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1e. Cable TV, Transfer Ownership CITY QF CHANHASSEN ss.1\.kLi' 690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317 (612) 937-1900 1 MEMORANDUM TO: Mayor and City Council FROM: Don Ashworth, City Manager DATE: April 11, 1988 ISUBJ: Cable Television Request to Transfer Ownership Approximately 30 days ago the City received notification from Dowden of its desire to sell its communications system, which includes Chanhassen, to Triax Midwest Associates. Included with that information was the proposed transfer agreement, sales docu- mentation, their financial audit reports , and supporting documen- tation (4-5 inches of documentation) . All information received was forwarded to the City Attorney' s office requesting his review, advice, and recommendation regarding how to proceed with the request. ' During the past month, the City Attorney and this office have discussed, hopefully, all aspects/options associated with the proposed transfer. Although not shown in Mr. Knutson' s final ' opinion, I did have the attorney research the City' s ability to require documentation regarding rates , programming, etc. His findings in these areas were not surprising in light of a similar ' question posed to him approximately six months ago when Dowden unilaterally proposed to increase their fee structure, i .e. the federal legislation requiring deregulation of industries such as airlines , communications and cable television has virtually stripped local governments of most regulatory powers. The City may keep intact its franchise agreement requiring certain main- tenance levels, etc. In addition, the maintenance of a bond to ' insure that the technical aspects of the system are maintained is allowed. In almost all other respects, deregulation removes tb- local control. A key provision was maintained in that, should the City be dissatisfied with the regulations as established by the company, the City does maintain the ability to acquire the system at its fair value. To date I have not received $90 million dollars worth of complaints and accordingly, am not proposing ' City acquisition. I have had approximately three conversations with Triax/Dowden representatives regarding the proposed transfer . All local 11 r Mayor and City Council April 11, 1988 Page 2 operational personnel would remain employed with Triax as a part 11 of the merger. I have a great deal of respect for Dowden' s (proposed Triax' s) regional manager, Mary Smith. Mary feels very confident that the acquisition will improve not only her own position, but also the positions of Triax and the City. The "buying power" associated with larger networks for station II programming makes it very difficult for the smaller communication systems to continue to compete. Dowden' s acquisition by Triax should reasonably assure the City that rate increases will not occur as often and that the level of programming can not only be II maintained but hopefully increased. In light of recent agenda lengths, I have not encouraged repre- ' sentatives of Dowden or Triax to make a presentation before the City Council. I am confident that they would be more than willing and would welcome the opportunity to provide a presen- II tation of who they are, what they would propose, and why the acquisition is necessary. Again, the City has maintained an outstanding relationship with Dowden and all communications to date with Triax would lead me to believe that that will continue II to be the case with Triax. Again, the Council may wish to ask that a presentation be made solely to maintain the personal rela- tionship which has existed over the past several years . This office would recommend that the City Council approve in con- cept the acquisition of Dowden by Triax Midwest Associates . As a part of the concept approval, the City Attorney should be II instructed to prepare a franchise ordinance modification reflecting the transfer while binding Triax to all portions of the existing franchise agreement, including bonding. A potential II presentation by Triax could be made at the time of consideration of the first or second reading of the modified ordinance. II i.(11-j I 0,1 6-i. b..