Bell Atlantic Bails on TCI [as I and others had predicted .. djf]

[David Farber <farber () central cis upenn edu>]

CyberWire Dispatch//Copyright (c) 1994//


Jacking in from the "Can't Touch This" Port:


Washington, DC -- Bell Atlantic and TCI announced late Wednesday
that they had just put up detour signs in the fast lane of the
information superhighway.  The companies jointly tossed their
proposed $26 billion merger into the toilet.


The companies stock holders have been bloodied by plummeting
share prices since the deal was announced last October.  In an
effort to avert an all out bloodbath, the companies have parted
ways, promising to work on "other deals."


The move, while surprising, has been grist for the insider rumor
mill for months.  After Bell Atlantic and TCI blew three
deadlines intended to ink the final agreements, Wall Street's
second largest deal in history is history.


"We are, of course, disappointed,"  said Ray Smith, Chairman of
Bell Atlantic, "but the unsettled regulatory climate made it too
difficult for the parties to value the future today.  Smith said
that the parties had resolved their major differences, but
that the Federal Communications Commission's decision to roll back
cable rates another 7 percent made reaching agreement on a
transaction of this magnitude impossible.


John C. Malone, President of TCI, said, "Given market and
regulatory uncertainties, Ray and I concluded that this is not the
time to bring our companies together.  We are discussing other ways
of working together, including possible joint ventures to build full
service networks, and joint investment in programming."


Smith had reveled in his 15 minutes of fame and for good reason.
His company stood to gain extraordinary power, gulping down the
nation's largest cable operator that has some 10.5 million
subscribers, about 25% of all cable subscribers.


Bell Atlantic insiders said during negotiations, Malone lived up
to his hard ass reputation, despite his public claims that he was
tiring of the limelight and simply wanted to pursue other
ventures.  During negotiations, Malone reversed field several
times, Bell Atlantic source said, pushing Smith to renegotiate
the tentative agreement.


Industry analysts openly derided Bell Atlantic's gutsy move,
claiming the company would have had to eat billions in the cost
of upgrading TCI's cable network to handle advanced services.
Profits were pipe dreams;  customers were penciled in under the
heading "field of dreams."


Malone, accustomed to making fast deals and moving on, grew weary
the pending regulatory hurdles, sources said.  He seized on the
FCC decision to cut rates as a handle to parachute out of the
deal, TCI sources said.


Meeks out...