Montgomery County Executive Charles W. Gilchrist, angrily charging the county's cable television company with "downright mismanagement," announced yesterday that the county has begun a long process to strip Tribune-United Cable Co. of its franchise to operate the system and to seize $5 million it posted as collateral.
Declaring that the "time had come" to put an end to "our patience and forbearance," Gilchrist said at a Rockville news conference that repeated contract violations and poor performance by Tribune-United made the enforcement actions unavoidable.
The cable company, which is trying to sell the Montgomery franchise, halted construction on the system last month and proposed on Monday to slash up to half of the 120 channels of programming it promised to deliver. Since winning the franchise in 1982, the company has wired about one-third of the homes in the county, and has been involved in wrangling for 18 months with county officials over service and consumer complaints.
"I believe it is now quite clear that we wish to have Tribune depart . . . the sooner the better. I don't know when, but we hope soon," Gilchrist said.
Cable companies across the country, including the District of Columbia, have encountered problems similar to Montgomery's and have sought -- and in most cases won -- substantial contract modifications. But efforts by a local government to revoke a franchise is considered highly unusual, a cable expert said.
Yesterday the Supreme Court, acting in a case that could have a major impact on the beleaguered cable TV industry, agreed to decide whether constitutional rights to free speech limit the power of cities to regulate cable operators.
Gilchrist notified the company in two letters sent Monday of the county's intent to revoke the franchise and to seize a $5 million letter of credit -- essentially a security deposit -- to pay for contract items in default. He said the county would start next month levying daily fines of $9,000 against the company if it fails to resume construction on the system.
Whatever the outcome, Gilchrist said the company was legally obligated to continue serving its 18,000 subscribers, and he pledged to sue Tribune-United or hire a management company, if necessary, to keep the system going.
If the county succeeds in revoking the franchise, the company would have to be compensated for its investment in the system, but the amount could be offset by damages and other charges, said David P. Towey, the council's cable lawyer.
The company has 30 days to take corrective action after receiving the revocation notice. If it fails to do so, under the terms of the contract, the executive must hold a public hearing before he terminates the contract. The action must be approved by the council within 60 days, according to the contract.
Gilchrist said the county is still willing to listen to any specific proposals by the company and would be willing to work with any buyer on proposed contract modifications.
The executive's actions were designed, according to some officials, to bring the crisis to a head and to focus blame for the current situation squarely on the cable company.
"I think it was fairly inevitable that this was going to come to a crisis," said Abbe Lowell, who heads the County Council's cable oversight committee. "I think he is trying to get it to the point where, hopefully, this can be resolved before going to court."
Jay E. Ricks, a laywer representing Tribune-United, said in reaction yesterday that the executive's action was not "the proper course" to resolve the current situation. "We can't see anything positive by seeking to enforce a franchise that was written under circumstances that are totally inaccurate," he said.
Michael Pohl, a spokesman for the company, declined to comment on the latest twist in the county's growing cable crisis.
The county first threatened to declare Tribune-United in default last September, citing a list of unmet obligations that included failing to provide public studios and grants for local programming.
Two weeks ago it issued another formal notice of default after it discovered that the company, without notice, had halted all new construction on the system.
The company, which says it has already spent $46 million on the system, maintained in its request that it would suffer substantial losses if it were forced to build the system as it originally promised, and blamed the situation on unforeseen circumstances that radically slashed revenues from the system. The original estimate for building the system was $150 million.
"We're confident we can show that circumstances have changed; that services that were promised are unavailable," said Ricks.
But Gilchrist asserted that Tribune-United was in no position to cry over its promises, and angrily charged that the company was using "unsubstantiated statements" and "self-serving" claims to hide its mistakes.
"Basically, there has been bad performance, bad faith and we intend to correct it," he said