Speakers trade opposing views on cable purchase

Residents of North Meck and South Iredell filled the Davidson IB Middle School auditorium Thursday night for a public forum on a proposal by Mecklenburg County and five area towns to buy the former Adelphia cable system.

The towns (Huntersville, Cornelius, Davidson, Mooresville and Troutman) have the right of first refusal to buy the television and internet access system, which is up for grabs because of the bankruptcy of Pennsylvania-based Adelphia. Time Warner Cable is currently managing the system and would own it if the towns decide against the purchase.

Speakers Thursday generally fell into one of two camps: those philosphically opposed to government ownership of the system and those (including local officials) who see the purchase as a way to improve service, control rates and expand the network’s offerings.

(Note: since the hearing, Davidson officials have posted on the town Website a collection of documents related to the proposed deal, including a fact sheet, information about BVU, the third-party company chosen to run the system if the purchase goes through, and studies by consultants about the economics of buying and running the system. Click here for the documents.)
Davidson Town Manager Leamon Brice and Davidson Mayor Randy Kincaid led the two-hour session, which attracted reporters from a variety of local news media. (I actually covered the event for WFAE-FM in Charlotte.)

Brice laid out the rationale for the purchase, calling it “once-in-a-lifetime opportunity” for the five towns to have local control over the cable system. Local control will allow decisions about programming and upgrades to be made locally, he said. And profits generated by the system could be reinvested in improvements in technology, programming and customer service. (A lawyer working with the towns said Thursday night the system is highly profitable. Revenues currently exceed operating costs by 35% to 40%. That wouldn’t necessarily remain the case, however, as some excess profit likely would go to system upgrades and to help offset future rate increases.)

Other speakers were vehemently opposed to government involvement in the cable system, and said it should be turned over to Time Warner, one of the biggest companies in the cable industry nationwide. Time Warner operates the cable system in Charlotte and recently took over the former Adelphia franchise in Statesville.

Brice and other area officials who are considering the purchase said the system would be self-financing and would not require taxpayer money to fund operations. They also said the system would not be run by public employees, but instead would be turned over to an outside management company. The towns have been in discussions with Bristol Virginia Utilities, or BVU, of Bristol, Va. In 2001, BVU began offering cable services in competition with existing cable companies in Bristol.

More work ahead
The towns will continue their discussions in the coming weeks and still have many issues to work out, including an interlocal agreement that would guide how the towns cooperate in the project.

A judge overseeing Adelphia’s bankruptcy proceedings still must set a price for the system – a key detail the towns need as they consider whether to move forward. That could come by year’s end, and the county and towns then would have 30 days to make a decision. If the deal goes ahead, the county and town consortium could complete the purchase by late spring 2007.

Brice said the consortium’s business plan anticipates a maximum purchase price of up to $3,890 per subscriber. Town officials are still waiting for an exact subscriber count, but it is estimated at between 16,000 and 18,000. That would value the deal at a maximum of $62 million to $70 million.

Mecklenburg County will use its borrowing capacity to help the towns finance the purchase. In the short term, the towns reportedly have up to $78 million in loans lined up.

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