Canadian firm to buy Americast cable service
By John Duchemin
Advertiser Staff Writer
A small family-owned Canadian media company has agreed to buy Verizon's Americast television service in Hawai'i, a move that the companies say won't immediately affect Americast customers but that could lead to big changes for O'ahu's No. 2 TV system.
Craig Broadcast Systems, a television, radio and wireless Internet business out of Winnipeg, Manitoba, promises to keep Americast's current rates for now, but will give the service a new name. Craig Broadcast also plans to offer high-speed wireless Internet access over the Americast network. Officials say the Internet service will help it compete with Oceanic Cable, the state's dominant cable TV network and one of the largest local Internet access providers.
The deal is pending regulatory approval with the Federal Communications Commission, but should be completed later this year, Craig and Verizon said. Company officials said details on the new name, Internet service and pricing will become available as part of that process.
The impact of the deal on Americast's 80 employees is still uncertain, officials from both companies said.
Verizon said in a statement that the deal will take it out of the TV business and let the company concentrate on its local and long-distance telecommunications business. The deal was anticipated since last summer, when Verizon a company created last year by the merger of GTE and Bell Atlantic announced plans to unload all its wireless TV networks.
"Last year, Verizon said it planned to sell its Americast properties to a company that would see more strategic value in these operations," the company statement said. "Craig continues to expand its portfolio ... whereas Verizon has decided to focus on other opportunities."
Americast, a GTE creation, came to Hawai'i in 1998. The service offers 81 standard channels, 31 premium movie and multicultural channels, 40 pay-per-view channels and 41 music channels for prices starting at $39.95. Customers connect to Americast with small receiver dishes, which pick up broadcast signals from a network of transmitter antennas around O'ahu.
Oceanic, the market leader, offers a standard package of 55 channels starting at $31.99 per month, with digital cable and about 100 more channels available at higher prices. Oceanic, an AOL-Time Warner subsidiary, also offers Time Warner's RoadRunner cable-modem Internet service. Its services are offered over a cable network.
Americast's market share is tiny about 10,000 subscribers, compared to Oceanic's 250,000-plus subscribers and service is limited to areas with a clear line of sight to Americast antennas. Reception is limited in downtown Honolulu and Waikiki; Palolo, Manoa and Kalihi valleys; parts of Kane'ohe and Kailua; and much of the North Shore, including Hale'iwa and Waialua. Oceanic, by contrast, is available on most of the island.
Those obstacles do not deter Craig Broadcast co-owner Boyd Craig, who said that his business will be able to compete effectively especially once it starts to offer Internet access over its antenna network. That will be made possible by equipping customers' receiver dishes with small transceivers, turning them into two-way communications ports, Craig said. Speeds will rival RoadRunner and DSL, he said.
Craig's target for Hawai'i is 10 to 15 percent of the TV market.
"If we get 10,000 TV customers from Americast and add a few more, and then get 10,000 or so Internet customers, then Hawai'i will be a very attractive market," he said.
Oceanic spokesman Kit Beuret said he knows little about Craig Broadcast but welcomes the competition.
"I think we've sharpened our skills and expanded our services as a result of competition," Beuret said. "So aloha, welcome to the market."
Craig Broadcast owns four television stations and four radio stations in the central Canadian provinces of Manitoba and Alberta. The company in the past five years has spent tens of millions of dollars to expand into the wireless TV world, buying several companies and bandwidth licenses in Canada and the United States. Craig Broadcast now owns wireless TV companies and assets in Manitoba, British Columbia and New Zealand, and operates a wireless Internet service in Palm Springs, Calif.