N.Y. Upgrade Likely Before Ownership Revamp

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New York -- The New York Interconnect, which will soon be
ready with its long-delayed digital upgrade, is moving slowly -- but perhaps not so surely
-- toward a new ownership structure.

Already delayed several times since the originally
announced July 1 date, the upgrade could be completed by the end of the month, said Larry
Fischer, president of Time Warner CityCable, the ad-sales arm of 1.2 million-subscriber
Time Warner Cable of New York City.

But last week, a spokesman for Eglon Simons, vice president
and general manager of the interconnect, said, 'A small technical glitch' will
be bumping the upgrade's turn-on from today (Jan. 26), with no new target yet set.

The upgrade, which would enable insertion of 16 cable
networks (six more than currently), had, in November, been slated to start by Jan. 1.

More than 85 percent of the interconnect is completed,
Fischer said. One small portion within the lower Manhattan area will be among the last to
be fibered, he added.

Also on hold pending the upgrade's launch is the
interconnect's proposed marketing campaign, targeting the New York advertising
community. A package of on-air promo spots has been in development since the fall, Simons
said in an earlier interview. He did not return calls seeking comment last week, but he
talked through a spokesman.

The six networks being added -- all targeting young adults
-- are Black Entertainment Television, Comedy Central, E! Entertainment Television, ESPN2,
MSNBC and VH1, Simons has said.

On the ownership front, talks began late last year aimed at
changing the interconnect from a Rainbow Advertising Sales Corp.-owned operation to one in
which RASCO would share ownership with the participating MSOs. That, too, is said by some
industry sources to be on track for approval later this year, although some MSO sources
countered that it's by no means a certainty.

'Things could change even at the 11th hour,' most
likely due to RASCO's parent, Cablevision Systems Corp., said one MSO executive.

Fischer, chairman of the interconnect's executive
committee, would only say that 'negotiations are ongoing. We continue to talk.'

A spokesman for David Kline, president and chief operating
officer of RASCO, said last week that 'talks are progressing nicely.'

Another participant in the discussions said the key issue
is now centered more on the makeup of the new board and the allocation of voting rights,
rather than on the composition of the interconnect's dedicated inventory.

Regarding the latter topic, some sources said the MSOs in
the No. 1 DMA would like to hold on to as much of their highest-rated-network avails as
possible. Each MSO's share is based on how many subscribers each brings to the table,
which means that Cablevision, Time Warner and Tele-Communications Inc. are the biggest
participants. Cablevision accounts for 38 percent of the interconnect's subscribers,
Time Warner 27 percent and TCI 17 percent. That will change after Cablevision completes
its purchase of TCI's New York-area systems.

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