FAIRFIELD — Bare-bones budgets are nothing new for CATV, which operates the region’s local access cable channel, but as the station recovers from a six-month virtual shutdown, town and station officials are looking for ways for it to stay afloat long-term.
A combination of unfunded coverage of local college sports, station manager medical leave and an ongoing fee dispute with Time Warner cable led to a financial crisis at Central Maine CATV that forced day-to-day operations at the station to all but shut down for six months.
The station, which provides programming for nine area towns, resumed normal operations late last month, when the town injected the station with more than $13,000 received as its franchise fee from Time Warner Cable.
But officials say the station needs more help from the nine communities that carry the station on their cable systems — particularly populous Waterville and Winslow — and to win a fee dispute with Time Warner.
The station would have shut down completely for six months if it hadn’t been for the dedication of station manager Laura Guite, who worked for free several hours a week, as well as the cooperation of board members and the station’s paid contractors, said Board President and Fairfield Town Councilor Aaron Rowden.
“This could have dramatically fallen apart,” Rowden said.
A federal court suit is pending over the fee issue, and money recovered by settling or winning the suit could be used to improve the station’s finances, station and town officials said.
As a long-term answer, the CATV board is looking for ways to sustain and expand the station by increasing participation by area towns and cities and getting more of a slice of the franchise fee revenue those communities get from Time Warner.
Cable television franchise fees are paid by the system operator — in this case, Time Warner — in exchange for the right to string cable wires over public rights of way.
Fairfield got a little more than $13,000 this year and $16,000 last year. Nearby Winslow got $69,000 and Waterville got $180,000.
Winslow, Waterville and seven other area communities carry CATV, Time Warner’s channel 7, which broadcasts local government meetings, high school sports, religious services, community events and produces some original programming.
Money also comes from underwriting grants from more than 60 sponsoring businesses and organizations, fees for filming meetings and events and DVD sales. The channel recently increased the amount it charges Waterville and Winslow to tape council meetings and now gets $2,700 a year from Winslow and $5,000 from Waterville.
The station operates on a $45,000 budget, Guite said. Much of that money comes from the franchise fee Time Warner pays Fairfield.
That budget pays Guite’s $35,000 salary, two contracted videographers and keeps the rest of the station running, she said.
Guite’s 40-hour week includes filming and editing, as well as programming the channel and finding sponsors.
Fairfield provides TV with free space for an office and editing room in the town’s community center on Water Street.
Fairfield became the designated center of the Waterville-area public access operation several years ago, mainly because it was willing to set up a town department to oversee its operation, according to Guite.
The coverage area was determined by the cable company, which groups communities geographically in order to share resources in development of local cable TV programming.
Before becoming an independent corporation, CATV was a Fairfield town department, Rowden said.
EXPANSION WITHOUT THE MONEY
While the tight budget keeps the station running, it doesn’t leave much money to update aging equipment or expand operations, Rowden added.
A couple of years ago, the town made an effort to recruit new blood to the board that oversees the operation.
“Essentially what we realized was that the station had stagnated,” he said.
New members appointed to the CATV board two years ago to make the station more relevant to the communities in its service area encouraged towns to appoint board members and signed a new franchise agreement with Time Warner to fund improvements, Rowden said.
The board also wanted more variety in public access offerings and wanted to improve the quality of the broadcasts, he added.
In a bid to broaden its viewer base, the board decided to tape Colby College sports, Guite said. The problem was that the station was expanding without bringing in additional revenue.
“That put a drain on the budget, having to cover that,” Guite noted.
The station was already operating with less revenue than planned because of a drop in the franchise fees paid by Time Warner to Fairfield.
Cable companies enter into individual agreements with towns, usually based on a percentage of cable revenue the carrier generates in the community.
Under federal law, towns are not obligated to direct the fees toward public access cable stations. In the CATV coverage area, Fairfield is the only town that uses its fees to support the station. Other municipalities use the fees, which can be substantial, as general revenue.
FALLING REVENUE
According to an agreement between the town and CATV, the station is entitled to up to $20,000 of the fees paid to the town, but in recent years, the town hasn’t received that much from Time Warner, according to Town Manager Josh Reny.
