City Cable’s Value Is Between $23.7M and $40M

After six weeks of assuring city employees that City Cable wasn’t selling as previously blogged in January, City Manager Bagby finally announced in Sunday’s paper they’ve been working on selling City Cable since November.

On the agenda for Monday night’s City Council is both a workshop and voting session item to sell City Cable. But Bagby gives no explanation as to why the sale of this asset is being fast-tracked on Monday night, why the details of the sale are being kept from the public, or why the city lied to their employees for six weeks.

I asked Fred Goldstein from InterIsle Consulting about the value of a cable subscriber in today’s market and he responded with, “Last year, TDS bought Baja Broadband, a smaller operation from New Mexico, paying $267M for approximately 71,000 subscribers: about $4400 per subscriber. Comcast is offering $45.2B for Time Warner Cable, which reportedly has 11.4M subscribers: that’s over $3950 per subscriber.”

Most people in the industry believe that Comcast’s CEO Brian Roberts is always the smartest guy in the room and they would certainly agree that Comcast never overpays. For that reason you can be assured that a “buyer’s” value per subscriber is $3950.

In April 2013, NewWave, who provides cable services in Dexter and other surrounding areas, is speculated to have sold for more than $4000 per subscriber. According to “Investment Points” in WhereverTV’s presentation from Feb 2013, the value is between $4000 and as high as $5000 per subscriber.

It has been rumored that city leaders are calling this a “deal of a lifetime” opportunity and a “too good to be true” offer; so be ready to hear those phrases bantered about during Monday night’s meeting. But if that is the case, we should expect the offer to be closer to a “seller’s” price of $5000 per subscriber.

According to City Manager Bagby, the network currently has 6000 subscribers making the “too good to be true” value of our 6000-subscriber City Cable network around $30,000,000. Alternatively, a good “buyer’s” price would be $23.7M.

But here’s the problem: the offer being voted on to sell City Cable is reportedly less than $18M that’s less than $3000 per subscriber. No wonder the city leaders haven’t released any details of the sale.

I’m also very leery of Bagby’s “6000 subscribers” quote in today’s paper. Three years ago, the city claimed to have over 8000 subscribers. Has City Cable actually lost more than 2000 customers in 36 months? Or is it because the lower the number of subscribers you report, the higher the per-subscriber valuation looks?

    $18M / 6000 = $3000 per subscriber
    but
    $18M / 8000 = $2250 per subscriber
     

If City Cable actually still has 8000 subscribers then the high-end seller’s value of the network is closer to $40M. Honestly, I would encourage the city to sell City Cable if the offer was between $27M and $40M.

Bagby “emphasized” in today’s paper that a citizen vote is not required to sell the network, however that doesn’t mean the city leaders have the right to sell it without public discourse. And it’s certainly hard to claim “public discourse” with no details provided and only 36 hour notice.

When city leaders say this is a “once in a lifetime” opportunity, I wish someone would ask, “For whom?” Only city leaders in Poplar Bluff can lose between $7M and $20M on the sale of an asset and brag to the citizens it is the deal of a lifetime.

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After graduating from Mizzou with Computer and Electrical Engineering degrees in 1985, Brian Becker spent a decade singing Christian Rock and being a labeled artist with Benson Music Group of Nashville. In 1995, he and several investors started the area's first Internet Service called PBMO.net and by 2000 the company was serviing Internet access in over 50 communities throughout Southeast Missouri as SEMO.net. In July 2014, Becker again made a major pivot and became Publisher of the SEMO TIMES: a weekly print and daily online news and entertainment source for the region.

  • Brian Becker

    There is a law that states a bid that is within 1% of the winning bid by a company within the city of Poplar Bluff must be accepted. If you wanna help raise $18M to buy City Cable for the City of Poplar Bluff, then go to http://tilt.tc/0CxO and pledge money. Amounts received are not donations and will either be loans or equity stake in the company.

    Come on let’s see what we can do in a day, or two!

