Arlington's cable television system is in serious financial trouble that could drive it out of business unless the county extends it franchise, due to expire in 1985, until at least 1991, according to a blue-ribbon committee appointed by the County Board.
The committee recommended to the board yesterday that the franchise of Arington Telecommunications Corp. (ARTEC), which serves an estimated 20,000 households in the county, should be extended until at least 10 years from now to allow it to obtain more favorable financing on close to $6 million in short-term debts.
"Without a restructuring of the company's capitalization, ARTEC could be forced to default in its loan repayment or, alternatively, to sell its system," the committee said.d
The report fromt he committee, which is headed by former Federal Communications Commission chairman Richard Wiley, seems to reinforce ARTEC's position at a time when the cable firm is under heavy community pressure to make good on some of its contractual promises, such as providing an equipped production studio and public access programming opportunities. The County Board is expected to decide soon on the troubled cable system's future.
Although the cable television industry is considered extremely lucrative in the long run, industry analysts say the high cost of stringing cable to subscribers means that most cable companies must wait up to 10 years from the start of transmission before receiving a return on their investment.
Supporters of ARTEC said the company ran into trouble because unforseen problems, including the death of an early company officer, delayed the system's start for three years. At the end of 1980, the company's net worth was estimated to be a negative $1.5 million, although its cable and equipment is worth an estimated $8 million.
ARTEC officials have said they cannot deliver all they promised unless the franchise is extended, and that the assurance of long-term operation after 1985, when the franchise is now due to expire, is needed in order to refinance company debts.
According to the report, ARTEC has provided a "well constructed, [well] developed and [well] operated" cable system since it began operation in 1978. But high interest rates, delays in the delivery of needed equipment and the exclusion of ARTEC from a number of large apartment buildings have combined to cause "serious cash flow and earnings shortages" to the company, it said.
In addition to recommending the extension of ARTEC's franchise, the committee urged that the company be required to make good its promises to provide public access and local programming, as well as complete two-way television service for county schools. It also called on ARTEC to maintain its rate near current levels that average about $20 a month.
Critics of ARTEC have charged that the firm is seeking the extension so it can sell the county's cable franchise for a multimillion-dollar profit, but members of the panel said they found no evidence of a planned sale.
The county's Cable Television Advisory Committee, a larger group than the blue ribbon panel that reported yesterday, recently recommended that the board deny ARTEC's request for an extension.