Go back to Front pageSAN FRANCISCO -- Viacom Inc. is expected to announce the sale of its cable television system to a group led by InterMedia Partners of San Francisco for $2.4 billion, the Free Press has learned.
The pending sale -- which would be one of the biggest buyouts in industry history -- will affect hundreds of thousands of cable television customers in the Bay Area., Seattle, Nashville, Dayton, Ohio; and Salem, Ore. In the Bay Area alone, Viacom has 476,000 customers.
Executives at InterMedia and New York-based Viacom declined comment on a possible sale, which has been rumored for months. However, according to informed sources the two parties are finalizing details of an agreement and were planning to announce the sale next week.
The sources added that the sale is expected to clear regulatory hurdles, in Washington and the cities that are involved, by April.
When InterMedia completes the Viacom system buyout, it is expected to upgrade Viacom's existing cable-TV network within several years. In Marin County, for example, where Viacom customers receive only about 35 channels (65 is typical), the network will be rebuilt to provide a few hundred channels. The sale will not necessarily lead to rate increases, because prices are regulated by the Federal Communications Commission.
InterMedia is teaming up with Frank Washington, a Sacramento communications investor, to buy Viacom's cable-TV system. The Bank of New York will be the lead bank in financing the buyout.
Privately held InterMedia is a 6-year-old cable venture founded by some former executives of the San Francisco Chronicle, including Leo Hindrey, who served as chief financial officer, and Alan Mutter, who was assistant managing editor at the newspaper. Tele-Communications Inc., the industry's biggest cable-TV operator, is a major investor.
InterMedia, with estimated annual revenues of more than $200 million, has more than 750,000 customers, largely in Santa Clara County and Nashville. It is the nation's 18th largest cable-TV operator, but will leap to the seventh largest with the buyout.
With Viacom's operations under its wing, InterMedia will have about 1.8 million customers. That makes it one of the industry's fastest-growing companies.
Viacom is expected to use the proceeds to pay down debt from its recent purchase of Blockbuster Entertainment and Paramount Communications. Viacom's annual sales will top $9 billion with the two acquisitions.
The Bay Area cable TV landscape may experience even more change. The sale of San Francisco-based Western Communications, owned by Chronicle Publishing, also is pending. Possible buyers include Century Cable of Stamford, Conn., Continental Cablevision of Boston and TCI.
Denver-based TCI has teamed up with Rupert Murdoch's Fox Broadcasting to bid for all of Chronicle Publishing's electronic media properties. TCI wants to buy the cable-TV business, and Fox wants to buy KRON television, sources said.
But family members who own privately held Chronicle Publishing disagree on whether to sell the TV station because it is a cash cow. A decision on any sale is expected this month. Executives at Chronicle Publishing could not be reached for comment.
Chronicle Publishing also owns the San Francisco Chronicle, which has been struck by its unionzed workforce in a labor dispute that began last Tuesday when employees walked of their job.
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