North Carolina Group Weighs Buyout

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A consortium of towns near Charlotte, N.C., have until mid-June to decide whether to buy the local cable system once owned by Adelphia Communications but now operated by Time Warner Cable.

Their biggest challenges: deciding whether the venture is worth $3,810 per subscriber (possibly up to $43 million) and determining how many cities will eventually participate in the municipal cable operation.

Attrition has already shrunk the potential intergovernmental agency that would run a regional cable system. Initially, the alliance included Cornelius, Davidson, Huntersville, Mooresville, Troutman and Mecklenburg County. Now, according to information on the project published for residents by the town of Davidson, only Davidson, Mooresville and Troutman are firmly committed. Cornelius held hearings on the venture last week, but officials might transfer that cable subscriber base to the consortium without actually joining it, according to the pro-consortium materials.

The cities had language in their franchises giving them the right to try to buy the local system which dates to 1999, when Prestige Cable sold that operation to Adelphia. The provision was triggered when Adelphia declared bankruptcy in the wake of its 2002 accounting scandal and agreed to sell out to Comcast and Time Warner Cable.

Time Warner Cable challenged the cities' purchasing rights. But the Adelphia bankruptcy court ruled for the localities, designating Time Warner Cable “interim operator” and giving the towns “reasonable time” to figure out how a municipal operation would separate itself from the regional Time Warner Cable system.

The court also determined that appropriate price for the systems, notifying the cities of the $3,810-per-subscriber figure on May 16.

Although that was $1,200 more per subscriber than officials had estimated, the cities are proceeding with hearings to gauge support for a buyout.

The Davidson report states consortium members expect financing from Bank of America and have computed financing plans using either three or four consortium members. The purchase price could range from about $20 million to $43 million, depending on participation, the cities estimated.

City officials hope to gain control over escalating rates, increase signal reliability and launch services such as telephony, video-on-demand and higher Internet access speeds.

The communities have until June 16 to decide on attempting to buy the local operations. They would then have 120 days to arrange financing, craft programming contracts, hire and train staff and finalize the engineering necessary to separate the municipal operation from Time Warner.

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