TCI diet sweetens stock price

NEW YORK — Tele-Communications Inc. stock soared $2 to its highest point in the past year Tuesday after TCI president Leo Hindery gave an upbeat presentation to investors and revealed that the cabler had finalized a yearlong streamlining of its cable systems.

Hindery told the PaineWebber media investment conference that the cabler had agreed on the two remaining systems deals that had been under negotiation. He declined to identify the two deals, pending an announcement scheduled for late Tuesday, but one is believed to be a $1 billion exchange of systems with US West Media Group.

Hindery’s speech to the conference sent TCI stock up $2 to $26.37, its highest point in the past year. TCI has risen from a year low of $10.75.

Hindery said TCI would emerge from all the deals, most of which have been announced but not closed, with fully owned systems covering 10 million subscribers concentrated in 16 cities. When Hindery took over in February, TCI had 14 million subscribers in systems stretching across 48 states.

Series of deals

In the past 10 months, TCI has announced 11 joint ventures with other cablers, including deals in which TCI has either sold systems to other operators in exchange for stock, and six systems swaps. The idea behind these various deals is to make it easier for TCI to manage the systems it fully owns as well as to improve its balance sheet by transferring debt along with systems.

In the 16 cities that account for most of TCI’s remaining systems, “we are the dominant provider,” Hindery said.

Hindery also revealed that subscriber losses at the cabler have ended, as he promised Wall Street earlier this year, and that subscriber growth in the fourth quarter would be better than expected. He told the conference that TCI would report subscriber gains of more than 90,000 for the quarter, which compares with losses of 47,000 in the third quarter.

Hindery also said customer reaction to TCI’s new digital cable service, now being rolled out, was better than he expected.

“I can’t keep it on the shelf long enough. We are struggling with the demand quotient. It’s so high and so robust that it exceeds every one of our expectations,” he said.

The strong demand extends to pay-per-view offerings, which are being expanded with the new service. Wall Street analysts “are right in being skeptical about Blockbuster,” Hindery quipped, referring to Viacom’s troubled video rental chain which some on Wall Street think is threatened by pay-per-view services on cable and satellite.

Hindery and other cable execs who addressed the conference Tuesday faced a noticeably friendlier crowd than in past years, when cable has been out of favor with investors. But Microsoft’s $1 billion investment in Comcast Corp. and News Corp.’s decision to abandon plans to enter sat-TV have eased worries among investors about the competitive threat posed to cable by sat TV.

DirecTV forecast

Indeed, DirecTV chief financial officer Robert Meyers revealed in a presentation later in the day that the sat-TV operator has pushed back the time it expects to break even financially by at least a year to sometime in 1999.

“We thought we would break even on earnings before interest and taxes in the high 3 million subscriber count. That has been pushed at least a year … now high 4 million,” Meyers said in answer to a question from an analyst. DirecTV has just broken through the 3 million subscriber count and is adding about 1 million subscribers a year.

Also during the day, Comcast Corp. treasurer John Alchin revealed that E! Entertainment Television’s proportion of original programming will hit 90% by the end of 1998, compared with 70% when Comcast and Walt Disney Co. acquired control of the channel earlier this year.

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