Road Warriors of the Infoway

November 21, 1994|By MICHAEL J. DAVIES

Hardly a week goes by without another conference or seminar on the so-called information superhighway. The participants, like the faithful trekking to Lourdes, are looking for miracles and a vision of the future. Almost without exception, they come away unfulfilled.

What's going on in the world of news, information and entertainment -- what used to be called the media -- is nothing short of a revolution. And, like many revolutions, this one is messy and out of control.

Truth often takes a back seat to exaggeration and rumor. For many companies, last year's enemy who became yesterday's ally becomes today's enemy again. Small players desperately seek the protection of stronger warlords. And the warlords, on constantly shifting sand, look for new alliances. What seemed a certain path to victory last week often turns out to be more of a dirt road than a superhighway.

Modern soothsayers make solemn predictions on the outcome of the conflict. So far, their crystal balls have been clouded.

A major part of the revolution revolves around who will build and control the highway.

Will it center on an interactive television set hooked up to telephone wires? The regional Bell telephone companies hope so. Or will information come over the same wires that now bring you cable programming? Or will data be beamed into homes by satellite signals or microwave transmissions received on dinner plate-sized receiver dishes and small antennae?

Will the personal computer rather than the television set be the command center in the home? Or will the TV set and the PC merge into one instrument?

Another part of the struggle involves the information providers. Who will be creating and producing the enormous streams of news, information and entertainment that will flow along the highway? And what will become of the more traditional forms of media such as newspapers and magazines?

Complexity, confusion and stunningly unexpected developments have become commonplace as behemoths and minnows jostle for position.

* Last year Tele-Communications Inc., the nation's largest cable-television provider, and Bell Atlantic, one of the regional telephone companies, shocked the business world when they announced they would no longer fight each other. Instead, they trumpeted a merger agreement initially thought to be worth $30 to $40 billion dollars. Raymond Smith, the chairman and chief executive officer of Bell Atlantic, said at the time, ''This is the perfect information age marriage.''

Perhaps, but it wasn't consummated. The deal fell apart in the wake of falling stock prices and a rollback in cable-television rates ordered by the Federal Communications Commission. John Malone, TCI's chief executive, said FCC Chairman Reed Hundt should be shot. (He later apologized).

There are some who think Mr. Malone never really intended to merge with Bell Atlantic. The theo- ry goes that he used Bell Atlantic to leverage the perceived value of TCI so he would be in a better bargaining position when he approached a more logical target, perhaps AT&T or Sprint.

As for Bell Atlantic, one insider said that right up until the day the deal died, Mr. Smith didn't grasp the fact that because many of TCI's cable systems were old and had limited channel capacity, they were incapable of providing the interactivity he had been touting.

Also, the insider said, because many of TCI's systems were in rural areas, the chances of making much money from interactive features were limited anyway. The argument is that people in urban areas, with more disposable income, are more likely than rural residents to buy extra services or shop over the airwaves.

* TCI and Bertelsmann, a large German company, announced they were combining resources to create programs to compete with MTV and the home-shopping channels. They recently had a change of heart and are dropping the plans.

* A large Hollywood talent agency, Creative Artists Agency, announced that it had hired Robert Kavner, who was spearheading AT&T's expanding multi-media efforts. Mr. Kavner's job is to make sure directors, writers and performers get their slice of the goodies from the information pie.

A telephone man getting a plum job at a talent agency?

* Times Mirror, a large media company (and owner of The Sun and The Evening Sun), sold its TV stations last year for $330 million. The buyers quickly turned around and sold those same stations to New World Communications for $716 million, netting a tidy profit.

Times Mirror, saying it wanted to concentrate on being an information provider, shucked off another asset when it announced it was selling its cable holdings, the 11th largest in the country, to Cox Enterprises Inc. The combined entity would be the third-largest cable system in the country.

It would have been, that is, until Comcast Corp. made a cash bid of $1.27 billion to buy Maclean Hunter's U.S. cable operations. The Comcast deal, if it goes through, would create the third-largest cable system in the country.

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