The president of the cable firm expected to be awarded the District's cable television franchise said yesterday that a lawsuit seeking to block the award could jeopardize the firm's ability to raise money for the system, even though the lawsuit is a "ploy" and "totally without merit."
"It would be a significant shadow in attracting any investments," Robert L. Johnson, president of District Cablevision Inc., said of the lawsuit filed in U.S. District Court last week by Capital City Cable, an unsuccessful bidder for the cable franchise.
For its proposed $130 million residential cable system, District Cablevision, according to Johnson, needs to raise $50 million in bank financing and about $30 million through limited partnerships, a method by which investors buy shares in the system to reap tax benefits.
Johnson said yesterday that his firm had discussed financing with officials at American Security Bank, a local bank that has made loans in the cable industry.
Roger Conner, a spokesman for American Security Bank, said that it would be improper for his bank to comment on any specific loan application or talk about any specific case.
"Generally speaking," Conner said, "pending litigation is certainly a subject of concern and consideration to any lender in review of extending credit."
Meanwhile, the D.C. City Council's cable committee yesterday voted to send the full council a proposed agreement between the city and District Cablevision. The council is expected to tentatively approve the agreement on Dec. 4 and give final approval on Dec. 18.
If the council follows its schedule, Johnson said that construction on the cable system would begin in 1985 and that some homes in every ward in the city would be wired by early 1986.
Johnson, during a press conference, called the lawsuit "sour grapes" but said his company will treat it as "a very serious nuisance."
The $125.7 million antitrust lawsuit filed by Capital City alleges that District Cablevision and its business partner, the Chesapeake & Potomac Telephone Co., conspired illegally to win the cable franchise and seeks an injunction to block the franchise award.
"Capital City Cable's complaint is completely and totally without merit," Johnson said. "DCI will respond fully and aggressively in court to this obvious ploy by Capital City Cable to force their way into the cable franchise negotiations. DCI will undoubtedly prevail in court . . . ."
But following the press conference, Johnson was less optimistic about the potential impact on his company. He expressed concern that a lengthy court fight could raise doubts that would discourage potential investors. Johnson has maintained that his company's financial plan has "little margin for error" and that if anything adverse happens "the whole thing begins to get sort of shaky."
William R. Hyde, a Capital City official, said "I know he can't finance that deal" but "our lawsuit will have absolutely no impact on his ability to raise financing."
Hyde asserted that District Cablevision will have financial problems due to its agreement to have C&P Telephone construct and hold title to the cable transport lines.