Last year, the station expected to get the full $20,000, Rowden said, but only got about $16,000.
Then, last summer, Guite, 63, underwent two surgeries, putting her out of work for weeks. Paid contractors covered the events she planned to film, stretching the already tight budget to the breaking point.
“Around August, I couldn’t make enough money to meet all ends,” Guite said. She had not been paid for three weeks when she finally took a leave of absence.
But for the next six months, despite not getting paid, Guite kept the station running, coming into the office for a few hours a week to complete paperwork, answer emails and voice messages and keep in touch with videographers, who kept producing footage for the station.
“Laura went above and beyond what I would expect was her job,” said Shelley Rudnicki, the CATV board treasurer. “I don’t think she’s given a lot of the credit she deserves, working on such a small budget.”
She went back to work full time last month when the town’s franchise fees came in.
While the station is on steadier footing for now, its survival over the long term is still in the balance.
Rowden attributes the shortfall in fees paid to Fairfield to Time Warner’s interpretation of its contract with the town. The cable company says it is obligated to pay 5 percent of its revenues from basic service, while the town contends it should get 5 percent of Time Warner’s total gross revenues, including from the more lucrative higher tiers of cable service.
Fairfield officials filed suit against Time Warner in October to recover money it says it is owed. At the time the suit was filed, town officials estimated the annual difference could be as much as $50,000.
“The primary problem is and always has been Time Warner’s refusal to fulfill their obligations under the franchise agreement and federal law,” Rowden said.
In its response to the complaint, filed in federal court in January, Time Warner called Fairfield’s allegations baseless, claiming the town never indicated that it wanted to change the agreement to include 5 percent of gross revenues. Paying at the rate demanded by the town would result in higher prices for its customers in town, the company contended.
In a statement Tuesday, Time Warner spokesman Scott Pryzwansky said the company had paid the town the 5 percent of basic cable fees as outlined in the franchise agreement.
“Not until 2014 did the town complain that the franchise fee it was receiving from Time Warner Cable was less than it thought it should be,” Pryzwansky said. “We have tried to work with the town to resolve this issue in a collaborative manner, but the town decided to take the matter to court.”
Rowden said a settlement with Time Warner would ease pressure on the station’s finances, but conceded that budgeting will remain challenging while the case moves through the courts.
“We’ll have to work harder this year to avoid funding issues,” he said.
The suit was first filed in Somerset County Superior Court and was removed to U.S. District Court in Bangor at Time Warner’s request in November. The town has filed a motion to transfer the case back to the Somerset County court. A hearing on that motion is scheduled for Thursday.
Franchise fee revenue paid to Fairfield has continued to decline from the $20,000 level of the past to only $13,187 this year. Town officials say they hope a settlement or victory in the lawsuit will make up some of the shortfall.
“This has created a revenue gap for CATV, but we anticipate transferring the balance once the franchise fee issue is reconciled,” Reny said in an email.
GIVING TOWNS A STAKE
In the long term, the CATV board would like to bring in new members and money from nearby communities.
Its bylaws, which previously required towns with seats on the CATV board of directors to dedicate 100 percent of franchise fees to the station, were recently amended to allow communities to take a seat on the board with a smaller contribution starting at 5 percent.
That could make a difference for places like Winslow and Waterville, Rowden said, which may be more inclined to participate at a lower price.
Winslow received $69,000 in fees from Time Warner last year, while Waterville received $180,000.
Councilors from Waterville and Winslow have attended CATV board meetings as observers, but those communities did not appoint representatives to the board.
Town Manager Mike Heavener said the Winslow Council has not discussed joining the CATV board.
Waterville City Manager Mike Roy also said the city council had not discussed the issue, but added that CATV’s financial troubles were concerning.
Still, Rowden said it is possible that more of the communities served by CATV could soon take a bigger stake in its operation by appointing representatives to the board and paying some of their franchise revenue into the public access TV system.
“Right now we need to rely on the good will of the communities,” he said.
Peter McGuire — 861-9239
Twitter: @PeteL_McGuire
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