New General Manager Alan Hall meets the board. (David Boraks photo)
By DAVID BORAKS
DavidsonNews.net
MOORESVILLE – MI-Connection Communications System said Thursday its financial results for the first quarter of the 2009-10 fiscal year were slightly behind budget, but the business is continuing to grow since completion of a system upgrade last spring.
Meanwhile, at a board meeting in Mooresville, MI-Connection also introduced a new general manager, cable industry veteran Alan Hall, who started work Oct. 1.
Mr. Hall said he is developing revised discount packages to lure new customers and working to keep expenses under control. He also said officials are conducting a system audit to recoup about $85,000 a month in lost revenues from residents who are receiving cable without paying for it – a problem that plagues many cable operators.
NEW LEADER, NEW FACESAlan Hall has been named general manager of MI-Connection. He takes over from Junior Miller, who has overseen the system since Davidson and Mooresville bought it in 2007. Mr. Miller, who led a $20 million upgrade of the system, is now operations manager. Mr. Hall is a 25-year cable industry veteran who has worked as a marketing executive and manager at cable giants Time Warner Cable and Charter Communications. He also once worked for Adelphia Communications, in Frederick, Md. Adelphia also owned the Lake Norman area cable system until its bankruptcy several years ago. Also at the meeting were two new board members - John Venzon of Davidson and Dawn Huston of Mooresville – and MI-Connection’s new marketing manager, Ellen Baker, who started work a few weeks ago. |
The board on Thursday also discussed plans to hire an independent consultant to review MI-Connection’s financial performance in comparison with other smaller cable operators. Bristol Virginia Utilities (BVU), which manages the system for its owners, the towns of Mooresville and Davidson, said it would split the $5,000 cost of a preliminary study with MI-Connection. The board could vote to go ahead with the study at its next meeting, in November.
BUDGET REPORT
In a financial report at the meeting, MI-Connection reported revenues for July, August and September – the first three months of the new fiscal year - of $3.88 million, which officials said fell about $262,000 behind projections.
The system, which Mooresville and Davidson bought in December 2007, lost $1.76 million during the three month period, or $143,000 more than budgeted. Officials blamed the below-budget performance in part on higher overhead costs, commercial and marketing expenses, and administrative expenses.
Operating earnings – before debt payments, depreciation and other non-operating costs – totaled $244,543. That also fell short of budget, but is a sign that the system is generating enough revenue to more than pay its operating expenses. Officials have said the shortfall is covered by reserves through the end of this fiscal year. They’re hoping the system will continue growing fast enough so that revenues will cover debt payments in future years. (MI-Connection did not provide year-to-year comparisons.)
CUSTOMER GROWTH
That growth will depend on the continued addition of new cable TV, internet and telephone customers, and selling additional services to existing customers. On that front, Thursday’s report included some positive signs.
Total customer relationships grew to 15,335 at the end of September. That’s up 142 from the July 1 start of the new fiscal year, though 491 fewer since the towns bought the system.
For now, most of the growth is coming through selling telephone and high-speed internet services to existing cable TV customers. The total number of products sold, known as revenue generating units (RGUs), has grown by 1,156 since July 1, to 29,264. Included in that growth are several dozen business customers for both telephone and internet – an area that system officials see as one of their biggest growth opportunities.
MI-Connection has added 64 small business telephone customers in the past three months, and 27 commercial high-speed internet customers, the report said.
“We have a tremendous opportunity in the business/commercial market out here. We’re aggressively pursuing it and I think that’s just a huge opportunity for us both in terms of revenue growth and just expanding this network,” Mr. Hall told the board.
FINANCIAL REPORTING CHANGES
The board also spent time Thursday talking about revising and improving its financial reporting to the towns, and in some cases limiting the information it makes public.
Davidson Town Manager Leamon Brice has been discussing the need for improvements with MI-Connection’s board, and with BVU. In the future, the system will offer both towns’ boards a monthly or quarterly financial review, as they deem necessary, Ms. Bright said. She said BVU plans to share only highlights of the results with the town boards, though it will deliver more detailed results to the MI-Connection board.
Ms. Bright said it’s important for BVU and MI-Connection to keep some information private, particularly customer growth figures and other details that could give an advantage to competitors. “What we have is a highly competitive business,” Ms. Bright said. “We can’t play our hand on putting competitive or sensitive information in the hands of someone who could share that with the competition.”
Also Thursday, the board went into closed session following the open meeting, to discuss an undisclosed issue of potential litigation.
AUDIO REPLAY
Listen to a replay of Thursday’s board meeting below.
Leading the meeting is Board Chair John Kasberger. He introduces new general manager Alan Hall (around the 3 minute mark) as well as new board members John Venzon of Davidson and Dawn Huston of Moresville. Mr. Hall gives a brief business overview. Operations manager Junior Miller reviews customer service and other operating statistics. Board member Dave Pendleton of Mooresville leads a financial review (around 18:00). Also heard discussing financials is Chief Financial Officer Stacey Bright. Ms. Bright, who was at the meeting via teleconference link, also leads a long discussion of planned changes in the way the system results are presented to town boards and the MI-Connection board (around 35:00). The system’s attorney Nick Miller is heard on a telephone connection (around 1 hr 17 mins) discussing hiring a consultant to look at financial performance and plans for renewing the system’s lobbying contract and other legal issues.
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MP3 format, 1 hour, 34 minutes.
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Ah, the “Cable” issue. Let’s see: an 8% Revenue Shortfall, a $1.76 million loss for the quarter ending in September (8% higher than expected), Operating earnings “fell short of budget”. Is there a pattern developing here? Performance: 142 new customers from the start of the fiscal year on July 1. That’s 491 fewer since the purchase of the system. 64 new small business customers, 27 new commercial high speed internet customers. These are paltry numbers at best. It gets better. They want to revise and improve the financial reporting to the towns and limit some information it makes public. Maybe they have forgotten that the system is owned by the towns of Mooresville and Davidson and we are the public.
Open meeting laws do present challenges to a local government owning a business. Here is a simple approach for deciding what information should and should not be released: put out exactly the same information as publicly held Time Warner Cable, DirectTV, AT&T, and DishNetwork do in their quarterly and annual reports. No more, no less. If you have read through these reports (I have), you’ll see that our competitors publish a wealth of information, including the type of information that MI-Connection won’t release for fear of tipping of the competition. Governments should have learned long ago that withholding information from the public is never a good thing.