Higher Rates Needed, Cable Tv Company Tells Council

Mid-atlantic Says Money Will Help It Honor Franchise Agreement

March 31, 1991|By James M. Coram | James M. Coram,Staff writer

The general partner of Mid-Atlantic Cable Television Co. says the company must raise subscription rates if it is to honor its franchise agreement and finish 30 miles of construction in the western and central part of the county.

Even if the County Council agrees to such an increase, Mid-Atlantic would not be able to finish the job until one year from when the increase is OK'd, said John C. Norcutt, general partner of Mid-Atlantic. The remaining construction, affecting 520 homes, was to have been finished Dec. 31.

Norcutt did not speculate on how much of an increase the company needs.

He told the cable advisory board Wednesday that the company's $5.5 million debt was 129 percent more than anticipated. Company losses of $940,923 as of Dec. 31 were 275 percent more than projected when the franchise was granted in November 1988, he said.

The franchise agreement required Mid-Atlantic to provide cable to 71 subdivisions in the western half of the county, but Norcutt said only 61 havebeen built.

The advisory committee is waiting until April 10 to discuss the problem, then will decide what action to recommend to the County Council.

Delays, cost overruns, and a downturn in the economy prevented Mid-Atlantic from completing the work, Norcutt said. The bottom line now, he said, is that future construction will have to be paid for with subscription and advertising revenue because capitalis no longer available.

Money is tighter and lending standards for the cable industry are more stringent than they were three years ago, Norcutt told the board. No bank is willing to finance the 20-home-per-mile rate Mid-Atlantic agreed to in its franchise agreement, he said.

"Sounds like you sold something you couldn't deliver," cable advisory board member Peter H. Bennett told Norcutt.

"Maybe the economy changed," Norcutt shot back. "If I had 35 channels, 75 homes per mile and charged $13.95 for Home Team Sports (like Mid-Atlantic's competition, Howard Cable Television Associates Inc.), I wouldn't haveany problems."

Bennett said Mid-Atlantic's "up-front costs are not unheard of. My reaction is that you've done a good job on most of what you said you would do. I'm willing to cut you a little slack."

That "slack" extends to the time limit, only, he said.

"I think you should finish what you said you would first before asking for anything else," Bennett told Norcutt.

Norcutt would like the franchiseagreement amended so it requires future construction only in areas with 30 or 35 homes per mile instead of the current 20-home requirement. He also wants to postpone a linkage with the government and educational channels for several years.

Norcutt said Mid-Atlantic can now carry day-old tapes of programs aired on those channels, but to carry them simultaneously would add $10 a month to subscription fees even if lingering technical problems could be worked out.

Norcutt asked the committee whether it might not be better to provide cable to more populated areas before bringing it to the remaining subdivisions.One of the 12 subdivisions still to be connected has no houses on it, and another does not exist, Norcutt said.

Cable administrator James W. O'Connor said Norcutt's suggestion "comes under the heading ofprioritizing the list. If he has to depend on cash flow, then it makes more sense to get more people hooked up quicker."

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