Cable system price tag rises
Subscriber numbers higher than expected,
but officials say that means system is healthy
By DAVID BORAKS
Davidson and Mooresville will pay about $50 million – about $10 million more than planned – to buy the local cable television and internet system, Commissioner Evan Webster said at the Town Board work session Tuesday. That’s because the system has more customers than anticipated, said Mr. Webster, who also chairs the board of the planned MI-Connection cable consortium. The bigger pricetag could require additional borrowing, but the higher subscribership also is a sign that the system is healthier than originally believed, he said.
Mr. Webster disclosed the new numbers during a presentation in which he also handed out 29 pages of spreadsheets with updated financial projections. He was joined in the presentation by James Miller, MI-Connection’s (pronounced “my connection”) general manager.
Davidson and Mooresville are expected to close the purchase of the former Adelphia Communications network on Dec. 19. Time Warner Cable has been operating the system while the towns decided whether to buy it.
REVISED NUMBERS
The towns had estimated they would inherit about 10,500 cable TV customers in Mooresville, Cornelius, Davidson and surrounding areas when they took over the system. But as they have worked on the transition with Time Warner, they’ve obtained new calculations of subscribers and the size of the local market.
Mr. Webster said the system now has 13,197 cable TV customers and about 8,000 high-speed internet customers. New estimates also show that the system passes about 40,000 homes. That puts cable TV penetration here – after years of substandard service - at about 33 percent, far lower than the 65 percent average nationwide, he said.
The towns have arranged about $80 million in financing – about half to buy the system, and the rest to pay for badly needed upgrades. But the higher than expected customer numbers mean the towns may have to use more of the borrowing for the purchase. “We’re going to have to come back with a secondary borrowing,” Mr. Webster said Tuesday.
But the higher subscribership also means more revenue than in the towns’ original projections. “Having more customers means it’s a strong system financially,” Mr. Webster said.
That means the towns will take on less debt per subscriber, he said. And the system could begin making money for the towns in 2011 – a year earlier than previously projected.
Critics of the purchase have argued that the towns should stay out of the cable business or that the purchase is too risky. The new figures may be a sign that the towns are getting a clearer picture of what they’re buying, as they work through transition issues with Time Warner.
Time Warner and fellow cable giant Comcast had bought most of Adelphia’s assets out of bankruptcy last year. Time Warner, which operates cable systems in Charlotte and Statesville, had battled the towns in court to hold onto the north Mecklenburg system. But a bankruptcy court in New York ruled that the towns had the right of first refusal for the system, then later set a price of $3,810 per subscriber.
Huntersville, Mecklenburg County, Troutman and Cornelius also had considered joining the cable consortium formed to buy the system, but dropped out. But Cornelius and Mecklenburg County have agreed to transfer their subscribers to the new system.
CREATING JOBS, NO SERVICE CHANGES
Customers should see little or no change in service initially, Mr. Miller, the general manager, said in his presentation. In addition, MI-Connection plans to hold prices at current levels for at least 12 months. Mr. Miller said MI-Connection also is committed to improvements in customer service, including shorter wait times for customer service representatives, quick response times for repairs, and specified times for cable service appointments.
As system upgrades are completed over the next year and a half, MI-Connection plans to add new digital channels to the lineup, picture quality and internet access speeds should improve and the consortium also expects to add telephone service.
Town board members said based on their own experiences, or those of neighbors, those changes won’t come a moment too soon. Said outgoing commissioner Cary Johnston, “People are anxious for them to start.”
Mr. Miller said MI-Connection is in the midst of planning for conversions of its customer billing system and other systems. He said internet customers would begin seeing email addresses change to “@mi-connection.com” in January or February.
Meanwhile, Mr. Miller already has begun hiring. He said the creation of MI-Connection eventually will create about 30 new jobs in the area.
CONTACT MI-CONNECTION
MI-Connection
435 S. Broad St.
Mooresville, NC 28115
704-662-3255
http://www.mi-connection.com
Filed under: Cable TV, Davidson town board, Links
I have read, reread, discussed with others over and over this whole cable purchase and I still have the same feeling no matter how much I try to understand and support the purchase: If it smells like a skunk then it probably is a skunk. I’ve talked, literally, to dozens of people about the purchase and I have not been able to find one person, other than those voting for the purchase, that is in favor of the cable deal. The same sentiment is repeated in every conversation, why can’t we bring this to a public referendum, why don’t we start a petition? I know the answers to these questions, as do others, because public support for the purchase is not there.
I agree 100 percent with Rusty Knox concerning the cable deal. Banks will make millions on interest payments. The residents could be stuck with a very large bill to pay with future taxes. The government should not be in the telecommunication business. Is it too late to get out of this deal or could we at least let the voters of Davidson decide the fate of this transaction?
