Political Chowder's NUMBER OF THE WEEK - Sponsored by www.no-deal.org



October 28, 2007
NUMBER OF THE WEEK
 5 Billion
Source: Oct 25th 2007
From The Economist print edition

Spooky Business

The Nightmare before Christmas

Fear is Booming

IS HALLOWEEN becoming the new Christmas? The creators of Nightmare, New York City's most popular haunted house, certainly hope so. Every October their slickly produced horrors scare up big money, and they are not alone.

The attraction asks New Yorkers to reveal their most elemental fears via the internet and then incorporates the most horrifying submissions—which can be very alarming indeed. Like zombies, locals have shuffled to Nightmare in droves: from about 6,000 visitors in its first production in 2003 to over 25,000 last year. This year's version, Ghost Stories, re-creates Gothamites' spookiest paranormal experiences across 23 rooms, each of which features a different spirit. Chip Meyrelles, the exhibit's producer, is expecting 35,000 visitors during the September 28th to November 3rd run. The takings should exceed $1m.

No surprise, then, that Nightmare has company. Just up the Hudson river is Headless Horseman, where Washington Irving's fictional and famously decapitated equestrian has returned with dozens of creepy friends in tow. At Terror on the Fox in Green Bay, Wisconsin, visitors can look forward to vertigo, claustrophobia and the scurrying and slithering of live rats and snakes. And Mountville, Pennsylvania's Field of Screams unleashes a bloodthirsty butcher on adults while youngsters are shunted off to Little Screamers, a non-scary hayride. In fact, some 30m American adults will spend over $650m at America's more than 1,200 haunted attractions this year.

This is all part of a broader boom for Halloween, which bridges the retailers' gap between the return to school and Christmas. Stores like Target and Wal-Mart start selling costumes, sweets and other ghoulish offerings as early as Labour Day in early September. Total spending is up more than 50% since 2005, with Americans poised to lay out a record $5 billion this year, according to the National Retail Federation, a trade association. There's still a long way to go before it supplants Christmas, though. Spending over the grandfather of all festivals is an astonishing $475 billion.

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THIS WEEK'S NUMBER: 18 Million

CONCORD – FairPoint Communications Inc. will be too deep in debt if it is allowed to borrow $1.7 billion to acquire the land line operations of Verizon Communications in New Hampshire, Maine and Vermont, consultant John Antonuk testified yesterday.

Antonuk, founder and president of Liberty Consulting Group in Quentin, Pa., filed testimony on behalf of the staff of the New Hampshire Public Utilities Commission.

Antonuk, under questioning by state Consumer Advocate Meredith Hatfield, said FairPoint's leverage ratio -- a number figured by dividing its debt by its earnings before interest, taxes, depreciation and amortization (EBITDA) -- would be 5.75 in the first year and 5.5 thereafter, which he said was "relatively high." Leverage ratios for similar deals "is 4.75 in the first year and 4.5 in the years thereafter," Antonuk said.

Yesterday was the fourth day of an evidentiary hearing that will help the PUC decide whether to approve FairPoint's pending $2.715 billion acquisition of Verizon Communications wireline business in the three northern New England states. If it receives all needed regulatory approvals, FairPoint hopes to close on the deal in January 2008.

Antonuk said he is not opposed to the deal if the PUC imposes conditions that lessen the risk to New Hampshire customers.

Purchase of the northern New England assets is being funded by FairPoint at the parent level with about 37 percent equity and 63 percent debt according to testimony filed by Michael J. Balhoff, managing partner of Balhoff & Rowe, LLC, in Columbia, Md., and a financial expert retained by FairPoint to assess its financial strength.

When it announced the deal in January, Charlotte, N.C.-based FairPoint Communications said for the year ended Dec. 31, 2005, the operations of Verizon's Maine, New Hampshire and Vermont properties to be merged with FairPoint generated approximately $1.2 billion in revenue and $431 million in EBITDA.

Another witness, David Brevitz, yesterday also questioned the debt load FairPoint wants to carry under the proposed deal.

Brevitz, an independent telecommunications consultant with Brevitz Consulting Services, in Topeka, Kansas, was hired by the Office of Consumer Advocate.

"The call for this commission is whether this transaction makes sense from a Main Street perspective, and my testimony is that it does not," Brevitz said, citing the proposed debt arrangement.

Under questioning from attorney Patrick McHugh, of the Devine, Millimet law firm, which is representing FairPoint, Brevitz also questioned a report filed by Verizon with the PUC that showed Verizon was losing $18 million a year on its New Hampshire land line operations as of Dec. 31, 2006.

"It does show that and if that were really the case, you wonder why FairPoint is spending $2.7 billion to acquire an operation like that," Brevitz said. "I just don't believe that that's really the underlying economics for the enterprise."



There are many, many more issues that need to be examined. This is just a snippet of what's wrong with this deal. For more in depth details, please go on-line to www.no-deal.org. This is a bad deal for consumers, tax payers, rate payers, our communities and for the economic growth of New Hampshire.