Cox Cable Buys Its Way To No. 3

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The latest consolidation in the cable TV industry estab- lishes one company as a major hardware force and sets the other firmly down a software path.

Cox Enterprises last week announced plans to acquire Times Mirror Co.'s cable properties in a complicated $2.3 billion deal that will group both companies' systems under the Cox Cable Communications banner.

Cox's subscriber base will jump to 3.1 million households with the addition of Times Mirror's 1.2 million, instantly vaulting the Atlanta-based company from sixth to third place among multiple-system operators.

The pact provides cash to Times Mirror, which says it wants to focus on software, not the system that will deliver it to households. Times Mirror, whose media holdings include Newsday and the Los Angeles Times, recently invested in software developer Digital Pictures and expects to make similar deals for content providers.

As part of the Cox accord, Times Mirror also will own two-thirds of a new programming venture that includes fare such as the previously announced Outdoor Life Channel, named for a Times Mirror magazine.

The deal puts Cox in line behind cable giants Tele-Communications Inc. and Time Warner, which still dominate the industry with 10 million and 7 million subscribers, respec- tively.

With nearly twice the subscriber base, Cox can now accelerate its new-media activity. Cox's interactive TV plans include a fall test in Omaha with ICTV.

On a more low-tech front, Cox is expected to step up its local cable ad sales effort, since Times Mirror's systems represent a strong geographic fit with Cox's existing subscriber base. Times Mirror systems in Orange County, Calif., for example, complement Cox's strong San Diego base, and the southern California combination may help fuel local ad sales.

But advertisers say size isn't all that matters in the fragmented cable market.

"There's keen interest by our advertisers to do the type of precise, geographically targeted buys that local cable promises," said Erica Gruen, senior VP-associate director of TV information and new media at Saatchi & Saatchi Advertising, New York.

"But we're still faced with problems, like verifying that any spots have run when they're supposed to. That isn't going to be solved by adding subscribers."

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