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Tele-Communications to Divide System Into Regions

Cable TV: The decision is part of the firm's effort to bring management closer to key markets, president says.

March 05, 1997|From Bloomberg News

ENGLEWOOD, Colo. — Tele-Communications Inc. plans to divide its cable TV operations into as many as 12 regional units and possibly bring in regional partners or create joint ventures.

The moves end a 2-month-old plan to divide the company's cable TV operations into three units based on type of service and will bring management closer to key markets, President Leo Hindery said Monday at a Merrill Lynch & Co. meeting in New York.

"Regionalization is the way to go," said Jay Nelson, an analyst at Brown Bros. Harriman in New York. "You can't beat local management if they're good."

Since coming on board three weeks ago, Hindery has publicly argued for changing the structure of the company's U.S. cable business, TCI Communications Inc., from the three-unit structure. Those units are major metropolitan cable markets, medium and smaller cable systems, and test markets for new products, said Mike Smith, a Tele-Communications spokesman.

Merrill Lynch analyst Jessica Reif said Hindery told analysts and investors he would bring in affiliates, which has worked well in the past as a way to trim its heavy debt. Reif said Hindery told her there would be 10 to 12 regional units.

Reif also said Hindery plans to pursue joint ventures in certain regions, because some markets, such as Los Angeles, don't have a dominant cable provider.

Brendan Clouston will become Tele-Communications chief financial officer, after overseeing core cable operations, spokesman Smith said. Clouston will supervise the company's investments in data, telephony and other non-Liberty assets. Liberty Media is Tele-Communications' programming arm.

TCI Communications said Monday that it stemmed the loss of basic cable subscribers in the U.S. during the fourth quarter as it took steps to become more efficient and cut debt.

It ended the quarter with 13.9 million basic subscribers in the U.S., unchanged from the third quarter, when it lost 70,000 subscribers before acquisitions because of higher rates and competition from satellite TV.

The company is also losing pay-TV subscribers at a slower rate. Pay-TV subscribers fell 102,000 in the fourth quarter. In the third quarter, the company lost 308,000 subscribers. The figures exclude the impact of acquisitions and dispositions, the company said.

For the fourth quarter, cash flow rose 19% to $598 million. Revenue rose 23% to $1.62 billion from $1.31 billion in the year-earlier quarter.

The unit said it would take charges of $36 million in the quarter, including $27 million for eliminating the jobs in December and $9 million for consolidating the company's accounting activities.

Shares of Englewood, Colo.-based Tele-Communications rose 75 cents to close at $12.625 on Nasdaq.

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