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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) MARCH 1, 1996
NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
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(Exact name of registrant as specified in charter)
State of Washington 0-16718 91-1366564
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(State or other jurisdiction of (Commission (IRS Employer
of incorporation) File Number) Identification No.)
NORTHLAND COMMUNICATIONS CORPORATION
3600 WASHINGTON MUTUAL TOWER
1201 THIRD AVENUE, SEATTLE, WASHINGTON 98101
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(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (206) 621-7244
N.A.
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(Former name or former address, if changed since last report)
This filing contains pages. Exhibits Index appears on page .
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NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
ITEM 2. ACQUISITION OF ASSETS
On January 26, 1996 and February 5, 1996, Northland Cable Properties Seven
Limited Partnership (the "Registrant") entered into separate agreements to
acquire substantially all operating assets and franchise rights of the cable
television systems in or around the communities of Vidalia, Higgston, Lyons,
Santa Claus and certain unincorporated areas of Montgomery County and Toombs
County, all in the state of Georgia (the "Vidalia system"). The cable television
systems represent approximately 6,500 basic subscribers and were owned by
Southland Cablevision, Inc. ("Southland") and TCI Cablevision of Georgia, Inc.
("TCI"). The assets were acquired on February 29, 1996 and March 1, 1996 for the
purchase prices of $3,710,000 and $6,527,530 for the Southland and TCI systems,
respectively. Of the total $3,710,000 purchase price, Southland received
$2,640,000 on February 29, 1996 and $770,000 on March 1, 1996. Under the terms
of a subordinated, non-interest bearing hold-back note, the balance of $300,000
will be payable to Southland 180 days after the closing date, net of any
purchase price adjustments. Of the $6,527,530 purchase price, TCI was paid
$6,201,155 on March 1, 1996. The balance due of $326,375 was deposited into an
escrow account payable to TCI, due no later than 120 days after the closing
date, net of any purchase adjustments. The purchase price is based on Sellers'
representations as to monthly revenues and the number of basic subscribers as of
the closing date. There is no material relationship between the Registrant and
the Sellers or any of their affiliates, directors, officers, or associates.
FINANCING
The purchase was financed by borrowings under the Registrant's term loan
facility. At the time of this filing, the balance under the credit facility is
$26,400,000. The interest rates on the credit facility are as follows:
$7,300,000 fixed at 8.34% under the terms of an interest rate swap agreement
with the Registrant's lender expiring January 16, 1998; $8,091,000 fixed at
7.40% under the terms of a self-amortizing interest rate swap agreement expiring
September 30, 1996; $10,000,000 fixed at 8.42% under the terms of an interest
rate swap agreement expiring March 6, 1998; and $1,000,000 fixed at 8.31%
expiring April 9, 1996. The balance of $9,000 bears interest at the prime rate
plus 1.75% (currently at 10%). The above rates include a margin paid to the
lender based on overall leverage, and may increase or decrease as the
Registrant's leverage fluctuates.
PROFILE OF THE VIDALIA SYSTEM
The Vidalia systems serve the incorporated communities of Vidalia, Lyons,
Higgston, Santa Claus and nearby unincorporated areas of Toombs County and
Montgomery County, all in the state of Georgia.
Vidalia is located approximately 180 miles southeast of Atlanta and 95
miles west of Savannah. It is the home of the Vidalia Sweet Onion. Nearby Lyons
is the county seat of Toombs County.
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EFFECTS OF REGULATION
On October 5, 1992, Congress enacted the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Act"). The 1992 Act
substantially reregulated the cable television industry and imposed numerous
requirements, including provisions subjecting rates for certain services and
equipment to regulation by the applicable local franchising authority and by the
Federal Communications Commission ("FCC"), exclusive programming arrangements,
the carriage of broadcast signals, customer service standards, leased access
channels, customer premises equipment compatibility and various other matters.
On April 1, 1993, the FCC announced the adoption of rate regulations which
became effective September 1, 1993. Under those initial regulations, rates were
evaluated against "competitive benchmarks" and were generally subject to
rollbacks if they exceeded the benchmark levels. On February 22, 1994, the FCC
substantially revised the rate regulation rules to effect further rate
reductions effective May 15, 1994, or later in certain circumstances, based on
complex formulas and revised benchmarks.