„ I j_,,„ I I I I , I LAW OFFICES GRANNIS, GRANNIS, FARRELL & KNUTSON DAVID L.GRANNIS- 1874-1961 PROFESSIONAL ASSOCIATION TELECOPIER: I DAVID L. GRANNIS,JR. - 1910-1980 POST OFFICE Box 57 (612)455-2359 VANCE B. GRANNIS 403 NORWEST BANK BUILDING DAVID L. HARMEYER Ewan B. KNETSCH VANCE B. GRANNIS,JR. 161 NORTH CONCORD EXCHANGE MICHAEL J. MAYER PATRICK A. FARRELL DAVID L. GRANNIS,III SOUTH ST. PAUL, MINNESOTA 55075 TIMOTHY J. BERG ROGER N. KNUTSON TELEPHONE(612)455-1661 II March 29, 1988 I Mr. Don Ashworth City of Chanhassen 690 Coulter Drive, Box 147 IChanhassen, Minnesota 55317 RE: CATV IDear Don: You asked me to review the proposed sale of the Dowden Cable II System, which includes Chanhassen, to Triax Midwest Associates. Article X of the City' s franchise agreement with Dowden gives the City the right to purchase the CATV system within Chanhassen. I Assuming there is no interest in purchasing the system, Article XI of the franchise agreement provides that the proposed sale requires the City' s consent "which consent shall not be I unreasonably withheld. " The new owner will be bound by the same franchise agreement that binds Dowden. The only concern the City may have is their ability to perform. Since Triax is investing over $90 million dollars, presumably they think they can perform. I The City could have a financial audit performed to determine if they have enough capital to succeed, but I really don' t think that is necessary. There is no feasible way of keeping Dowden in Ibusiness and the sale, on i face, appear legitimate. V-ry truly y urs, , ---) /B : _� I C 'oger N. K tson RNK:srn I I MAR 3 0 1988 1/4..11-Y OF CHAN1-1A:, t-" I Dowden 111 Cablesystems March 30, 1988 ' Mr. Don Ashworth, City Manager City of Chanhassen 690 Coulter Drive P.O. Box 147 Chanhassen, MN 55317 Dear Don: On behalf of Triax Communications Corporation and Mr. James C. Vaughn, its Director of Operations, I am enclosing the following information for your review: -Financial Statements for Year End 1987 r -Organization Chart of Triax Corporate Staff -Brief Biographies of Key Personnel -Triax Growth and Development Brochure , Also enclosed is a proposed resolution from Triax for your consideration. If ou have any questions or need additional information, y q , please do not hesitate to contact me. Yours very truly, 1)\tow-rA A Mary A. Smith Regional Manager MAS:mrf Enclosures I CC: James C. Vaughn M. Kent Sharp APR 0 1 1988 CITY OF CHANhASSEN • Managed By Dowden Cable Partners,L.P., 2381 Wilshire Boulevard,Mound,Minnesota 55364 (612)472-6394 1 1 1 1 1 1 1 1 1 1 1 1 11111 1 1 r 1 1 - TRIAX OPERATING COMPANIES COMBINING STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1987 ELIMI• TCC PERF G.P. TAI TAIL TAIII TAIV TDC NATIONS TOTAL REVENUES: BASIC REVENUES ••• -•- •-- 4,841,917 804,041 172,393 1,454,189 503,060 ••- 7,775,600 PAY REVENUES .-• -•- •-• 1,705,098 309,030 83,970 541,803 243,182 ••• 2,883,083 OTHER REVENUES 48,641 ••• ••• 1,105,228 173,256 29,631 148,882 43,351 ••• 1,548,989 AFFILIATE REVENUE 1,208,369 646,147 ••• •-- -•- •-• ••- -•- (1,765,126) 89,390 TOTAL REVENUES 1,257,010 646,147 0 7,652,243 1,286,327 285,994 2,144,874 789,593 (1,765,126) 12,297,062 EXPENSES: PROGRAMMING •-• --• 1,449,046 240,915 64,849 424,979 177,659 ••• 2,357,448 OPERATING •-• 580,826 •-• 807,563 135,951 43,552 220,318 101,832 (580,826) 1,309,216 MARKETING .-• --- --- 247,402 59,953 3,610 76,343 12,346 -•• 399,654 GENERAL & ADMINISTRATIVE 861,121 •-• ••• 1,743,582 291,161 80,381 508,512 183,948 --- 3,668,705 TOTAL EXPENSES 861,121 580,826 0 4,247,593 727,980 192,392 1,230,152 475,785 (580,826) 7,735,023 CASH FLOW 395,889 65,321 0 3,404,650 558,347 93,602 914,722 313,808 (1,184,300) 4,562,039 INTEREST 6,389 1,777 ••- 2,851,507 349,444 134,037 1,080,385 322,009 (1,777) 4,743,771 MANAGEMENT FEES ••• --• -•- 382,611 102,906 20,019 107,243 55,269 (668,048) 0 DEPRECIATION & AMORTIZATION 28,239 18,191 ••• 3,256,576 467,897 196,969 883,160 424,234 (59,181) 5,216,085 EQUITY & LOSSES OF SUBSIDIARIES 1,124,000 •-- --• --- •-- -•• -•• ••• 1,124,000 NET INCOME (LOSS) (762,739) 45,353 0 (3,086,044) (361,900) (257,423) (1,156,066) (487,704) (455,294) (6,521,817) CASH FLOW % 44.49% 43.41% 32.73% 42.65% 39.74% qr