Magazine article Editor & Publisher

Cox, Southwestern Bell Discuss Major Cable Deal

Magazine article Editor & Publisher

Cox, Southwestern Bell Discuss Major Cable Deal

Article excerpt

COX ENTERPRISES INC. and Southwestern Bell Corp. are negotiating to merge their cable holdings and spin them off into a publicly held company.

Cox' Atlanta Journal and Constitution first reported the story Nov. 4 -- to the consternation of Cox corporate executives.

Tentative plans called for Southwestern Bell, based in San Antonio, to invest $1 billion in the new company, including the $650 million that it is spending for Hauser Communications' Washington-area cable system and its 228,000 subscribers.

The Los Angeles Times elaborated on the deal the next day, reporting that Texas investor Robert Bass was negotiating to trade the 440,000 subscriber cable system that he controls in Atlanta for Southwestern Bell stock.

Press accounts said the merger initially would form the fifth-largest U.S. cable company, with about 2 million subscribers, and the new company quickly would move through acquisitions to double its subscriber base and become the nations third-largest cable operator.

Southwestern Bell's basic business is providing phone service to 13 million customers in five Western states.

Cox already is the sixth-largest U.S. cable operator, with 1.7 million subscribers.

The arrangement would give Atlanta-based Cox majority control of the new cable and entertainment company and would allow it to keep most of Cox' assets, with estimated annual revenues of $3 billion, in private hands.

Cox said it is discussing business ventures with the six other regional Bell operating companies and GTE, AT&T and MCI Communications.

Press accounts said nothing had been settled but an agreement was expected by Thanksgiving.

Spokesmen for both companies did not return phone calls.

As regulations barring phone companies from owning cable systems have fallen to court rulings, cable and phone companies -- both of which own information pipelines into millions of homes -- have scrambled to team up. …

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