Updated Thursday, May 6, 2010, 2:53 p.m.
The MI-Connection communications system board of directors has scheduled a special meeting Friday, May 7, to review a fiscal 2010-11 budget that will be sent to the towns of Davidson and Mooresville. The meeting, which will be by conference call, begins at 9 a.m. at the system headquarters, 420 S. Academy St., Mooresville.
Also, at its regularly scheduled board meeting a week ago, the board reviewed quarterly results and elected a new treasurer.
The towns of Davidson and Mooresville, which own the cable and internet system, are waiting for MI-Connection’s budget so they can plan their own spending next year. The biggest questions will be the size of debt payments in the coming fiscal year and how much MI-Connection wants for capital improvements to continue expanding its network.
Update: A public notice on May 4 said Friday’s meeting would be “to adopt the budget and send to the towns.” But General Manager Alan Hall on Thursday afternoon clarified that Friday’s meeting will not be final vote on the budget. The board will vote only to recommend the budget to the towns, he said. It must hold a public hearing on the budget, which is planned at the regular board meeting May 27. An adoption vote will follow the public hearing. End of update
The towns this spring have given the system $576,000 to cover a budget shortfall. It’s expected that the system will need another cash subsidy again next year – and the number is a big question mark until MI-Connection’s board approves a budget.
Officials from both Mooresville and Davidson told the MI-Connection board at its April 29 meeting that they can’t complete their own town budgets until they know the size of possible contributions for next year. The board agreed to schedule Friday’s special meeting to speed up delivery of a budget.
Friday’s budget session comes on the heels of a quarterly financial report last week that showed the system is still losing money and customers. The quarterly loss widened by 23.5 percent, to $1.7 million. But revenues have begun to rebound, and rose 9.4 percent on sales of second and third services – telephone and internet – to existing customers.
Chairman John Kasberger was optimistic after hearing the latest results at the April 29 board meeting. “One of the key objectives we’re going to have to accomplish is increase our revenue per customer, with a higher percentage of bundling,” Mr. Kasberger said. “Even with a net loss of video customers … by bundling we were able to increase our revenue, and therefor our EBIDA” (That’s earnings before interest, depreciation and amortization – or cash flow – and it’s a key measure of the health of system, excluding debt service and other one-time expenses.)
“Let’s keep it up. It’s certainly a move, a development, in the right direction,” Mr. Kasberger told MI-Connection General Manager Alan Hall.
John Venzon, one of Davidson’s two representatives on the cable system board, added, “The numbers are positive. We’re getting the growth that we have to have. We can only grow our way out of the situation that we’re in. So the revenue growth is great, (but it’s) always concerning to see relationships going down,” he said. He said Mr. Hall, who was hired last fall, is coming “into his time in command, and the results are starting to show.”
TREASURER ELECTED
Also at the April 29 meeting, the board elected Mr. Venzon as treasurer. That completes a transition in leadership on the board. Mr. Kasberger, a retired Lowe’s executive from Mooresville, was recently elected as chairman, and Ken Essex of Davidson was re-elected as secretary.
See all DavidsonNews.net’s coverage of MI-Connection and related stories under the MI-Connection tag.
– David Boraks
What MI-Connection needs to show is how revenue actually leads to greater cash flow. In its last two reporting periods, including the most recent quarter, MI-Connection reported revenues increasing in the 9-10% range, but both times the loss was greater than the year before. This is a concerning trend.
The market is very competitive. MI-Connection is growing business through promotions and by paying referral fees. This is in response to market actions of the satellite providers, Time-Warner, and AT&T (all of whom have much deeper pockets than MI-Connection). As a result, the gross margin (this is an indicator of profit after paying direct expenses like programming fees), dropped from 63% to 55% in a year. Next year the debt service of MI-Connection goes up by $2 million. The modest increase reported in EBIDA just makes a dent in that number.
If this meeting is open to the public, everyone in Davidson and Mooresville should attend. Whether Davidson is able to provide anything other than basic services without raising property taxes by 50% will depend on the success of MI-Connection. This is the most important issue facing our town and we citizens must all be involved.
For those readers who do not know me, I am the General Manager of MI-Connection. I appreciate Mr. Graham’s comments and completely agree with his point about how important it is for all citizens to be involved.
If I may, I would like to clarify an important point. Tomorrow’s meeting is open to the public, but it is not open for public comment. At tomorrow’s meeting the MI-Connection board will vote on a budget to send to the Towns. This will not be the final approval for the budget. The recommended budget will then be posted for public review, and a public hearing will be held at the next MI-Connection board meeting on May 27.
The citizens of Davidson and Mooresville are our “shareholders” and are therefore invited to take part in this process. I would hate for anyone to travel for this meeting and be upset if they thought this was the public hearing when it is a work session for the board.
Alan Hall
ahall@mi-connection.net