Consult with Legal Counsel before Signing Agreement with Cable Company
Many of our clients have recently been approached by their local cable franchise with an agreement with exclusive rights for the cable company. We advise community associations to consult with legal counsel before signing any agreement with their local cable company.
Routinely, the cable company has offered to pay the association or apartment community a one time up front sum equal up to several hundred dollars per unit in exchange for the association’s or community’s agreement to (1) exclusively market the cable company’s services to its co-owners or residents and (2) grant the cable company an exclusive right to provide services to the condominium. Failure by the association or the community to fulfill these exclusive obligations would render it in default thereby triggering certain remedies such as the ability to terminate the agreement and seek the return of the lump sum payment or a prorata portion thereof.
Exclusive Marketing
The exclusive marketing agreement means that the association or community cannot market or advertise the services of another cable service provider or multiple television station provider for a number of years, being the term of the agreement. While at one time the term of the agreement averaged approximately seven (7) years, the agreements tend to be longer now averaging about fifteen (15) years. There is often an automatic renewal period for a number of years. We have successfully negotiated for shorter renewal terms since after fifteen (15) years, the association or community may no longer want to automatically be bound to such an agreement.
Exclusive Right
The second part of association’s or community’s agreement is more problematic. If the association or community grants the cable company an exclusive right to provide services to the condominium, it means the co-owners cannot contract with other cable and/or satellite dish providers. It is imperative that the cable agreement provide an exception for certain satellite dish or antenna systems that provide telecommunications service consistent with FCC rules and guidelines. Otherwise, the grant of an exclusive right would violate FCC rules and guidelines. It is typically our recommendation that the association or community grant the cable company a non-exclusive right to provide services to the condominium or community, thereby allowing the co-owners or residents to contract with other cable and/or satellite dish providers.
In summary, the community association should not blindly sign the cable franchise agreement presented to it without having experienced counsel review and negotiate the best terms for the association.