A federal judge ruled today that Montgomery County may seize $5 million from Tribune-United Cable Co. and begin proceedings to revoke the company's cable television franchise.
U.S. District Court Judge Herbert Murray agreed to lift a temporary restraining order issued last week that had blocked the county from taking the action.
Tribune-United immediately appealed Murray's order to the U.S. Fourth Circuit Court of Appeals, and a hearing on the issue is slated for 2:30 p.m. Wednesday.
At the request of Judge Harrison Winter, who will hear the appeal, the county has agreed not to seize a $5 million letter of credit the company posted as collateral until after the hearing.
County officials announced last week that as a result of repeated contract violations and shoddy performance by Tribune-United they would revoke the company's franchise, seize the $5 million collateral and impose a $9,000-a-day penalty for the company's failure to live up to terms of its contract.
"The county is very encouraged by the opinion," said Nicholas P. Miller, a lawyer representing the county on cable matters.
"The opinion obviously indicates the judge has reviewed the facts and reviewed the law and apparently agrees with the county's opinion. The county fully expects Tribune-United to try additional strategies to frustrate enforcement of this contract, but this opinion suggests that the eventual result will be in the county's favor," said Miller.
Tribune United has wired about one-third of the county's 228,000 homes for cable service since it won the franchise in 1982.
County officials have been deluged with consumer complaints about poor picture quality and lack of service.
Three weeks ago the county issued its second notice of default to Tribune-United after it discovered that the company had halted all new construction.
On Nov. 8, Tribune-United asked the county to scale back its obligations for the franchise.
Several days later, County Executive Charles W. Gilchrist, saying the firm had displayed "downright mismanagement," announced that the county would seek to strip the company of its right to operate the cable system.
Tribune-United lawyers sought a restraining order, arguing that the company is in the midst of proceedings to modify its contract.
But in his 18-page order issued today, Murray said, "A modification request, simply, cannot be said to cure past breaches."
Otherwise, said Murray, "cable operators could conceivably inundate franchising authorities with modification requests in order to prevent them from exercising their enforcement authority against operators for violations or breaches of the franchise agreement."
Tribune-United attorney Jay E. Ricks said today that he believes it was a "legal error" for the judge to rescind the restraining order.
He has said that he believes that under federal law, the company needs to demonstrate only that provisions of the franchise are economically infeasible.
The county would then have to agree to contract changes, or Tribune-United could ask the court to modify the franchise agreement.
The company said it must cut back on promised services, including 120 cable channels, because of an unforeseen revenue shortfall.