Cable Systems

WASHINGTON -- The Federal Communications Commission voted yesterday to allow broadcast television networks to buy local cable television systems, a move that could hasten a basic realignment of the television industry.Rather than having one local over-the-air affiliate station in a city, for example, a network could operate a local cable system offering dozens of channels of programming. That probably would alter, and perhaps terminate, the traditional relationship between the networks and local affiliates.

NEW YORK -- When it comes to reach, few news organizations rival that of the BBC, the venerable British broadcasting service recognized for its no-nonsense newscasts delivered in crisp, clipped tones. BBC World, the BBC's commercially funded 24-hour television news channel, attracts 76 million viewers a week from more than 200 countries, making it one of the biggest international news networks. But 16 years after its launch, the channel is largely absent from one major market: the United States.

In a further deregulatory action aimed at helping the shrinking fortunes of the three major television networks, the Federal Communications Commission yesterday unanimously overturned a 22-year prohibition against networks' owning cable TV systems.The 5-0 decision, which followed the FCC's promise last year to conduct a thorough review of decades-old regulations governing televisionnetworks and local stations, is designed to give the networks new areas in which to expand in the face of growing competition from cable.

Cable customers in the Baltimore region and several other markets can still watch American Idol on their cable system but the battle over how to pay for such programming continued yesterday despite a new four-year agreement between Sinclair Broadcast Group and Comcast Corp. to carry Fox and CW affiliates. Financial terms of the deal were not disclosed, but both companies insisted each stood its ground in a growing fight over so-called retransmission fees. The battle garnered nationwide attention because of its potential impact on cable rates and other factors across the television industry.

ATLANTA -- Cox Communications Inc., the No. 5 U.S. cable operator, said yesterday that it will swap $2.85 billion in AT&T Corp. stock for some AT&T cable systems and $750 million in cash, to become the dominant provider in Louisiana and Oklahoma. Cox will swap 50.3 million AT&T shares for systems serving 495,000 customers in Louisiana, Oklahoma, Texas, New Mexico, Arkansas, Utah and Nevada. That and other pending acquisitions will give Cox a total of 5.5 million customers. AT&T, the No. 2 cable TV operator, is selling systems to concentrate on major markets and head off regulatory concern that its pending acquisition of MediaOne Group Inc. might make it too big. Cable companies such as Cox are building large regional groupings, or clusters, to market and deliver new services such as digital cable and high-speed Internet access more efficiently.

In the first transaction of its kind, a telephone company has acquired a cable television system, signaling the start of a race between the two industries to dominate the delivery of communication services of all kinds to the home.Both industries want to use their elaborate networks to provide movies on demand, hundreds of channels of television programming and on-line electronic libraries. And advances in technologies, blurring the distinctions between what the two industries can do, have set off a Darwinian contest.

As a result of the $30 billion merger between Bell Atlantic Corp. and Tele-Communications Inc., eight local cable systems currently owned by TCI will be sold off by the end of next year.The sales would eliminate a potential conflict between Bell Atlantic and federal regulators, who might object to Bell Atlantic controlling both the phone and cable service in the same area."We don't want that cloud over the merger," said Bell Atlantic spokesman Dave Pacholczyk.Bell Atlantic currently provides phone service in Maryland through the Chesapeake & Potomac Telephone Co. of Maryland.

Time Warner Cable reported last night that it had reached an agreement with Sinclair Broadcast Group Inc. that allows the cable provider to continue carrying Sinclair-owned local network affiliates on its systems. Details of the agreement were not released. But in a programming notice posted on a Time Warner Web site for its mid-Ohio division, which includes Columbus, the cable company said it reached a three-year agreement with Hunt Valley-based Sinclair "for continued carriage of Sinclair-owned stations in former Adelphia [Communications Corp.

Tele-TV Systems, the video joint venture of Bell Atlantic and two other regional Bell companies, has struck a deal with Thomson Consumer Electronics under which Thomson will provide it with 3 million "set top boxes" for the partners' planned "wireless cable systems" in Baltimore and other cities.Under the contract, valued at more than $1 billion, Indianapolis-based Thomson will supply the digital devices at a cost of less than $400 per unit -- far lower than earlier versions of the technology.

Comcast Corp., the cable TV giant, said yesterday that it completed a multibillion-dollar acquisition of AT&T cable systems that will bring it nearly 600,000 new customers in six states, including Maryland. The acquisition bolsters the cluster of cable systems Comcast holds from Northern Virginia to Delaware, adding customers in Cecil County and Ocean City. "It adds to their critical mass of subscribers," said David Lee Smith, a senior analyst who follows Comcast for Dain Rauscher Wessels.