TRIAX COMBINING BALANCE SHEET DECEMBER 31, 1987 ELIMI- TCC PERF G.P. TAI TAIL TAIII TAIV TDC NATIONS TOTAL ASSETS: CASH 250,541 1,000 ••• 206,417 52,754 24,203 153,810 291,263 ••• 979,988 ACCOUNTS RECEIVABLE, NET ••• 1,452 -•• 326,914 67,150 22,411 153,255 36,186 -•• 607,368 INVENTORY ••• ••• 595,104 118,821 3,243 58,704 36,500 ••• 812,372 PREPAID ASSETS 9,637 -•- ••- 41,712 10,900 210 18,283 9,651 •-• 90,393 PROPERTY, PLANT & EQUIPMENT, NET 147,542 64,929 --• 17,633,328 2,671,154 1,141,479 9,046,159 4,195,220 (45,353) 34,854,458 OTHER ASSETS, NET 20,667 ••• •-• 12,317,173 253,873 847,131 12,186,703 2,541,072 (409,941) 27,756,678 INTERCOMPANY ACCOUNTS, NET 336,233 28,577 (28,229) (307,748) (36,592) (113,425) (571,593) 692,777 •-• 0 INVESTMENT IN AFFILIATES 528,600 -•- 526,000 ••• ••• ••• ••• ••• (526,100) 528,500 1,293,220 95,958 497,771 30,812,900 3,138,060 1,925,252 21,045,321 7,802,669 (981,394) 65,629,757 LIABILITIES & EQUITY: , DEBT 22,840 4,840 •-• 26,655,910 3,384,958 1,350,000 19,158,123 5,962,139 --- 56,538,810 ACCTS. PAYABLE & ACCRUED EXPENSES 70,844 45,664 -•- 1,289,265 142,862 44,210 419,668 197,310 •-- 2,209,823 UNEARNED REVENUES ••- --- •-• 132,827 29,129 7,695 22,348 10,044 •-- 202,043 CONVERTER DEPOSITS ••• -•- ••• 325,360 73,084 10,770 1,249 880 •-- 411,343 OTHER LIABILITIES -•• ••• ••• 153,313 ••• -•• •-• -•• -•• 153,313 EQUITY 1,199,536 45,454 497,771 2,256,225 (491,973) 512,577 1,443,933 1,632,296 (981,394) 6,114,425 1,293,220 95,958 497,771 30,812,900 3,138,060 1,925,252 21,045,321 7,802,669 (981,394) 65,629,757 MI NM EMI MEI INS OM Mill IIII MI MN ME RN ME ME NM ME IIIII MN MN TRIAX COMMUNICATIONS CORPORATION I CORPORATE OFFICE ORGANIZATION CHART MARCH 1. 19521 IJAMES OESCRREMIO CNAIIIMN Of TO WARD/CEO I • SMARM SMAR AWN ^ EXECUTIVE SECRETMY II JAY R. WW1 PRESIDENT I/ l I I I COt I DAVE MEY PART IEYERS JIN VAX*. NICE PA MM[ET OEVEIOPMEMT 11.1.S. IIAMAGER OPESAT TOMS CORPORATE OOMi110llER I LORI PM% DART SC*)LT2 PAUL NAZARW JOE VITO STEVE EWE EEVERIY PRERS MARKET DEVELOPMENT ARTIST SALES MANAGER SPECIAL PROJECTS MANAGER ACOOIA111MG MANAGER ADMIVISTMi1VE NAMAGER / I ADMINISTRATOR Off ICE MANAGER fI stuff SLAW EARS MATTERS GAVE LLOTO KIN SiMON , Al RANIREZ AONIMIStSAIIVE ASSISTAVI GEM LEDGER ACCOUNTANT ACCOUNTANT ACCORITS PATAE NT IE ACCOUNTS PATASLE , I (AIRY ANDERSON , CAW NATEOA OPEN RECEPTIONIST ADMINISTRATIVE ASSISTANT SECRETARY, ADNIM. ASST. I 1 -- I COMMUNICATIONS CORPORATION I I14 TRIAX COMMUNICATIONS CORPORATION MANAGEMENT BIOGRAPFIIES 1 JAMES DESORRE flO - Chairman of the Board and Chief Executive Officer Mr. DeSorrento has served as Chief Executive Officer and Chairman of the Board of ' Triax Communications Corporation since the company's formation in 1982. He is also a General Partner of Triax Associates I, L.P., one of TCC's operating affiliates. Mr. DeSorrento has been involved in the cable television industry since 1970, holding various operational and management positions over the 18-year period. Mr. DeSorrento is a past president of the Ohio Cable Television Association, and was active on the state's President Committee, an NCTA subcommittee formed to lobby Congress regarding the passage of Copyright legislation. Mr DeSorrento has been responsible for financing and managing the growth of TCC and its affiliates from zero to nearly 60,000 subscribers. During this period, the Company won over 40 new franchises and completed 16 acquisitions. Under Mr. DeSorrento's direction, TCC's gross revenue has grown to over $18 million, and operating cash flaw has increased to over $9 million. Prior to TCC, Mr. DeSorrento held positions of Vice President of Corporate Development with U.S. Cable Corporation, a 150,000 subscriber cable MSO; and spent almost five years as Vice President of Investment Banking at Daniels & Associates, one of the largest investment banking and brokerage firms serving the cable television industry. From 1970 through 1975 Mr. DeSorrento held various operational and management positions with Viacom International, Inc., including Director of Marketing, and General Manager in San Francisco, one of the larger cable television systems in the early 1970's. After San Francisco, Mr. DeSorrento became 11 Viacom's