[July 22, 2011] Time Warner Cable to buy New Wave Tweet MIDDLESBORO, Jul 21, 2011 (Middlesboro Daily News - McClatchy-Tribune Information Services via COMTEX) -- A representative from New Wave Communications and one from Time Warner Cable addressed the Middlesboro City Council on Tuesday night to seek the city's blessing on a franchise deal that is underway. Carla Deaton, Government Relations Manager for the Time Warner office based in Richmond, Ky., and Tim Jones, General Manager for New Wave Communications for Eastern Kentucky, addressed the city council to ask for a resolution consenting and approving of the assignment of the cable franchise and system to Time Warner NY Cable LLC. Last month on June 11, New Wave entered into an asset purchase agreement with Time Warner to acquire cable system assets including the New Wave franchise. As part of the deal, the operation of cable service for New Wave customers in the region, including Bell County, will be turned over to Time Warner. "That's everything in east Kentucky," explained Jones of the region included in the agreement. "All the way up to Hazard, Mount Vernon, Liberty, Somerset..." The first concern for the council was the possibility of a rate increase for customers. Councilor Doug Hughes was the first to ask Deaton about a potential rate hike. "I will guarantee that your rates will not go up because of this deal," Deaton said. She added, however, that it is a customary practice of all cable operators to evaluate consumer rates versus operating expenses annually in order to make a yearly decision regarding a rate increase. Later in the meeting, she acknowledged that there was little chance for rates to decrease. Councilor Ronnie Carter remarked that he has seen cable service change hands several times and that each time, rates increased. "Two months after you all take over, you'll come in here and the rates will go up. I guarantee it sitting right here tonight," Carter declared. "I guarantee you, be my luck, that that's exactly what will happen," Deaton rejoined. Jones said that some services were cheaper under Time Warner and Deaton said that according to a recent survey, Time Warner service rates represented a "happy medium" among all cable companies. Deaton went on to say that Time Warner was not in the practice of purchasing and then selling companies. Councilor Gary Mills said that the council needed more time to evaluate the request before resolving to approve a franchise. Deaton said that she understood, but indicated that a refusal would have no bearing on the outcome of the deal. "...I will let you know that the only way that you can really deny the franchise transfer is if you can prove that Time Warner is technically, financially, and legally incapable of providing service to your area," she stated. Deaton said that the company hoped to receive the city's blessing, however, on the transfer. Mayor Bill Kelley pointed out that the franchise purchase represented "a private business selling to another company." He also told Deaton that the city's concerns were influenced by the fact that "we have a utility that right now we feel is taking advantage" of state and federal laws in order to raise rates. "But I do want you to know," said the mayor, "we'll welcome you, we'll work with you, but as rates and everything goes up we will question why and where." The council also expressed concerns about the future of New Wave employees. "What about our friends and neighbors that work for New Wave?" asked Councilor Hughes. Deaton said that per her understanding, the agreement between New Wave and Time Warner stipulated that 95 percent of the employees be retained. Mills inquired about the number of employees locally, and Jones said that there were about five or six. "Six. So 95 percent of that will pretty well knock off one or two?" Mills asked. Jones observed that two men had been working for the local cable company under different owners for more than 60 years and Deaton noted that customer service and technician jobs "usually are safe." Jones said that from his point of view, he could envision jobs being added in the area after the purchase. The suggestion was not convincing for Mills who noted that Jones was "selling the house." Councilor Evelyn Farmer asked about changes in local services, and Deaton responded that there would be no real change. "So the people that have the phone, the internet, and the cable -- that's all still going to be there and they're not going to lose any service?" Farmer inquired. Deaton said that no service would be lost. The biggest change for customers would be that New Wave e-mail accounts would eventually roll over to a Time Warner account. Councilor Ronnie Carter asked if other cable companies could be invited to bid for the franchise. Deaton said that the city could, as the agreement was non-exclusive. The city does face slim chances, she commented, on getting another bidder. The cost to extend cable lines some parts of the county often exceeds the revenue that would be generated by potential customers. "You're looking at roughly $42,000 a mile," Deaton said of the cost to extend cable lines. That particular cable problem is one that the city has faced before. "I was going to say," Farmer agreed, "its just not cost effective for another [company] to come in. That's what we found out in 2006." Still, some councilors opposed granting approval of the purchase agreement, regardless of its affect on the outcome of the deal. "I do not give my blessing," said Mills. "I don't recommend the council does. It won't stop it, but I don't think we ought to go along with it. And I recommend we pursue another cable company that might wish to invest in Middlesboro." Farmer said that five years ago, bids for cable companies were advertised in Lexington, Ky. and Knoxville, Tenn. No bids were made. Councilor Farmer made a motion to accept the resolution approving the assignment of the cable franchise to Time Warner. Councilor Philip Ball seconded the motion. Councilor Kevin Barnett voted in the affirmative, with Councilor C.A. "Buddy" Massengill passing on the vote, and Councilors Lucas Carter, Ronnie Carter, and Gary Mills voting "no." Councilor Bo Green did not attend the meeting. Since the vote failed, a letter will be sent to Time Warner via the city attorney in opposition to the deal. A motion was made by Councilor Evelyn Farmer and approved by the council to table ambulance bids until after review by the chief and the finance and safety committee. The committees will meet to discuss the issue on August 2, at 6 p.m. in council chambers, one hour before the next regular meeting. The city council additionally approved motions to: enter reports, enter the list of paid city bills, and the minutes of the last regular meeting. Lorie Settles is a staff writer for the Middlesboro Daily News. She may be contacted via e-mail at [email protected]. To see more of the Middlesboro Daily News, or to subscribe to the newspaper, go to http://www.middlesborodailynews.com/. Copyright (c) 2011, Middlesboro Daily News, Ky. Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com. [ Back To TMCnet.com's Homepage ]