Tele-Communications Inc., the nation's largest owner and operator of cable television systems, is prepared to invest at least $30 million to bail the District's cable firm out of its financial problems, according to a top TCI official.
TCI Vice President John Sie said yesterday that banks are not willing to help finance the system until District Cablevision establishes a track record. Until that time, Sie said, TCI is willing to "take on the whole thing and take the front risks" necessary to help District Cablevision secure a bank loan.
TCI, a Denver-based company, currently has a 20 percent share of District Cablevision, which was awarded a 15-year cable franchise here. TCI has signed an agreement to manage the proposed system.
In return for providing the equity necessary to finance the system, TCI would become District Cablevision's chief limited partner, entitling TCI to substantial tax benefits and giving it a greater role in overseeing the system.
"We think D.C. is a good city for cable and we think cable will work if it is done right," said Sie. "We should be thought of as a friendly but very highly powered consultant."
Progress on the District system has been stalled because District Cablevision has been unable to raise enough money to begin construction. The firm has asked the City Council to adopt emergency legislation allowing modifications in its agreement with the city that would scale back the planned system and save the company at least $32 million.
Even with the proposed changes, District Cablevision officials say that some homes in the District would be wired for cable by next summer. District Cablevision officials said they cannot yet determine which neighborhoods first would receive cable service, but promised to provide the city with a map before starting construction.
While TCI officials stress that the giant company's new role would in no way alter the control that District Cablevision has over the system, some city officials have maintained that TCI is calling the shots. TCI currently owns, manages or invests in about 700 cable systems.
Sie said that he and TCI President John Malone met with Mayor Marion Barry recently to discuss the modifications. District Cablevision President Robert L. Johnson acknowledged at a press conference yesterday that TCI's willingness to help finance the system depends on whether the City Council agrees to the proposed modifications and whether District Cablevision can negotiate an acceptable agreement with the Chesapeake & Potomac Telephone Co.
C&P has a contract with District Cablevision under which the telephone company would build, own and maintain the cable transport lines for the system. C&P's experience and a promise that its involvement would save District Cablevision $20 million in construction costs were major factors in the company's successful campaign to win the franchise.
But Delano Lewis, a vice president for C&P, said modifications to the franchise agreement could void the telephone company's agreement with District Cablevision.
"The phone company may or may not be involved," said Lewis. "We would like to be involved, but we would have to see what the modifications are."
Yesterday, Johnson said the modifications are "absolutely essential" to making the District's cable system economically viable.
The proposed modifications include providing alternative service to homes where installing cable would raise the company's construction costs above an average of $500 per home, reducing the number of residential network channels from 78 to 60, and delaying activating an institutional network.
Johnson said yesterday that when the original promises were made, "I looked at it with a bit of emotionalism" and tried to provide some special services, such as channels for community and government programming and grants, but this weakened the system financially.