With the last of their franchise transfers in hand, TCI
Communications Inc. and Adelphia Communications Corp. last week closed on a regional joint
venture that will serve 470,000 subscribers in three states.
The deal was sealed when officials in Buffalo, N.Y., voted
to transfer the franchise covering their 85,000-subscriber TCI system to a partnership
headed by Adelphia.
"We have all of our transfers, and we're ready to
go," said Adelphia senior vice president Tim Rigas of the partnership, which was
first announced in June 1997.
Under a joint venture, TCI contributed systems serving a
combined 170,000 subscribers in Erie, Pa.; Ashtabula, Ohio; and Buffalo, along with a
second Adelphia partnership it's involved in that serves 20,000 customers in western
Adelphia added its operations in western New York and
Lorain, Ohio; its majority interest in the earlier partnership; and the Empire Sports
Network, which analysts believe will benefit by boosting its subscriber count by 170,000
TCI holds a 33.3 percent stake in the partnership, while
Adelphia holds a 66.7 percent interest and will manage the properties.
"We're pleased to have completed this transaction
with TCIC," said Adelphia chairman and CEO John Rigas, in a statement. "We think
that these properties will fit nicely into the Adelphia family of companies."
The only remaining system to be transferred had been
Buffalo, where TCI has been at odds with officials over the shutdown of its local
telecommunications center and the MSO's failure to upgrade the local network.
After months of negotiations, however, Adelphia has agreed
to complete the upgrade by the end of 2001. To compensate for the delay, subscribers will
receive a rebate of $3 a month for three months. Those with addressable converters can
receive one free premium service for three months, or five pay-per-view movies over the
"They [Adelphia] didn't think it was going to
take so long," said Buffalo city spokesman Tom Tarapacki. "They were very
anxious to complete this deal, compared to TCI."
The agreement also calls for the city to receive monthly
payments of $10,000 beginning in January 1999, and continuing until the rebuild is
completed. It will also receive a fine payment of $10,780 to cover TCI's failure to
submit a report detailing why it had not met its rebuild obligations.
The agreement also stipulates that local cable rates will
not increase prior to June 1999; employment levels will be maintained; one cable modem
will be provided to each public school once the rebuild is completed: a "Showcase
School" project, with advanced telecommunications equipment, will be installed at the
Buffalo Academy for the Visual and Performing Arts; and $200,000 will be provided for
public access facilities.
"We're happy to be bringing in Adelphia,"
Tarapacki said. "Because of its ownership of the Buffalo Sabres, there's more of
local feeling than there was with TCI."