For people willing to gamble, there's gold in them thar cable franchises, says national cable TV consultant Martin Malarkey. This is how Malarkey says folks can get rich in the cable business:
Start with a county that has 200,000 households. Set up a cable TV company. Sell shares to 20 friends and friends of friends -- giving each person 5 percent of the stock.
Apply to the county for a franchise to install cable TV in the area. It can cost your firm up to $500,000 to prepare the application, and this may require stockholders to come up with additional capital.
With the help of your stockholders, you win the franchise.
The value of a cable franchise is based on the number of householders in an area, not on the number of households that might later subscribe. The cable industry figures that getting a franchise is worth between $5 and $60 for each of the 200,000 households in the county. Most well-run firms are in the $60 range.
Using the $60 figure, your company wil be worth up to $12 million before any wires are installed. Your five percent share of the company would be worth an estimated $600,000.
The heavy profits, the experts say, can become available after the cable system is completed and the maximum subscribers are tied in -- usually in six years. An estimated 40 percent of households -- or 80,000 -- are likely to subscribe to your service.
If the company is sold, on the basis of its revenues and national trends it would be worth an estimated $47.4 million. And your 5 percent share, in that case, would be worth an estimated $1.27 million.
These figures, Malarkey says, are based on the experiences of successful cable TV systems across the country. There is no way to know, Malarkey said, whether this pattern might apply to Montgomery County.