Southwestern Bell pays dollars 1.6bn for cable television stake

NEW YORK - Southwestern Bell has become the latest US telephone utility to take the leap into interactive media, paying dollars 1.6bn yesterday for a 40 per cent stake in 21 of Cox Enterprises' cable television franchises, writes Larry Black.

The investment will create a joint venture worth some dollars 5bn, and extend Southwestern's reach well beyond its base in Texas and neighbouring states. Southwestern is also in the process of acquiring two cable franchises in the Washington DC area for dollars 650m from Hauser Communications.

It said yesterday that it was prepared to acquire other cable properties and programming sources through the new joint venture.

Southwestern also obtained an option to raise its stake in the Cox joint venture to 50 per cent. Cox, which is privately held, has some 1.8 million subscribers, making it one of the largest independent cable systems in the country, with 1992 revenues of roughly dollars 650m.

The 'Baby Bell' joins four other regional US phone companies that have announced multi-billion-dollar investments in cable television this year.

Bell Atlantic and America's largest cable operator, Tele-Communications Inc, will merge in a dollars 30bn deal, while Bellsouth and Nynex have lined up on opposite sides of the battle between QVC Network and Viacom for Paramount Communications.

And USWest paid dollars 2.5bn for a 25 per cent stake in Time Warner, the big entertainment conglomerate that ranks as the second-largest US cable operator.