Time Warner Slashes Cable Rates 30 Percent At Towers Deal May Trigger Similar Cuts Elsewhere

Eager cable television viewers at North Shore Towers last week flocked to the sign-up tables to take advantage of Time Warner Cable of New York’s 30 percent rate cut for the 65-channel "basic plus" standard service.
Four hundred residents of the 1,844-unit luxury high rise North Shore Towers in Floral park, filled the on-site subterranean movie theatre on Jan. 11, but the subject was a special "shared savings" cable television deal, not motion pictures. Representatives of Time Warner Cable of New York City were on hand, at the invitation of the North Shore Towers Board of Directors, to explain all the aspects of a newly negotiated deal that included the buyout of the in-house cable system, Commander Satellite, serving 1,050 apartments since 1985. Time Warner had also maintained a presence at the Towers since 1991, but were serving only 400 subscribers because they were unable to compete price-wise and were incapable of furnishing the popular in-house services that Commander Satellite supplied for the Standard Service charge of $25.95
Harriet Novet, vice president, Public Affairs, for Tim Warner Cable, said Time Warner entered into an agreement that was fair to North Shore Towers and Time Warner Cable. We have marketing agreement with with many different buildings in Manhattan and Queens. This particular agreement recognized the fact that there was an agreement in place with a previous cable service provider.
If other co-op or condo boards want to learn how they can take advantage of these shared savings programs contact Ken Fluger at (718) 670-6583.
North Shore Towers Board President Selwyn Robbins began the meeting by explaining that under Commander Satellite’s contract with the Towers, the Board of Directors had to approve of any buyer that Commander Satellite proposed. By initially rejecting the proposed buyer, Time Warner, the Board showed Commander Satellite that something would have to be put on the table by either of the parties that would benefit the shareholders of the converted rental complex. At the time it became co-op in 1986, North Shore Towers was the costliest conversion in New York City with a total insider price of $498 million.
Robbins went on to say that the Towers’ Negotiating Committee he headed went through three negotiating teams from Time Warner before cementing the deal. "Now, I don’t want to sound arrogant when I say this, but it is a fact that we wore out two negotiating teams from Time Warner before concluding the agreement that, over its 10 year life, will be worth approximately $2 million to North Shore Towers" boasted Robbins to the assembly. Among the concessions that Time Warner had to make in order to effectuate the purchase of Commander Satellite were:
• They will lower the price of Basic plus Standard Service, now costing $34.90 throughout Queens, to $25.95, the same price charged by the soon-to-be-defunct Commander Satellite. This special price, available only to the lucky residents of North Shore Towers, includes converter rental fee, and cannot be increased before the 10-year deal concludes, when Robbins estimates that subscribers outside the complex will be paying $52 per month to the Time Warner cable monopoly.
• As Time Warner begins laying new fiber optic cable at North Shore Towers, they will also create, at their expense, a Local Area Network (LAN) that will tie together computers in use at the high-rise’s gatehouses. security office, management office, health club, power plant and golf course tool shed. This LAN would have cost an estimated $75,000 of the co-op’s money if they had to bear the expense of doing it.
• Time Warner agrees to maintain all existing in-house services currently supplied by Commander Satellite including lobby cameras, information channel for text-based announcements and videotaping of local activities including open board of directors meetings.
• Time Warner will pay an annual fee to North Shore Towers of $80,000, or twice the amount that Commander Satellite paid the co-op for the right to vend cable television.
Robbins then introduced Time Warner Cable of New York City Director of Sales Scott Henry who gave his company’s perspective of this precedent shattering deal by the company whose parent just announced their proposed merger with AOL to form the largest corporation in the history of civilization. "The Board of Directors of North Shore Towers has brokered an exceptional agreement. As a matter of fact, our arms are still a little twisted from it," said a smiling Henry. "What this means essentially is that you are receiving a 30% discount from our retail rate for ten years. Next month, Time Warner and other cable companies will be going through with a monthly rate increase of $2 throughout the city. But at North Shore Towers, the rates will be frozen at $25.95 for ten years. We also came up with a very special offer. We will waive our normal $58 installation fee and bring everybody on board with their choice of two premium channels free, for one month."
As the meeting ended, residents crowded around tables near the exit and eagerly signed up for the bulk "shared savings" 10-year deal. What remained unanswered is what effect this might have on cable fees elsewhere. Will other high rises organize their tenants to collectively bargain for a lower rate? Why should this bulk rate be limited to apartment buildings? Could not a Queens neighborhood homeowners’ or block association demand the same kind of consideration? What about poorer neighborhoods that lack the resources needed to effectively negotiate?
Time Warner Cable of New York has been serving Queens residents since 1982. They were known as Warner Amex Cable of New York when they, American Cablevision of Queens and Queens Inner Unity Cable System were awarded the exclusive, lucrative franchises by the city of New York. At that time, Queens District Attorney Santucci investigated allegations made by a company called Ortho-Vision that they and a second company, Cablevision Systems, failed to obtain a franchise because they failed to pay "six-figure fees." Ortho-Vision head Al Simon claimed that he was solicited by an unidentified Queens Democrat. Former vice-presidential candidate Gerry Ferraro’s husband, John Zaccaro, was named in a separate investigation as having sought a $1 million fee, on behalf of then Queens Borough President Donald Manes, from a lawyer for Cablevision Systems Corp. in order to help the Woodbury, L.I. firm get the Queens franchise. Zaccaro, facing seven years in prison on bribe-receiving and attempted-extortion charges, emphatically denied any wrongdoing, and was ultimately acquitted.
Time Warner Cable, was awarded its Queens cable television turf during the administration of Donald Manes, who took his life in 1986 when he was implicated in another franchise payoff scheme involving collection of overdue parking violation fines