Northland Sells Subs To Affiliates for $70M

Seattle-based MSO Northland Communications Inc. has dissolved one of its partnerships, selling off 32,100 subscribers to affiliates in a flurry of deals valued at more than $70 million.

Northland, which has about 265,000 subscribers across the country, sold nine systems in Mississippi, South Carolina and North Carolina in four separate deals to three of its other subsidiaries. Although the company did not want to reveal the prices of the system sales, Northland said in its third-quarter financial statement with the Securities and Exchange Commission that the operations were valued at about $70.2 million.

At that price, the systems would have sold for about $2,193 per subscriber, well below the industry's range of between $3,500 and $4,000 per subscriber.

According to documents, Northland Cable Properties Six L.P. sold systems in Highlands, N.C.; Starkville, Philadelphia, Kosciusko and Forest, Miss.; Bennettsville, S.C.; and Barnwell, Allendale and Bamberg, S.C. The Mississippi systems represented the largest cluster, with a total of 18,400 subscribers.

The buyers were three separate subsidiaries of Northland Communications: Northland Cable Television Inc., Northland Cable Networks LLC and Northland Cable Properties Inc.

Northland, like other rural MSOs, has been struggling to upgrade its systems and provide advanced services. According to SEC documents, Northland Communications has about 7,700 digital subscribers and has spent about $10 million this year alone to upgrade its systems to a capacity between 400 megahertz and 550 MHz.

Denver-based cable investment banker Daniels & Associates Inc. represented the seller in the four deals.

Northland Cable Properties Six was one of three wholly owned limited partnerships of Northland Communications. In the SEC filings, Northland said sale proceeds were used to pay down debt, with the balance distributed to its limited partners.

In a separate deal, Northland Cable Networks — another wholly-owned subsidiary of Northland Communications — said it raised about $16.6 million in equity from Providence Growth Partners L.P., an affiliate of Providence Equity Partners, to buy the Bennettsville and Mississippi systems.

Daniels & Associates also represented Northland Cable Networks in the equity deal.

Although not a public company, Northland does have public debt, which means the company must file financial statements with the SEC.

In its third quarter ended Sept. 30, Northland Cable Television reported revenue of $15.4 million, up 1.5 percent, and cash flow of $6.7 million, up 0.5 percent from the same period last year.