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Duarte OKs Cable TV System Sale

June 05, 1988|SIOK-HIAN TAY | Times Staff Writer

DUARTE — Rather than waiting a decade to recoup the cost of establishing its own cable television system, Duarte has decided to sell the operation to Kinneloa Television System this month.

Kinneloa Television System, the Pasadena firm that designed and has been managing the system since 1985, will pay the city $4.5 million when the sale closes June 25. An additional $336,000 will be paid over the next 20 years, Kinneloa President Melvin Matthews said.

Duarte Finance Director Donald Pruyn said the move will extricate the city, one of three in California that owns its cable system, from a difficult financial situation.

Because of over-projections by the consultants on the number of potential subscribers and a yearlong delay in construction of the $2.5-million system, Kinneloa was unable to make its lease payments on schedule, Matthews said.

The money was to have been used to help pay off $4.7 million in bonds that the city floated to wire homes for cable. As a result, Duarte has spent $550,000 from its reserve fund to pay the interest on the bonds, Pruyn said.

Consultants had estimated in September that it would take 10 years for Duarte to break even on the venture.

"We would have had to spend $400,000 a year out of the city's general fund to subsidize" the system until then, Pruyn said. He added that the City Council will discuss an ordinance to regulate the cable franchise at its June 14 meeting.

The city, which opted to build the cable system in 1984 after years of "extremely poor" service by a series of private cable companies, decided to sell to Kinneloa because Matthews has "done an outstanding job," Pruyn said.

With close to 2,000 Duarte subscribers, cable television is especially important in the area because of nearby foothills.

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