After successfully negotiating a franchise transfer, Cox
Communications Inc. met its self-imposed deadline of June 15 to buy Tele-Communications
Inc.'s Tucson-area systems with 115,000 subscribers.
The deal enhances Cox's southwestern cluster, which
will contain 1.8 million subscribers after Cox closes its $1.3 billion deal to buy Prime
Cable's 319,000-subscriber operation in Las Vegas. The cluster will also include TCI
systems in Sierra Vista and portions of Pima County, Ariz., acquired as part of the Tucson
Cox did not disclose the financial terms of the Tucson
deal. But, because Cox was able to get the deal done on June 15, the company completed the
transaction in time to use cash gained from selling 85,000 subscribers in Central Ohio to
FrontierVision Partners in December without suffering an income tax hit on the proceeds.
Cox sold the Central Ohio system for $204.2 million,
recognizing a book gain of $26.4 million, but was able to defer the tax hit by reinvesting
Franchise talks in Tucson -- which recently had extended
TCI for 10 years -- went down to the wire. The mayor and city council ended up approving
the transfer shortly before midnight, eastern time, on Monday, officials said.
Deputy city attorney Brad Detrick said Cox had balked at
taking on TCI's obligation to build a fiber network for city offices. Ultimately, TCI
agreed to pay for building a more extensive institutional network than it had originally
planned, for an estimated $5 to $8 million. That broke the logjam.
The city also pushed out a deadline to finish a rebuild
after Cox agreed to upgrade the system capacity to 750 megahertz, not TCI's planned
550 MHz system, Detrick said. TCI was scheduled to finish the rebuild by the end of next
year, but Cox will have an additional 18 to 30 months, the city official said.
"This turned out to be beneficial to both
parties," Detrick said.
Ellen East, a Cox spokeswoman, said the company was happy
with the outcome. "We got what we wanted," she said.
Cox said it plans to offer digital television in the Tucson
systems. Jones Intercable Inc., which has 63,000 subscribers in Pima County, also offers
digital TV there.
Gretchen Shine, who ran Cox' Roanoke, Va., system will
head the Tucson operations as vice president and general manager.