You can look at the extra subscribers (and hence the extra $10MM in debt payments) in two ways. First, as a good thing, because it signifies more subscribers and more revenue. This is the view taken by the board. Second, as a bad thing, because it represents more risk. It’s kind of like buying a bigger house - that could be a good thing until you lose your job, or your specific house goes out of style and your larger investment is devalued.
Those of us who argued against the cable purchase never doubted that the financials look good, with certain assumptions. The primary assumptions (which was also the Town’s paid consultant’s opinion) are that MI-Connection will have little to no competition, and will require no significant reinvestments after the initial upgrades.
I personally think the above two assumptions are unlikely, and comments at Tuesday’s Board meeting supported my belief. First, Town Manager Leamon Brice stated that residents will have a lot of options to choose from, such as DirectTV, AT&T, and possibly in some areas even Time-Warner Cable. Second, when asked whether additional investments will be required down the road, MI-Connection General Manager James “Junior” Miller said he didn’t know, because “the way things are changing, we have no idea what will happen in five years.” Which is exactly the point the opponents of the cable purchase have been making: technology is changing, and a company such as MI-Connection with $20MM in annual revenue is not going to be the leader in technology. Thus this is a risky venture.
So, I would not jump to the Martha Stewart-esque conclusion that the additional $10MM in debt is a “good thing.” Only time will tell.
Well taxpayers, the cable deal isn’t finalized yet but the town is already proposing to borrow MORE money for this highly risky venture. I fear this is just the beginning.
At $50 million, the proposed indebtedness equates to over $5,400 for every man woman and child in the town. To calculate the cost for your household, multiple $5,400 by the total number of adults and children in your home. This is what your town commissioners have committed you to without a public vote. Amazing!
A good way to put these figures into perspective is to apply them to the county of Mecklenburg. It would be the equivalent of the county borrowing $4.2 BILLION without a bond referendum. Amazing!
I encourage you to ask your town commissioners for an explanation. Also note that town commissioner Webster is on the board of the cable company. A conflict of interest?
I am 100% in favor of the town’s purchase of the cable franchise. My prediction is that the for-profit management contractor will provide service superior to the large national providers. Also the system will provide an important income source that will allow the Town to resist the financial lure of convenience marts and drive-through junk food eyesores.
The red-herrings put out by those who say nobody wants town-owned cable are over-ripe baloney. Davidson just had an election. Those who were in favor of cable were elected. They TROUNCED those who explicitly and passionately were against it. What more referendum do you need than that?
And on mass transit: Can the antis not take a hint from the transit referendum that won 70% over 30%, despite their baloney that “no one wants mass transit”?
I’m all for criticism of government, but there are other areas where time and attention can be spent. Anti-cable folks, please stop claiming you have the public behind you. Wake up, read the numbers, and get over it.
Obviously, election results can be interpreted in many ways. One could say that the fact that the sitting commissioner who heads up the cable venture narrowly (I think being elected by 40 votes out of over 2000 cast does not qualify as a TROUNCING) was re-elected over 3 newcomers - and did not even place in the top 5 in either of our two precincts - was a referendum against cable. We will of course never know, because the only way to know how our citizens feel specifically about cable would have been to have a referendum on cable, which did not happen and probably never will happen.
The political event that is most germane to this whole conversation is not the town board election of 2007, but rather all previous elections dating back to the Constitutional conventions in the 18th century. These fights and elections give us the right to criticize decisions made by our government, and that right does not terminate with an election. FDR was re-elected (in a landslide) after wrongfully incarcerating American citizens of Japanese ancestry. Did someone back then tell the Japanese-Americans “you lost the election - get over it?” Fortunately, no.
Whether in the minority or the majority, people have a voice and should be encouraged to use it, not told to “get over it.” Anybody who thinks local governments don’t at times do foolish things should Google “Randy Parton Theater” and read about the fiasco unfolding in Roanoke Rapids, NC (pop. 17,000) whose local officials recently went into debt for $21.5MM (which was reviewed and approved by the same Local Government Commission who approved our cable venture) to build a theater to be managed by Randy Parton (in case you - like I - are wondering who is Randy Parton, he’s Dolly’s brother), a venture which just this past week ended with an inebriated Mr. Parton being escorted out of the theater by the police.
Now, I certainly feel our local officials have much more sense than those in Roanoke Rapids. But, I also feel that our town is best served by the collective wisdom of elected officials, and the wisdom of the citizenry. So, at the risk of offending Mr. Maier, I think we’ll all continue to raise questions about cable and other things instead of “getting over it.”
There are many more ways to dispute and confront town government than a referendum. What people need to get over is thinking that they have some secret insight into what’s really going on, because they talk to a handful of people who say they agree with them. I say, give me data. Let me see a petition, a survey, daily demonstrations, or something besides threatening a referendum. An impossible referendum is not the solution.
As of about two hours ago, I am no longer a Davidson Town Commisioner so I now feel free to comment on town issues. I have always read all comments with interest. One thing I learned within a few months of being elected four years ago is that people who oppose something comment constantly. People who are happy with the situation usually do not take the time to comment.
