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TCI Buys Into Emerging Interactive-TV Market : Technology: Cable giant will pay $11 million for up to 15% of a Bay Area firm launching a two-way TV system.

April 28, 1993|JOHN LIPPMAN | TIMES STAFF WRITER

Cable TV giant Tele-Communications Inc. will buy up to 15% of Interactive Network Inc., a Mountain View, Calif.-based company that is trying to launch an interactive TV system.

TCI's $11-million investment should help alleviate a cash shortage that the 5-year-old start-up has experienced in recent months. Interactive Network is one of several companies scrambling to enter the emerging high-tech market for two-way TV services.

Interactive Network offers subscribers the opportunity to play along with game shows, sporting events and other programs by tapping instructions on a wireless keyboard that transmits commands over an unused portion of the FM radio band.

TCI is not the only company betting that Interactive Network has the ability to deliver on its promise of becoming a national interactive TV service. Other backers include NBC, broadcaster and newspaper publisher Gannett, TV ratings service A.C. Nielsen Co. and cable operator Cablevision Systems Corp. Together they own about 28% of the company.

TCI will buy 1.65 million shares of Interactive Network's stock at $6.50 per share. About $6.6 million of the total will be paid in cash. The rest will be paid in advertising on TCI cable systems to promote Interactive Network when it begins its planned nationwide rollout this fall.

TCI, which has about 10 million cable TV customers, is upgrading its coaxial cable network with fiber-optic cable, providing a "platform" for new interactive TV and data services.

The company over the last year has made a wide array of investments in emerging technology companies, including the test marketing of an interactive movie-on-demand service outside Denver. Last week, it also invested $90-million in Carolco Pictures as part of a plan to preview the studio's movies on a pay-per-view basis.

So far Interactive Network is only available in Northern California and has about 3,300 subscribers.

"We have watched the progress TCI has made with their electronic highway and new addressable decoder boxes, and our technology is designed with that in mind," said David Stockton, chief executive of Interactive Network.

The fiber optics and decoder boxes that TCI is installing into its cable TV homes will provide subscribers with literally hundreds of channels to choose from, many of them with interactive or two-way capability via a hand-held remote control.

Viewers who want to subscribe to Interactive Network must pay about $200 for the hand-held remote keyboard device and another $15 a month for the service. Lockton said the goal is do away with Interactive Network's keyboard, replacing it with cable's standard remote control.

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