An article yesterday incorrectly said that Media General Cable of Fairfax Inc. purchases easements from private property owners for its cable television equipment. Property owners do not receive payment for giving the cable company easement rights.
Fairfax County's cable television company lost $21.7 million on its operations last year, a deficit so large that it has prompted county officials to review the financial health of the firm.
Media General Cable of Fairfax Inc., which holds the county's cable franchise and has more subscribers than any other cable system in the Washington area, has lost $32.8 million in the last two years, according to the company's 1985 annual report.
Company officials said they expected the loss and believe the firm will become profitable in the long term.
Thomas E. Waldrop, chairman and chief executive officer of Media General of Fairfax, blamed the losses primarily on high construction costs.
"We've anticipated that in the start-up of a system like this we would see these kinds of losses," he said. "So there aren't any significant surprises there."
Thomas G. Robinson, a cable regulator for the county, said, however, "We're doing our own review. I wouldn't say we're worried, but we're interested."
Media General, which was awarded the county's cable television franchise in 1982, is a wholly owned subsidiary of Media General Inc., based in Richmond.
Waldrop denied reports that the firm may be sold to cut the parent company's losses. He said the parent company's losses would be cut in half after tax benefits and investment tax credit write-offs are tallied.
Waldrop said the firm expects to turn an operating profit in 1988. He said those figures, however, would exclude interest payments that cost the firm almost $13 million last year.
The firm originally estimated that it would cost about $125 million to wire the county for cable. That forecast now has been increased to about $200 million. The company says most of the system will be finished by 1987.
The primary reason for the cost overrun, according to Media General officials, is the Virginia Department of Highways and Transportation's policy that forbids the company to place electronic housings in state-owned underground utility strips.
That policy forced Media General to buy individual easements from property owners, a time-consuming and expensive procedure, according to company officials.
Earlier this month, the franchise signed up its 100,000th subscriber. It expects another 30,000 by the end of the year, officials said. The firm's cables run past more than 200,000 households throughout the 399-square-mile county.
Some business analysts said they are generally confident that the cable system in Fairfax will become profitable for Media General.
"These numbers in the report are not very important because they're still in their build-out stage," said Charles T. Akre Jr., director of Research at Johnston, Lemon and Co. Inc. of Washington. "The system's going to make a lot of money for them. It's certainly a jewel in their portfolio of businesses."
Media General recently asked the county for an 18-month extension in its scheduled wiring of Reston. Another firm, Warner Cable, operates a cable system in Reston without a franchise from the county. Officials of both firms say they are trying to work out the details of a plan in which Media General would assign its Reston franchise to Warner.
If the county awards Warner the exclusive franchise for Reston, that would eliminate the only potential situation in the county in which two cable firms would compete in a local market.