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SEC Filings

S-4
AVALON CABLE OF MICHIGAN INC/ filed this Form S-4 on 04/01/1999
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anticipates the deployment of a fiber optic network that will span
approximately 75% of the Michigan Cluster's customer base. After completion of
the plant upgrade projects, approximately 98% of the Michigan Cluster's cable
systems will have a bandwidth capacity of at least 450 MHz (60+ analog
channels) and approximately 90% of the Michigan Cluster's cable systems will
have a bandwidth capacity of at least 550 MHz (78+ analog channels).
 
   We generally package our basic cable service in the Michigan Cluster into
three distinct tiers: Limited Basic Service, Expanded Basic Service and the
Family Value Package. We currently price Limited Basic Service, which consists
primarily of broadcast channels, at an average cost of $11.35 per month;
Expanded Basic Service, which includes traditional cable channels, at an
additional average cost of $11.33 per month; and Family Value Package, which
includes popular sports and cable news channels, at an additional average cost
of $7.13 per month. As of December 31, 1998, Cable Michigan's penetration rates
for Expanded Basic Service and the Family Value Package were 89.2% and 82.4% of
basic subscribers, respectively. In May 1998, Cable Michigan implemented an
average annual rate increase for basic cable service of $2.29 per month, an
increase of approximately 8.3%. We plan to carefully review and refine our
existing programming packages and pricing structure in conjunction with our
marketing strategy.
 
   We believe that there are significant opportunities to increase revenue in
the Michigan Cluster. As of December 31, 1998, the Michigan Cluster maintained
a 63% basic penetration rate and a 35% premium penetration rate, as compared to
national averages of 69% and 72%, respectively, according to Paul Kagan Inc. In
order to increase our pay and basic penetration rates, we plan to introduce
targeted marketing campaigns such as outbound tele-marketing, direct mail,
advertising and sponsorship of community based events. We also believe that we
will be able to generate additional revenues from the upgrade of our cable
systems by providing expanded tiers of basic programming, multiplexed premium
services, additional home shopping channels and pay-per-view services. In
addition, we believe that the revenues generated by the cable systems serving
the Michigan Cluster will increase due to the substantial projected growth of
the communities located in the Michigan Cluster.
 
 The New England Cluster--Acquisition History
 
   The New England Cluster has been formed through our acquisitions of Amrac
and Pegasus. We plan to add to the New England Cluster through the acquisitions
of Taconic and Hometown.
 
   Amrac and Pegasus. On May 30, 1998, we acquired the assets of Amrac for
approximately $8.1 million. The Amrac cable systems serve the towns of Hadley
and Belchertown in the vicinity of Amherst, Massachusetts. On July 21, 1998, we
acquired the assets of Pegasus for approximately $30.5 million. The Pegasus
cable systems serve seven towns located in Massachusetts and seven towns in the
County of Litchfield, Connecticut. As of December 31, 1998, these cable
systems, which currently constitute the New England Cluster, passed
approximately 34,000 homes and served approximately 20,600 basic subscribers.
 
   Taconic. On September 10, 1998, we entered into an agreement to purchase the
cable related assets of Taconic for approximately $8.5 million. As of December
31, 1998, Taconic's cable system passed approximately 7,200 homes and served
approximately 5,000 basic subscribers. Taconic's subscribers are located in
eight towns in upstate New York, all of which are situated in close proximity
to our current cable systems in the New England Cluster. We expect that the
consummation of the Taconic Acquisition will occur in the second quarter of
1999.
 
   Hometown. In December 1998, we signed an agreement to acquire certain assets
of Hometown for approximately $0.5 million. As of December 31, 1998, Hometown's
cable systems passed approximately 700 homes and served approximately 400 basic
subscribers. We expect that the consummation of the Hometown acquisition will
occur in the second quarter of 1999.
 
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