From: owner-cablereg-l@netcom.com

From: [email protected]
Date: Sun, 16 Apr 1995 06:41:07 -0700
Subject: Cable Regulation Digest 4/17
Reply-To: [email protected]

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CABLE REGULATION DIGEST
Summary of regulatory news from Multichannel News 4/17/1995. Vol.2, No.16
Copyright 1995 Multichannel News. Reproduction/distribution is permitted
so long as this document is left fully intact. NO CHANGES are to be made
to this document without the written consent of Multichannel News.
Listserver, Gopher, FTP info attached at bottom.
Refer questions to John Higgins ([email protected] or
212-887-8390)
For Multichannel News subscription information: 800-247-8080. A bargain
at $78/year.

Multichannel e-mail contacts:
Marianne Paskowski, editor: [email protected]
Andy Grossman, news editor [email protected]
John M. Higgins, finance editor: [email protected]
Kent Gibbons, new media editor: [email protected]
Leslie Ellis, technology editor: [email protected]

EDITOR'S NOTE: Back in action. Good vacation all around. Went to see Lucious
Jackson, an awesome white girl sorta rap, sorta funk act. Run to get the CD.
And today it's my birthday. Oh joy, another one. I'm not getting older, I'm
still getting better, right?

QUOTES OF THE WEEK
"I think these guys see the handwriting is on the wall and they're going to
have to go against the telcos, so clusters of 50,000 subs aren't enough."
Mark Riely, partner in New York securities firm Media Growth Research,
on TCI and Time Warner's talks to swap $1 billion worth of systems.

TCI, TIME WARNER TALKING $1B MEGA-SWAP
New York - In a sign that cable operators may be getting serious about
trading systems, Tele-Communications Inc. and Time Warner Inc. are
discussing a wide-ranging swap with a value approaching $1 billion.
Other than the sheer size of the possible swap -- involving several hundred
thousand subscribers -- the talks are unique because both sides seem willing
to trade even large, well-clustered operations for more properties in even
more favorable markets, all in the name of clustering.
Sources cautioned that no deal is imminent. The two largest MSOs have been
dickering since late last year and have still not agreed on which systems to
throw into the deal. While one investment banker familiar with the talks said,
"they're heating up," another cautioned that "there's been talks about a mega-
swap forever. It's an annual thing."
A Time Warner executive said exiting regions of little strategic
importance to the MSO has become a high priority for the company,
particularly with the acquisition of Cablevision Industries Inc. and
KBLCOM Inc. plus its joint venture with Newhouse Broadcasting Corp. The
executive confirmed the TCI discus sions but noted "there have been many
swap ideas, but a lot of them don't materialize."
For years, swapping systems has been a chess game in which cable players
would only sacrifice pawns. For example, TCI recently agreed to trade a few
systems around Wichita, Kan., to get Multimedia Cablevision's systems in sub
urban Chicago. The latter is a huge priority for TCI but a marginal one for
Multimedia, which has a big Wichita-area cluster.
But Time Warner, at least, may now be willing to part with knights and
rooks, ceding some prime markets coveted by TCI in order to bulk up top-
priority regions in which the Englewood, Colo.-based MSO has midsized
operations.
Sources have said the pieces Time Warner is proposing to trade away include
its 240,000-subscriber Houston operation and the Portland, Ore., system that
it will gain as part of the MSO's acquisition of KBLCOM Inc.
TCI, in turn, is willing to cede part of its Florida operations in Daytona
Beach, Vero Beach and Titusville, plus properties in upstate New York -- in
cluding Buffalo -- near Time Warner's Rochester system, one of the latter's
highest-priority markets.
Time Warner is aggressively pursuing upstate New York and its other core
markets because of its desire to offer wide-ranging telephone services.
"Anything in New York state, North Carolina and Florida, Time [Warner]
wants," said one source familiar with the discussions.
"I think these guys see the handwriting is on the wall and they're going to
have to go against the telcos, so clusters of 50,000 subs aren't enough," said
Mark Riely, partner in New York securities firm Media Growth Research.

