Time Warner, the nation's second-largest cable company, said
yesterday that it would merge some of its extensive cable systems
with those owned by Newhouse Broadcasting cable systems, which
serves 1.4B subscribers. In a separate deal, Time Warner will
pay $375M in stock to Summitt Communications to acquire a cable
system in Winston-Salem, NC, and two in suburban Atlanta. Both
transactions, which Time Warner accomplished without spending any
cash, will increase Time Warner's customer base to 8.9M. Though
a value wasn't put on the Newhouse transaction, market analysts
estimate the total value at $8.4B (Mark Robichaux, WALL STREET
JOURNAL, 9/13). Under the deal, Time Warner will "thoroughly
dominate" markets in Charlotte, NC, upstate NY and Orlando, FL
(Paul Farhi, WASHINGTON POST, 9/13).
BEEFING UP FOR A FIGHT?: In New York, Geraldine Fabrikant
writes that the venture is a "way to survive the consolidation
sweeping the industry as even the biggest players brace for
expected competition from the regional telephone companies" (N.Y.
TIMES, 9/13). Time Warner Chair Gerald Levin contended the deal
will improve "growth prospects" not only for cable business and
advertising sales, but also telephone and "future interactive
services" (James Bates, L.A. TIMES, 9/13). Newhouse President
Robert Miron: "To be prepared for the future, I need three
things: the size of these geographic clusters, technological
expertise and a sound financial partner. We got all three in
Time Warner" (WASHINGTON POST, 9/13).