All of the Registrant's cable systems are potentially subject to rate
regulation. The 1992 Act (i) requires the FCC to establish rate standards for
basic cable service rates which may be regulated by the applicable local
franchising authority, (ii) requires the FCC, upon receipt of a complaint, to
review rates for additional tiers of cable service, (iii) regulates rates for
mandatorily offered commercial leased access channels and (iv) eliminates the
automatic five percent annual increase for basic rates allowed under prior law.
Rates for channels offered on a per-channel basis as individual purchase options
and pay-per-view events are excluded from rate regulation.
Basic service rates, including the equipment used to receive basic service,
may be regulated by a local franchising authority once it has been "certified"
by the FCC. When the certification becomes effective, the local franchise
authority may request the cable operator to justify its existing rates charged
for basic service and related equipment ("request for justification" or "RFJ").
Rates charged in excess of the maximum allowable rates determined under FCC
regulations are subject to refund for the period in which the excess rates were
charged or one year, whichever is shorter. Additional tiers of service are
subject to regulation only upon an appropriately filed complaint to the FCC by
any subscriber, franchising authority or other person ("subscriber complaints").
If no subscriber complaints are filed within 45 days of a change in the FCC
regulated rates, such rates are not subject to challenge unless and until the
cable operator seeks to modify them. Refund liability, if any, generally would
be limited to any incremental increase in rates. In late 1994, the FCC revised
its rules to permit cable operators to offer New Product Tiers at rates which
they elect so long as, among other conditions, other channels that are subject
to rate regulation are priced in conformity with applicable regulations and
cable operators do not remove programming services from existing service tiers
and offer them on the New Product Tier.
On May 5, 1995, the FCC announced the adoption of a simplified set of
alternative rate regulation rules that will apply to "small" cable systems,
defined as a system serving 15,000 or fewer subscribers, that are owned by
"small" companies, defined as a company serving 400,000 or fewer subscribers.
Under the FCC's definition, the Registrant is a "small" company and each of the
Registrant's cable systems are "small" systems. Maximum permitted rates under
these revised rules are dependent on several factors including the number of
regulated channels offered, net asset basis of plant and equipment used to
deliver regulated services, the number of subscribers served and a reasonable
rate of return.
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As of the date of this filing, the Registrant has received notification
that local franchising authorities with jurisdiction over approximately 22% of
the Registrant's subscribers have elected to certify, no RFJ's have been
received from franchise authorities and three subscriber complaints have been
filed in systems representing 8% of the Registrant's total subscribers. Based on
management's analysis, the rates charged by these systems are within the maximum
rates allowed under FCC rate regulations.
On February 8, 1996, the Telecommunications Act of 1996 (the 1996 Act)
became law. The 1996 Act will eliminate all rate controls on cable programming
service tiers of small cable systems, defined by the 1996 Act as systems serving
fewer than 50,000 subscribers owned by operators serving fewer than 1% of all
subscribers in the United States (approximately 600,000 subscribers). All of the
Partnership's cable systems qualify as small cable systems. Many of the changes
called for by the 1996 Act will not take effect until the FCC issues new
regulations, a process that could take from several months to a few years
depending on the complexity of the required changes and the statutory time
limits. Because of this, the full impact of the 1996 Act on the Partnership's
operations cannot be determined at this time.
