Eighteen years after establishing local cable television service, a Canby-based telecommunications company intends to sell the business.

DirectLink of Oregon Inc., which operates cable TV systems in Canby, Woodburn and other local areas, has announced the pending sale of its cable TV system to a private Missouri-based company for an undisclosed sum.

The company, a wholly owned subsidiary of Canby Telephone Association, is selling its cable TV arm to Millennium Digital Media of St. Louis. "As technology has changed, it has become clear we cannot sustain the capital investment necessary to build and maintain two separate delivery systems - telephone and cable - as we have done to date," DirectLink and CTA President Richard Ares said Monday morning.

"The board of directors made the decision to invest our time and resources in the telephone and Internet systems through the development of new technologies, such as DSL (digital subscriber services)."

The cable TV system was started in 1982, and was formerly known as North Willamette Telecom. As of July 31, DirectLink reported having 12,750 cable TV customers.

Ares said it would take many millions of dollars for the company to invest in emerging broadband technology for both its telephone and cable TV service.

"It just became too expensive," he said. "We just could not afford to do broadband for both, and do them well.

''We won't share the exact sale price, but DirectLink received a fair and reasonable price for its 18-year investment in the cable systems. The terms and conditions of the sale are confidential . . . (The money) will be adequate for significant investment in our telecommunications over the next few years."

DirectLink's cable TV division employs almost one-third of the company's 100-employee total workforce. Twenty-eight people work in Canby, and five employees are based in Woodburn.

"Only one part-time clerical position (in Woodburn) will be eliminated," Ares said.

"In the (sale) document, they (MDM) cannot guarantee everyone a job, but we've given them a list of our cable employees, and they will be making them offers."

Ares said the lengthy process leading up to the pending sale focused on trying to ensure a new owner would offer jobs to existing employees, as well as getting the best price for DirectLink.

"We spoke with four or five companies, and received two bona fide offers for the cable division," he said.

"Millennium made a significant commitment to our employees, which was important to us. The price is pretty competitive, but Millennium put on paper they would give prime consideration to our employee group . . . Employees had known for some time we were negotiating. Update memos were sent on Fridays, but rumors were rampant."

MDM officials were expected to meet with employees in Canby on Wednesday, and Ares said the two companies are working together to ensure a smooth transition of service for local cable TV customers.

"Millennium will talk to the cable TV employees about their plans," he said, noting cable product manager Sandy Coleman, a 15-year company employee, has already been chosen by MDM to be its regional manager. "Beyond that, I don't know."

Ares said some employees were concerned about the prospect of the cable TV unit being sold to an industry giant such as AT&T Cable, which has devoured Paragon Cable and other systems in and around the Portland-Vancouver metro area. It now has more than 300,000 cable subscribers in the region.

Local workers feared AT&T's wealth of offices and employees would result in redundancies and the closure of the Canby office, as the big firm sought to benefit from even greater economies of scale and resources. Ares said selling to a smaller company - MDM has rapidly grown to be one of the top 15 cable TV firms in the nation - with no local offices was the right approach.

"We wanted to make sure we got a good deal for the company, and a good deal for the community," he said.

Ares said affected employees in sales, service, repair and maintenance positions were informed of the sale news Friday.

"No one wants to lose track of the human element with this purchase," Ares said. "Since Millennium Digital Media has no local offices, they will need DirectLink's cable employees in Canby and Woodburn to operate the system."

Nevertheless, the long-running process of talking to potential suitors made some employees anxious and unsure of their futures.

"It's been a little bit like a divorce," he said. "Some people wanted it, and others didn't. It has been emotional at times . . . The grieving process has been going on awhile and, hopefully, we're past that."

Ares said DirectLink cable advertising contracts will eventually be owned by MDM, and any agreements made with DirectLink will be honored through the specified contract period.

Local cable access OCTS Channel 5 in Canby and WCAT in Woodburn will continue to operate with support from cable TV customers and MDM, DirectLink reported.

Next summer, DirectLink will declare "significant dividends to CTA cooperative customers from the proceeds of the sale," Ares said. "People who stuck with it will get rewarded."

The proposed sale will close upon approval from the Federal Communications Commission, the nine franchises in which DirectLink offers cable TV service, which includes the city of Canby and Clackamas County, Ares said.

The two parties expect all needed consents to be obtained within 120 days, he said.

After the cable TV sale, DirectLink will continue to offer and operate long-distance phone, voice-mail messaging, calling cards, toll-free numbers, and Web-ster Internet services, Ares said.

And DirectLink and MDM will eventually become competitors in the local Internet market, he added.

DirectLink's planned DSL and MDM's planned high-speed modem access will seek the same customers.

Cable modem service has been available in southeast Canby for about two years, but not citywide.

Ares said DirectLink's Web-ster Internet plans to launch dial-up Net services, including DSL, before the year's end.

Ares said DirectLink made the decision to sell the division earlier this year, and its board of directors had studied the issue for six months.

DirectLink expects MDM will assume ownership of the cable system by the end of 2000, and said local customers will not experience an interruption in service.

Local cable TV customers are due to soon receive additional information about the sale through the mail.

DirectLink currently manages and operates cable TV systems in Aurora, Barlow, Donald, Gervais, Hubbard and Oregon City. It holds a franchise in Clackamas County to provide services in Beavercreek, Clear Creek, Stafford, rural Canby and rural Oregon City.

MDM is in the business of providing basic and premium cable TV services, including digital cable products.

A call to MDM management was not returned by press time Monday. The company is reported to be aggressively rolling out new cable markets, and currently provides service to about 300,000 customers in Idaho, Indiana, Kentucky, Maryland, Ohio, Virginia, Washington, and the District of Columbia.

MDM already provides cable service to about 10,000 apartment complex residents in the Portland area, and to a small coastal community.

"From what I know, they have amassed quite a war chest of capital for the purpose of acquiring and upgrading cable TV systems," Ares said.

For more information on MDM, view its web site at www.mdm.net.