cr> Fruits of the Telecom Act: US West/Continental


Craig A. Johnson

Any views on what this means for consumers, public interest, etc?

Seven point one million households?!  We're talking "bundling" galore 


Date:          Wed, 28 Feb 96 16:46:36 -0400
From:          "NewsFirst Administrator" <•••@••.•••>
Subject:       NewsFirst Extra - US West/Continental
To:            •••@••.•••

           < < <   N E W S F I R S T  <>  E X T R A   > > >

                 Part of the NewsFirst Telecom Service

           Telecom Market Research, Analysis, and Consulting

== Vol. 4 Issue E2            US West/Continental          February
28, 1996

      Thoughts on the US West/Continental Merger

US West has always tried to run out in front of the herd, reckoning
that the demographics and geography of the serving area won't let the
company trot along the same path followed by the other RBOCs.  But we
all know you risk taking shots if you run too far ahead, and they did
take hits in the past (their foray into real estate after Divestiture
comes immediately to mind).  While we won't say the $10.8 billion
acquisition of Continental Cablevision announced yesterday is bullet
proof, we do believe the move is going to eventually lead the company
to solid ground because US West is sticking close to its core

If the merger does indeed go forward, U S West adds 4.2 million 
households to its 2.9 million base (the base includes its 25 percent
share of the Time Warner partnership as well as the 500,000 subs it
owns outright in Atlanta).  With certificates of public convenience
from State PUCs in its new major metro areas, U S West Media Group
commands the mass to begin rolling out bundled offerings including
data access and voice over cable without having to worry about
recalcitrant partners.  Moreover, when you start your build out with
the  US West name attached to it, chances are your debt offering is
likely to receive a better rating than the kind commanded by a
debt-burdened cable operator. 

US West has spent the last two years learning to run with the cable
operators.  Its stake in Time Warner put the company into the thick of
planning process for cable upgrades, giving them real insight into
what it is going to take to turn a these cable systems that run ten
amplifiers deep into something approaching a digital service platform.

The Time Warner experience has been instructive to U S West for
another reason.  The suit that is still pending between U S West and
Time Warner is ostensibly about Time Warner's purchase of Turner
Broadcasting and US West loss of control in the resulting partnership.
A  major factor underlying the dispute is control of the content owned
by Time Warner and Turner, but according to the New York Times, US
West may be willing to cede some control over content for a greater
say in the underlying network.  The other alternative, says an analyst
quoted by the Wall Street Journal, is to split off 25 percent of the
Time Warner base and end the dispute that way.  No matter how you cut
it, Continental's purchase gives U S West leverage; that leverage will
show up in the Time Warner court case, and in the kinds of deals that
the company can cut with sofware developers and content providers down
the road.

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