CATV DEALS: Eyecom, Inc.

GCI Cable to Acquire Girdwood, Alaska CATV System

GCI Cable, Inc., a subsidiary of Anchorage, Alaska-based GCI (Nasdaq:GNCMA), recently announced that it had agreed to acquire the cable television assets and operations serving Girdwood, Alaska from Eyecom, a subsidiary of Anchorage, Alaska-based TelAlaska, Inc.  The Girdwood system currently provides CATV service to approximately 500 subscribers. 

According to a story in the Turnagain Times, GCI will purchase the Girdwood system for $500,000 but, according to GCI spokesperson Davide Morris, “I don’t think a lot of upgrades have been put into (Eyecom’s) system over the years.  We will probably put into it three times the money to upgrade compared to the purchase price.”  Morris said GCI is committed to upgrading Girdwood’s cable signal to digital and offering more channels, up to 162 regular channels, as well as 39 high-definition channels.  “What we plan on doing is what’s called digitizing the plant,” said Morris.  “Right now there’s an analog signal.  Most likely the channels in Anchorage will be the channels in Girdwood.  There will be [cable modem service] of 10MB and a lot more channels available.”

The agreement is expected to be approved by the Regulatory Commission of Alaska no later than April 13, 2010.  “Until it’s done, it’s not a done deal,” said Morris.  “But we see no reason why it wouldn’t go through at this point. 

JSICA Observations:  Girdwood, an unincorporated township that lies within the municipality of Anchorage, is a few miles off the Seward Highway on Turnagain Arm, just south of Anchorage.  GCI, which cut its teeth in the long-distance business, got into the cable business in 1996.  It wasn’t long after that that GCI began eyeing Eyecom but TelAlaska, then led by the late Jack Rhyner, had no interest in letting the property go.  In July 2008, Charlotte, N.C.-based American Broadband closed on its $40m acquisition of TelAlaska (The Deal Advisor, 7/08, p.8), which prompted GCI to reopen negotiations. 

Considering the apparent condition of the property, the $1,000 per sub price is pricey.  If what GCI spokesperson Morris says is correct, GCI expects to spend another $1.5m “digitizing” the Girdwood plant, which would up the price to a rather rich $4,000 per current subscriber. 

But Girdwood counts about 2,000 year-round residents and is home to Alyeska, Alaska’s top ski resort, so there might be some room to grow once the plant is all cleaned up.  GCI’s nemesis, Alaska Communications System (Nasdaq:ALSK), provides voice and data services in the Girdwood market.  DISH and DirecTV service is said to be spotty due to the surrounding Chugach Mountains. 

Still, we have to admit, the Girdwood area has lost a bit of its luster ever since the Birdhouse burnt to the ground back in the late 1990s.