Maryland Cable Corp., which paid a near-record price in late 1988 for the cable TV systems that serve northern Prince George's County and Leesburg, Va., is in financial trouble and seeking new loans or capital, according to a company report to the Securities and Exchange Commission. The company lost $5.8 million in the first quarter of this year.
Sluggish growth in its subscriber lists and higher-than-expected spending on equipment to upgrade the systems caused the problems, said John Motulsky, senior vice president of Multivision Cable TV Corp., which manages the systems.
Motulsky and local officials said the troubles had not affected quality of service to the company's approximately 80,000 subscribers. The Prince George's County government said it was watching the situation closely, however. "I am highly concerned," said John Askew, executive director of the county's cable TV commission.
Motulsky denied that the firm had paid too much for the systems and said that it was trying to increase its subscriber base and its operating cash flow. "We do anticipate that we will need additional funds ... and that those funds will be available to us," said Motulsky. He said the firm is talking to its parent, ML Media Opportunity Partners, and its banks about new money.
Last December, in a separate development, Microband, a so-called "wireless cable" company offering pay TV over the air to homes in D.C. and other cities, filed for Chapter 11 bankruptcy protection. Microband is not linked to Maryland Cable.
Motulsky said there is no chance Maryland Cable would be sold or go bankrupt due to its current difficulties. Asked if customer rate increases might be imposed, he replied that "we do plan to have periodic rate increases" but said he couldn't predict when the next might occur. Under current law, the company does not need government approval to raise its rates.
Maryland Cable is the third owner of the northern Prince George's County system. In late 1988, it bought the system for a price reported to be $198 million from Prime Cable, a price equal to almost $2,800 for each subscriber, ranking near the top of prices nationwide. However, the company's average revenue per subscriber is higher than the average because the system has a large, 84-channel capacity.
Maryland Cable's woes were detailed in a May filing to the SEC. Shortly afterward, Standard & Poor's Corp. lowered its rating on $162 million in subordinated debt to CC from CCC, reflecting the company's "limited ability to meet scheduled principal payments and operating cash requirements."
In the filing, the firm reported a net loss of $5.8 million, compared with $4.8 million in the first quarter of 1989. As of March 31, the report said, the company's interest load exceeded levels permitted by an agreement with its banks and that it expected to be in breach of other similar agreements later on. This would permit the banks to call the loans but the company said it was hoping to obtain a waiver.
Maryland Cable's operating revenue increased 18 percent to about $9.5 million in the first quarter of 1990, up from $8.1 million in the first quarter of 1989.
Subscribers grew to 79,794 compared with 73,279 at the end of the first quarter of 1989. But the number of premium services subscribed to declined from about 130,000 to 121,000, which the company attributed to rate increases imposed and cancellation of promotional rates.