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In re Petition

Decided: March 13, 1984.

IN THE MATTER OF THE PETITION BY CONTROLLED CABLE CORPORATION, CABLEVISION OF JERSEY CITY, SIX STAR CABLEVISION, AND NEW JERSEY CABLE TV COMMUNICATIONS SYSTEMS, INC., FOR A CERTIFICATE OF APPROVAL TO CONSTRUCT AND OPERATE A CABLE TELEVISION SYSTEM IN JERSEY CITY, HUDSON COUNTY, NEW JERSEY


On certification to the Appellate Division, Superior Court.

For affirmance -- Chief Justice Wilentz and Justices Clifford, Schreiber, Handler, Pollock, O'Hern and Garibaldi. For reversal -- None. The opinion of the Court was delivered by O'Hern, J.

O'hern

This appeal concerns the relationship between two provisions of the Cable Television Act, N.J.S.A. 48:5A-1 to -53 (Act). The specific question is whether a proposed cable television licensee may be denied a franchise by the Board of Public Utilities Commissioners (Board) without the hearing mandated by N.J.S.A. 48:5A-16b when the Board makes a preliminary determination that the municipal consents required by N.J.S.A. 48:5A-17a have not been obtained in compliance with applicable rules and regulations. We hold that the statutory hearing must be held unless there are no relevant issues in dispute, and affirm the Appellate Division judgment directing that a hearing be held in this case.

The case arises from a contested application for the Jersey City municipal cable television franchise. Seven cable television companies submitted applications for the franchise. The Municipal Council of Jersey City (City Council) conducted a series of hearings in which it considered the merits of each individual application. Ground rules for the conduct of the hearings were set down before commencement. Specifically, it was agreed that the applicants would present their own cases on the merits and refrain from disparaging competitors; that a schedule of submission dates would be established, including specific hearing dates for each of the individual applicants, two public hearings, and one decisional meeting; and that the deadline for submission

of additional data would be five days after the last hearing date.

The last hearing was on October 8, 1980. On November 7, 1980, the City Council adopted a resolution awarding the franchise to Controlled Cable Corporation (Controlled). During Controlled's hearing before the City Council, its principals repeatedly stressed their intention to provide local management and ownership of a Jersey City cable television system. They would not be, in their words, "absentee owners," "carpetbaggers," or "conglomerate[s] * * * not really truly concerned in the local programming." They gave a "guarantee that there will be local management." At two points during the hearing Council members questioned the exact nature of Controlled's relationship with Suburban Cablevision (Suburban), another cable television company that was not an applicant for the Jersey City franchise. Controlled made it clear that Suburban was to be its principal financial and technical source. Controlled's principal said, however, that while it was "associating" itself with Suburban it remained the "prime mover in the corporation." In reaction to objections from two other applicants who charged that Suburban was a "back door" candidate, Controlled's principal stated: "It's very clear. Suburban Cablevision is not an applicant here." These comments were made on September 24, 1980.

Less than three weeks later, news accounts circulated in Jersey City that Controlled had agreed to sell 80% of its stock to Suburban. Suburban is one of the largest cable television operators in the State of New Jersey. It, in turn, is a subsidiary of Maclean-Hunter Cable TV, Ltd., a Canadian firm. On October 15, 1980, one of the other applicants sent a copy of the news article to the City Council, and emphasized that Controlled had not disclosed these arrangements. Another objector restated this argument to the City Council on February 10, 1981, when the City Council confirmed its resolution by the adoption of an ordinance, pursuant to N.J.S.A. 48:5A-24, awarding the franchise to Controlled.

On March 12, 1981, Controlled filed a petition with the Office of Cable Television in the Department of Public Utilities for a certificate of approval, as required for operation of a cable television system under N.J.S.A. 48:5A-16a. Contesting applicants petitioned for review, all alleging arbitrary refusal by the City Council, some alleging that they were entitled to the franchise because of regional considerations under N.J.S.A. 48:5A-17b, and others appealing to the exercise of the Board's paramount jurisdiction. The Board determined on June 22, 1981, that it would not conduct a hearing on Controlled's application, but permitted the parties to submit briefs and affidavits. Suburban then sought to intervene in the proceeding before the Board.

Without a hearing, the Board rendered its decision on September 28, 1981. It found that on November 14, 1980, Controlled had entered into an agreement to transfer 80% of its capital stock to Suburban, and found that the agreement was not before the City Council during its deliberation, in violation of the Act. It further found that a submission by Controlled on October 16, 1980, as well as those by two other applicants, were amendments to the applications filed after the previously determined deadline for amendments. On the basis of these irregularities, it denied the petition of Controlled for a certificate of approval and remanded the matter to the City Council for further hearings. At the same time, it denied the petitions of the other applicants and denied Suburban's motion to intervene.

On appeal, the Appellate Division reversed that order. That court held that the Board had improperly denied Controlled a hearing, and that all parties included in the proceedings before the Board, including Suburban, should be allowed to participate. The court agreed with Controlled that it should have had the chance to show that the City Council had before it the details of its relationship with Suburban; that any deficiency was not a violation of applicable regulations; and further that the October 16th, 1980, amendment merely corrected clerical mistakes and was not a source of error in the proceedings. The court also

held that the statute requires a hearing before the Board may deny an application for a certificate of approval after municipal consents have been obtained. Primarily because of an asserted conflict between this decision and In re Micro-Cable Communications Corp., 176 N.J. Super. 197 (App.Div.1980), we granted certification. 94 N.J. 537 (1983).

In Clear Television Cable Corp. v. Board of Public Util. Comm'rs., 85 N.J. 30 (1981), we reviewed in detail the history and purposes of the Act.

The Act, discussed in more detail below, provides a framework for the issuance of CATV [cable television] franchises and the regulation of cable television service. The power over cable television, both in franchising and regulation, is divided between the Board and the municipalities. The Board sets certain minimum technical requirements for all cable companies in the State. The municipality then selects a cable television company and the type of service that conform at least to the minimum requirements. The Board has the ultimate power to grant or deny the right to operate where a municipality has given a company consent thereto. [ Id. at 35.]

Under the statutory plan, cable companies must first obtain the municipal consents required by N.J.S.A. 48:5A-16a. Those consents must conform to "all requirements of this act and of rules, regulations and orders duly promulgated by the director [of the Office of Cable Television]." N.J.S.A. 48:5A-25. Companies then apply to the Board for a certificate of approval in order to operate, N.J.S.A. 48:5A-15, attaching to this application the municipal consents. N.J.S.A. 48:5A-16a. To insure compliance with the Act's terms, the Board is required to conduct a further review. Here the Board has authority to deny certification to an applicant, even where a municipality has granted consent, if the applicant does not meet the standards of public convenience and necessity, considering its suitability, character, and financial responsibility, and the applicant's ability to perform efficiently, considering regional needs, the proposed service and other services that may be required during the term of the municipal consent. N.J.S.A. 48:5A-16b. In a footnote, the Clear Court stated, however, that "the Board may not reverse the municipal consent without a hearing. Section 16(b)." 85 N.J. at 37 n. 3.

The Act provides that upon receipt of an application for certificate of approval,

the board shall review the same and shall, within 30 days of the receipt thereof, either issue the certificate applied for or order the director to schedule a hearing upon the application. No application shall be ...


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