
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, February 24, 1994                   TAG: 9402240219
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-1   EDITION: METRO 
SOURCE: Los Angeles Times
DATELINE:                                 LENGTH: Medium

BELL-TCI MERGER CALLED OFF

In a move that stunned Wall Street and cast doubt on plans for creating the much-ballyhooed information superhighway, cable TV giant Tele-Communications Inc. and Bell Atlantic Corp. on Wednesday announced that they have canceled their $33 billion merger agreement.

The companies said that a decision to lower cable TV rates, announced by the Federal Communications Commission this week, was at least partly to blame for the merger's collapse. But the complex agreement had run into problems before the FCC decision.

In the more than four months since the deal was announced, Bell Atlantic's stock price had slid more than 20 percent. The companies also missed three self-imposed deadlines for reaching a definitive merger agreement.

The failed merger may presage problems for other companies hoping to lead the way onto the superhighway. The TCI-Bell Atlantic agreement was hailed as a crucial step to making the highway a reality, because the marriage would have allowed people access to hundreds of cable TV channels and new telecommunications services such as instant home shopping and banking.

Wednesday's announcement may also result in another reordering of the communications universe.

The merger triggered a massive dash among other cable TV operators and regional telephone companies - historically longtime adversaries - to merge and create joint ventures in expectation of what is to become the biggest economic boom since the Industrial Revolution.

Some speculated that the two groups will again go their separate ways. Also at issue is the future of John C. Malone, the deal-hungry chief executive of TCI. Some allies expect that he will quickly seek out another major deal after failing to make a success of Bell Atlantic.

At the very least, Wednesday`s announcement showed how hard Malone is willing to fight against cable TV regulators. The TCI leader is notoriously disdainful of politicians and regulators who have tried to reign in the cable industry after years of spiraling rates.

Some observers were speculating late Wednesday that the decision to call off the deal was actually a high-stakes gambit by the companies to embarrass the Clinton administration - which has been an enthusiastic proponent of a high-tech cable/telephone infrastructure - and get the FCC to reverse its cable rate rollback.

TCI is expected to launch a vigorous attack on the FCC, blaming it not only for the scuttled merger plans but for forcing it to abandon a major capital expenditure campaign to upgrade its cable systems and triggering layoffs at the Denver-based company.

Bell Atlantic Chairman Raymond C. Smith said in a statement that the "unsettled regulatory climate made it too difficult for the parties to value the future today."

TCI and Bell Atlantic left the door open that they would cooperate on possible joint ventures in the future, including the building of high-tech cable/telephone systems and investments in programming.

by CNB