TCI sells sticks to Falcon

NEW YORK — Cable giant Tele-Communications Inc. will announce the latest set of cable system sales tomorrow, demonstrating how aggressively the company is moving to make manageable its far-flung collection of cable systems.

TCI has scheduled a press conference for Thursday in Washington D.C. to announce a deal in which the cabler will sell systems covering 300,000 subscribers in five Pacific Northwest states to Falcon Cable TV, in exchange for stock representing 40% of Falcon, sources say.

Meanwhile, TCI is negotiating other such deals with cablers including Comcast Corp. and Jones Intercable, sources say. The Wall Street Journal reported Tuesday that TCI was also negotiating deals with Time Warner, TCA Cable, Charter Communications and Falcon. TCI stock rose 31¢ to $16.50 Tuesday.

TCI declined comment, while a Time Warner spokesman said any deal it did would not increase TW’s debt. Time Warner and TCI are already partners on a Kansas system, and it is understood the partnership will be enlarged to include another TCI system in Kansas.

The deals under negotiation follow TCI’s announcement of the sale of its New York-area systems to Cablevision Systems Corp. in exchange for 33% of Cablevision stock, and formation of a partnership with Adelphia Communications earlier this month to hold its upstate New York systems.

All are part of TCI president Leo Hindery’s strategy of selling small systems to other cablers operating in the same regions in exchange for stock. These deals give TCI a continuing interest in the systems that Hindery believes can be better managed by the local player. At the same time, TCI hopes to improve its balance sheet by offloading debt attached to the systems.

Hindery told investors earlier this year he planned to do about 10 such partnerships. By the end of the process, the cabler will likely have reduced its subscriber count from about 14 million now to between 11 million and 12 million, taking it down to No. 2 cabler Time Warner’s level.

At the same time, TCI hopes to reduce its debt from $16.5 billion (including preferred stock) to $13.4 billion, improving its financial ratios substantially, according to Lehman Bros. analyst Larry Petrella.

Petrella says TCI’s remaining subscriber base will be concentrated in a smaller number of bigger clusters — led by clusters of more than 1 million subscribers in markets like Seattle, San Francisco, Hartford and Chicago.

The pattern of system sales highlights where TCI is concentrating its resources. Falcon Cable TV, for instance, is buying TCI’s systems in California, Oregon, Idaho and Washington state. TCI will keep only its systems in Portland, Ore., and Seattle as part of its new focus on large urban markets.

Meanwhile, Hindery’s efforts in shaking up TCI’s top management continued Tuesday when the cabler’s longtime senior VP of communications and policy planning Robert Thomson quit “by mutual decision.”

Thomson had overseen TCI’s media and government relations for the past decade, but Hindery had made clear his unhappiness with TCI’s public relations effort earlier this year, and he recently brought back Lela Cocoros from NBC to oversee the cabler’s press relations.

“Our operating styles didn’t quite mesh,” Thomson said Tuesday.

TCI said VP Stephen Brett will take over responsibility for dealing with the government.

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