Block Communications Inc.’s system in Toledo, Ohio, is the largest urban cable system in the country not under the direct or indirect control of a major MSO, according to company officials.
BCI’s Buckeye CableSystem, in the No. 70-ranked DMA, and a second system some 55 miles east in Sandusky, Erie County Cablevision, have about 146,000 subscribers in all.
BCI — a privately owned family business that has public debt — also owns the local Buckeye CableSystem Sports Network, a commercial phone company, five TV stations and two newspapers.
THEY GET ALONG WELL
Buckeye, the nation’s 24 largest MSO, has enjoyed good relations with broadcasters in Ohio, according to company officials. “That’s mainly because we sit down and look for common ground that works for both of us,” BCI president David Huey said.
Buckeye has run fiber into the TV stations’ facilities in its market “to make sure that there’s no disruption of their signal,” according to Huey.
And advertising — both barter and paid — rather than cash, has been an element of Buckeye retransmission-consent deals, he said. The cable system has also worked with broadcasters to distribute their digital-HDTV signals, according to Huey.
Buckeye is even offering some of the TV stations’ local newscasts on demand in Toledo, he said. The local NBC and CBS affiliates are participating in that video-on-demand initiative, according to W.H. “Chip” Carstensen, Buckeye’s president and general manager.
“We digitize their broadcast, their newscast, and have it available in an hour and a half,” he said. “It’s very popular.”
Buckeye offers most games televised by Buckeye CableSystem Sports Network on VOD, which is free to subscribers that have its digital-basic package, Carstensen said.
From January 2004 through April of this year, the local sports channel has aired more than 1,000 high-school, college and pro sports events, according to Carstensen.
“We want to do about 80 [events] a month,” BCI chairman Allan Block said.
In the second quarter, BCI posted a loss of $438,800 on revenue of $109.5 million, according to a company securities filing.
BCI’s broadcasting and publishing units have seen revenue declines, while cable revenues grew. Cable operations generated $32.1 million in revenue, with net income of $3.1 million in the second quarter. BCI’s broadcast operations posted $9.5 million in revenue, with net income of $849,000.
In the second quarter, BCI saw its average monthly revenue per basic-cable subscriber increase by $5.38, to $73.50.
Buckeye offers a full range of products and services: Not only VOD but residential voice-over-Internet protocol telephony, which launched this year. Buckeye has a triple-play package, digital video recorders, a robust HDTV offering and a variety of free and paid on-demand services.
BCI also owns a commercial phone company — a competitive local-exchange carrier called Buckeye TeleSystem — so it had the backbone to offer VoIP without needing a partner like Sprint Corp., according to Block.
Buckeye is installing phone service “as fast as we can,” and expects to have 10,000 voice customer by the end of year, Block said. It had nearly voice subscribers 3,000 as of June 30.
In the second quarter, overall basic subscribers were down slightly, by 402, or 0.3%, to 145,578. The kit came in Toledo, which lost 1,212 basic customers, because of departing college students, disconnects due to the city’s the slumping economy (a 7.1% unemployment rate, among the state’s highest) and competition. The Erie system gained 810 basic customers.
AGGRESSIVELY BUNDLING
Buckeye is planning to use its bundle, by aggressively pricing the voice portion, to help reduce churn to satellite TV, according to Block.
Buckeye’s other advantage is that it has local programming, like its sports network and the market’s The WB affiliate, which is cable delivered.
But Block maintained the difficult economic environment in the Toledo area is having an impact on Buckeye, causing the operator to lose subscribers.
“More churn has gone to the economy here than has gone to DBS,” he said. “The northern Ohio economy is not going to improve anytime soon. But our goal is to minimize churn first — whether it’s to the economy or to DBS with its almost-predatory offers — this fall.”