Regional Manager in Cleveland, Ohio. JAY R. BUSCH - President Mr. Busch has responsibility for TCC's continuing operations with areas of corporate finance, acquisitions, and corporate emphasis in the rpo cqui rporate development. Mr. Busch's 14-year history in the cable business has focused on corporate finance and mergers and acquisitions. Responsibilities include assessing capital needs and designing funding alternatives to reach corporate objectives. As a Senior Investment Banker with Daniels & Associates over the last eleven years, Mr. Busch completed financing transactions totalling about $500 million; merger transactions totalling over $1 billion; and a variety of consulting projects for clients such as General Electric, Tribune Company and Warner Communications, Inc. Mr. Busch assisted in the strategic planning and development of the Investment Banking Division at Daniels which grew from six people in 1977 to 20 people at the end of 1987. Mr. Busch is a regular speaker on the financial panels offered at Paul Kagan Seminars, the National Cable Television Association Conventions and Daniels and Associates seminars. Prior to joining Daniels & Associates, he spent four years working for Syracuse University designing, and implementing a cable television system on the University campus. Mr. Busch completed his B.S. degree with a major in Finance at Syracuse University and received his M.S. in Business/Engineering from the University of Colorado. ' I JAMES C. VAU N - Director of Operations Mr. Vaughn has overall responsibility for the day-to-day operations of Triax ' Communications Corporation and its respective operating entities, including administration, plant construction, technical operations, franchise and customer relations, budget and expense controls. Over the last six years, Mr. Vaughn has held operations management positions with Enstar Communications, Harte-Hanks, and most recently, with Tele-Co munications, Inc. in the 500,000 home Chicago system. In these positions, Mr. Vaughn supervised start-up cable operations in Miami, Florida, Chicago, Illinois and several smaller southeastern cainunities. Fran 1977 ' to December, 1982, Mr. Vaughn was Director of Engineering for Cbx Cable Corporation, supervising over one million total subscribers and specifically overseeing the start-up of cable operations in New Orleans, Louisiana, Tucson, Arizona, Omaha, I Nebraska and Cleveland, Ohio. Prior to joining Cox Cable, Mr. Vaughn held the position of Director of Engineering in various Viacom International, Inc. cable systems. In those positions Mr. Vaughn participated in many engineering projects including the development and execution of satellite delivery and launch of Viaccan's Showtime pay television service. DAVID M. DOWNEY - Director of Marketing and Franchise Development Since 1983, Mr. Downey has worked at a variety of operational positions with Triax Ccarnnunications Corporation. Currently, Mr. Downey has responsibility to ' conceptualize and administer the direct marketing plan of TCC and its affiliates. Additional responsibilities include rate planning and new property development. Prior to joining TCC, Mr. Downey worked for U.S. Cable Corporation in their corporate development office. In that position, Mr. Downey was active in system franchising and assisted in system planning and budgeting. In 1980 and 1981 Mr. Downey worked as a staff representative for the franchising efforts in New York, Chicago and Los Angeles. Prior to joining the cable industry full time, Mr. Downey produced television commercials for Los Angeles based retail advertisers and held a door-to-door sales position near Pasadena, California. J. MICHAEL PAUK - Corporate Controller Mr. Pauk joined TCC in August, 1986, during the start-up phase of its corporate headquarters. Mr. Pauk helped develop and implement financial, accounting and ' administrative controls including initial set-up of chart of accounts, computerized general ledgers and reporting systems. Mr. Pauk is involved in a number of acquisition projects and analyses including contract review, projections and analyzing financial structures. Mr. Pauk is responsible for cash management, regulatory filings, financial statement