television systems and have resulted in additional regulatory oversight by the
Federal Communications Commission and local and/or state franchise authorities.
A number of states, including New York, Connecticut, and Massachusetts, subject
cable systems to the jurisdiction of centralized state governmental agencies in
addition to more local regulation. Regulations cover, among other things:
. rates for certain services,
. mandatory carriage and retransmission consent requirements that require a
cable system under certain circumstances to carry a local broadcast
station or to obtain consent to carry a local or distant broadcast
. rules for certain franchise renewals and all transfers, and
. other requirements covering a variety of operational areas, such as equal
employment opportunity, technical standards and customer service
Changes in regulations can adversely affect our financial results and help our
Our results of operations may be adversely impacted by changes in federal,
state and local regulations. For example, pending federal legislation would
make it easier for direct broadcast satellite services to provide local
programming in local markets. If passed, the legislation would make direct
broadcast satellite services more competitive with cable television, which is
not currently similarly limited with respect to local programming. We cannot
predict whether this legislation, or any other pending or future legislation,
will ultimately become law, if it does what its final provisions will be and,
consequently, what impact it would have on us.
We will not be able to remain competitive if we cannot keep up with
The cable television industry is subject to rapid and significant changes in
technology. We plan to upgrade the technical quality of our cable plant to
expand our services, increase the number of channels that we offer to customers
and, if economically viable, provide new services. We cannot assure you,
however, that existing, proposed or yet undeveloped technologies will not
become dominant in the future or otherwise render cable television services
less profitable or less viable.
Our financial performance will be adversely affected if we cannot continue to
obtain programming on reasonable terms.
Our cable programming services are dependent upon our ability to obtain
attractive programming at reasonable rates. Although we believe that our
relations with our programming suppliers are generally good, the results of our
operations could suffer a material adverse effect if we lost key programming
contracts because the quality and amount of programming we offer affect the
prices we can charge and the attractiveness of our services to subscribers. We
also anticipate that the cost of obtaining programming will rise in the future.
If we were unable to pass on these increases to our customers, these increases
could have a material adverse effect on our results of operations. For
additional information, please refer to the "Business--Programming" section of
Your investment may be adversely affected due to conflicts of interest between
noteholders and our controlling equityholder.
ABRY Broadcast Partners III, L.P. controls our total voting power and can
therefore direct our policies. In addition, it controls the selection of a
majority of the managers of Avalon Cable Holdings LLC and, indirectly, the
managers and the directors of the issuers. Certain changes in ABRY Broadcast
Partners III's beneficial ownership interest in the issuers would constitute a
change of control under the indenture governing the new notes and under other
agreements, including our secured credit facility, and could result in an event
of default or otherwise give rise to an obligation to make an immediate payment
under these agreements.