My Thoughts on the Alleged Sunflower Buyout


Sunflower @ Youth Garden
Originally uploaded by rian_bean

In case you haven’t heard, an industry publication is reporting that Sunflower Broadband is close to sealing a deal to be purchased by Knology, a cable company from West Point, Georgia. Many of my customers, friends, and followers have been asking my opinion on this issue since I’ve been vocal about both my support and complaints about the company in the past. So here it goes…these opinions are only my own and not based on any “inside information” I may have.

First question I hear circulating around our community is “Why sell the most profitable division of the World Company?”

I give this analogy. A farmer has two cows. One is producing a lot of milk and making the farmer a lot of money. The other cow, the first one he bought, has been neglected and is in desperate need of care, lest it kick the bucket. The farmer realizes some key problems with his current business model. Paying for the care of two cows is costly. He could get rid of the older, sicker cow and focus on the healthy cow that is producing the milk. Unfortunately, who wants to buy an older, sick cow?

The healthier cow, while it produces a big profit to feed his family, takes all of the farmer’s attention. The older cow gets sicker and all the other crops have been neglected while he focuses on (pun intended) his cash cow. A problem, of course, is that a cow doesn’t produce milk forever. If you wait too long to sell the cow, the cow’s value diminishes. Moreover, it’s just one cow. It can only produce so much milk. The farmer needs to buy more cows to make more money. But since he’s maxed out his cash cow, he simply doesn’t have the money to buy another cow. He’s stuck, a victim of his cash cow’s success, along with his older cow and his crops. When his cash cow dies, he’ll have nothing because he neglected everything else

The farmer gets smart and realises the key is to sell the cash cow, now, while its value is highest. He can then take that money and use it in other areas in his farm so they can start producing money too. That, or move to the city. A smart buyer realizes that the farmer’s cow is great stock (pun intended), and if integrated into a bigger farm, the offspring this cow produces helps improve the entire herd. Take this phenomenal cow and with a bit of selective breeding, you’ve got a super cow! The buyer now has the needed genes to enhance his own herd. Everyone benefits: buyers, sellers, and consumers of milk.

That’s what we have here. Sunflower Broadband is truly a leader in broadband services in every respect. Lawrence was one of the first markets to have cable modems. We were one of the first to move to high speed DOCSIS 3.0. Our customer service is local and 24 hours a day: having round-the-clock customer service that isn’t outsourced is absolutely unheard of today. I have nothing but respect and admiration for Sunflower and its employees. As DoctorDave, I work with all providers in our region such as Cox Cable, Time Warner and AT&T. Sunflower spoils us like we were its grandchildren. It’s a great product sold at a great price, and many people don’t always realize this until they move outside of the community. I recommend Sunflower to most of my customers, with only one major caveat that is a sticking point for me.

Limits to information access

Yes, bandwidth limits (or allotments as Sunflower refers to them). The internet is the most important mechanism for sharing information in our society today. Freedom to access information is the cornerstone of a free society. The Internet is the modern public library. Any artificial limit to accessing information creates a chilling effect and is a limit to democracy. My nationally recognized and vehement opposition to Internet bandwidth limits has put me with odds with Sunflower in the past and is the key reason why they are no longer my home Internet Service Provider. To me this is a moral and ethical issue. It’s my white whale. This is one reason I am a vocal supporter of Lawrence Freenet, because I believe that everyone regardless of financial means should have access to the internet.

However, it is but one aspect of the company. Some users don’t care, and if you don’t mind the limits, then Sunflower is an obvious choice for most. Ironically, newspapers as our trusted “Fourth Estate” have always worked to keep the flow of information going. They keep our government honest and us as informed as citizens. By capping bandwidth and making many users afraid to use the Internet freely lest they get an unexpected overage, the World Company has violated that trust in my opinion.

The fact that the World Company owns both the major cable and Internet provider (including the only local televised news) and the daily newspaper is a unfortunate quirk of living in Lawrence, Kansas. Having one company own so many avenues to information access is dangerous. In any other city, the news of a major buyout such as this would be front page news and our local media would be fighting to give its readers the full story. The fact the Journal World hasn’t run a story on this issue (only a terse no comment statement) is a fatal flaw in this newspaper that this buyout will hopefully correct.

A sale of Sunflower Broadband to another entity such as Knology will have profoundly positive impact in our community

Sunflower stands apart from most Internet Service providers with its bandwidth caps. Knology and other suitors of Sunflower do not have these artificial limits. We’ll be free to use the internet at whatever speed we choose to pay for without fear of limits and overages. Online backups, security updates, and videos will be accessible without the worry of nasty additional fees.