preparation, insurance coordination and corporate administrative functions. Prior to joining TCC, Mr. Pauk held the position of Audit & Accounting Manager for Arthur Andersen & Co. where he was ' responsible for all levels of planning, supervision, coordination and review of audits of various sizes ranging from $1 million to $6 billion in assets. I 1 • ERIC OLSEN - Regional Manager Mr. Olsen is the Regional General Manager of the newly-acquired Illinois systems, I where he molded together seven companies. He implemented policies to upgrade the systems, raise rates and begin an extensive marketing campaign. Prior to being appointed Illinois Regional Manager, Mr. Olsen held several positions in TCC II affiliates, including Data Processing Manager, whereby he converted 16,000 recently acquired subscribers into a new billing system. Upon joining Triax Associates II in 1983, he designed and oversaw the construction of 200 miles of plant in Indiana, ' serving 2,500 subscribers. He was System Manager of the North Webster, Indiana system serving over 14,000 subscribers, which included duties in the areas of engineering, marketing and budgeting. Prior to joining Triax Associates II, Eric worked for U.S. Cable where he began as an installer in 1978 and rose to the II position of Chief Engineer, a position he kept until leaving U.S. Cable. STEPHEN R. TRIPPE - Regional Manager ' Mr. Trippe is the Regional General Manager of Ohio, Indiana and Michigan. He has had extensive experience in the cable television industry during the past six years, including the areas of marketing, customer service, franchising and operations. II Prior to becoming a Regional Manager, he spent three years as a System Manager in Waterville, Ohio, where he was responsible for the daily operations of the system. Previous to this, he was selected as Marketing Manager for Triax Associates II in II North Webster, Indiana. He spent two years in this position where he supervised and maintained a sales staff of 12. His experience also includes three years as a Platoon Leader of a combat engineering platoon in the Ohio National Guard. He spent four years on active duty in the United States Army where he graduated from Officer Candidate school and the United States Army Engineering School at Ft. Belvior, Virginia. GARY T. CROSBY - Regional Manager Mr. Crosby has served as the Regional Manager in Illinois and Wisconsin for Dowden II Cable, Inc. since joining the company in 1982. From his headquarters in Lena, Illinois, Mr. Cosby has been responsible for construction and development of 29 systems serving 55 communities. Under his supervision, the regions have grown to 18,000 subscribers served by 525 miles of cable plant. Included as part of Mr. II Crosby's responsibilities are management of 28 people, maintenance of a cable network of systems from the East St. Louis area to Central. Wisconsin, and public relations. Mr. Crosby is familiar with the franchising process and is active in II community affairs. He is currently active in the Illinois Cable Television Association and Chamber of Commerce affairs. Prior to joining Dowden, Mr. Crosby was Vice President and third-generation principal of Crosby Cable Co., Inc., which was founded by his grandfather in the early 1950's. IP II ' JOYCE VER1ACE - Regional Manager Mrs. Vermace is Regional Manager for Cowden's Iowa systems and is a 6-year veteran ' of the company. She began her career assignment in 1982 by coordinating early efforts in Iowa as Dowden pioneered the cluster concept of small community cable television operations. Mrs. Vermace has played an active role in all phases of ' cable development and operations from franchising through construction to customer service. She is responsible for a network of 35 systems serving 45 communities which serve approximately 12,500 subscribers in Central and Eastern Iowa. Her day- to-day responsibilities include personnel training and supervision, government and ' public relations, marketing and overall systems operation. Mrs. Vermace is Vice President of the Iowa Cable Television Association and has lobbied in Washington, DC, on behalf of the cable television industry. Prior to joining Cowden, she was Shipping