Millions of cable customers nationwide, including many in the Baltimore region, are waiting to see if popular Fox shows such as American Idol remain on their cable systems as Sinclair Broadcast Group Inc. and Comcast Corp. approach tomorrow's deadline to reach a deal on programming costs. Comcast said yesterday that discussions between the two parties remain "productive" and that they are working to reach a "fair agreement that would avoid any interruption in service for our customers."

Some analysts say any deal between Sinclair Broadcast Group and Comcast Corp. to carry networks such as Fox on Comcast's cable systems would likely include cash payments for the television programming in what would mark a major precedent in this growing industry battle over fees. Comcast, the nation's largest cable operator, and Hunt Valley-based Sinclair, one of the country's largest television station owners, extended yesterday their current contract hours before it was set to expire.

Talks continued last night between Sinclair Broadcast Group Inc. and Comcast Corp. to ensure that popular network programs such as American Idol remain on the air for nearly 4 million cable customers nationwide, including many in the Baltimore region, Comcast executives said. Sinclair threatened to cut off its programming to Comcast systems as early as 2 a.m. today if a deal was not reached over retransmission fees. A contract between both companies was set to expire today. Without an agreement or an extension, the Hunt Valley broadcast company could order Comcast to remove 30 network-affiliated stations - including Baltimore's WBFF-Fox 45 and WNUV-CW 54 - from cable systems that reach 3.8 million customers in 23 markets from Tampa, Fla., to Pittsburgh to Flint, Mich.

To collect cash for its television programming, Sinclair Broadcast Group Inc. played hardball last month by pulling its stations from cable systems in the Midwest and South and sending a strong message to the industry that its payment demands are serious. The stakes are higher for the Hunt Valley broadcaster in a fight to obtain similar fees from Comcast, the nation's largest cable operator and the biggest player in the Baltimore area. A source familiar with the negotiations said yesterday that Sinclair is prepared to cut off its programming to Comcast systems at 2 a.m. tomorrow because talks between the two sides have stalled.

Sinclair Broadcast Group Inc. said yesterday that it expects to almost double to $48 million this year the revenue it receives from cable operators and others who pay to retransmit its local television signals, providing what could become a steady profit stream for a company that has led the industry in fighting for retransmission fees. Those figures emerged as Hunt Valley-based Sinclair announced its fourth-quarter earnings. Sinclair shares reached a 52-week high yesterday, climbing 4.7 percent to close at $14 on Nasdaq.

Sinclair Broadcast Group Inc. and a New York cable operator agreed on a price yesterday to carry Sinclair's local broadcast stations. The agreement ends a nearly four-week stalemate that left 2 million viewers in the Midwest and South without major networks on their cable systems. The deal, reached two days before the Super Bowl, resolved a bitter standoff between Sinclair, of Hunt Valley, and Mediacom Communications Corp. of Middletown, N.Y. The dispute caught the attention of the industry because of its potential effects on similar negotiations and cable rates.

WASHINGTON -- The Federal Communications Commission proposed new rules yesterday that would give some communities more power to limit prices for local cable television service.Under the existing FCC rules, only about 3 percent of the nation's more than 9,500 cable television systems have their rates regulated. The new rules, if enacted by the agency, could give local governments a powerful new weapon to block rate increases.In recent years, cable television rates have doubled and tripled in many cities.

There's about as much ferment in the legal and strategic planning offices of communications companies these days as in their historically productive research labs. As quickly as the engineers come up with technological breakthroughs, the marketers think up ways to convert them into products and the lawyers figure out how to avoid legal obstacles.A federal court in Alexandria, Va., has raised the stakes considerably for regional telephone companies and local cable TV systems. In a case brought by Bell Atlantic, which owns C&P Telephone Co., the court ruled the phone companies had a First Amendment right to sell their own programs over their networks.

Leaders of a Senate committee that oversees the Federal Communications Commission urged the agency to resolve an impasse that has left 2 million cable viewers in the South and Midwest without major networks. The FCC's intercession was sought in a letter from Sen. Daniel K. Inouye, the Hawaii Democrat who chairs the Committee on Commerce, Science and Transportation, and Sen. Ted Stevens, of Alaska, the panel's Republican vice chair- man. The action comes more than three weeks after Sinclair Broadcast Group Inc. of Hunt Valley blocked programming from its 22 TV stations from being aired on cable systems in 13 states.