Post sells its stake in APC

January 10, 1995|By Michael Dresser | Michael Dresser,Sun Staff Writer

The Washington Post Co. bailed out of its investment in a new generation of wireless telephone services yesterday as it announced the sale of almost all of its stake in Bethesda-based American Personal Communications.

The Washington-based newspaper company sold all but 1.5 percent of its 70 percent stake in American Personal Communications to APC Inc., its partner in the venture, and a joint venture of Sprint Corp. and three of the nation's leading cable companies.

APC Inc., controlled by the Schelle family of Brooklandville, will own 49.5 percent of American Personal Communications, which has been awarded one of the two licenses for "personal communications services" (PCS) in the Baltimore-Washington area. The Sprint-cable venture known as WirelessCo L.P. will own 49 percent.

The $33 million sale effectively terminates an investment that brought the Post Co. and its flagship newspaper little but grief. Post Co. spokesman Guyon Knight said the company essentially recovered its investment, minus the 1.5 percent, but did not realize a profit.

The Post bought into APC with hopes of getting a head start on technology that proponents see as a rival to the cellular phone industry. What it got was a complicated deal that got caught up in a regulatory morass and became a political football during last year's debate over the General Agreement on Tariffs and Trade.

Post Co. President Alan Spoon said yesterday that political controversy had nothing to do with the sale. "This was an economic decision," he said, citing regulatory delays and a government policy change that increased American Personal Communications' start-up costs far beyond early estimates.

Paul Sweeney, an analyst with Wheat First Butcher Singer in Richmond, Va., said the Post Co. had sound business reasons for selling.

"There's a lot of uncertainty connected with the deployment of PCS," he said.

But the deal represented a potential coup for the Sprint-cable venture, which includes Tele-Communications Inc., Comcast Corp. and Cox Cable Communications.

By buying into American Personal Communications, the venture guarantees its access to the Baltimore-Washington market without having to bid any more in the Federal Communications Commission's current round of auctions of radio spectrum for PCS.

Only one Baltimore-Washington license is on the block because the FCC decided in 1992 to award one of the licenses to American Personal Communications for its role in developing PCS technology -- a concept called "pioneer's preference."

Under the FCC's original rules, three "pioneers" in Baltimore-Washington, New York and Los Angeles were to have received 30-megahertz broadband licenses for free. But last year, under pressure from the pioneers' potential competitors, the FCC reversed itself and decided that the pioneers would have to pay a percentage of the winning bids.

The Clinton administration and the pioneers ended up negotiating a settlement that was folded into the bill to implement GATT that was passed during a special session of Congress in December.

GATT opponents criticized the Post for running editorials in favor of the trade agreement while holding a stake in American Personal Communications. The Post denied any connection between the investment and its editorial policy but acknowledged it erred by not disclosing its investment in each editorial.

Congress finally passed GATT, but only after the administration promised that the new Republican congressional majority would have an opportunity to reopen the pioneer's preference issue this year.

Scott Schelle, executive vice president of American Personal Communications, said he hopes the sale will help lay the issue to rest.

"Certainly some of the issues that we ran into probably were motivated by the fact that there was some anti-Post feeling out there," he said.

Mr. Schelle said his company will continue under its current management, led by his father, Wayne Schelle.

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