Bob Maier is right, of course. We had a referendum on cable a little over a month ago, and I assume all the email writers voted. John Woods won two-to-one. Margo Williams led the vote for commissioner. Evan Webster won a close vote. All three were re-elected. Three seats were up for grabs and each was won by a person who did not oppose the cable purchase. The candidates who did oppose the purchase were not elected.
The result in Mooresville was the same. The mayor who broke the tie and supported the cable purchase was easily re-elected. A commissioner who opposed the cable purchase was defeated and replaced by one who took no stand on cable, so my Mooresville friends tell me.
Regarding programming, Davidson through MI Connection is now part of a consortium which is bigger than Time Warner and smaller than Comcast. We can and will compete!.
Davidson, like the federal government, is not a direct democracy. We have representative government. In Davidson voters are given the opportunity every two years to “throw the bums out.” I, and I believe the other commissioners, made the vote we thought was in the best interest of the citizens of Davidson.
The people who talk to me tell me they are eager for MI Connection to take over. Give it a chance. I predict you will be receiving much better cable and internet service in a year and that when the next election rolls around, cable will not be an issue!
I am one of the many who have serious concerns about the town’s venture into cable. I would offer the following observations
1. I think it is naive to assume the the recent town elections can be considered a positive referendum on cable. Many of the people I talked to in Davidson have no idea the town had purchased the cable system, and those that did have no idea of the price paid. I have yet to talk to a town resident who is gushing about the towns purchase (town board members and other politicos excepted). The fish kill Griffith St. took place during the past regime’s watch, but the fact they were re-elected shouldn’t be viewed as support for dead fish.
2. I find it disturbing that the town spent many months and 10’s of thousands of dollars on due diligence and were off on the subscriber numbers by 25%. Are there other surprises awaiting us?
3. The town paid over $3700 per subscriber. I’m currently not a subscriber, but would be willing to sign up for $3500, a deal by current prices. Ok, how about $2,500??
The concern I have had the last few years regarding many of the Town’s decisions is that the folks in Town Hall are hearing from the same small group of like minded individuals who tend to agree with whatever is proposed.
As a tax payer, I truly hope it does work out as planned. I hope folks like Cary and Bob can snicker behind my back in a few years due to my lack of faith in Town Hall. The question is, is this a gamble a town the size of Davidson needed to have made……
“And so tonight - to you, the great silent majority of my fellow Americans - I ask for your support.” Thus said Richard Nixon in November 1969, introducing a new phrase to the political lexicon.
Nixon used the ’silent majority’ phase to dismiss the rather vocal protests against the Vietnam War. He maintained that the majority of Americans supported the war, but just didn’t speak out. Given that he was re-elected in a landslide in 1972, perhaps he was right. Given that both his presidency and the war ended rather badly, I personally think that while Nixon in 1969 was right about the ’silent majority,’ in the end it was the ‘vocal minority’ that had the correct position on the war, and the correct suspicions about Nixon. Maybe that’s because being informed usually goes along with being vocal. Sure, some people just like to hear themselves talk, but typically people speak up because they care, and they care because they’ve taken the time to learn what’s going on.
Now, of course our discussions regarding the cable venture do not have the same import as discussions about war and peace. But, it is interesting to me that this notion of a ’silent majority’ is being perpetuated today just as it was in 1969.
My fear about the ’silent majority’ argument is that any politician - be they President of the US or Davidson town board commissioner - can use it to claim support for their positions, even in the absence of any evidence of support.
This is what we’ve seen during the cable discussions. The vast, vast majority of vocal comments, be they via this website or public hearings, have been anti-cable. When I campaigned for the board, I literally had 1 citizen tell me they supported the cable purchase, and at least 100 people who spoke up to me and said they did not support it. But, town officials claim a ’silent majority,’ and are dismissive of those who vocally oppose their decisions.
The issue here is not cable. That decision has been made, and I would hope that all of us, like Frank, hope that it turns out to be a wise decision. Only time will tell.
The larger issue is how we as citizens interact with our town officials, and vice-versa. I am concerned that the town officials are dismissive of those who disagree with them, whether it be on cable or any other issue. Why would they dismiss someone who has clearly taken the time to educate themselves about an issue, and speak out about it?? Why would they instead listen to a ’silent majority’ who is so apathetic that they don’t even speak out, or even attend board meetings or hearings? Is this how a democracy is intended to function? Rule of the mute?
Conversely, citizens need to interact more consistently and frequently with their town government. On a good night, only about 20 citizens (out of 5000+ permanent voting-age residents) show up at board meetings. Several people who have been rather vocal against the cable purchase were not present at the public hearings or board meetings. Perhaps their informed comments would have made a difference at that time. They clearly will not at this time.
It’s true that every 2 years we can “throw the bums out” as Cary says. But in those intervening 2 years our elected officials can do alot of things that cannot be undone come election time. So, it’s extremely important for citizens to be involved with their government more often than every two years.