01-27-1992 Council Packet - Laserfiche WebLink

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No Moves on HLTs By JOHN M. HIGGINS ■I ederal banking regulators disappointed cable lobbyists as last week came and went with no HH movement on restnctions on bank loans to H highly leveraged transactions. ^ Many cable executives had been predicting that regulators would take action in time for a Dec. 16 meeting of 500 banking examiners to discuss some of the conflicts between loan standards and the Bush ad ministration's push to loosen credit in the face of the recession. The banking agencies — the Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of Currency — had hoped to outline new HLT startdards to examiners at that time. But HLTs didn't come up. "HLTs just weren't a opic," said an official with one agency. Cable lobbyists said they were in the dark about where the rule proposals — which had been drafted two weeks ago — stood at the end of last week. “I was convinced we were going to have something," said one lobbyist. Others weren't surprised. “It’s like I said before." said Comcast Corp. treasurer John Alehin, who has helped spearhead liie fight against HLT rules. “Definitely by the end of the year, but which yearT ’ Other industry executives said they still expect fed eral action by the end of 1991, but aren't clear about what changes might be made. If relaxed rules are im posed by year-end. banks would be able to close out their books more favorably to merlia borrowers. A de lay could put off meaningful impact until the end of 1992. But there is no assurance that any modification' will be either favorable or meaningful to MSOs, "They ’ve muffed this before." said one MSO execu tive. “No bets on this one.” For two years, MSOs and media lenders have been trying to peel back HLT restrictions. The rules force banks to reclassify loans made to a leveraged buy-out or other acquisitions into a .separate category. A par ticular credit is labeled an HLT if a deal is m.ide with less than 25 percent equity or if equity quickly falls below that level. Regulators haven’t placed specific limits on how much a bank can lend to HLT companies; lenders are requited only to list the loans separately. Ncverthele.ss. bank examiners and securities analysts have taken large HLT holdings as a sign that a bank is financial ly weak, so HI.T money has dried up as banks try to reduce their HLT portfolios. The rules immediately crushed cable's access to bank loans, sending system values down 30-35 per cent MSOs also slashed capital spending, damaging hardware vendors. ■ Cable, Public TV Spar on S 12 By RACHEL W. THOMPSON r ollowing “a misunderstanding" p between cable executives and ■ public television’s lobbying group stemming from the group's endorsement of pending cable leg islation. the public TV group’s president agr^ to clarify his po sition with lawmakera. America ’s Public Television St-iUons on Nov. 7 joined other or ganizations announcing their sup port for cable bill S 12 during a Capitol Hill press conference. Not unexpectedly. APTS president David J, Brugger reafllnn^ APTS' support for language in .S 12 sup porting must-carry fur pul>lic tele vision stations. What surprised and angered ca ble executives was Brugger’s state ment of overall support for S 12, which they viewed as unnecessar ily broad. Continental Cablcvision chair man Amos B. Hostettcr. a former director of the Corporation for Public Broadcasting wrote to Brugger a day later terming "trou bling” Bmgger's “switch fror- non- combatant to adversary wit* .-t.* .• much as a simple ‘heads up. ' “Public television did not need to choose sides in this NAB-NCTA dispute," said Hostetter, who has a clu.se relationship with public sta tion WGBH-TV in Boston. The broad endorsement also brought apologies from some at WGBH. sources said. Brugger responded that APTS’ position had not changed, and said he would continue to .support must- carry language for public TV while refraining from taking sides on un related issues addressed by cable legislation. National Cable Television As.socialion president James P. Mooney then wrote to Brugger on Nov. 13: “I also think 1 understand the English language, and the plain meaning of your statement ... is that you’re for S 12. the v/holc load." After some back and forth dis cussion. Hostetter wrote to Brugger on Dec. 6: “I would be delighted to work with you ... (to) ’clarify ’ your position.” Brugger and a spokesman for Hostetter last week said the dispute had been cleared up. The NCTA said it had no comment. Asked whether any lawmakers may also have misurxtcrstood APTS’ position. Brugger said. "We haven't found anyone on the Hill who mis understood, and it's because we've been consistent fmm the start." Brugger also said he had sent to Hostetter a draft of an alternative statement. ■