Washington -- With top Federal Communications Commission
aides just a couple of tables away, Tele-Communications Inc. president and chief operating
officer Leo J. Hindery Jr. said last week that Wall Street money would dry up if efforts
to reregulate cable prevail.
Hindery, in a speech here to the Washington Metropolitan
Cable Club, said the billions of dollars that the industry needs to upgrade systems --
$1.8 billion alone for TCI over the next three years -- would flow elsewhere should the
FCC tighten cable-rate rules.
"Wall Street would far prefer to provide capital to
companies in a deregulated industry than to those in a regulated business," Hindery
said, adding that Congress and the FCC should allow the free market to dictate prices and
services to consumers who are facing a growing menu of choices.
FCC chairman William Kennard has ordered a review of cable
rates, and particularly of whether programming costs are largely responsible for the
average 8.5 percent increase last year.
Kennard's staff is looking at whether cable operators
should offset programming-cost increases with ad revenue, home shopping commissions and
launch fees before passing on the costs to subscribers.
On Capitol Hill, Rep. Edward Markey (D-Mass.) has a
introduced bill that would continue FCC oversight of upper-tier cable rates beyond March
31, 1999 -- the sunset date in current law. And Rep. Peter DeFazio (D-Ore.) has introduced
a bill that would freeze cable rates, coupled with an FCC investigation into the cause of
cable-rate increases over the last five years.
"Reregulation would severely damage the capitalization
of this industry," he said.
Hindery added that TCI was not insensitive to rate issues.
As recently as two weeks ago, he said TCI will hold 1998 rate hikes to 4.5 percent, noting
that two-thirds of the increase is program-cost-related.
Responding to a question from the floor, Hindery said FCC
rules requiring cable operators to carry digital-broadcast signals would be "the
height of rudeness," claiming that it would require cable operators to drop
established cable networks on channel-locked systems.
Hindery said none of the TV networks is begging for digital
must-carry, but the National Association of Broadcasters is out front in support for such
"I think that there's a split between their
association and the networks. I think that you should probably ask Eddie" about the
split, he said, referring to NAB president Edward Fritts.
"Digital must-carry is essential to the transition to
this new technology," NAB spokesman Dennis Wharton said.
Separately, Hindery said TCI would continue to seek out
minorities for hire, even though FCC equal-employment rules have been struck down in
court. He added that he made that pledge in a call to Kennard last Wednesday.