Merger will create new US cable giant: Cox and Times Mirror in dollars 2.3bn deal

Click to follow
TWO big US media companies, Cox Enterprises and Times Mirror, are to announce plans on Monday to merge their cable television operations, creating America's third-largest system with some 3 million subscribers.

The dollars 2.3bn deal, confirmed by both groups yesterday, would breathe new life into the consolidation drive among America's biggest communications companies, which has slowed as a result of new cable TV regulation. A number of big mergers have been called off since the beginning of the year, including a dollars 33bn deal involving Bell Atlantic and Tele-Communications Inc.

Cox, which would manage the new publicly traded joint venture, had itself planned to merge its cable operations with those of Southwestern Bell, which promised to invest an additional dollars 1.6bn in the new firm.

But the Texas-based 'Baby Bell' pulled out of the deal amid falling cable shares in April, delaying the trials of Cox's 'full service network' - a project to offer subscribers services ranging from movies-on-demand to on-screen shopping and an alternative telephone service.

Despite forecasts that telecoms, entertainment and computers would essentially merge into one industry by the end of the decade, only two important multimedia deals have been consummated: US West's dollars 2.5bn investment in Time Warner and Nynex's dollars 1.2bn stake in Viacom's takeover last winter of Paramount Communications.

Cox, which also owns 17 daily newspapers, including the Atlanta Constitution, and seven TV stations, remains among the most aggressive of the US cable operators, and is believed to have been in talks with a number of alternative partners.

Its cable systems currently rank as the sixth-largest in the US.

Times Mirror, publisher of the Los Angeles Times and New York's Newsday, has been badly hurt by declining advertising revenues, particularly in southern California. Last year it sold its four TV stations for dollars 335m.

Analysts welcomed the deal, but expressed some scepticism at to whether it would be completed.