan MI0566 ) CONSOLIDATED ORDER Adopted: September 11, 1995 Released: September 15, 1995 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. By this Order, we consolidate two appeals of local rate orders filed on September 28, 1994 by Joppa Associates, L.P., d/b/a Consolidated Cablevision ("Consolidated") and rule on the merits in each proceeding. In deciding this matter, the Bureau has reviewed all the pleadings filed in the separate proceedings. We have determined that the proceedings are sufficiently similar to justify the resolution of all the issues raised by each of the concerned parties in one consolidated proceeding. Specifically, the Bureau resolves in this Consolidated Order the two separate appeals of local rate orders issued by the local franchising authorities, Benton Charter Township and St. Joseph, Michigan ("the Cities"). Consolidated initially filed for its rate increase with the Cities on June 30, 1994. The Cities dismissed the filings without prejudice for not being timely filed. On August 5, 1994, Consolidated refiled with the Cities. Both St. Joseph's and Benton Charter's local rate orders were issued on August 30, 1994. The rate orders deny proposed rate increases for Consolidated's basic service tier rates. 2. In the Cities' reviews of Consolidated's Form 1210s, which Consolidated filed in order to obtain approval for its proposed rate increases, the Cities rejected Consolidated's proposed increases for its basic service tier, ruling that Consolidated had to take into account revenue earned from home shopping channels in calculating its proposed rate adjustments. Consolidated argues that the Commission has already ruled that home shopping channel revenues are irrelevant to proposed rate increases such as those sought here by Consolidated. Consolidated argues that the Cities should be assessed forfeitures in the amount of $50,000 each for their disregard of the Commission's ruling. In their oppositions dated October 14, 1994, the Cities state that the appeals are not timely; that the Commission's ruling on home shopping channels cannot apply generally and is only binding on the parties to whom it was addressed; and that the First Amendment of the United States Constitution requires that the Commission have a compelling government interest before it may grant a preference to certain programmers based on content. The Cities state that if the Commission applies the home shopping rulings generally, the Cities should be granted a waiver. On November 3, 1994, Consolidated filed Replies to the Cities' oppositions. II. DISCUSSION 3. Under our rules, rate orders made by local franchising authorities may be appealed to the Commission. In ruling on appeals of local rate orders, the Commission will not conduct a de novo review, but instead will sustain the franchising authority's decision as long as there is a reasonable basis for that decision. The Commission will reverse a franchising authority's decision only if it determines that the franchising authority acted unreasonably in applying the Commission's rules in rendering its local rate order. If the Commission reverses a franchising authority's decision, it will not substitute its own decision but instead will remand the issue to the franchising authority with instructions to resolve the case consistent with the Commission's decision on appeal. 4. FCC Form 1210 is the official form an operator uses to justify adjustments in the rates it computed on its FCC Form 1200, the form used to establish an operator's initial maximum permitted rates under our rules that went into effect May 15, 1994, or on a previously filed Form 1210. An operator may increase its rates to reflect increases in external costs, increases in the number of channels, and inflation. Among the categories of external costs with respect to which operators can make adjustments to their rates are programming costs. An operator may file to increase its basic rates on account of changes in external costs for the period from the end of the last quarter for which an adjustment was previously made through the end of the quarter that has most recently closed preceding the filing of the Form 1210. An operator may file a Form 1210 up to quarterly, but must file within the quarter following a decrease in costs due to channel deletions and within a year following a decrease in other costs. An operator must file for a rate increase within a year of its increase in costs in order to recover those costs in its rates. A. Timeliness 5. In their oppositions, the Cities state that Consolidated's appeals were not timely filed since Consolidated failed to appeal the Cities' initial dismissal of Consolidated's original Form 1210 filings. The Cities contend that Consolidated should have raised any issues related to those filings within 30 days of the dismissal. Consolidated filed its Form 1210s on June 30, 1994. The City of St. Joseph dismissed without prejudice Consolidated's Form 1210 on July 25, 1994 and Benton Charter Township did the same on July 28, 1994, based on the timeliness of the filings, and on Consolidated's failure to provide the home shopping channels' revenue data. Shortly after the dismissals, on August 5, 1994, Consolidated refiled with the Cities. By definition, "dismissal without prejudice" means that the dismissal affects no right or remedy of the parties, is not on the merits, and does not bar a subsequent suit on the same cause of action. Consequently, when the Cities issued their final orders on August 30, 1994, Consolidated was free to appeal any issue relating to those filings and to that order. We therefore reject the Cities' argument that Consolidated's appeals are untimely. B. Home Shopping Channels Revenue Data 6. Consolidated challenges the Cities' request that it submit information on its Form 1210 regarding the revenue it receives from home shopping channels. In our Rate Order, we determined that any revenues an operator receives from a programmer or shares with a programmer must be offset against programming costs for purposes of calculating whether there has been an increase or decrease in programming costs. The Commission codified this requirement in the Second Order on Reconsideration, Fourth Report and Order, and Fifth Notice of Proposed Rulemaking ("Second Reconsideration Order"). In response to inquiries, the Bureau has stated that the rules require only that payments from programmers to operators must be offset on a per channel basis. In other words, revenue an operator receives from a particular channel is only used to offset programming costs of that channel. If revenue exceeds programming costs, no costs are entered for that channel, but the excess revenue cannot be used to offset programming costs from other channels. The Commission codified this revision as part of the Sixth Order on Reconsideration, Fifth Report and Order, and Seventh Notice of Proposed Rulemaking ("Going Forward Order"). 7. Since revenues are offset against programming costs on a per-channel basis, home shopping revenue is only relevant to calculate adjustments to the respective home shopping channel costs. Consolidated has stated that it does not pay for carriage of its home shopping channels, and that its increase in programming costs did not include any costs for its home shopping channels. For these reasons, and because the home shopping revenues cannot offset increases in programming costs from other channels, Consolidated is correct in stating that the information requested was "not relevant" to the consideration of the rate increase. 8. The Cities argue that the Bureau letters on which Consolidated relies cannot apply generally, and that the letters are only binding on the parties to whom they were intended. The letters at issue were a clarification of our rules. Consolidated was entitled to rely on them as an interpretation of our rules in determining its rates. The Cities also contend that the First Amendment requires that if the Commission's rules make a content- based distinction among programmers, the Commission must have a compelling reason in support thereof. We find this argument lacks merit. The Commission's rules treat all channels the same, i.e., the revenues derived from each channel are offset against the programming costs for that channel without regard to the content of such programming. Thus, contrary to the Cities' assertion, the letters did not create a content based policy. Lastly, the Cities state that if the Commission generally applies the position taken in the QVC and HSN Letters, they should be granted a waiver of the rule because Consolidated carries an excessive number of home shopping channels. To grant such a waiver would require us to distinguish programming content, which we decline to do. For all these reasons, we remand this case to the Cities, with instructions to review the Form 1210 Consolidated has provided in a manner consistent with this decision. IV. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED that the Appeals of Joppa Associates, L.P., d/b/a Consolidated Cablevision of the local rate orders issued by Benton County Township and the City of St. Joseph, Michigan, with respect to calculation of home shopping revenue data, ARE REMANDED to the Cities for resolution in accordance with this Order. 10. This action is taken by the Chief, Cable Services Bureau, pursuant to authority delegated by Section 0.321 of the Commission's rules. 47 C.F.R.  0.321. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau