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Archive for Thursday, August 5, 2010

Company agrees to purchase Sunflower Broadband

August 5, 2010

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A Georgia-based communications company has agreed to purchase Lawrence-based Sunflower Broadband, ending more than 40 years of the Simons family owning the cable, Internet and phone company.

A deal between Knology Inc. and Sunflower’s parent company, The World Company, was signed Tuesday. The transaction is valued at $165 million, according to Knology, which is a publicly traded company. The agreement was announced to Sunflower employees Wednesday morning and to the financial markets during Knology’s earnings report.

Knology is expected to take over operations of Sunflower’s cable, Internet and phone services by the end of the year.

“We are very bullish on the community,” said Rodger Johnson, chairman and CEO of Knology who was in Lawrence for the announcement. “We still plan to be a big part of this community.”

Dolph C. Simons Jr., chairman of The World Company, said now was the right time to sell the cable company that he first dreamed of creating after hearing a presentation about “community antenna television” at a newspaper publishers conference in the late 1960s.

“It is never an easy decision when you have started something over 40 years ago and gone through many changes and had great success in changing with the technology,” said Dan Simons, president of electronics for The World Company. “At this time, for this company, this seemed to be the right thing to do.

“What makes me happy is we were blessed to have a company such as Knology to take over. It makes it so good to have the employees in good hands, the company in good hands and the community in good hands.

“And, obviously, we’re still planning to be extremely involved in Lawrence through the Journal-World, our software division and our other ventures. We plan on growing yet again. We plan on discovering new opportunities that will allow us to build new businesses in Lawrence.”

Customer changes

The deal will make Sunflower part of a growing communications company trying to expand its reach nationally. Knology, based in the small Georgia town of West Point, offers cable, phone and Internet services to about 700,000 residential and business customers in more than 45 cities in eight states.

Johnson said Sunflower subscribers will continue to have access to high-quality services and should experience a smooth transition to being served by Knology.

“Everything is still going to be there,” Johnson said. “It ought to be a transparent transition as far as the consumers are concerned.”

Johnson said Knology has made no decision yet whether to continue to use the Sunflower Broadband name or re-brand the service under the Knology (pronounced Nah-luh-gee) name. The purchase agreement is between The World Company and Knology of Kansas Inc., a newly formed arm of the parent company.

On Wednesday, Knology made no specific announcements about future rates and service terms, but it advertises cable, phone and Internet packages in other communities for rates similar to those offered in Lawrence.

For example, in Rapid City, S.D. — and in other cities in the company’s northern territory — it offers a digital trio of Internet service of 25 Mbps, a cable package including high definition channels and a DVR, and phone service with unlimited long distance for $99 per month, according to its Web site. In some of its southern markets, prices ranged from $89 to a little more than $100 a month, depending on the levels of service a customer chooses.

Johnson said the company will be rolling out more Lawrence details in the near future.

“When the time is right, we’ll do a kickoff for the community and introduce ourselves to the community,” Johnson said.

News operations

As part of the deal, Knology will own Sunflower’s Channel 6, which provides local programming and airs local news broadcasts six nights a week. But Knology has contracted with The World Company — which continues to own the Lawrence Journal-World, various weekly newspapers and KTKA 49 in Topeka — to provide news-gathering functions for Channel 6.

Johnson said his company does not own a local news channel like Channel 6 in any of its other markets, but he is interested in learning more about the operations.

“We made a commitment to continue to try and operate Channel 6,” Johnson said. “This will be our first venture into ownership of a television station. We have local programming in many of our other markets, but many times that is from an outside provider. We’re excited to learn and see what we can do with that asset.”

Knology officials said they still were exploring future staffing levels and other management-related issues for their Lawrence office. Sunflower has been a large employer in Lawrence, with about 200 employees prior to the sale.

“We’re going to work with the folks here and figure out what the right staffing structure is going forward,” Johnson said.

But Knology leaders said they do believe there are good opportunities to grow their business in the region that could increase the company’s operations in Lawrence.

Knology currently has operations in several southern states, including Alabama, Georgia, Florida, South Carolina and Tennessee. More recently, the company has acquired operations in northern states, including Iowa, Minnesota and South Dakota. Sunflower will be the company’s first Kansas system.

“We hope to have an opportunity to expand the Knology footprint in this part of the country,” said Todd Holt, president and chief financial officer, who also was in Lawrence for the announcement. “So this could be a foundation to do bigger things right here.”

Sunflower history

The deal does mark the end of an era for one of the country’s more successful independent cable operators. Sunflower, originally known as Sunflower Cablevision, went on the air Jan. 5, 1972, with Max Falkenstien — the former voice of the Kansas Jayhawks — serving as its general manager.

