Cable Set Top Box Repair House Files for Bankruptcy

dkreichen1968

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Staff member
#1
Contec, which repairs cable TV equipment, has filed for Chapter 11 bankruptcy protection in Delaware in an attempt to regain its financial footing.

Bain Capital of Boston owns Contec, which had $153 million in revenues in 2011. It is heavily leveraged with $360 million in outstanding liabilities.

The company repairs millions of set-top boxes that cable TV companies put in customers' homes as well as other equipment such as modems. In general, broken equipment is shipped to the company's Mexico facility, repaired and shipped back. A smaller number of repairs are done in the United States.

The company, founded in Schenectady in 1978, said in the filing that like other cable TV equipment repair companies, it is suffering from eroding revenues and thinning margins as consumer spending has slowed. Also, consumers increasingly turn to streaming media on the Internet to watch TV shows and movies.

Another factor for the decline in revenue was that a year ago, one of its large customers stopped repairing set-top boxes and instead bought new units with more capabilities.
Read More: Filing seeks court refuge - Times Union

Being somewhat familiar with Contec's competition I really doubt that their down turn in business is the result of "internet streaming." The competition seems to be doing just fine. It may have something to do with the fact that they DO THEIR REPAIRS IN MEXICO. Do you really save that much money on labor to make up for the expense of transportation? And, what about quality control? The Volkswagon plant in Mexico is infamous for it's low quality, and some of that can be simply attributed to the low quality of the work force.
 

MrPogi

Moderator, , Webmaster of Cache Free TV
Staff member
#2
I'll bet that before Bain Capital bought them out, those repairs were done in the good ol' USA. Yep, right!
The bankruptcy is just the latest painful chapter for the company. Three summers ago, Contec laid off more than 100 employees and moved production to Mexico, according to the Albany Times Union.
Hurray for the "Job Creators!" To be fair,
Bain bought Contec, a company that repairs cable equipment, in 2008, after Romney left the firm.
Because, you know, Bain didn't do things like that when Mitt was there! (Please read preceding sentence with sarcasm.)

I will say that I understand why cable companies aren't bothering to repair cable boxes: They are leased by customers (aka "suckers") who pay for them, and most keep working well past their payback period. It's paid for and obsolete by then. If one needs repairs, it's cheaper to toss it and give customers (aka "victims") a new one.

Makes economic sense, but -
Not very "green".
 
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MrPogi

Moderator, , Webmaster of Cache Free TV
Staff member
#4
So, more fodder for my anti-cable cannon:

Cost of basic cable box per month: $6.99 (Call it $7)
TIMES 12 months: x$84.00
TIMES average 7 years age of box: =$588.00

You can't tell me it costs the cableco $588 for a simple SD box. In fact, I couldn't find anywhere what it costs the cable company per box.
(If anyone (Dan??) could provide some sort of ballpark figures for what a cable box costs, it would be appreciated!)

And it just gets worse from there. An HD box is $9.00 a month. That's $756 over 7 years. An HD DVR is also $9 a month - PLUS a $10 monthly "DVR fee". It can't possibly cost $10 a month for your provider to allow you to use your dvr. In fact, I'm going to bet it's at most $2-$3 a month, making $7-$8 a month pure profit. Being extremely generous at only $5 a month profit, it's an additional $420 profit over 7 years they are getting out of each HD DVR customer.

Pricing source:
Cable TV Pricing & Plans, Video Service Pricing serving Arizona | Cox Communications

(For a good laugh, check the cost of their "Starter Package".)
40 channels for $24.99 + tax.
Out of those 40 channels, at least 10 are public access/religious or home shopping networks, and there are also at least 5 Spanish language channels. That would leave me with 25 channels I *might* watch.

I get 38 channels OTA, of which only ONE is local advertising, one (BYU) semi-religious, and 3 Spanish language channels.
11 of these channels are HD. I actually watch 30 of those channel at one time or another.
Price for my 38 channel "Starter Package" is: FREE.
 
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dkreichen1968

Moderator
Staff member
#5
I'm really not sure how much the cable boxes cost. You have to figure the Dish DTVpal DVR retailed for $300. Those older bigger boxes that handled both digital and analog I'm sure had to be expensive at the time, which I'm sure is part of the reason the cable companies aren't in a hurry to ditch them. I know that Verizon FiOS has largely taken the old QIP 2500 SD boxes out of circulation. When they started their Cisco areas they didn't bother to even offer SD boxes. Now the main non-DVR box in the Motorola areas is the QIP 7100 p2, which is small, and the new DVRs are the QIP 7232s. Comcast, outside of the small areas where they use Cisco (Scientific Atlanta)have a big inventory of the old large case 6000/7000 series silver Motorolas. Cox uses a lot of pre-Cisco Scientific Atlanta boxes.

Cisco purchased Scientific Atlanta in 2006. I'm not sure when the rebranding happened.
 
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