Baltimore, MD – An audit of Baltimore City’s only cable franchise agreement identified miscalculations resulting in an underpayment of $19,744 by Comcast. Including interest, Comcast owes Baltimore City $21,884.

This finding was included in a report presented by City Auditor Josh Pasch to the Board of Estimates this morning. The Department of Audits (DOA) reviewed Comcast’s adherence to the terms in the Baltimore City Cable Television Franchise agreement. This is the second of three reports on the Franchise, the second of which can be found here.

• Report 1: Verify the City is monitoring Comcast’s compliance with the PEG and reporting requirements of the Franchise Agreement from January 2017 through January 2021 (Performed by Department of Audits)
• Report 2: Verify that Comcast has paid franchise fees and PEG fees to the City in accordance with the Franchise Agreement from January 2018 through January 2021 (Performed by Department of Audits)
• Report 3: Review cable franchise agreements from other Cities with Baltimore City’s (Performed by Comptroller’s Office)

The objective of this report was to verify that Comcast has paid franchise fees and PEG fees to the City in accordance with the Franchise Agreement. Among the findings, the City Auditor noted these exceptions:

• Comcast underpaid the City $16,453 in franchise fees 
  • In the same period, Comcast paid $19,377,048 in franchise fees
• Comcast underpaid the City $3,291 in Public, Educational, Governmental (PEG) fees.
  • In the same period, Comcast paid $4,065,779 in PEG fees.
• Per the agreement, Comcast owes interest on any late payments. As of September 30, 2022, the Department of Audits calculated interest on late payments totaling $2,140.

Comcast agreed with all the findings.

There were no exceptions noted related to:

• Comcast subscriber charges and calculations for services provided to Baltimore City citizens.
• Payment of operational costs relating to PEG Channels.
• Quarterly payments made by Comcast.

“I am grateful for our auditors for tackling this complex agreement,” said Comptroller Bill Henry. “Maximizing revenue collection is necessary to maintaining trust with our residents and effecting change. I’m looking forward to collecting this check from Comcast and seeing an improved payment process going forward.”

Recommendations

The City Auditor recommends that the total amount owed by Comcast be remitted to the Department of Finance, Bureau of Revenue Collections at 200 Holliday Street, Baltimore, Maryland 21202.

Perspective

Typically, franchise agreements authorize the municipality to conduct audit investigations to ensure payments are in accordance with the agreement. To put Baltimore’s audit in perspective, the Comptroller’s Office researched other similar investigations.

The Comptroller’s Office is in the process of reviewing these investigations and other franchise agreements to support recommendations for the next Cable Franchise Agreement. The current agreement expires in 10 years.

Background

Public, Educational, and Governmental (PEG) Fees: Access channel fees are assessed by cable franchising authorities for costs associated with those local channels.

Franchise Fees: Fees that are paid to local governments as compensation for Comcast's use of the public rights-of-way and easements. The Federal Cable Act authorizes cable operators to collect from customers the full amount of franchise fees paid to local governments.

Resources

Comcast Franchise Agreement

Comcast AUP Part 1

• Report
• Press Release

Comcast AUP Part 2