OCA Audit Reports

Issued: June 2008

This report presents the results of the Time Warner Cable Franchise Fee Audit, Part II.

The City of Austin granted Austin CableVision a cable television franchise in 1981. The Austin CableVision franchise expired and was renewed in July 1996 with Austin CableVision’s successor, Time Warner Cable Television (TWC), operating under the franchise agreement. Under City Ordinance Number 960613-A, this cable franchise agreement runs for fifteen years and will expire in August of 2011.

The franchise agreement between the City of Austin and TWC requires a payment of five percent of gross revenue derived within the franchise area. A 35 cent monthly fee per customer to fund the public, educational and governmental (PEG) access channels is also paid by TWC to the City. These payments from TWC are to compensate the City of Austin for the use of the public rights-of-way.

In reviewing TWC’s financial data to determine if the franchise fee and PEG fee payments are correct, we found that:

• PEG fees were excluded from the calculation of gross revenue subject to the franchise fee by TWC resulting in a liability to the City of $524,386.
• Bad debt expense was improperly apportioned resulting in a liability to the City of $248,511.
• TWC did not pay interest on the franchise fees for a prior period adjustment made related to advertising revenue resulting in a liability to the City of $71,210.
• Advertising revenue was under reported resulting in a liability to the City of $18,586.
• Other Revenues were overstated by TWC resulting in an overpayment of $198,703.

The net liability to the City is $663,990.

Download the entire text of our Time Warner Cable Television Franchise Fee Audit, Part II in Adobe Acrobat. You will need Adobe's Acrobat Reader to view these files. Or request a hard copy of this audit report, No. AU07108B, by submitting this audit report request form.

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