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TCI Rumored to Be Seeking Prodigy Stake

July 09, 1994|From Times Staff and Wire Reports

Tele-Communications Inc. is rumored to be negotiating with IBM and Sears to buy a one-third stake in Prodigy Services Co., their jointly owned on-line service provider.

TCI said it had no comment on the rumors, reported this week in a newsletter published by New York-based Jupiter Communications. The report said TCI is offering $400 million for a one-third ownership position, with International Business Machines Corp. and Sears each retaining a third of the company. Officials at IBM, Sears and Prodigy were not available for comment.

An investment in Prodigy--which has about 1.2 million subscribers, more than any competing on-line service--might make sense for TCI. The cable giant has been experimenting with Intel Corp., General Instrument Corp. and several on-line services to offer interactive services to personal computers over cable.

Because of the huge amounts of data that can be sent over coaxial cables, on-line information can be delivered as much as 1,000 times faster over cable than over normal phone lines.

Prodigy has been the most active of the on-line services in seeking to move its service to cable television and was the first service to start a trial on cable TV, through Cox Enterprises Inc.

"There is good synergy in many areas," said Gene DeRose, director of research at Jupiter.

But after pouring nearly $1 billion into the service over the last decade, IBM and Sears are about to see Prodigy's first year of profitability, and analysts said it might be an odd time to sell.

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