    Crowd Tilt – http://tilt.tc/0CxO

  • Tim Funke

    If they sell, we had better not see a rate increase for a loooong time.

    And I totally agree that this is very disconcerting that this is just sprung on us. What is the reason for the secrecy and why does this have to happen Monday?

  • Gail Tinsley

    I’m hearing that this also includes the Municipal Utilities office building too. What about the big building across the street that houses all the trucks an equipment? Where would we put the MU offices? Back on Oak street? Not enough time here to even think of all the questions that need to be asked? Why the disclosure of price and terms the same night as the vote? Do they already have the votes they need to pass this? Is that the big hurry?

    • Keri Clark

      In my opinion it certainly seems Bagby is fast tracking this for a reason, probably because there is a huge chance the city council will change in April and they are the ones who have to approve this deal. Perhaps the new council would ALL stand up and ask too many questions and dig deeper before having to vote on such an important issue within an hour or so of learning the price and all the details. To me, it only seems logical they already have the votes they need, and this is exactly why they are fast tracking everything with no details being provided ahead of time. If they wait one more month, they may not get the early “yes sir” votes they have now.

      This is something everyone should question and think about when voting in April (along with everything else that has already been reported, questioned, and rumored). In my opinion, it is time for a major change in who runs this city and how it is being ran, and that starts with voting for new city council members. We need a city council who is free to have independent thoughts and enough intelligence and guts to question things and represent the citizens of this town as they were elected to do.

  • Denny Brannum

    love the city hate the politics

  • Jim Becker

    A couple of years ago the city confiscated about a thousand subscribers of semo.net that were on the city cable through open access. At a fire sale of $2000 per subscriber it seems like the city owes about two million dollars to semo.net.

  • Joe Public

    fast tracking most likely means some fast pocket change for the City Council. How much did the city pay to buy out the old city cable when it came into play? New building, New optical cable, buy out of old city cable company, etc cost more than 18m did it not. Seems someone really wants the details to be short on view and the page signed before the dust settle around this sweet heart of a deal for someone other than the public or city before elections. Makes you really wonder how honest the deal or the players are?

  • http://poplarbluffmunicipalutities larry hill

    What will happen to city employees? Fired,layoff, offered jobs with the new owners lower wages any benfits?
    and what about me,better service,lower rates expanded service better customer service
    and why do the citizens of poplar bluff and subscribers have no say so in the matter?

  • Polly Hurst

    What goes with the sale? Buildings? Offices? Equipment?

    Is all of City Cable free and clear or is there still a balance to be paid off? What are the plans for the money if there is a profit? If there is no profit why are they selling it? If buying it had to be voter approved originally, then why is the sale being conducted behind closed doors? Is it a public utility or not? Does it come under the Public Service Commission? Does it not come under the Sunshine laws and if not why not? Too many clouds hanging over this whole deal. Even the weather man gives the public a better warning of upcoming events which may affect the citizens in its viewing area.

  • common citizen.

    I would like to see the latest financial statement on city cable. Is this a profitable dale for the city and if so where will the profits go?

    • Brian Becker

      Here are the earnings over the past 6 years. Since City Cable has never been operated to “make a profit” then one way to look at this is that the city finally was able to make a profit on the sale of City Cable. Let’s be clear, this was a profitable deal for the City. My point all along has been that we are selling it under value, and for that I have no idea why:

  • http://www.newwavecom.com/internetpricing/ James

    Did some digging and here are new wave prices on internet. 3meg 33.99. 10 meg 44.99 15 meg 53.99 30 meg 63.99 and 50 meg 73.99. now do they math I currently have 20 meg for 54.00 that is a down grade at the same price. not a good deal I say

    Source http://www.newwavecom.com/internetpricing/

  • James

    oh and there is a 30.00 on up installation charge as well so who is getting hosed here

  • PBEscapee

    You mean Doug Bagby was involved in something underhand and shady? In other news, the sky is blue, water is wet, and fire burns.