A Richmond-based communications company has guaranteed the construction of an $85 million cable television system in Fairfax County if its subsidiary is awarded a franchise, giving the firm a potential edge in the heated competition for the award.
Media General, Inc., which owns Richmond's daily newspapers, this week signed a guarantee of performance on behalf of its local subsidiary after county board Chairman John F. Herrity said he feared the subsidiary--Media General Cable of Fairfax County Inc. might not have enough money on its own.
The parent company of the competing firm, Tele-Communications, Inc. of Denver, so far has declined to sign a similar guarantee, although its president told the board at a public hearing that he would back the local venture.
"This is certainly going to have a major impact," Herrity said. "You can have all the great plans of mice and men to build it, and if you don't have the financial wherewithall the whole thing could fall apart."
Media General and Tele-Communi- cations, which own 49 percent of a local partnership called Fairfax Telecommunications Co., are waging a fierce battle for the 15-year cable monopoly the Fairfax board is set to award on July 26. A county consultant estimated last year that the franchise could be worth as much as $260 million in 15 years.
Herrity and other board members have said they fear, despite letters and verbal assurances from top company officials, that the parent companies will not stand behind their affiliates if the operations encounter unexpected difficulties. Herrity had county officials send what he said is a "legally binding" contract form to both firms last week.
A spokesman for Tele-Communications, Inc. said yesterday in Denver that his company cannot sign the guarantee, as requested by Herrity, because the 215 shareholders who are the firm's local partners legally control 51 percent of the operation.
"I don't understand how someone could expect TCI to guarantee something that we don't control," said David R. Schulz, assistant to TCI president John C. Malone. "It's unreasonable."
At the same time, Schulz pointed to Malone's letters and statements as evidence that TCI, which claims to serve more households than any other cable company in the country, will ensure that Fairfax gets a viable cable system. "We don't understand why there is any question regarding TCI's commitment," he said.
At a public hearing before the county board June 16, TCI president Malone said: "Tele-Communications, Inc., the parent company, is prepared to make whatever financial commitment is necessary to have its subsidiary, which is the partner in this deal, capable of fulfilling its obligations."
Herrity has said that such blanket pledges may not be legally binding. He said that in Alexandria and Arlington locally controlled firms found themselves without enough capital to keep their promises, leading to delays in service in Arlington and to the sale of Alexandria's system to a major communications company that owns The Chicago Tribune.
John N. Papajohn, an attorney and one of the original local investors in Fairfax Telecommunications, said yesterday that Herrity's latest demand represents an illegal change of rules in the middle of the game.
"Media General filed whatever it filed and apparently that was not enough," Papajohn said. "So what is Jack Herrity doing going around asking for additional information from everybody? . . . It gives whoever is applying the right to sue."
Calling Papajohn "a good friend," Herrity said, "I would suggest that they sue then." Mason District Supervisor Thomas M. Davis III called TCI's decision so far not to sign the contract "obviously significant."
"You don't want your company to abandon you or sell halfway through," he said.