Time Warner Inc. and Comcast Corp. are negotiating a system
swap involving operations in Indianapolis with more than 70,000 subscribers, people
familiar with the talks said.
The deal would bulk up an already large Indiana cluster for
Comcast -- the company has 120,000 subscribers in Marion County, which surrounds
Time Warner could also sweeten the pot by including systems
it owns in nearby Carmel and Zionsville with 50,000 subscribers.
In return, Time Warner would most likely receive comparable
systems in Florida, according to sources. However, it is unclear which systems and how
many subscribers will be involved.
Time Warner already has significant clusters in the Florida
market, including a 781,000-subscriber cluster in Tampa Bay and a 568,000-subscriber
cluster in central Florida.
In May, Comcast agreed to trade systems in Los Angeles and
Palm Beach, Fla., with a total of 440,000 subscribers, for properties owned by Adelphia
Communications Corp. Comcast will get Adelphia systems on the East Coast and in Michigan,
New Mexico, Indiana and Fort Myers, Fla., with about 464,000 customers.
Officials at Time Warner and Comcast declined to comment,
citing policies about not responding to rumors. But some people close to the deal said it
has been in the works for months, and it could be finalized in the next few weeks.
"It does make sense for something to happen," one
source familiar with both companies said. "Time Warner owns the city of Indianapolis,
and Comcast owns all that surrounds it."
The deal is one of several system swaps expected to take
place during the year, as cable companies begin to rationalize the clusters they have
acquired during the most recent rounds of consolidation.
Time Warner has been growing its presence in Florida over
the past few years, and it has some of its biggest clusters in that state. Tampa Bay is
the company's second-largest cluster after New York, and Time Warner has other large
concentrations of subscribers in northern Florida.
While Time Warner moves to bolster its Florida cable
clusters, it may be willing to give up some control of cable systems within its Time
Warner Entertainment partnership with MediaOne Group Inc.
Time Warner chairman Gerald Levin told reporters last week
that the company would most likely take full control of TWE's programming assets --
including Home Box Office and the Warner Bros. film studio -- in exchange for upping
MediaOne's stake to more than 40 percent and possibly contributing other cable assets
to the partnership.
MediaOne owns 25 percent of TWE -- a stake that would
transfer to AT&T Corp. after that company completes its $58 billion acquisition of