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Harrowing TV Saga : Plot Filled With Turmoil May Have a Happy Ending for Troubled CommuniCom Cable

March 16, 1986|DAVID FERRELL | Times Staff Writer

For more than four years, viewers of CommuniCom Cable TV have watched the harrowing saga of a company gone bad.

The plot has been thick with turmoil. A difficult birth. Poor growth. Television-signal problems. Subscriber complaints. Service blunders.

The climax came a year ago when the West Los Angeles franchise, burdened under debts of more than $165 million, became the country's first major urban cable system to file for federal bankruptcy protection. Its future, by many accounts, looked as dim as a broken picture tube.

But now-- Don't touch that dial!-- changes are taking shape. A new story line is being patched together and played out under a new leading man--graying Richard E. Matthews, 53, a specialist at resurrecting bankrupt companies.

At a hefty salary of $20,000 a month, Matthews was hired last year by CommuniCom directors with the approval of a federal bankruptcy judge. He is the temporary chief executive officer--a clean-cut, unpretentious figure who could pass for a high school principal.

But associates know him as a hard-bargaining, no-nonsense Harvard graduate whose credits include a string of failed companies brought back to life.

CommuniCom under Matthews has drawn upon a pool of more than $10 million in court-approved emergency loans, has completed major reconstructive work on its Culver City offices and its problem-plagued, 1,000-mile cable system, and has entered what industry leaders consider a critical period in its battle for survival.

It is a turbulent time for the company, which serves just over 50,000 subscribers mostly located in a wide belt of territory reaching from Venice to downtown Los Angeles. CommuniCom's pressing challenges range from lingering debts and operating losses to charges of mismanagement and questions of franchise renewal.

Chief among those challenges is the continuing effort to sell the company--considered a vital but difficult step toward erasing company debts. Twice before, proposed deals for the sale of CommuniCom have fallen through. New negotiations are under way, Matthews said. "We've got to find the right kind of (buyer)," he said, "and I'm sure we will in the near future."

At the same time, the firm is continuing to battle consumer complaints. Despite a marked improvement over the last two years, CommuniCom still ranks last among Los Angeles' 11 active franchise areas in quality of customer service, based on the number of complaints reported to the city per 1,000 subscribers.

Such struggles are drawing close attention from cable industry leaders, who see CommuniCom as a pointed lesson in the delicate art of cable expansion. In Los Angeles, where cable continues to grow, more than 220,000 households are plugged into cable systems.

To date, 11 of Los Angeles' 14 cable franchise areas are receiving service, and a 12th, United Cable's East San Fernando Valley system, is under construction. Construction in two other areas, East and South-Central Los Angeles, has been held up by disputes between the city and the designated cable operators. But city officials hope that those, too, will be built or be under construction by the year's end, said Susan Herman, director of the city Department of Telecommunications.

Cable service promises wondrous improvements over standard-fare television. For fees ranging from $8 to $13 a month, viewers are told, they can enjoy consistent, high-quality pictures and enormous program variety--in some cases, 40 to 50 channels of sports, cultural arts, music, government and more.

Yet these are difficult years for cable television. Drained by heavy construction costs and unmet revenue projections, cable operators no longer see their industry in the rosy light of the late 1970s, when companies battled for franchises and boldly promised features like two-way communication and public programming that would turn every viewer into a potential TV producer.

"A lot of the benefits that people thought cable television could provide have simply not developed as people (had) hoped," said William R. Cullen, president of the Southern California Cable Assn., a trade group representing executives from most of the area's major cable firms. "Some of that technology that looked great on paper has never been implemented--either because there has never been the demand, or because fewer people subscribing has resulted in less money to do those things."

In CommuniCom, industry leaders see a stark symbol of the leaner times. Even after a year of promising resurgence, CommuniCom reaches only about 15% of the homes in its franchise area--less than half the norm for most cable operators.

An appraisal of the firm, completed shortly before its aborted sale for $200 million to United Cable Television Corp. in 1984, attributed many of CommuniCom's past problems to city construction deadlines in 1981, which required work crews to lay 200 miles of cable in 17 days.

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