Click’s future heads to the council amid questions over network’s finances
The battle over who will run Tacoma Click Network heated up this week ahead of Tuesday’s City Council meeting that could set in motion formal negotiations with a local cable and internet provider.
Tacoma Public Utilities is exploring partnering with one of two cable and internet service providers to run Click while still retaining the network as a publicly owned asset.
At two hearings held by TPU, Click customers expressed growing concerns over what an expanded public-private partnership would mean for the network, lauded by many at the hearings for its customer service and value.
Additionally, the lack of an independent audit of Click has left TPU board members to explain Click’s financial issues leading to the proposed new business model, particularly at its March 18 meeting.
Board Vice-Chair Karen Larkin referenced Click’s annual rebroadcast fees as being in the tens of millions of dollars at that meeting. Larkin later corrected her remarks after a video clip from the meeting with her quote made the rounds on social media and in emails sent to The News Tribune from Advanced Stream CEO Mitchell Shook.
Shook’s business is an internet service provider for Click under the network’s current business model.
In a memo sent to The News Tribune on Wednesday evening, Larkin said she “misstated when I said Click! spends ‘tens of millions of dollars on retransmission fees annually.’”
“Since 2009, Click Network has paid nearly $12 million in retransmission consent fees to local broadcast stations. In 2018, Click paid approximately $1.85 million in retransmission consent fees,” according to Larkin’s memo.
“With regard to payments to cable networks, Click has paid over $100 million in programming license fees since 2009. In 2018, Click paid approximately $10.3 million in programming license fees. Combined, Click has paid over $114 million in retransmission consent and programming license fees over the last decade. The fact is that Click expenses for cable television have increased dramatically over the years.”
Shook, in a separate email sent Thursday to The News Tribune, wrote that “Larkin’s statement added more sensational negative numbers with no context” and called for corresponding revenue figures for last year and since 2009.
He took issue with any characterization of Click “as being a real loser when there has been no audit.”
This isn’t the first time retransmission fees have taken center stage for Click. In January 2015, The News Tribune reported that documents from the city “appear to show Click paid roughly $2 million in retransmission fees to broadcasters, a little less than 10 percent of the cable system’s total programming costs of $22.4 million for 2013 and 2014.”
The newspaper gained access to those documents after the state Court of Appeals ruled for The News Tribune in November 2014 after the newspaper fought for access to the records, arguing they pertained to public business and should be disclosed.
In 2015, The News Tribune reported that new contracts for that year showed KOMO, KING, KIRO, KSTW and Q13 Fox collectively charging Click about $2 million to rebroadcast their signals.
When asked about an audit Thursday, TPU Director Jackie Flowers responded to The News Tribune via email: “TPU’s financials are audited every year and filed with the State Auditor. The City is subject to annual financial audits and those audits are available for your review.”
Flowers also provided a link to the city’s online financial reports section.
According to figures provided from TPU on Thursday, as of March 14 of this year, Click serves 14,286 cable TV customers and its private ISP partners serve 21,739 customers (those numbers do not add up for a total customer count because some households have cable and internet); 26,522 households have cable and/or internet services over the Click network.
Those customers will have another chance to speak to city leaders about the potential future business plans.
The city will take public comment on the resolution at its Tuesday (March 26) regular council meeting, at which time it could vote to authorize moving forward in negotiating with Rainier Connect.
TPU’s board, at a hearing March 18, approved a resolution to move forward in negotiations with Rainier Connect, sending it to the council for a vote.
The Tacoma-based company, also a current internet service provider for Click, was recommended after an outside consultant’s review of term sheet proposals from Rainier Connect and Kirkland-based Wave Broadband and how they aligned with the city’s 12 policy goals for Click. The recommendation was first announced at a March 5 presentation to the board and the City Council at a joint study session.
TPU, on its Click Network Update page, emphasizes that if the deal is completed, “TPU will retain ownership of the existing network and take ownership of all upgrades the private partner makes to the network.”
During Monday’s hearing, the question was raised on what happens if Rainier Connect is awarded the contract and then later files bankruptcy.
Flowers told The News Tribune on Thursday that “ownership of the Click network will never be at risk because TPU will retain ownership of the Click network. The new operator’s only interest will be the rights to operate over the Click network that are granted pursuant to the indefeasible right of use of agreement and any interest the operator may have in any agreements assigned to the new operator by TPU.
“In the event of bankruptcy, it is possible that the rights under these agreements could be sold to another operator; however, these rights do not include the right to sell the network.”
This story was originally published March 21, 2019 at 5:26 PM.