DOLAN DECLARES VDT WAR ON ADELPHIA IN N.J.
Washington -- Following through on threats to invade other MSOs' territory,
Cablevision Systems Corp. has asked to lease 192 channels on Bell Atlantic
Corp.'s video dialtone facility in Dover Township, N.J.
Chris Levesque, a spokeswoman for Cablevision's Rainbow Program Holdings
Inc., Friday confirmed the request but added the company had not received a
formal reply. The 192 channels would be half the capacity of the Dover system.
She would not provide further details about Cablevision's Dover plans.
Bell Atlantic won permission to build the 38,000-home network last July -- the
first commercial video dialtone system ever approved. Video providers (known
as VIPs) cannot sign up subscribers until the Federal Communications Commis
sion approves a tariff outlining charges to the VIPs.
Under FCC rules, the MSO could offer a vast array of cable programming on
the telco network without needing a local franchise.
Cablevision chairman Charles Dolan made headlines last July by declaring
he might invade other operators' turf, either by overbuilding or by
leasing space on telco video dialtone networks. Cablevision provides a
service -- video programming -- and doesn't necessarily have to own the
wires that carry the programming to customers, Dolan said.
The Woodbury, N.Y.-based MSO later wrote to Bell Atlantic, seeking VDT
channels.
Bell Atlantic said in a press release Thursday that 302 of the 384
channels had been reserved during a one-month open enrollment. The
remaining 82 channels will be allocated on a first-come, first-served
basis.
Bell Atlantic released the names of three VIPs but did not disclose
Cablevision's interest because of a confidentiality agreement.
FutureVision of America Corp., a software company in West Conshohocken, Pa.,
previously had signed up for 96 channels. Graff Pay-Per-View signed up for a
single channel. And International Telecommerce Corp., an interactive home
shopping network, was assigned 12 channels.
The Rainbow lineup includes American Movie Classics, Bravo, Independent Film
Channel and Prime Sports Channel Networks.
Martin Lafferty, executive vice president at FutureVision, said he was glad
other video providers want to be on the network because "it validates our view
that successful businesses can be built" on that basis.
Cablevision's VDT venture could be costly. The channel reservation fee, re
quired up front, would be $345,600 for 192 channels. Lafferty said digital en
coders needed to convert analog programming into digital signals run about
$100,000 per channel, or about $19 million for 192 channels.
Other costs would be for in-home wiring, digital set-top terminals, trans
porting video to Bell Atlantic's headend and tariffed costs for channel rent
al.
Adelphia Communications Corp. is the incumbent cable operator in Dover
Township. Adelphia spokesman Jerold R. Clark would not comment on
Cablevision's plans. Adelphia has an 80-channel-capacity system in Dover,
with 24,000 subscribers.

SUBSCRIBERS' LAWSUIT STAYS ALIVE
A federal court judge has kept alive a consumer's lawsuit against
Chambers Communications in Novato, Calif., over the operator's decision to
dump the local ABC affiliate from its lineup for seven months while a
must-carry agree ment was negotiated.
The attorney for Chambers had requested that the lawsuit be moved to federal
court in San Francisco, arguing that the plaintiff's charges constituted a
violation of the 1992 Cable Act.
Chambers attorney Richard Harmon earlier predicted that all actions would be
thrown out at the federal level, but instead U.S. District Court Judge Sandra
Armstrong ordered that the class action by subscriber Greg Lerigo be sent back
to state court to be heard. The superior court judge could still throw out the
case, but a hearing on a motion to certify the class has been set for May 4,
according to Lerigo's attorney, Max Hopkins.
Harmon was out of his office for the week and unavailable for comment.
The plaintiff, who is soliciting money from consumers in Novato, has col
lected about $4,000 from other subscribers to pursue the suit, Hopkins said.
"We think it will be a tough battle," Hopkins said of the suit. Hopkins will
argue that each channel on a cable system has a monetary value and that if one
is unavailable, subscribers are entitled to a refund of that value. If a judge
buys that argument, Chambers could face refunds of up to $107, plus interest,
for each of the 17,400 subscribers that fit the class.
A similar case, which was removed to federal court on a challenge, centers
on a $95 small claims court judgment won by a Chambers subscriber against the
system.
That plaintiff, Phil Schlenker, argued that he spent that money running up a
bar tab as a result of traveling to a nearby town to watch Monday Night Foot
ball when the ABC station was darkened. That Chambers challenge has not had
its court date.

