A new wave of industry consolidation has begun to pick off smaller independent cable operators who find profits squeezed by increased programming costs and dwindling subscriber numbers.

This month, the private equity firms that back Atlantic Broadband have put the company up for sale. ABRY Partners, which controls the cable venture as well as much larger RCN and Grande Communications, is ready to ditch the Atlantic venture and its 255,000 subscribers in Pennsylvania, New York, West Virginia, Florida, Maryland, Delaware, and South Carolina. Most of the cable systems controlled by Atlantic Broadband were considered “non-strategic assets” by former owner Charter Communications, which sold them to the Atlantic Broadband start-up in 2004.

Although profitable, Atlantic has been losing customers — 4 percent last year alone — and that worries investors. Acquiring television programming continues to grow more difficult for smaller operators who do not receive the volume discounts larger players do. As programming costs rise, pressure on profit margin results.

Atlantic Broadband was the 14th largest cable operator in the country. The sale could bring $1.4 billion to the equity firms, and industry analysts predict another equity firm will likely emerge as the buyer. Most of Atlantic’s systems are outside of the the areas where large cable operators create enormous regional clusters of operations. Time Warner Cable dominates in New York, Comcast in Pennsylvania, Maryland, and Delaware, and Suddenlink in West Virginia.

Atlantic Broadband is not the first smaller cable venture to find itself for sale.

• Time Warner Cable acquired Insight Communications last August;
• WideOpenWest announced plans to buy Knology for $750 million in April;
• WaveDivision Holdings LLC, which serves more than 325,000 residential and business customers in Washington, Oregon and California, also is exploring a sale.

Did you know privately-run cable companies can get public tax subsidies, grants, and even loans at favorable interest rates? When opponents of community broadband complain government-funded broadband competes against the private sector, the hidden truth is many “private sector” companies also enjoy benefits at the public’s expense.

Cablevision is the latest example, reports the Star-Ledger. When the company noted its lease for a call center in Newark was set to expire in two years, the Economic Development Authority responded, approving a $37.5 million Urban Transit Hub tax credit for the private cable company.

“Cablevision has a long-standing and important relationship with the state of New Jersey and the city of Newark, and a commitment to local hiring, local jobs and supporting the local economy,” said Cablevision spokesman Jim Maiella. “We are pleased to be investing in a new state-of-the-art call center, larger than our existing facility, closer to mass transit and modernized for our more than 500 Newark employees.”

New Jersey is currently mired in a major budget battle, trying to find enough revenue to sustain a general tax cut for New Jersey residents.

The cable industry is moving in on the phone companies' best customers: commercial enterprises

The growing competitiveness of the cable industry in the commercial services sector could spell trouble for some of the nation’s smaller telecommunications companies.

A new report from Moody’s Investor Service declares the cable industry is spoiling the business plans of telephone companies to grow revenue selling service to business customers.

With cable companies now investing in wiring office parks and downtown buildings to sell packages of voice and data services to corporate customers, traditional phone company revenue will suffer, declares Moody, which predicts traditional wireline revenue will be flat or decrease this year into next.

“Cable Companies Quash Telecom Business-Revenue Rebound,” warns the companies at the greatest risk of revenue declines include EarthLink, Inc., Integra Telecom, Inc., U.S. TelePacific Corp., and CCGI Holding Corp. Among familiar independent phone companies, Frontier Communications, FairPoint Communications, and Hawaiian Telcom are at the biggest risk of losing customers, primarily because all three lack strong business products, according to the Moody’s report.

AT&T, CenturyLink, and Verizon are at a lower risk of losing customers, because all three focus investments on commercial services. CenturyLink’s acquisition of Qwest, a  former Baby Bell, strengthened its business services position, especially in the Pacific Northwest.

The cable companies best positioned to steal away telephone company customers are Comcast and Time Warner Cable, both of which have invested heavily in wiring commercial businesses for service. In the past, cable operators charged thousands (sometimes tens of thousands) of dollars to install service in unwired commercial buildings, but now that initial wiring investment is increasingly being covered by cable operators.

Moody’s declares the business service sector a growth industry for cable. The report notes business revenues only account for $5 billion — just six percent — of the cable industry’s total business in 2011. In contrast, phone companies earn 40 percent of their revenue from business customers.

The report also states individual cable companies are now collaborating to deliver business service to companies with multiple service locations, which used to present a problem when offices were located in territories served by different operators.

If the cable industry continues to erode traditional telephone company revenue, it could eventually threaten the viability of some companies, especially those heavily-laden with acquisition-related debt.

Time Warner Cable is rolling out a new look to its online program guide and set top box menus after ongoing criticism from customers who found the old look hard to read and software cumbersome to use.

Central New Yorkers woke up this morning to the upgraded look, which the company says now features a sleeker and more modern appearance. It also adjusts the color scheme to make on-screen text easier to read and channels easier to find.

Set top box software is criticized even by cable executives, who call the often-proprietary software outdated and difficult to update and manage. Some cable operators have licensed set top box software from TiVo, while others are switching to an IP-based “web”-like experience that can offer viewers more detail and a customized appearance.

Ultimately, some cable executives would like to see the back of set top boxes altogether, hoping future technology upgrades will let viewers access cable programming and features from hardware built-in to modern televisions.

Time Warner Cable CEO Glenn Britt is among them.

“I hate set-top boxes,” Britt said in a recent interview.

[flv width=”432″ height=”260″]http://www.phillipdampier.com/video/YNN Syracuse Time Warner Cable makes changes to onscreen guide 6-4-12.mp4[/flv]

YNN Central New York reports on the latest update to Time Warner Cable’s Navigator set top box software, unveiled early this morning in the Syracuse area. (1 minute)

This scrap copper wire is as good as gold

While telephone companies continue to suffer repeated outages from copper wire thieves, the growing problem of copper theft has now begun to impact cable-TV providers and even electric service in some areas.

Over the Memorial Day holiday, thieves were busy stripping phone, cable, and electric wiring from utility poles, underground conduit, and even buildings. Windstream suffered significant losses in the greater Tulsa area late last week when thieves sliced through wiring supporting phone, television, and broadband service, quickly spooling it up on pickup trucks to be hauled to copper recyclers, often to finance drug habits.

Windstream reports the problem of copper wire theft is growing and becoming more widespread, especially in out of the way places where thieves are not likely to be caught in the act. The Tulsa-area copper capers are characterized as semi-professional because thieves are starting to use professional tools to quickly slice through wiring and can scoop up 1,000 feet or more of cable in minutes.

Copper theft has even become a problem in office parks, where thieves are stealing high voltage electrical cables, often at the point where they attach to buildings. One Albuquerque radio station was off the air for nearly 14 hours after thieves ripped the radio station’s electrical wiring right off the building and out of the underground conduit.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/KOKI Tulsa Thieves cut copper and knock out cable 5-25-12.mp4[/flv]

KOKI in Tulsa takes a look at the latest wave in copper cable theft — stealing cable television -and- telephone wires that disrupt phone, TV and Internet service all at once. (Warning: Loud Volume) (2 minutes)

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/KOB Albuquerque Copper thieves knock local radio station off the air 5-30-12.mp4[/flv]

KOB in Albuquerque talks with a nearby radio station taken off the air when cable thieves cut the building’s electrical wiring and yanked some of it right out of the ground.  (2 minutes)