Eight more cable operators have signed up as affiliates with the joint venture in which Sprint will help its three partners – John Malone’s Tele-Communications Inc., Comcast and Cox – carve out a slice of the local telephone business.
The goal of the $4.4 billion Sprint telecommunications venture is to offer what John Harrison, director of strategic planning for Sprint, calls “one-stop shopping,” in which customers would get all of their services – cable TV, wired telephone, long distance and cellular phone – through the same company.
Leo Hindery, managing general partner of Intermedia, one of the eight new affiliates, said the Sprint-led venture is “the only practical way” for a cable operator of Intermedia’s size – a little more than 1 million subscribers – to have any chance of making inroads against the local Baby Bell.
In exchange for access to all of the households passed by the cable systems in the venture, Sprint will pay the operators a monthly fee of $1.75 a household, even if the home doesn’t actually subscribe to cable.
“The affiliate will be able to use that fee as collateral with a bank,” Harrison said, “to get the money for upgrading its facility” to meet the specifications set out by Sprint in its contract.
And once Sprint signs a household within the cable system’s geographical area for voice services, the cable operator pockets 22% of Sprint’s revenues from that customer.
Lou Borrelli, executive VP and chief operating officer of Marcus Cable, another new affiliate of the venture, said that Marcus is eager to align itself with Sprint for various telephone services because of the brand identity Sprint has created through its high-visibility advertising and marketing campaigns, many of them featuring Candice Bergen as the spokeswoman.
TCI, Comcast and Cox – the first, third and fourth largest cable operators in the U.S., respectively – pass 30 million homes. The eight new affiliates reach about 8.8 million homes. In addition to Intermedia Partners and Marcus Cable, they are Falcon Cable, the Lenfest Group, Rifkin & Associates, TKR Cable, Susquehanna Cable and Coastside Cable.
In a statement, Ronald T. LeMay, CEO of the venture, said he expects to sign more cable-operator affiliates in the coming months.