Coordinator/Dispatcher for Santee Cement Corporation in South Carolina. MARY A. SMITH - Regional Manager Mrs. Smith is Dowden's Regional Manager in Minnesota. She is responsible for supervision and development of the 15 headends serving 43 Minnesota communities. Her strong organizational skills, public relations and marketing efforts have placed ' Dowden in a highly-respected position in an area where cable operators have often failed to deliver on the expectations of cable television. Before joining Dawden, Mrs. Smith was Manager of Zylstra/United Cable Television Company's Chaska and Shakopee, Minnesota systems throughout the construction and initial operations stages. She coordinated land acquisitions for several headend sites, established public access studios and business offices, hired staff, directed marketing and sales, initiated television production workshops, and produced and hosted a weekly ' television show. Mrs. Smith was instrumental in setting up the Twin Cities Cable Consortium and the Twin Cities Metro General Managers Committee. She is presently Chairman of the Twin Cities Cable Marketing Consortium. RIC HANSON - Regional Manager Ric Hanson joined Triax in March, 1988 as Regional Manager. Prior to joining Triax, ' he was Regional Manager for Combined Cable Corporation for over nine years where he operated systems in Minnesota, Iowa and Wisconsin. Mr. Hanson was responsible for franchising 17 communities and overseeing the construction of 27 cable franchises. ' He converted all subscribers to CableData's on-line billing system and completed CableData's training and conversion seminars. He built and operated the company's only addressable system which linked ten communities' school systems together via microwave. Mr. Hanson was also responsible for developing a four-state dispatching system, allowing cable customers 24-hour services. r I --- - ---- , I../ • i . kt ' i .e 1 . . 1 . 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'''; I.'!' • ''4 • i'i •ir''-a ‘•`" ',,','"' .; ',,,'. , ,' .4 -r4f-' 1;4 k•"'...'''''•--.'.4., •-y . ,.. _-, I ' 1: N 41.' 41' - ' i;..q '.....• 1 ' - , • ` '.. I ••• -.‘ = •S; •: , • ''''', •••(• -, • =. IT. i 0 )1 '4i-•T'I.,. ;‘4„,-".-: , ,-0, #4.• 4-•••Op,. 'Art4.- •••0` ,-% - 'i - s "N'' ' tr- .'• •.4 --''r-:••':. . 4" 41 ',.,.-•`P . ''',„ • ',i ' If . p • :t. •v 1 6,-,.,- ; --#. • ' .,.i , .....,--s- - '- ; z . , t-•:.,-.;--,f.. ..',...,.0.. ,..., •.• i , - 1,... 74. _ ._ .• ' '.. • . . '17+1 " CABLE TELEVISION IS OUR ONLY BUSINESS " ,, ) . . .• ...• .. ... • • ..... ;. F , . TRIA>K. COMMUNICATIONS CORPORATION n 1982, conventional wisdom held that the cable industry had become a big money game; that only giant conglomerates had the financial resources to compete in this capital-intensive growth business. That same year, James DeSorrento and a partner committed their personal resources to form Triax Communications Corporation. Triax was founded on the belief that growth opportunities still existed within the cable business, and that selective acquisition • of cable properties and the application of sophisticated management skills would result in superior financial performance and exceptional increases in asset value. { Triax applied this concept to the marketplace, and the results have consistently exceeded performance and growth projections. Today, Triax Communications Corporation manages several cable system complexes in 6 midwestern states and serves nearly 60,000 subscribers. Triax Communications Corporation was founded at a time when the cable industry was beginning the process of slowly consolidating. The large multiple system operators (MSO's) were constructing major urban franchises and acquiring adjacent properties to increase their .0 share of the market. I l ' • '�,.-`_."