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Cable Firms to Buy Storer Systems for $1.55 Billion

April 25, 1988|Associated Press

NEW YORK — Two major cable television system operators have agreed to acquire the cable systems of the former Storer Communications for about $1.55 billion, the companies announced Sunday.

The planned buyout by Comcast Corp. and Tele-Communications Inc. comes months after a larger consortium that included the two companies dropped a proposal to pay about $2.9 billion for SCI Holdings, the company created when Storer was taken private by the investment firm Kohlberg, Kravis & Roberts in a $2.5-billion leveraged buyout in 1985.

SCI owns and operates cable television systems serving about 1.48 million subscribers in 12 states in the East and South. The company sold its six television stations last year for about $1.4 billion.

The companies did not provide details of the proposed acquisition in a news release, and telephone calls Sunday to Comcast headquarters in Bala Cynwyd, Pa. and Tele-Communications headquarters in Denver were unanswered. SCI offices in Miami were closed Sunday.

SCI did state that it estimated the purchase price would mean a payment of between $4 and $4.50 for each outstanding warrant of SCI.

In December, SCI said it had signed a letter of intent to be acquired by a consortium including Comcast, American Television and Communications Corp., which is owned by Time Inc., and Taft Cable Partners, a partnership of Tele-Communications and Texas investor Robert M. Bass.

That proposal was for an acquisition of SCI's 212 million common shares at between $9.25 and $9.75 apiece, plus the acquisition of preferred stock and $2.4 billion in debt.

But that deal fell through in February when the consortium attempted to cut the purchase price. John Malone, president of Tele-Communications, contended that SCI had made inaccurate representations that were disclosed during the course of the deal, prompting the group to seek a price reduction.

Comcast operates cable systems serving about 1.35 million subscribers plus a number of Muzak franchises. The company also owns American Cellular Network Corp., which operates cellular telephone systems in New Jersey, Delaware and Maryland. Comcast posted a net loss of $9.4 million in its 1987 fiscal year, compared to a 1986 profit of $1 million, due to the costs of financing acquisitions and accounting factors. Revenue rose to $309.2 million from $130.8 million.

Tele-Communications owns or controls cable systems serving about 6 million subscribers, according to industry estimates. It also owns a 52% stake in United Artists Entertainment Co., which has interests in cable television and movie theaters. Tele-Communications posted a profit of $5.6 million, in fiscal 1987.

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