Eager Industry Awaits Sale of Cable Firm
In the rough-and-tumble world of media economics, it may surprise some that the upcoming sale of Choice Television--the largest cable company in the San Gabriel Valley--has elicited anticipation, not fear, among local executives in the highly competitive cable industry.
The sale, to Missouri-based Cencom Cable Associates, is a sign that cable is alive and well in the region, and will bring new vitality to the industry and benefit cable subscribers, competitors say.
“Any time you have new people in a market, it gives the opportunity to learn,” said Pam Mackenzie, general manager of Insight Cablevision in Claremont.
Insight is one of 12 cable companies serving the San Gabriel Valley. It is part of a market where cable services must compete against 18 broadcast channels and an abundance of entertainment and recreational activities.
Big Market of Viewers
Nonetheless, the San Gabriel Valley offers cable companies hundreds of thousands of potential viewers and a foothold to expand to other lucrative cable markets in the region. One of the reasons Cencom decided to buy Choice is the potential in Riverside County, the fastest-growing county in California, according to Howard Wood, president and chief executive officer of Cencom.
“The potential for growth is one of the primary factors we look at when evaluating a possible acquisition, and you can’t do much better than the Los Angeles area in that regard,” Wood said in a written statement.
By adding Choice’s 19 franchises in Los Angeles and Riverside counties, Cencom would boost its national subscriber base to 400,000.
If the sale of Choice is finalized, which is expected to happen this fall, Cencom Cable Associates will become the 32nd-largest cable company in the nation. The privately held company, based in Chesterfield, Mo., operates cable systems in 10 states in the South and the Southeast, and on five U.S. military bases.
Falcon Cable Media, which serves Azusa, will also be included in the sale package, said John Brooks, a vice president for Cencom. Falcon’s chief executive officer, Mark Nathanson, an owner of Choice Television, said details of the sale have not been disclosed.
Survey to Be Done
No drastic changes in service are being planned for Choice’s 132,000 subscribing customers, Brooks said.
“We are not going to come in Day 2 and add channels or take things off,” Brooks said. The company is planning to first conduct a market survey to determine what services and programs are preferred by existing and potential subscribers, he said.
In other systems that Cencom has bought in Missouri, Tennessee and North Carolina, the company has expanded channel capacity, upgraded billing and telephone services and increased the offering of pay-per-view services such as movies and special sports events.
“We are very aggressive as a company in pay-per-view,” Brooks said, adding that Cencom may expand that service for San Gabriel Valley viewers.
Before the sale can be finalized, the transfer must be approved by the cities and counties that granted Choice its franchises, Brooks said. Two cities, Huntington Park and La Canada Flintridge, have already given their approval, he said.
Cable service began more than 20 years ago, mainly to improve television reception for people in remote areas. The industry expanded rapidly with the advent of satellite programming services that offered channels such as Cable News Network and Home Box Office.
To gain the right to build a system in a community, cable companies vied for franchises from local governments, promising everything from fully equipped television studios to hooking up the local school district for cable service.
Cencom’s foray into the Southern California market comes at a time when the cable television industry here has steadily increased its market penetration and is expanding the number of channels it offers subscribers. At the same time, some federal legislators are urging that the industry, which was deregulated in 1987, come under governmental scrutiny again, to monitor price and service.
In the San Gabriel Valley, many of Cencom’s future competitors took news of the sale in stride.
“We look to it as a positive step,” said Melvin Matthews, owner of Kinneloa Television Systems and Duarte Cable Communications. “If they are a good company, they will do nothing but benefit us. The better image that cable has in general in the San Gabriel Valley, that will help us get customers.”
When he acquired the Duarte cable franchise last year, Matthews said, he had to contend with the legacy of the city’s previous cable company. His predecessor, Acton Cable, had parted on bad terms with subscribers and city officials, he said. After its experience with Acton, Duarte briefly operated its own cable system before selling it to Matthews.
“In general, the poor reputation of Acton and surrounding systems hurt our chances to convince people to get cable,” Matthews said.
Officials at the 10 other cable companies in the San Gabriel Valley also said they do not feel threatened.
For example, Tom Prevette, general manager of Foothills Cablevision, welcomed the arrival of a new player in the cable market.
Foothills entered the San Gabriel Valley cable television market in 1975 and now serves five northern cities and surrounding county areas. Recently, it renewed a 15-year contract with Bradbury.
To stay competitive, Foothills regularly monitors the quality of its customer service. The company has a policy of trying to answer its phones within four rings, Prevette said, and tries to avoid keeping customers on hold for more than 30 seconds.
Like other cable companies, United Cable is trying to stay competitive by tailoring its offerings to the region’s diverse ethnic groups. For example, because half of the residents in its service area are Latino, United was one of the first companies to offer, for an additional charge, Spanish-language premium channels such as Galavision, said district manager Richard Glascock.
To attract the growing Asian population in cities such as Monterey Park and Alhambra, Choice Television was the first to go into partnership with Hong Kong-TVB to offer Chinese-language premium programs through the Jade channel, said Choice’s regional manager, Craig Watson.
Draw of Jade Channel
At a subscription rate of $17.95 a month, or $8 to $12 more than other premium channels, the Jade channel has attracted 2,300 subscribers for Choice, Watson said. The company also provides Spanish-language channels for the substantial Latino population in communities such as South San Gabriel, Montebello, Alhambra and Norwalk, he said.
Though Brooks of Cencom said the region’s ethnic diversity was not a big factor in the company’s decision to buy Choice, he said that Cencom is aware of its significance.
“We do recognize it as a challenge,” Brooks said. “It’s the first multi-ethnic purchase we’ve made.”
Formed in 1982, Cencom has apparently developed a good reputation owning and managing cable television systems.
B. G. Peck, mayor of Angleton, Tex., which granted Cencom a cable franchise 3 1/2 years ago, said residents have been pleased with the company. Peck is listed as a reference in an information packet Cencom has sent to operators of newly acquired systems.
“It seems our service is steadier,” Peck said. “There are less outages, so they must be paying more attention. When we have a problem, they are quick to respond.”
Hugh Rice, regional manager for Falcon Cable Media, was also positive about Cencom.
“Any company that’s fixing to buy another cable company and is willing to list mayors and city managers on their resume, that tells me something,” Rice said. “They are being very candid.” He said he also likes the fact that Cencom executives appear to be knowledgeable cable-industry veterans.
“I’m not going to have to explain to the people who own me what cable is all about,” said Rice, who has worked in the cable business 25 years.
Said Cencom’s Brooks, “We’re a long-term cable operator. Since 1982 we’ve sold only one cable system. We are strong believers in the business.”