Additionally, because our newspaper and television providers will be separated, the Journal World will be able to more accurately and fairly report news in Lawrence. No longer will they be limited by their vested interest in the cable company. Media consolidation is generally against FCC rules, but the loophole is that Sunflower is not seen as a “media” company. The loophole will be closed and growth of both companies will be natural and organic and both companies will be made stronger. We as citizens will trust the newspaper to accurately report the news and the Journal World will be restored to its role as watchdog for the citizens it serves. If the cable company isn’t acting in our best interest, I would trust the Journal World to report on it. Knology won’t be able to slack off and reduce the quality we’ve come to expect from Sunflower–the newspaper will see to that.

Our local economy will benefit

The number one concern I hear from others about the buyout is the fact that some larger national company is going to take over and destroy our local economy. Massive layoffs combined with money being sent outside the community will hurt Lawrence.

I think the opposite will happen. As stated earlier, Sunflower is an outstanding company with good employees. Its people are what make Sunflower what it is. Knology wouldn’t be interested in the company if it weren’t for that strength. You can’t buy the milk without buying the cow, and the employees that produce Sunflower’s product. Warren Buffett generally buys a company because of the strength of how it’s run, and thus does not involve himself with daily operations or change things. Knology would be smart to leave Sunflower alone, and retain its employees and learn their best practices for running a technologically advanced broadband company.

In fact, I strongly suspect the potential purchase might be made more for Sunflower’s knowledge rather than just its subscriber base. Instead of a national company dictating top-down policies to our community, Sunflower employees will most likely help improve Knology’s own services in other communities in how to deliver “World Class Broadband! Home Town Care.” The quality of our community will raise the level of technology and service in other communities. Again, why buy the cow unless it has a unique value? Let it lead the herd instead of follow.

With the removal of the conflict of interest at the Journal World, Knology, and competing companies such as Lawrence Freenet and AT&T will have better access to advertising options, without concerns about lining the pockets of their competition. More jobs can be created. Sales reps for cable and the newspaper no longer can cross sell. When positions are consolidated, it creates redundant positions and layoffs. When roles are separated, jobs can be created. Ad sales will increase with a new business in town.

Finally, the World Company and Sunflower are privately owned businesses. They are simply not accountable to our community beyond their own goodwill. While the owners live and work in our community and thus want to make it better, we have no direct way of controlling the company’s destiny and decisionmaking. Knology is a publicly traded company accountable to its shareholders. We as a community will be able to buy and invest in our cable company if we choose. If we don’t like a policy, we have a voice and a power to change it. Its success will be our success if we choose it to be.

This is a critical move to protect our local newspaper

We are extremely lucky in a town of this size to have a locally owned and operated newspaper. Everyone lives and works in the community. The paper is printed right here in Lawrence. Detractors say “newspapers are dying.” To an extent that’s true. The newspaper of 20 years ago is hearing its own death rattle and will not exist 10 years from now. That’s ok and we’ve seen this before. How many families crowd around the Zenith Radio at 7:00pm to hear Amos and Andy or The Avenger? Nobody. They crowd around the TV. Radio serves a new purpose now in our entertainment portfolio. The camera didn’t kill off art. Artists still paint, though it’s unlikely the family will sit each day for weeks while an artists makes an oil color of them.

What is the newspaper of tomorrow? I have no idea. I’m confident though we have brilliant minds here in Lawrence. Look at what savvy World Company employees did with their portfolio of web sites, like ljworld.com, lawrence.com, and KUsports.com, not to mention things like django and Ellington Marketplace! Tomorrow I predict will begin today right here in Lawrence. Allowing the World Company to focus on its core business will position it to be the leader in whatever becomes of the newspaper industry. I hope the proceeds of the Sunflower sale are used to make the new 609 New Hampshire into a think tank for ideas to revitalize the newspaper industry. As the radio moved from a centerpiece in our homes, to something we listen to in the car, to something we stream at work…I believe the quality reporting of the World Company employees will morph into some new form. I’m excited to see what they have in store and hope they are given the latitude to express and explore their ideas.

For the record, I should say I do have a vested interest in one aspect to this buyout. My business obviously competes with Geeks on Wheels. Most likely Knology won’t be interested in this aspect of Sunflower, as my research indicates they don’t have on-site repair divisions in any of their other markets. I’m excited to potentially hire some of their quality techs for my own business and of course I, and other local computer repair companies, would like to partner with Knology to provide onsite computer repair. As you can tell, though, that’s not the reason I’m excited about this sale.

The potential Knology acquisition is a win-win-win solution for the World Company, Knology, their employees and our community as well as for the newspaper and cable industries as a whole, and I look forward to seeing what exciting things are going to happen.

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