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SEC Filings

S-4/A
AVALON CABLE OF MICHIGAN INC/ filed this Form S-4/A on 07/22/1999
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   We also provide cable television services to approximately 25,800 basic
subscribers in western New England as of March 31, 1999 after giving effect to
all completed and pending acquisitions. These operations commenced with our
acquisitions of cable system assets from AMRAC Clear View in May 1998 for
approximately $8.1 million and from Pegasus Cable Television in July 1998 for
approximately $30.5 million. We believe that the consolidation of these
operations has allowed and will continue to allow us both to retain and attract
higher quality management and to realize lower overall operating costs for
these systems. Building on this base of operations, we intend to seek other
opportunistic acquisitions in western New England and upstate New York, where
cable system ownership is highly fragmented.
   
   Since we established our New England Cluster, we have acquired the cable
system assets and related liabilities of Taconic Technology in July 1999 which
had approximately 5,000 subscribers as of December 31, 1998 and have entered
into an agreement to acquire the cable system assets and related liabilities of
Hometown TV, which had approximately 400 subscribers as of March 31, 1999. The
combined purchase price for these pending transactions is approximately $9.0
million.     
 
                               Business Strategy
 
   Our objective is to increase operating cash flow and maximize the value of
our cable television systems by utilizing our expertise in acquiring and
managing cable systems. We seek to be the leading supplier of multi-channel
television services in our chosen markets by delivering high-quality products
and service at competitive prices. To achieve these goals, we are pursuing the
following business strategies:
 
   Target Mid-Sized Markets. We believe that the mid-sized suburban and exurban
markets that we target have many of the beneficial attributes of larger urban
and suburban markets, such as moderate to high household growth, economic
stability, attractive subscriber demographics and the potential for additional
clustering. We believe that in these markets the lower population densities and
higher costs per subscriber of installing cable plant tend to result in less
direct competition from other multi-channel television services than in larger
markets. We believe that this reduced competition has benefits in both
operating and acquiring cable television systems. First, in operating cable
television systems, we expect to experience greater stability as a result of
lower customer turnover, as there are fewer multi-channel television and other
entertainment alternatives for subscribers in those markets. Second, we expect
to face less competition in acquiring cable television systems than in larger
markets, which has and is expected to continue to result in lower purchase
price multiples.
 
   Build Regional Clusters; Achieve Operating Efficiencies. We believe that by
building regional clusters of 200,000 to 300,000 basic subscribers we will be
able to realize economies of scale while maintaining geographical diversity for
our company as a whole. We have achieved this critical mass in Michigan through
our acquisition of Cable Michigan. The economies of scale include spreading
fixed and semi-fixed costs over a greater number of subscribers, including
costs relating to general management, marketing, technical support and
administration. We believe that we may also be able to reduce technical
operating costs and capital expenditures associated with implementation of new
channels and services by consolidating headends and utilizing digital
compression technology. Furthermore, by aggregating small systems in the same
region, we believe that we will be able to attract higher quality management
than these systems could attract on a stand alone basis.
 
   Grow Through Strategic and Opportunistic Acquisitions. In pursuing its
clustering strategy, we will continue to seek strategic acquisitions at
attractive prices. In the Michigan cluster, given the critical mass achieved
from the acquisition of Cable Michigan, we will continue to pursue fill-in
acquisitions, such as the Nova Cablevision, Cross Country Cable TV and R/COM
acquisitions and the pending cable system acquisitions entered into by Cable
Michigan, and exchanges of systems with other cable operators to create a
 
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