-'.1-1r -q�'iii ;Il T `• '}. I �-. Vii% 5i'r�"7 •rJ• �a -� At the same time, the vast majority of cable properties continued to remain small, independently operated enterprises. These systems I were often technologically outmoded, and did not utilize the sophisticated marketing and customer service techniques that had I been developed by the large MSO's for their urban systems. As a result of these historic trends, a new entrepreneurial opportunity beckoned. Because of the emphasis by the major MSO's on rapid growth and large urban systems, many smaller cable I properties were being ignored by the marketplace. Triax began by commiting to the strategy of franchising and acquiring a number of small adjacent cable properties . Triax centralized operations, and implemented modern management I techniques and reporting criteria. These networks of small cable franchises now operate at similar levels of performance and I profitability as larger cable franchises. In essence, Triax found a niche in the cable business that was both too I small and specialized for the large MSO's to exploit, and too demanding of the limited resources of small, independent cable I operators to duplicate. Beginning with the acquisition, construction and integration of a I network of new cable franchises in rural and suburban areas of northern Ohio, Indiana and Michigan, Triax has successfully I I applied its innovative formula. I 471,1 - ----:' I t ) .'t 'i :fix ,.. = I ',< r ix t' * V , -, MILE 4. . „..,%, •, :_ . . . ., • i___ - I 1 lirStatistics and Service Area Map IN Ml WON$ 20 - I GROSS , REVENUE 18 - 17.521.381 -,-' I The charts located on this page reflect 16 - Triax's steady growth in gross revenues, ....-, I 14 homes passed, and subscribers. ,.. 12.159.031 ..-#.. .f 12 - I 10 - - -,4 ..4.'....t ' ID 8 - 6.001 .7 , ....;,...D. 1.-r•- . 856 • • opposite page: "1988 Service Area Map II 6 - .--,i, :! -1-,, 4 2 1.904.338 F. '- 4„4„ '- - . , -4-... — 530.869 ,,i 4.. 1---tzi if.gi , 0 24.953 1982 1983 1984 1985 1986 1987 31c.r.48, YEAR I IN INOUSAND3 I IN THOUSANDS TOTAL . 107 73 106.952 3 .- . , 70 TOTAL HOMES SUBSCRIBERS i 60 839 IC° ' PASSED ; 60 • 93 . I • , 85 . 1 i ...,". ,. „, I I .9C) . 75 . ,.-' ...:.'" 50 - , ... , ‘ I -. 4... , 70 ' i , .,...2!.• I . .-, rtt; 65 . 40 • 59.472 -,. I • 60 . .8.. _I 55 . '" ' „vv.- I .: ': ...i...j.,7. 31.367 I '. 30 - I ;5 . 40 . 35276 r:.- 35 • . ,f`-' ■-4-..z ■.'`"--i,,,4. r-•„,_t..--: .„, $4,_ 1 .k._.!' f.. 20 • ,`"."0..''-'f,,ii''''4.7.1;'-1.X13.77ktit 33 . l' ''/I.-4, . . ' .-.;!• r,,,,i... . T..;:i.0'+I'f.1.4 I 25 . a) . 23274 ' -S411 ,'.:, /". -...-rftNik....e.:,,,,f,k. _, .4.4 -VPk ''- - 4)17-"2.-: r1;,-ti*- 18.510 .1i, 15 • -',--,!Tg tOsl'' 1„,,,,v,t1.,.-,„..2,We)4....;."..- .,, 10 . -.r "T.:"--.'4 il,.. •...;..y.,„,;.....4.r _ ..,„.. ' :744, i..1--,....:1::....:,i,t-i.-...•aps4., ':- I 10 • 5 . .- tZ4'''''At'‘ ' -'-'.401iXE•'`f(4.1'.'"' .i. VA-.A ,1.,' to ',r'l 1 145 / . .., 7-.,,,y,,,,,,-,.e.,.:;:., . ,•.4,, -ir.."-,.. "- :.,?,. 705 4.747 ,41.0.,' 4...;:i-v.ii,v4 44-,-.: - -...4,-.)„, • 0, ' 0 - 1982 1983 1984 1985 1986 1987 1988 1982 1983 1984 1985 1966 1987 1988 3....g. S.,82.. I YEAR YIAlt I •Flag sun ARIZONA I •Pha.. • I I1 3 •1 •'Noon 11I 1 ' • O • d MINNESOTA e''0* 4 0. / _s- 2 it I A Z 1�J 4 '3 i WISCONSIN Y•• S•• . S MICHIGAN I ( ... •Mnakan 1 •:• • • 9 • • `. {ana.q .pa„o• 1 ego•Cadar R�d •)•• Kuamazoo Q`\` I •Oes Manes ** • • oat—,.1 A •cm�ago 41*I IOWA'••• • •`'�""" •saum El is R _ ,4 ' 1 • $ f OZ OHIO 1 >' a.�Q11� rrnona '' q, I �� y� INDIANA _V�t 4!f 4Champaign spnngl.a�d •C WUmpq j :4411 •IntlaNpoef I .%sows ON 2 ' .C.ncmna, At t....; IMISSOURI I TRIA K I 1 ? U COCORPORA SON S I 1 LEGEND 1 TRIAX ASSOCIATES I, L.P • DOWDEN CABLE PARTNERS L.P. it TRIAX ASSOCIATES II :: VANTAGE CABLE, INC. _4 I TRIAX ASSOCIATES IV, L.P. (NEW) TRIAX COMMUNICATIONS CORPORATION COPYRIGHT 3/e/88 I 't a. 5.\. �. ! z! \ :: '.?S' Vii., i • i =�'• r�'Y�{'iF_ {41'"": y � r y*JO !t w i'. — 1 •'' 'tic • I i »` Y x.�trr; t k-• -F ;fit "+y''s--- {rat " - • t r L '-.^s•. - Yr tin —� T P1i�i c y. _ c .:.,- ,{. S .f r§ .fi,F r .!*.3':S:,y+.a,}g 4=.:rb jx r J , L k 1 { Y , gY �- f } I i. • - j..,..,--.4,.. I, t se r , Ii z It'' , A • ; i / 4, ,, , . ' -,..--E: 4 F i .nom t �s+;?4:r n ,fZ li t i / Iy j'JS' tij r i • r .,. 4. I "The primary emphasis throughout the Triax organization is to achieve and r- maintain excellent picture quality. Our service call ratio is consistently maintained at better than acceptable industry levels. We believe very strongly that the major benefit to subscribers of a cable system is a crisp, clear I picture at all times, supported by a commitment to customer service. Add to this a wide variety of programming, and the essential nature and function of a cable television system is achieved." JAMES DeSORRENTO Chairman of the Board; Triax Communications Corporation . Fs a , . i:- !