The gist: On Thursday, the Federal Communications Commission voted to change the way franchise fees work, threatening to eliminate up to two-thirds of AOC Community Media’s annual funding.
Franchise fees are what cable companies pay to use the public’s rights of way. Typically cable companies pay 5% of their gross cable revenue to local franchising authorities.
Franchise fees account for about two-thirds of the public access media organization’s annual budget, which is a hair under $900,000. The other third comes primarily from contracts it has with LCG to record and webcast council meetings and other events.
Changes would threaten that revenue for AOC. The changes will allow cable companies to count a variety of in-kind contributions against that 5% franchise fee, rather than pay the entire fee in cash. Contributions could include courtesy equipment, network capacity, channels, grants, sponsorships, specially created programming, local retail facilities, and free advertising, according to the The Internet and Television Association, a trade organization that represents cable companies and supports the new rules.
Full disclosure: AOC Community serves as The Current’s fiscal sponsor for tax-exempt contributions.
The budgets of the city and parish of Lafayette could also take a haircut. Only one-third of the franchise fee revenue goes to AOC, with the rest split between the city and parish general funds. In other words, LCG could lose $1.8 million in general fund revenues.
Th next step will likely be the courts. Local public access channels and city officials have already started to band together in opposition, with more than 200 mayors voting in opposition of these new rules. Assuming it passes, it will almost certainly be challenged in court.
If this rule survives legal challenge, AOC could be significantly diminished. According to AOC Executive Director Ed Bowie, some version of his organization should be able to continue operations, but it will obviously have to be at a reduced scale if it loses two-thirds of its revenue.
The legal process could take a year or two to work through the courts. So even if this rule passes the FCC, it should be a while before its impacts are felt.