James Cable Partners L.P., a Bloomfield Hills, Mich.-based
MSO with about 72,000 subscribers, said it hired Communications Equity Associates Inc. to
help seek a buyer.
In its third-quarter financial statement, filed with the
Securities and Exchange Commission last week, James Cable said it has "for several
years been exploring various strategies to enhance its value, and it has recently engaged
an independent investment advisor to assist it in evaluating the various strategies."
The filing continued, "The strategies under
consideration include a restructuring involving the sale of securities to a third party,
business-affiliation opportunities and the possible sale of the company. No decision has
been made to sell the company, and there can be no assurance that any transaction will
result from this process."
CEA senior vice president Jay Dugan confirmed that his
company was the adviser. James Cable officials did not return phone calls for comment at
In a research note written shortly after James Cable's
numbers were released, CIBC Oppenheimer Corp. cable and telecommunications analyst Aryeh
Bourkoff said the likely suitors for James Cable could be other small MSOs like Classic
Communications Inc. and Mediacom LLC.
Bourkoff also wrote that St. Louis-based MSO Charter
Communications may be interested in the systems once it returns its focus on acquisitions
following its initial public offering.
James Cable mainly operates in small rural areas. Revenue
for the third quarter ended Sept. 30 was down 3 percent, to $9.1 million from $9.4 million
in the same period last year. Cash flow dipped 5 percent, to $3.45 million from $3.62
James Cable has also been losing subscribers -- about 1,000
since the second quarter of this year -- due to competition from direct-broadcast
But Bourkoff saw some light in the company's
high-speed-data offering, "NetCommander," which has grown 14 percent to 800
customers in the third quarter compared with 625 subscribers in the second quarter. The
company also has 2,000 dial-up Internet subscribers.
James Cable is spending to upgrade its network -- about $10
million this year -- and it expects to have 30 percent of its customer base served by
750-megahertz, two-way plant by the end of the year.
Although cable systems have sold for between $4,500 and
$5,000 per subscriber this year, that has been mostly for urban markets. Rural systems
like James Cable's are more likely to attract prices in the $2,000-per-subscriber range,
which could bring its owners about $144 million.
James Cable is also rolling out digital service, via
AT&T Broadband & Internet Services' Headend in the Sky, which it plans to have
available in eight markets by year-end.
Although it has lost some subscribers to DBS, revenue per
subscriber actually rose in the third quarter, to $42.24 from $41.41 in the previous