_ RT IA\X . _ C _ C OMMUNICATIONS CORPORATION 1000= HART- ROAD- BARRINGTON ILLINOIS 60010 - (312) 3826801' TELECOPIER: (312) 382-6163 :-6I.,: -1-.; ' .t174:,. - t •-...: I, i - f •1.••••■• ■••- ,....„ pRO•.:,43;:.7,•;:',1,...'",,,,''.):....''... '—.. -- ., - - - , s!. ( ..S,t '1"av '. -, 4.1,-,• rt't ' t l. s _ • t t▪t -:"-,�a" •! .4.�� t# .I J.` .�1'� aX; t- ,' f`i;* ? ,K; - - } 1Y �+..lo.,.c,.'4` '.�.t _', - '+:,� T r i � '* "� f t _ 'S ".'�,'�.1 .+ s t.-n'. l'li t f yn .,..; 'f2 mod+',,a,..S• .. `.1. 'i - ; et ,'Y',R, R" 0t r. o„ -Yee.-- , war, r r .s F t'r • 't' 5-,'t+5,y I^4-'.' 4.yF`4 4 ■ , y » , -- M� -1 y =.v}# a...,t , 4. T .r 'i #{'4"-- \ t. ``.I �_rt ': r^',,-(,.43,1„. 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M`•• eta.<, ,r."" �.+'•i ?Fx7 t >' •�.S _•}-- .K i"VC} /r ar ~r 3�'i�,y.:` ..t .• v .. a ty' j's' c ctf*s ',} ..+t• ) t?a.• • M ,� _ •'<:: �- t1.j;e XX',� :: .-- t- r 1 y., _ - S 1-.,.• ..ft`�'f'``�-Hw y; .. 4 Krf S.-"�» 1,/. itA •3 i - z ,;'+�.'• r r 1. -.-..Zti lick":s.i.`--7.“...'-i%.,--,. .', ' *,....'":.:'- " s r4. 4•X ice?.: - •. � rT .. • '44,* � �t,{ I. . . .. !_l.: two 4 a i 77 • rti • a d a n s '�, t. v a• _,�4,-,t� 4 e 9i.Y' •;,i. I' "1,+. 17 #'� ,[.. •' • thy`' t '' •1 • • "fit y ;r+•, t � Vx•�s} " °r ;''.4 l`�+ 4 �• w ;� -i '.f ry.. � a +.1 r's. r, -4"Sf •`ti - ?',�J' -,Ew :- ? _'_F `sb. i. M• iv. �•y ::-...:2';'," ..1 r..L,4 f• f Y ' . 5:4, ,`, 1 N,,.. • ,,, N.,, "RTTi is, r , 1'. `a S - a r4,K'' '�f re T 4 4"..IX;r''''"1-..".'.-;.',."..t.';;",..'•''..^th` �,,. C+l�., k ;- X ' c ,i '.,.. 1• -'�w '� } i'zr�`' r x`.,17„ - y t. :jj ' ;,:s.;....4..-,-,.-a Y '.."•' l -s- ` 1 a.},,[ -•. _ t :-,--,.,.:-;4%; `s, -.. ;.,.%a:‘,';',.,v-43.•,-,;‘,..'-.:--,4',. ` t!• -_'y t !'Y.,�,'t_ is ,•t; q zs ` u •i y f ` � '�`•r K' � T � ,,•t ry' -^.jt, '.,-�.. i _a,3 Y ' , 1 'c4+ *�T,{�!,t, 'N.ar. v,F+' ;,4j ;: .4) a - � t X1 t.� r ' , F TRIAX COMMUNICATIONS CORI'ORATIO,N COPYRIGHT 3/1/88 a sue% j: I , , Dowden f C Communications I 1 February 26, 1988 I Mr. Don Ashworth I City Mayor City of Chanhassen Chanhassen, Minnesota IVia Federal Express 1 Dear Mr. Ashworth: 1 This letter will confirm our telephone conversation of today. Dowden Cable Partners, L.P. has signed a purchase and sale agreement for the assets of Dowden Cable Systems with Triax I Midwest Associates, L.P. including the cable television system serving Chanhassen. Pursuant to our franchise dated April 2, 1984 we are I obligated to offer the city an opportunity to purchase the system. Assuming there is no interest on the part of the city to purchase the system, we would like to exercise our right to request that Ithe formal transfer process begin. Triax Midwest has agreed to purchase 100% of the assets of Dowden Cable Partners, L.P. free and clear of all liens, I liabilities and encumbrances for $91. 5 million dollars. A full package of information detailing the terms of the sale is being submitted to your city by John Byrnes, attorney for the seller. IIt is my understanding that Triax Midwest will continue to operate the system in the same professional manner as has Dowden I and no changes in local management or technical staff is contemplated. 1 • Rr:C.3.:v .) 1 FEB 2 6 1988 iCITY OF CHANIHNSSLir Dowden Communications Investors, 3333 Peachtree Road-East Tower,Suite 1400,Atlanta,Georgia 30326(404)233-6960 -:: Mr. Don Ashworth Page #2 Mr Jim Vaughn, Opeations Manager of Triax will provide you with his company's resume and plans for operating the system in Chanhassen. Dowden and Triax Management are prepared to answer your questions and attend meetings necessary to expedite the transfer process. A closing date of May 30, 1988 is projected. Should you have any questions please feel free to call me. We have enjoyed our relationship with the city of Chanhassen over the years. 1 DOWDEN CABLE PARTNERS L.P. By Dowden CommunicationS Investors, L.P. By TCD Corp. By: M. Kent Sharp, ice President CC: Mary Smith Jim Vaughn John T. Byrnes • • I I 1 1