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SUBSCRIBER SUMMARY
(As of March 1, 1996)
SOUTHLAND TCI
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Estimated Homes Passed: 4,500 7,500
Basic Subscribers: 2,675 3,823
% of Homes Passed 59% 51%
Pay Subscribers:
HBO 531 1,415
Cinemax 144 -
Disney 80 630
Showtime 170 1,046
Starz - 37
Encore - 744
Total 925 3,872
% of Basic 35% 102%
CURRENT RATES
(excluding franchise fees, including sales tax)
Basic 18.75 14.50
HBO 7.95 11.95
Cinemax 6.95 -
Disney 5.00 10.95
Showtime 5.00 8.95
Starz - 4.75
Encore - 1.75
Installation 40.00 40.00
Reconnect fee 20.00 24.95
Transfer fee 20.00 15.00
Install extra outlet 20.00 19.95
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CHANNEL LINE-UP - VIDALIA, GEORGIA (TCI)
CABLE OFF AIR
CHANNEL CHANNEL STATION NETWORK AFFILIATION
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2 The Disney Channel
3 3 WSAV NBC (Savannah, GA)
4 FOX
5 Showtime
6 The Discovery Channel
7 WTBS
8 9 WVAN IND (Savannah, GA)
9 WUBI
10 22 WJCL ABC (Savannah, GA)
11 11 WTOC CBS (Savannah, GA)
12 CNN
13 Family Channel
14 Encore
15 American Movie Classics
16 11 WXIA NBC (Atlanta, GA)
17 WMAZ
18 Nickelodeon
19 C-SPAN
20 HBO
21 The Nashville Network
22 The Movie Channel
23 Sports South
24 ESPN
25 F/X
26 Turner Network Television
27 Lifetime
28 USA
29 CNN Headline News
30 VH-1
31 Black Entertainment Television
32 CNBC
33 QVC
34 Arts & Entertainment
35 The Weather Channel
36 MTV
37 Faith & Values Channel
49 Starz
50 Pay-per-view
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CHANNEL LINE-UP - VIDALIA, GEORGIA (SOUTHLAND)
CABLE OFF-AIR
CHANNEL CHANNEL STATION NETWORK AFFILIATION
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2 22 WJCL ABC (Savannah, GA)
3 3 WSAV NBC (Savannah, GA)
4 Local Origination
5 Family Channel
6 WTBS
7 Travel Channel
8 C-Span
9 9 WVAN (PBS) IND (Savannah, GA)
10 Faith & Values
11 11 WTOC CBS (Savannah, GA)
12 CNN
13 28 WTGS FOX (Hardeeville, GA)
14 HBO
15 USA
16 Headline News
17 11 WXIA NBC (Atlanta, GA)
18 WWOR (New York)
19 WGN (Chicago)
20 Nickelodeon
21 Weather Channel
22 Nashville Network
23 Country Music Television
24 Court TV
25 American Movie Classics
26 TNT
27 Lifetime
28 The Discovery Channel
29 The Learning Channel
30 Arts & Entertainment
31 ESPN
32 Black Entertainment Television
33 CNBC
34 WUBI
35 CVC
36 Home Shopping Network
37 WMAZ
38 The History Channel
39 Sport South
40 VH-1
41 MTV
42 Preview Guide
43 HBO
44 Cinemax
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CHANNEL LINE-UP - VIDALIA, GEORGIA (SOUTHLAND)
CABLE OFF-AIR
CHANNEL CHANNEL STATION NETWORK AFFILIATION
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45 Showtime
46 The Movie Channel
47 Disney
48 Viewers Choice
49 Future
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FRANCHISE AGREEMENTS
The Systems operate under the terms of following franchise agreements:
FRANCHISE EXPIRATION DATE FRANCHISE FEE
City of Higgston December 6, 2001 None
City of Santa Claus January 4, 2002 None
City of Vidalia March 28, 2000 5%
County of Toombs September 24, 2001 5%
City of Lyons March 28, 2000 5%
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Sequentially
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Item 7. Financial Statements and Exhibits
Financial Statements, Pro Forma
(a)(4) The financial statements required to be filed
were not available as of the date of this filing.
(b)(2)(c) Exhibits
Asset Purchase Agreement between Northland
Cable Properties Seven Limited Partnership and
Southland Cablevision, Inc.
Asset Purchase Agreement between Northland
Cable Properties Seven Limited Partnership and
TCI Cablevision of Georgia, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
BY: Northland Communications Corporation,
Managing General Partner
Dated: BY: /s/ GARY S. JONES
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Gary S. Jones
(Vice President)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
BY: Northland Communications Corporation,
Managing General Partner
Dated: BY:
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Gary S. Jones
(Vice President)
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INDEX TO EXHIBITS
Exhibit Sequentially
Number Description Numbered Page
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10.30 Asset Purchase Agreement between Northland
Cable Properties Seven Limited Partnership and
Southland Cablevision, Inc.
10.31 Asset Purchase Agreement between Northland
Cable Properties Seven Limited Partnership and
TCI Cablevision of Georgia, Inc.
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