Belmont, Calif. -- Tele-Communications Inc. will pay
Interactive Network Inc. $10 million, plus $2.5 million in legal fees, to complete a
previously announced settlement of the interactive-television developer's lawsuit
against TCI, INI said last week.
INI added that it plans to file for a voluntary Chapter 11
bankruptcy reorganization within 60 days.
INI sued TCI in August 1995, claiming that the cable
operator tried to force INI out of business in order to grab patents for another company,
Zing Systems Ltd., which was owned by TCI. Zing later went bankrupt.
INI spent more than $130 million, according to published
reports, on a system that used hand-held devices to let TV viewers play along while
watching football or Jeopardy. People familiar with the company said it is no
longer an operating concern. Company spokesmen did not return a phone message.
The settlement, following along the lines of a tentative
agreement that was reached in March, came after a trial had finally begun on INI's
claims. Gary Howard -- a longtime TCI executive who is currently executive vice president
and chief operating officer of Liberty Media Group, and who was an INI director -- had
testified after being named in the lawsuit.
"The issue is now behind us," TCI spokeswoman
LaRae Marsik said last week. She noted that TCI will have a stake in INI as part of the
settlement, adding, "We look forward to getting beyond this issue and onto future
Former INI chairman and CEO David Lockton, who filed the
lawsuit, opposed the settlement. Last month, INI's board named Bruce Bauer to replace
Lockton as chairman and CEO, although Lockton is still a director. A spokesman for Lockton
said last week that he had no comment until he sees how the settlement and the Chapter 11
proceedings play out.
As part of the settlement, TCI and other INI backers --
Sprint Corp., NBC Inc. and Motorola Inc. -- will convert $38 million in loans and accrued
interest into INI stock at a price that won't exceed $5 per share. Those shares will
be controlled by INI's directors under a four-year voting agreement.
TCI and the other investors also agreed to return "all
intellectual property acquired" from INI, and to release any liens or interests that
they had in INI patents.