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U S WEST Media Group, Time Warner Cable to Create Nation's Largest
Broadband Online Service Venture
12/10/97
Business Wire
(Copyright (c) 1997, Business Wire)
ANAHEIM, Calif.--(BUSINESS WIRE)--Dec. 10, 1997--Time Warner Cable and U S WEST Media Group (NYSE:UMG) today announced they plan to create the nation's largest broadband online business by merging the MediaOne Express and Road Runner services.
It represents a significant step in the delivery of broadband online services by the two MSOs who are leaders in the deployment of upgraded hybrid fiber-coaxial plant.
The venture will develop and provide sophisticated new online services and a state-of-the-art backbone infrastructure that facilitates high-speed access to the Internet. Together, these elements will bring consumers a powerful new way to experience the Internet, as well as offer cable operators and other broadband and telecommunications companies an alternative to other providers.
The partners' existing online services combined are available to more than 3.6 million households. The joint venture ultimately will be capable of reaching more than 27 million American homes, of which 17 million currently are cable customers. The footprint of the new venture includes households in such major markets as New York City, Los Angeles, Boston, Atlanta, Detroit, Tampa Bay and Orlando - as well as other markets such as Jacksonville, Fla.; Columbus and Akron, Ohio; Rochester, N.Y.; and Austin and El Paso, Texas. The new joint venture will seek affiliates to further expand that reach.
The new online service portion of the venture will provide programming and services to more than 45,000 high-speed data customers that the companies serve today and will aggressively promote this programming package to affiliate broadband network providers both in the United States and internationally.
The IP networking side of the venture will provide aspiring broadband network operators with a turnkey technical infrastructure that enables them to enter the exploding online market and offer their residential and commercial customers online services and Internet access over a highly capable and functional private network. "This venture is anchored in the strengths of two progressive communications companies that share the same vision and speak the same language," said Glenn Britt, president and CEO of Time Warner Cable Ventures. "We believe that the high-speed online business will ultimately be very profitable. By combining our talents and applying our resources to meet the demand that we see building among consumers, we will enhance our existing leadership position in the marketplace."
"Combining our resources will allow us to provide a more robust and powerful offering to our customers," said Doug Holmes, executive vice president for MediaOne(R), the broadband services arm of U S WEST Media Group. "As we rapidly deploy services, we'll grow closer to our goal of taking the broadband experience to the consumer mass market, improving the way our customers live, work and play."
The companies said the new venture will focus on broadband online services delivered through personal computers equipped with cable modems, television sets equipped with advanced set - top boxes or built-in access devices, and other "information" appliances. In addition, the venture is exploring partnerships and alliances with technology companies and other potential strategic partners.
The Venture
One focus of the new business will be on content, applications and services, and on the development and marketing of a branded, high-speed Internet PC and TV service that will be distributed through the networks of the partner companies and affiliates. The basic offering will incorporate the best of the partners' existing online services, including a user-friendly navigation system and a graphically rich interface that includes streaming video and high-quality audio. Interactive programming enhanced for delivery on broadband networks will be integrated with highly desired communications features such as e-mail, message boards, chat and personal home pages. It also will serve as a vehicle for advertisers, marketers and other companies seeking to provide premium content services such as video games and interactive entertainment.
The IP Networking effort will serve as the technical platform for the distribution of the partners' online service. The venture will expand and continually upgrade an existing network infrastructure built from a high-speed national Internet backbone and multi-regional networks of servers and routers - providing all necessary hardware, software, and transmission facilities to enable the delivery of Internet access and content services.
The partners' private Internet backbone network already exchanges traffic with other Internet service providers at major switching points. In addition, the backbone gives the venture the ability to ensure the performance and functionality of applications and content hosted on the network.
Ownership and Structure
U S WEST Media Group and Time Warner Cable are optimistic that, subject to final documentation, approval by their respective boards and appropriate regulatory approvals, the venture will be operational during the first quarter of 1998. During the next few months the management of Road Runner and MediaOne Express will work together to combine their considerable talent and to formalize the management and operating structure.
"This venture is another step in strengthening the partnership between Time Warner and U S WEST Media Group," said Holmes. "We feel that between us we have world class talent and experience in this business, and we're eager to develop a structure under which combined management teams, that complement each other extremely well, can flourish," said Holmes.
"Our aim is to set in place an organization that fully utilizes the creative, intellectual and business skills of our talented personnel," said Britt. "This venture makes us the largest broadband online service in the country and, by working together, our employees will make it the preferred service."
The joint venture brings together broadband systems owned and operated by four different entities in 41 states: Time Warner Entertainment Company, L.P., a partnership jointly owned and operated by Time Warner Inc. and U S WEST Media Group, which will have a 25.75 percent share; Time Warner Entertainment Company-Advance/Newhouse Partnership, which will have a 31.48 percent share; Time Warner Inc., which will have a 12.36 percent share; and U S WEST Media Group's MediaOne, which will have a 30.41 percent share. The ownership percentages reflect the number of homes passed by each entity. U S WEST Media Group and Time Warner Cable will have an equal say in the governance of the venture.
About the Partners
U S WEST Media Group, one of America's largest broadband communications companies, is involved in domestic and international cable and telephony, wireless communications, and directory and information services. For 1996, U S WEST Media Group had proportionate pro forma revenue of $8.1 billion. Media Group is one of two major groups owned by parent company U S WEST, Inc. The other major group is U S WEST Communications, which provides telecommunications services in 14 western and Midwestern states. U S WEST has proposed splitting the two groups into separate public companies by year-end 1998, pending shareowner and other approvals.
Time Warner Cable owns and manages the nation's most advanced, best clustered cable television operations, with 80 percent of its 12.5 million customers in systems serving 100,000 subscribers or more. The company administers cable operations owned by Time Warner Inc., Time Warner Entertainment and Time Warner Entertainment-Advance/Newhouse, among others.The Road Runner character is a trademark and copyright of Warner Bros., a division of Time Warner Entertainment Company, L.P.
CONTACT: MediaOne Rob Stoddard, 303/754-5483 Pager 1-888-220-1144 rstoddard@mediaone.com or Road Runner, Stamford Sandy Colony, 203/351-2024 Pager 1-800-946 4645 #1426963 scolony@ct.rr.com
06:01 EST DECEMBER 10, 1997 |
