TCI deal. A yet to be named consumer electronics company and amazing equity deals.......................................
zdnet.com
Inter@ctive Week<Picture>December 18, 1997
TCI To Buy Interactive Cable Boxes With Creative Financing
By Peter Lambert
2:30 PM EST
Tele-Communications Inc. will share creative financing with as-yet unnamed strategic partners to pull together the purchase order of 6.5 million to 11.9 million interactive digital set-top boxes from NextLevel Systems Inc.
TCI and eight other cable operators have agreed to buy at least 15 million of the boxes from NextLevel, which is changing its name back to General Instrument Corp. (GI).
Time Warner Cable will purchase 500,000 units. The remainder of the 15 million will be split among smaller operators that are affiliates of TCI's existing Headend in the Sky (HITS) one-way digital TV broadcast service.
To be delivered between 1999 and 2002 at an estimated $300 each, the Internet- and digital video-capable boxes could reap $4.5 billion for NextLevel and a soon-to-be-named consumer electronics manufacturer partner.
NextLevel's stock, which surged 17.5 percent yesterday, was down almost 2 percent, to 17-3/8, in midday trading.
TCI Chairman John Malone said in a press conference today TCI expects to be "probably half owner" of a separate "financing vehicle" shared with "strategic partners" to bankroll the boxes off TCI's balance sheets. "We have broad support of the Silicon Valley industry to make this happen," financially and technologically, Malone said.
The creative financing also will extend to GI. As part of the box deal, the operator-buyers will gain $15-per-share warrants to purchase an aggregate 16 percent interest in GI. On news of the deal Dec. 17, NextLevel stock closed at 17-7/8, up 2-7/8 on 4.9 million shares traded.
Added to another 10 percent equity trade, through which GI will take over management of TCI's HITS digital TV distribution service, TCI now has warrants for about $400 million in GI stock.
TCI retains the right to approve GI's choice of a consumer electronics partner, which Malone said will gain for TCI not only a second box supplier, but a second provider of innovation as well as an entree into retail distribution. Through silicon chip integration, he said, the set-top box eventually "could find its way into a DVD [digital video disc] player or the TV set itself."
NextLevel can be reached at www.nlvl.com
Time Warner Cable can be reached at www.pathfinder.com |
