Pinnacle Woes Disrupt Signals

Cable operators and broadcasters in 14 states are learning first hand how it feels to be tossed into the seismic waves triggered by another accounting-related corporate bankruptcy.

Corban Communications recently informed such companies as Cable One Inc.'s Idaho systems that it could no longer transport analog video signals from distant broadcasters, thanks to the financial and legal troubles engulfing Pinnacle Towers Inc., which leases towers to the microwave carrier.

As such, Cable One's Idaho Falls system is looking for a substitute transport mechanism for two stations it imports from Salt Lake City, public broadcaster KBYU and NBC affiliate KSL. Idaho Falls already carries another NBC station, but local cable subscribers want KSL, too, said Cable One eastern Idaho general manager Dean Jones.

In August, Jones received a letter from Corban, serving notice that analog service would end Sept. 1. Since then, the deadline has been extended to give the operator more time to find alternative transportation.

But Jones is not alone in his scramble for alternate transport. Plano, Texas-based Corban, which operates 400 wireless sites in 30 states as well as 100 million circuit miles, told analog customers in 41 markets that it can no longer carry their feeds. President Hal Thomas said the change in business was prompted by the Pinnacle bankruptcy.

According to papers filed in U.S. Bankruptcy Court for the Southern District of New York, Pinnacle said the Securities and Exchange Commission questioned the way the company accounted for assets it purchased from Motorola Inc.

Sarasota, Fla.-based Pinnacle negotiated with the federal agency for a restatement of earnings without admitting to any irregularities alleged by the SEC. However, its officers are now the target of a class-action securities fraud lawsuit in U.S. District Court for the Middle District of Florida, according to the bankruptcy filing.

Those legal troubles, plus a downturn in the telecom sector that caused "tenant churn" at "higher than expected levels," caused Pinnacle to file a pre-packaged Chapter 11 bankruptcy petition in May. The venture is still negotiating its emergence from that bankruptcy.

In the wake of those proceedings, Thomas found his 25-year tower leases in jeopardy and was ordered to take his equipment down, he said. Thomas said Corban is one of the prime examples of what has happened to midsized companies as a result of the misdeeds of the "Global Crossings and WorldComs of the world."

"The cable operators' business plans didn't fail, ours didn't either, yet we're in a position of impossibility," he said.

Cable One Northwest division president Mitch Bland said the operator is negotiating with a Salt Lake City-based satellite carrier to uplink the broadcasters' signals to its distant cable systems. The switch will not cost much more than the company now pays for microwave service, he said.

And the operator has gotten a bit of breathing room, as Corban has extended the deadline to Oct. 13.

Jones is confident his operation will find an alternative before that date. "Our goal is to make the switch transparent to customers," he said.

As for Corban, Thomas is uncertain about whether it can reconstruct an analog network to replace the microwave towers. He also doesn't expect any assistance from the Federal Communications Commission in maintaining a dying technology.

"How can you argue it's in the public interest to save one of the last remaining analog distribution systems when the FCC has been pushing digital since 1996?" he asked.

If customers decide that now is the time to convert to digital, Corban can help them with satellite or Internet-protocol transport at present, Thomas said. But with 41 different markets to convert, there's a potential for service impairment, he said.