The company has grown to serve more than 33,000 video customers in Douglas, Leavenworth and Wyandotte counties, more than 28,000 Internet customers and more than 15,000 telephone lines.

The company’s roots, though, were in the cable television business. Shortly after attending the publishers convention where the new technology of cable television was discussed, Simons had national cable expert Bill Daniels come to Lawrence to evaluate the city as a cable market. Daniels advised The World Company not to proceed with a cable venture because of the strong television signals available over the airwaves from Topeka and Kansas City.

Simons remembers the conversation he had with his father, Dolph Simons Sr., who was in charge of The World Company.

“I told him that the man who’s the expert says he wouldn’t invest in cable here. But I said I thought we should go ahead.”

Simons Sr. agreed to move forward based on his son’s belief in the venture.

Simons Jr. said Wednesday he let a philosophy that has guided many of his business decisions guide his decision to take the cable risk.

“I’d rather have tried it and failed than to have let somebody else come into my hometown and try it and succeed,” Simons said.

Comments

Richard Heckler 4 years, 4 months ago

Typically this type of sale/takeover(too much money) = lost jobs and higher rates. Not good for local economy.

yankeevet 4 years, 4 months ago

If their rates go up;..........I'm done with them.........etc......

cavtrooper 4 years, 4 months ago

Don't forget "lean operations" and "effective" asset management. Also "personnel re-structuring"... Wonder how many local employees will be getting a pink slip for Christmas.

yankeevet 4 years, 4 months ago

Hopefully that wont happen; pink slips etc...........

John Hamm 4 years, 4 months ago

Guaranteed to be some. There has to be some duplication of "administrative" positions with those they already have in place......

OutlawJHawk 4 years, 4 months ago

At least the Simons did well on the sale...kudos to their family. They took risk and won. And their money will still be spent in our community...

Richard Heckler 4 years, 4 months ago

"And their money will still be spent in our community..."

What makes you think so? Please elaborate.

The Simons are among those who love OUR local corporate welfare tax dollars that deplete our personal expendable cash supply = negative impact on economic growth!

OutlawJHawk 4 years, 4 months ago

They live here in Lawrence, own a bank here, and spend their money here in Lawrence. I love the trickle down from the wealthy in this community, believe firmly in it, and make good money from many wealthy Lawrence people. I am not one of the wealthy but make a decent living working in the trades. You obviously are not a capitalist and would like nothing better than to tax the wealthly so you can get your Obama welfare check; do you even work?. What the hell is local corporate welfare tax dollars? You elaborate. Sounds like your economics is ass-backwards.

nobody1793 4 years, 4 months ago

I hope they fire Broadband Man. His super powers suck. And he scares kids.

ldawg 4 years, 4 months ago

I disagree, this is a perfect opportunity for Broadband Man to get additional training under new leadership and and hopefully fine tune his powers for a good cause. The community is behind you Broadband Man!!

Amy Heeter 4 years, 4 months ago

Maybe now Lawrence Freenet can get a break. Sunflower Broadband cut off their bandwidth when Freenet tried to expand. Alas Freenet had to start buying bandwidth fro AT&T.

gladiatr 4 years, 4 months ago

Not that the details make much of a difference, but unless you are thinking of the 2 DSL lines that were used during the early equipment testing phase, Freenet has never been an AT&T customer. Their backbone link is with Cogent.

Belinda Rehmer 4 years, 4 months ago

Thank you Chad for a good story. You answered all my questions as best as you could at this time. I really hope the changes are good ones. I don't think many people realize how fortunate we are to have our little TV station and I notice the new company is embarking on new ground taking this one on. I hope they come in dedicated to making it work and with the idea they can expand in that direction in their other markets.

I doubt many realize the benefit 6News provides Lawrence and I would hate to see it fail. There are so many small business' that are able to reach a market they would never be able to touch without our local station.

Joel Hood 4 years, 4 months ago

"...For example, in Rapid City, S.D. — and in other cities in the company’s northern territory — it offers a digital trio of Internet service of 25 Mbps, a cable package including high definition channels and a DVR, and phone service with unlimited long distance for $99 per month, according to its Web site. In some of its southern markets, prices ranged from $89 to a little more than $100 a month, depending on the levels of service a customer chooses..."

Ummmm, this sounds a lot cheaper than what I currently pay Sunflower Broadband for the Bronze CATV w/ Silver Internet service & no phone (approx $100 per month.) Any thoughts?

Clark Coan 4 years, 4 months ago

Now that the Simons family will have $165 million, maybe they can be generous like Tensie Oldfather and Petey Cerf and put in several million in the Douglas County Community Foundation.

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