THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, September 13, 1995 TAG: 9509130397
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: STAFF AND WIRE REPORT
LENGTH: Medium: 61 lines
Cox Communications Inc. and Tele-Communications Inc., two cable-television systems that operate locally, are planning a multicity swap of cable systems that would leave Cox as Hampton Roads' dominant provider of cable systems.
The plan, which must clear several regulatory hurdles, is part of the cable industry's strategy to expand into broad-band services - telephone, data transmission and other interactive businesses. The deal is expected to close in mid-1996 and would affect about 600,000 cable customers across the country.
Cox is already the largest cable-TV provider in Hampton Roads, with 205,000 subscribers in Norfolk, Portsmouth, Virginia Beach and Knotts Island, N.C. And it is in the processing of acquiring a TCI-managed system in Newport News with 48,000 subscribers.
With the addition of 44,000 subscribers in Chesapeake - part of the swap deal - Atlanta-based Cox will be the multichannel-TV provider in five of Hampton Roads' seven largest cities.
The plan calls for TCI, headquartered in Englewood, Colo., to receive Cox-owned systems in the Pittsburgh area; Spokane, Wash.; Springfield, Ill; Cedar Rapids, Iowa; the Quad Cities area of Illinois and Iowa; and Saginaw, Mich.
Cox will receive TCI-owned systems in suburban Phoenix; Bellevue/LaVista, Neb.; Council Bluffs, Iowa; North Attleboro/Taunton, Mass; Lincoln, R.I; and St. Bernard, La.
Under terms of the agreement, each company would receive about 300,000 new customers in areas that are ``contiguous or advantageous to locations where the companies already have a significant presence.''
Dana Coltrin, assistant general manager for Cox's system in Hampton Roads, said the company is building a ``strategic cluster'' in the region to compete against other telecommunications companies, particularly Bell Atlantic Corp., that plan to invade its turf. Also, like most other large cable operators, Cox is itself planning to branch into telephone services.
Covering as much of a metropolitan area as possible is key to competing successfully, telecommunications analysts have said.
Coltrin said Cox is hoping to complete its purchase of the Newport News system by the end of this year and the Chesapeake system by mid-1996.
He said he doesn't know of any active negotiations to purchase other local cable systems. ``As always, though, I'm sure we're interested.''
John Margeson, TCI's state manager, said customers in Chesapeake won't see any changes initially in services or rates. ``Down the road, I think it will be to customers' advantage because of the economies of scale that Cox will have when it gets the whole ball of wax.''
Margeson said Cox will be able to compete more effectively with phone companies, and that should help keep downward pressure on rates. A fragmented local cable-TV industry would have a harder time surviving and keeping phone companies ``honest,'' he said.
TCI has about 80 employees in Chesapeake. ``Most of our employees are customer-service representatives and technicians, and I would think Cox is going to need them.'' by CNB