Without Open Access PB "Possibly Lost out on" $318k...So Far
The City’s 2012 audited financial statements were finally approved earlier this month which allows us to look at how City Cable performed in 2012 without the “subsidizing” of Open Access. The financials show that the city would have made $317,756 more over the past two years had they not closed down Open Access to the citizen owned network.
City Cable has lost money four of the last five years. But that really isn’t a bad thing. After all, the city loses money on our street department. If run efficiently, I would never oppose the city losing money on (ie, investing in) our telecommunications infrastructure.
But let’s look at the numbers for City Cable department:
One metric used by businesses to analyze a company’s financials is called “EBITDA” which stands for Earnings Before Interest, Taxes, Depreciation and Amortization and pronounced phonetically as EH-BIT-DAH. If you look at City Cables EBITDA over the past five years you notice a significatn drop over last two years:
In 2012, even though their overall income increased $550k, their expenses went up even more and generated a drop of 20 percent in EBITDA in relation to Total Revenue.
In other words, City Cable’s expenses have grown at a much faster rate than their income these past two years.
Now let’s just evaluate the Internet service portion of City Cable. I’ve been tracking this information since day one. As one would expect, City Cable’s income goes up in 2011 & 2012 since they no longer have any competition, but their profitability doesn’t go up nearly as much.
That’s because their expenses for bandwidth, staffing, servers and tech support have to go up somewhat proportionately. The two easiest expenses to track for our calculations are Internet bandwidth costs and the outsourced technical support costs paid to ZCorum in Atlanta for the additional MyCityCable customers. For our analysis, we’ll limit their expenses to just these two.
|Internet Only Figures|
Look at the growth during the four years of open access: City Cable grew an average 17% every year. Compare that to the 2.7% and 8.7% growth of the past two years and it is evident that Open Access was NOT a drain on City Cable’s books. And if we calculate the average growth for the entire 9 year history of Open Access, it soars to over 25% per year.
With an average growth rate with Open Access at 17%, we can compare it to the actual City Cable Internet profit.
$2,344,920 – Actual Internet Profits WITHOUT Open Access for 2011-2012
$2,589,743 – Projected Internet Profits IF Open Access Existed for 2011-2012
Because the City ended Open Access, it can be projected that they lost $244,823 in revenue over the past two years. Add to that their legal fees in fighting Poplar Bluff Internet of nearly $73,000, and it’s clear:
Strictly speaking financially:
$317,756 more in revenue over the past two years.
2012 Unaudited City Cable Financials