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November 14, 2011
Northland Telecommunications Corporation, a medium-size private cable operator serving rural communities in Texas, Washington, Georgia and California, has agreed to sell two limited partnerships (LPs) it managed and partly owned since the 1980s.
On 25 October, Northland Cable Properties Seven LP announced three separate agreements to sell its four remaining cable systems which currently serve approximately 9,500 subscribers in the state of Georgia. Two of these systems serving 4,200 subscribers in Toccoa and Clayton will go to TruVista, a small operator based in South Carolina currently serving 9,000 basic subscribers. One system serving 2,000 subscribers in Sanderville will go to Charter Communications. The last system serving 3,300 in Vidalia will be sold to Northland Cable TV, a privately-held subsidiary of Northland Communications. The transactions are expected to close in the first quarter of 2012.
Similarly, Northland Cable Properties Eight LP signed an agreement to sell its two remaining cable systems in Aliceville, AL and Swainsboro, GA which serve approximately 4,100 subscribers. The buyer is also Northland Cable TV, the private affiliate of Northland Communications.
Seven's systems in Toccoa and Clayton which went to TruVista fetched the highest price on a per-subscriber basis, approximately $2,100 for a total price of $8.9m. This valuation is perfectly in line with current pricing of rural systems. According to IHS Screen Digest's Cable Deals Database, systems serving approximately 300,000 rural subscribers changed hands in 2011 for an aggregate price of $616m, or an average price of $2,075 per subscriber.
The other systems fell slightly below the average per-subscriber price. Charter agreed to pay $3m for Seven's Sanderville system, which comes down to $1,500 per basic subscriber. Seven's Vidalia system fetched $1,630 per subscriber for a total of $5.4m. Eight's Alabama and Georgia systems fetched the lowest per subscriber price of approximately $1,200, totaling $5m. Still, the systems did very well compared to the $533 per subscriber WaveDivison paid for the Washington and Oregon systems of bankrupt Broadstripe. Many factors typically affect the price of a system, such as location, median household income in the area, technological state of the system, and number of RGUs per customer relation. Naturally, the Toccoa and Clayton systems had the highest ratio of RGUs to customer relations: 1.5 RGUs per customer relation in 2010 compared to 1.4 for Sanderville and 1.3 for Vidalia, Aliceville and Swainsboro.
The sale of Northland Seven and Eight's systems brings to an end a liquidation process that started almost a decade ago and did not always run smoothly. In 2002, Northland Cable Properties VII served approximately 40,000 subscribers in rural communities in Texas, Washington and Georgia, while Northland VIII served 10,000 subscribers in Washington, Alabama and Georgia. In 2003, Seven and Eight's Washington systems serving 12,000 subscribers were sold to WaveDivison for $23.5m, or $1,975 per basic subscriber. Then in 2005, Seven sold its Brenham, TX system serving 3,300 subscribers to Suddenlink for a total of $7.6m, or $2,281 per subscriber. Seven's other Texas cable system serving 4,300 subscribers in Bay City was sold in the same year to Bay City Cablevision for a total of $9.3m, or $2,200 per subscriber.
In 2007, both Seven and Eight agreed to sell their remaining systems in Georgia and Alabama to Green River Cable, but the deal fell through in 2008 when the partnerships terminated the sale agreement. Green River Cable countered by suing, which started a lengthy litigation process that lasted until the two parties reached a settlement in the first quarter of 2011. The settlement cleared the path for Seven and Eight finally to sell the systems and be liquidated.
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