Denver -- Jones Intercable Inc. and BCI Telecom Holdings
Inc. (BTH) will allow a U.S. District Court judge to resolve their dispute over Jones
In a surprise development, the two sides agreed last week
to allow Judge Richard Matsch to combine a hearing on BTH's request for an injunction
prohibiting further launch of JIC with the trial that would follow.
This means that Matsch will decide the case solely on the
merits of the testimony presented during the injunction hearing.
"Matsch believes that he's heard enough to decide
it," said a source close to the issue.
Jones Intercable chairman Glenn Jones ordered his lawyers
to immediately accept Matsch's offer to decide the entire matter -- a potentially
risky move if the decision goes against the MSO.
"But Glenn said, 'Go for it,'"
according to one of Jones Intercable's lawyers.
It was not clear how long Matsch will take to issue his
BTH had asked Matsch to enjoin Jones Intercable from
rolling out JIC beyond Alexandria, Va., claiming that the operator violated a
shareholders' agreement by launching the service there without the approval of
BTH's independent directors on the MSO's board.
BTH is the largest outside shareholder in Jones Intercable,
with a 30 percent stake in the company.
Jones Intercable is arguing that the launch is permitted
under Section 3.5 of the shareholders' agreement because the content on JIC
constitutes programming and, under the agreement, Glenn Jones can program six Jones
Intercable channels through Jones International Inc., which owns JIC.
Meanwhile, a JIC executive testified that BTH had been
aware of the planned launch since 1995, when details were first provided to BTH officials,
including the executive who negotiated the company's $290 million investment in Jones
Jim Ginsburg, executive vice president of JIC, said the MSO
continued to keep BTH informed during a series of meetings, including the Jones Intercable
board of directors' meeting in January.
BTH filed its lawsuit in February.
Ginsburg disputed BTH's claim that JIC would only be
offered to Jones Intercable systems, noting that the company is negotiating to launch the
service on other cable systems.
Countering allegations that the affiliation agreement with
JIC would "siphon off" revenues from the MSO, Jones Intercable chief financial
officer Kevin Coyle said the contract with JIC would actually produce more revenues than
would have been produced from a contract with a competitive service, like @Home Network or
Time Warner Cable's Road Runner.
Moreover, with the exception of Alexandria, Va., Jones
Intercable's systems are not two-way-capable, which precludes launching @Home or Road
Runner, added Jim O'Brien, the MSO's president.
JIC scored some points when Edward Bennett, former
president and CEO of Prodigy Services Co., one of the earliest online services, testified
that such offerings as local updates by The Weather Channel represented programming that
would allow JIC to retain subscribers.
"Otherwise, subscribers would wonder why they're
paying for the service," Bennett said.