GTE GOES TO COURT OVER LONG DISTANCE
Washington -- GTE Corp., the largest regional telephone operator in the
United States, filed suit in federal court last week to wipe out a 1984
consent decree that bars GTE from interexchange calling services.
GTE wants to offer its local-phone customers long-distance services as
well as to deliver video signals across local-calling boundaries. Brian
Blevins, a company spokesman, said GTE would continue to seek Federal
Communications Commission permission to build video networks.
According to GTE, the decree, which is separate from the decree that broke
up the Bell System, was based on "facts that no longer exist." Last year, GTE
sold Spacenet, a satellite transmission service, and three years ago it
divested its holdings in Sprint Corp. Both were acquired when GTE bought
Southern Pacific Communications Co. in April 1984, and entered into the con
sent decree to get Justice Department approval.
Bell Atlantic Corp. and Pacific Telesis Group, two of the seven "Baby Bells"
created from the AT&T breakup, recently won permission to receive and transmit
video signals across local-calling areas.

OPS PROTEST TELCOS' WIRELESS CABLE DEAL
Washington -- Before Bell Atlantic Corp. and Nynex Corp. plunge into the
wireless cable business, the Federal Communications Commission should careful
ly scrutinize the deal for possible cross-ownership violations.
That was the warning being broached by the Atlantic Cable Coalition, the
multistate group of cable operators aggressively resisting Bell Atlantic's in
road into video programming.
The ACC, in an April 10 letter filed with the FCC by Cole, Raywid &
Braverman attorney John Seiver, said the telcos' investment could contravene
the 1992 Cable Act's ban on cable operator ownership of an MMDS system within
the same franchise area.
Last month, Bell Atlantic and Nynex announced they planned to invest $100
million in CAI Wireless Systems Inc., eventually taking a 45 percent stake in
the multichannel business.
Bell Atlantic spokeswoman Shannon Fioravanti dismissed ACC's letter as an
other attempt by the cable industry to avoid competition.
"It's like, here we go again," Fioravanti said. "The cable industry is using
the regulatory process to block competition in any form."
CAI, following its absorption of ACS Enterprises Inc., would be able to
of fer MMDS in Washington, Pittsburgh and Baltimore in Bell Atlantic's
region, and in Albany, Rochester and Buffalo, N.Y., and on Long Island in
Nynex's territory.
"It sounds like the cable guys are concerned we found a good strategic part
ner," said Robert Schmidt, president of the Wireless Cable Association.

GEORGIA OPS LOSE BELLSOUTH RULING
Washington -- A federal court last week dismissed a request by the Cable
Television Association of Georgia for expedited review of a video dialtone
ap proval for BellSouth Corp.
The U.S. Court of Appeals for D.C. Circuit said it could not step in until
the Federal Communications Commission had made a final decision.
Under an order from the FCC's Common Carrier Bureau in March, BellSouth won
approval to offer VDT to 12,000 subscribers in Chamblee, Ga., for an 18-month
trial as well as the ability to program the network, without requiring a cable
franchise.
The National Cable Television Association has appealed the bureau's action
to the five FCC commissioners for review.

-=-=-=-=-=-=-=-=-=-=-=-=-=-=And Finally...-=-=-=-=-=-=-=-=-=-=-=-=-
Even cable systems can't escape the foul-mouthed bigotry of Howard Stern. Time
Warner's Houston system is facing a storm of protests from Latinos furious
over Stern's radio parody of weeping fans of slain singing star Selena. Backed
by�Tejano music and punctuated by gunshots, the bit was so tasteless that even
Stern repented on the air. Not good enough. The Houston system has been
deluged with hundreds of calls from Selena fans demanding that Time Warner
block Stern's daily show on E! "I've taken 16 calls this morning here in my
office," said system president Ron McMillan. A few subscribers have terminated
service. One city councilman even drafted a resolution asking McMillan to
block Stern's show or the whole network. McMillan told the council that he
personally finds Stern "repulsive," but said the system had no control over
individual programs on any network and further couldn't simply drop E! (That
Time Warner owns 50 percent of E! didn't help him before the council). The
resolution passed 13-1.

He's gotten warmer receptions at cable conventions ... Folks at the
mucho-conservative Heritage Foundation got all hissy when Reed Hundt pulled
out of a seminar "Do We Still Need the FCC?" on just 24 hours' notice.
Heritage president Ed Feulner responded by slamming Hundt, keeping his seat
empty at the table with a name plate present and refusing to let FCC chief
economist Michael Katz substitute. "Sounds like censorship," a Hundt aide
said. There's history here. It seems Hundt took exception to the decidedly
free-market orientation of telecom reform papers drafted by Heritage policy
analyst Adam Thierer and gave him a scolding that included remarks "question
ing [Thierer's] intellectual integrity and even his patriotism," Feulner
sniffed.

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