Pepco Holdings Inc., the parent company of the Washington region's electric utility, said yesterday that it had found a buyer for its 50 percent stake in Starpower Communications LLC, the local cable television, telephone and high-speed Internet service provider.
Pepco announced the sale in its regulatory filings, but declined to identify the buyer until the deal is final. This year, the company said it planned sell its stake in ailing Starpower, a joint venture formed with RCN Inc., a New Jersey telecommunications company.
RCN filed for bankruptcy protection in May although it continues to provide cable, phone and Internet service to about 40,000 subscribers in the Washington area.
Starpower was launched as a competitor to Verizon Communications Inc. and local cable television companies. But it never lived up to its early promise and had to roll back plans to expand in Washington, Virginia and Maryland. Last year, Pepco took a $67 million after-tax charge related to its Starpower investment. Yesterday, Pepco said it took an additional $11.2 million charge related to Starpower.
Neither Pepco nor RCN would comment on the pending sale. A Starpower spokesman said he was not aware that Pepco had even found a buyer until yesterday's announcement, which was included in the company's second-quarter earnings release.
The company reported a profit of $90.4 million (53 cents per share) for the second quarter, more than doubling its earnings of $43 million (25 cents) in the second quarter of 2003. Revenue was essentially flat at $1.69 billion.
Pepco also reported that it benefited from increased power usage in May when temperatures were higher than usual.
Profit was boosted by earnings at its unregulated divisions Conectiv Energy and Pepco Energy Services, Pepco chief executive Dennis R. Wrasse said in a written statement released yesterday.
Pepco Energy Services specializes in providing energy consulting service to large government and commercial customers. Conectiv provides electricity and natural gas service in Maryland, Virginia, Delaware and New Jersey.