Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, June 6, 1994 TAG: 9406060107
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: From Los Angeles Times and Associated Press reports
DATELINE: LOS ANGELES LENGTH: Medium
Cox will manage the cable company created under the deal, which would have 3.1 million subscribers, making it the third-largest cable system behind Tele-Communications Inc. and Time Warner Inc.
Both companies are known for their newspaper operations. Times Mirror owns the Los Angeles Times. Cox is the privately-held owner of 17 daily newspapers including The Atlanta Journal-Constitution.
But Atlanta-based Cox also is the nation's sixth largest cable company, with 1.8 million subscribers and systems in San Diego, Virginia and the New Orleans area. Cox operates Cox Cable Roanoke, which has 52,500 subscribers. Cox also has investments in cable systems in Britain and Denmark.
Times Mirror, based in Los Angeles, is the nation's 11th largest cable company, with 1.2 million subscribers. It has systems in San Diego and Orange counties in California as well as in 11 other states.
"The Times Mirror Cable operating philosophy and culture are very similar to ours," James C. Kennedy, Cox's chairman and chief executive officer, said in a statement.
The companies also announced a partnership to develop and invest in cable programming. Times Mirror will manage the partnership and invest up to $200 million. Cox Cable will invest up to $100 million.
At a time of on-again, off-again media mergers - when companies are struggling to deal with technological changes that could dramatically alter the way consumers receive information - Times Mirror in effect has decided to divide itself in two. The move separates the production of information - which has traditionally been the company's core business - from its delivery.
"With this merger, we have committed our future to the content side of the information highway," said Robert F. Erburu, chairman and chief executive officer of Times Mirror.
Concerns about the future of newspapers in their current form is another reason Times Mirror is focusing on developing new modes of production and a wider breadth of media. Some analysts believe that most information will be delivered electronically in the future, rather than on paper.
"A substantial part of our business will still be the traditional newspaper business in five years," Erburu said. "I don't think things are going to change that fast. But the challenge for us will be to build the new businesses as fast as we can because that is the only hedge we have against something happening to the traditional business faster than we think."
As Times Mirror executives envision it, becoming a content provider means everything from launching and investing in cable TV networks, such as The Outdoor Channel, to using the information gathered by its newspapers and magazines for new programming services and ideas.
The emphasis on content also means that Times Mirror does not have to worry about which "platform" - cable TV, telephone lines, wireless personal communications services or satellites - delivers the information into the home and can become a provider to all of them.
Media companies like Times Mirror face a thundering herd of competition, from local phone companies to giant entertainment conglomerates and computer firms, which all want to cash in on ways to deliver information to the consumer at home and work.
"It pretty clearly tells you that Times Mirror feels the future of the business is providing content into the business-oriented distribution market," said James D. Dougherty of the investment bank of Dean Witter Discover & Co. The company believes, he added, that "it's better for Times Mirror to be out of the [cable] business when they can get a good price for it, and when they feel the returns on cable are just going to shrink over a long period of time."
The announcement said Times Mirror shareholders will receive about 20 percent of Cox Cable's common stock, valued at about $932 million.
In addition, Times Mirror will borrow $1.364 billion, which Cox Cable will record as debt. Times Mirror will keep the borrowed funds after the closing of the deal.
Executives at the companies declined to comment on the financial details of the agreement. Spokesmen said they planned a news conference today.
The merger is subject to regulatory approvals and the approval of Times Mirror shareholders.
by CNB