Backtalk: TCIs Curb Appeal


When you're gearing up to sell your home, one of the firstthings that the real estate agent will do is to calculate a rough assessment of theso-called curb appeal of your abode, in order to fetch the best price.

The agent will tell you to put a pot of yellow pansies onthe porch or entranceway, because yellow is the first color that the eye sees, and itactually distracts the eye away from nearby eyesores.

The agent may also tell you to bring in a landscaper to dosome pruning, or perhaps to plant a few strategically located trees to make a good firstimpression on would-be-buyers.

Once inside the abode, the agent will make a big deal aboutuncluttering the home so as to not turn off potential buyers with piles of strewn junk.

And that's exactly what Leo J. Hindery Jr., president andCOO of Tele-Communications Inc., did during his 16-month tenure at the helm of what is nowthe nation's second-largest MSO, thanks in large part to all of the curb-appeal work thatwas conducted under his watch.

For example, his much vaunted digital-service rollout,which required no expensive upgrading of plant, is kind of like the real estate agent'spot of yellow pansies at the doorway.

TCI's digital rollout distracted potential investors fromsome of the company's underlying infrastructure problems.

Looking at TCI's plant architecture today, according to itsown projections, by the end of 1998, about 42 percent of its plant will be running onbandwidth in the 550-megahertz to 750-MHz arena.

But about only 26 percent of that plant will have beenactivated for two-way delivery of all of the new services, other than digital, that TCIwants to roll out.

While the rollout of digital was under way, Hinderysimultaneously pruned back corporate debt and decluttered the P&L front via a seriesof complicated joint ventures.

Knowing that TCI's curb appeal needed even more work, healso mended fences within and outside of the industry to make the company as attractive aspossible to investors and potential buyers.

In the end, his efforts paid off, with the MSO's stockrising 149 percent during his tenure.

That's one of many improvements that we're sure thatAT&T took into account last week, when it announced that it was acquiring TCI -- debtand all -- for roughly $48 billion.

During an interview with Multichannel News shortlyafter he took the job in February 1997, Hindery maintained that his mission was not todress the company up for sale.

In subsequent interviews, the answer was always the same.

But that was then, and now is now, with TCI having found anattractive buyer for the second time this decade.

Nearly five years ago, TCI announced that Bell Atlanticstruck a deal to buy what was then the nation's No. 1 MSO.

For a number of reasons, that deal fell through when BellAtlantic -- not unlike an educated home-buyer who brings in the SWAT teams of engineersand inspectors -- realized that the home was overvalued, and that it was paying too much.

One of the many unanswered questions swirling aroundAT&T's acquisition of TCI is: Will this one actually go through?

Oddsmakers are betting that it will, because AT&Tdesperately wants it to happen, realizing that the Baby Bells will eventually becomecompetitors in the long-distance phone business.

That's one powerful motivator that will bring this deal toa close, according to many industry executives who were calculating the odds last week.

Another factor that is very different from the failedmarriage of Bell Atlantic and TCI is cable's command in the high-speed-data arena. That'sanother huge motivator for AT&T to close, and one that didn't even exist five yearsago.

Even though industry experts estimate that AT&T willhave to spend another $10 billion to get TCI's plant up to speed, in order to accommodateits "whole-house" bundling approach toward selling a wide array of products,apparently, the phone company knew that going into this mega-deal.

So the moral of this story seems to be that if you've got afor-sale sign on your door, curb appeal goes a mighty long way.