News

Consolidation Roadkill: Telesynergy Goes Under

2/20/2000 7:00 PM Eastern

Telesynergy Inc., the 17-year-old buying consortium that
lost most of its member MSOs as a result of consolidation during the past year, has closed
down.

Telesynergy, which at one point had 12 members, saw that
number dwindle as independent operators were swallowed up in the buying binge that has
swept cable.

In purposely fitting timing, Telesynergy decided to cease
active operations Jan. 31 -- the same day Cox Communications Inc. completed its purchase
of Gannett Co.'s Multimedia Cablevision Inc. -- according to Telesynergy president
and CEO Bob Barry.

"It really was not viable for us to continue,"
Barry said. "Going forward, it did not make sense. Looking at the landscape, there
weren't viable replacements for the members we lost."

Telesynergy, based in New York, debuted in 1983 with eight
charter MSO members as a consortium through which midsized cable operators could band
together to negotiate with programmers.

The idea was to use their combined distribution to create
clout and reach more favorable affiliation agreements with cable networks, getting volume
discounts the way the top 10 MSOs do.

Telesynergy's membership had been in the 5 million- to
5.5 million-subscriber range. But consolidation gobbled up a number of Telesynergy
members, particularly in the past 12 months.

In addition to its recent purchase of Multimedia, Cox also
bought Media General Inc. and TCA Cable TV Inc., Barry noted. And software billionaire
Paul Allen acquired Charter Communications Inc. and Marcus Cable.

These mega-MSOs can negotiate directly with programmers to
get volume discounts, so they have no need for a middleman like Telesynergy.

At the end, Telesynergy's members only included
Charter -- which has ballooned to more than 6 million subscribers -- Buckeye CableSystem
Inc., Armstrong Cable Services, R&A Management LP and RCN Corp., Barry said.

After Telesynergy stopped doing business in late January,
Buckeye, with 160,000 homes, and Armstrong, with 260,000 subscribers, joined the National
Cable Television Cooperative, a programming- and hardware-buying group that encompasses
both small and midsized cable operators. R&A has also signed up with the NCTC.

"Those three companies serve over half a million
basic-cable subscribers," NCTC vice president of national accounts Scott Abbott said.

The Lenexa, Kan.-based NCTC, which has grown substantially
during the past three years, now has 950 cable-company members reaching more than 10.5
million subscribers, according to Abbott. The co-op's largest MSO-member is Adelphia
Communications Corp., which serves 5 million subscribers.

Toledo, Ohio-based Buckeye was one of Telesynergy's
charter, and final, members.

"Toward the end of last year, we decided that we
should fold [Telesynergy]," Buckeye president David Huey said. "We are sad to
see Telesynergy go. It served its members well for 17 years and our industry well for 17
years. But all good things have to come to an end."

Armstrong officials couldn't be reached for comment.

A Charter spokeswoman said the MSO has no plans to join the
NCTC, and it will negotiate directly with cable networks.

"Bob Barry did a great job, but Telesynergy has served
its purpose," she said. "It just didn't make sense to continue
… We bought up many of the companies that were part of Telesynergy. We deal with
programmers directly now."

Barry said he expects it to take two to three months to
complete the dissolution of Telesynergy.

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