TCI again.....
TCI Is Close to Announcing Pact
With NextLevel for Set-Top Boxes
By LESLIE CAULEY
Staff Reporter of THE WALL STREET JOURNAL
Tele-Communications Inc. and other big cable operators are close to
announcing an agreement for NextLevel Systems Inc. to build as many as 25
million advanced digital-television set-top devices for the cable industry during
the next three to five years, according to people close to the matter.
The selection of the Chicago company to assemble the devices is the first
step in the cable industry's campaign to equip the nation's TV sets with
gizmos smaller than VCRs that improve on today's set-top boxes by adding
such fare as high-resolution movies, e-mail and easy Internet access. Still to
be decided is which companies will get which slice of the various
technologies, notably in the operating-system and chip realm, where Microsoft
Corp. and Intel Corp. are fighting with various rivals for business.
NextLevel, one of three public companies to emerge from General Instrument
Co.'s restructuring last summer, has been vying with Scientific-Atlanta Inc.
and Sony Corp., among others, for the systems-manufacturing work. It is
already a big supplier of today's familiar set-top boxes to TCI, whose
chairman, John Malone, once was General Instrument's chief.
Under the expected pact, individual cable companies would be responsible for
selecting the various "layers" of technology, such as microprocessors and
operating systems, that reside in the devices they purchase. The overall outlay
could be as much as $7.5 billion for the cable industry as a whole, based on
rough estimates of $300 a device, assuming big set-top orders materialize. But
the per-device price could go up or down, depending on which components
cable operators select -- a decision driven by how fancy they want to get in
the digital fare they offer customers.
NextLevel's deal will be a welcome boost for the company, whose stock
plunged in October when it replaced its chief executive and projected
weaker-than-expected earnings.
To help win the business, NextLevel spoke with cable operators about their
taking a stake in the company in exchange for large set-top orders. The
outcome of those talks isn't clear, but the deal clearly will help the concern
benefit from the cable industry's efforts to leverage its miles of wires with
software. Tuesday, NextLevel rose 56.25 cents, to $15 a share, in New York
Stock Exchange composite trading, compared with a yearly low of $12.625
and the past year's peak of $21.50.
The devices NextLevel would build would incorporate the "open" cable
architecture so fiercely endorsed by the cable industry. The agreement to
purchase assembled, advanced digital set-top devices could be announced as
early as Wednesday.
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