Comptroller
John C. Liu today announced the results of a new audit which found that
Verizon had significantly
under reported revenue as required by its cable franchise agreement with
the City and underpaid fees owed to the City. Verizon has agreed to
pay the City $1.41 million in additional franchise fees.
“Franchise
agreements with the City must be enforced both to deliver quality
service to our residents and to ensure that City
taxpayers are getting their fair share of revenues from these
franchises,” Comptroller Liu said. “Our audit spells out why Verizon
owes the City $1.41 million in franchise fees, and I’m pleased that
Verizon has agreed to pay up.”
Verizon
is required to pay New York City a franchise fee of 5 percent of gross
revenue as part of its agreement to deliver
cable service throughout the City. The 12-year non-exclusive agreement,
via the Department of Information Technology and Telecommunications
(DoITT), began in 2008.
This
audit by the Comptroller’s office found that from July 2008 to June
2013, Verizon understated advertising revenue on
the quarterly reports that it submits to the City by approximately
$28.2 million, resulting in underpayment of $1.41 million in franchise
fees owed to the City.
Specifically, the audit found that Verizon understated $17.1 million in advertising commissions that should have been included
in gross revenue and did not report $11.1 million in foregone revenue from the value of advertising retained for its own use.
The
audit called on Verizon to immediately pay the $1.41 million it owes
the City, report all revenue as required by its franchise
agreement, track the value of its own advertising, and provide DoITT
with access to all necessary records. DoITT agreed with the audit’s
findings and said it would ensure that Verizon accurately reports its
revenue and complies with its franchise agreement.
Verizon
disagreed with the audit’s findings, yet has agreed to pay the City the
full $1.41 million. This payment is in addition
to the recent $60 million settlement between Verizon and the City for
cost overruns caused by the company’s delays on the Emergency
Communications Transformation Program project.
Comptroller Liu credited Deputy Comptroller for Audit Tina Kim and the Audit Bureau staff for presenting the findings.
Background:
Mayor Bloomberg, Comptroller Liu Announce $60 Million Settlement Agreement With Verizon, Nov. 14, 2013:
http://comptroller.nyc.gov/
