US West makes new inroads into cable television market

THE regional telephone operator US West is to acquire two cable television systems in the Atlanta area for dollars 1.2bn ( pounds 785m) cash and stock.

The move accelerates the advance of the 'Baby Bells' into the cable business and challenges the BellSouth telephone company on its home turf.

The two - Wometco and Georgia Cable Television - belonged to the Texas investor Robert Bass and his family. Together they serve around 466,000 households.

US West has been the most aggressive of all the Baby Bells in moving into the entertainment and cable businesses. Last year it paid dollars 2.5bn for a 25.5 per cent stake in Time Warner Entertainment with the aim of developing full service networks.

Its chairman, Richard McCormick, said that although Time Warner was not involved in the acquisition of the two cable companies it would be a strategic partner offering programming and other expertise in developing them. Time Warner is the second-largest cable operator in the US.

The model for US West's push into cable is its British operation, where it has the TeleWest joint venture with Tele-Communications, the biggest US cable systems operator. TeleWest now has 252,000 cable customers and 182,000 phone lines in Britain.

Atlanta is the ninth-largest metropolitan area in the US and one of the fastest-growing cities in the country. The systems being bought are also attractive because they are highly clustered.

Bell Cablemedia, one of the largest British cable television operations, is raising dollars 479m through a public offering in the US and UK and the issue of senior debt notes. The shares will be traded on Nasdaq but the company hopes to seek a full listing in London.

After completion Bell Cablemedia, valued at around dollars 1bn, will be owned 42.2 per cent by Bell Canada, with Cable and Wireless owning 12.5 per cent.

Jones, a US cable group, will have 14.1 per cent of the new company after reversing its cable interests into the group. Part of the proceeds will be used to fund Bell Cablemedia's cable telephone and television franchises in Britain.