Verizon seeks bidder for cable unit

The company says the GTE americast subsidiary, with about 59,000 customers in Pinellas County, no longer fits in its strategic plan.

By MICHAEL BRAGA

© St. Petersburg Times, published July 4, 2000

Verizon Communications, the new company formed by the merger of Bell Atlantic and GTE Corp., is looking to sell its cable television subsidiary.

The GTE americast subsidiary, which serves about 59,000 customers in Pinellas County, is no longer considered a strategic asset by the parent company. So Verizon has hired the New York investment banking firm Goldman Sachs & Co. to help it find a buyer for its cable assets.

GTE americast, which is based in Irving, Texas, is estimated to be worth around $615-million. That's based on the fact that other cable companies have been sold for about $5,000 per customer, and GTE americast has about 123,000 customers in three states -- Florida, California and Hawaii.

GTE americast entered the bay area in 1996 with a plan to eventually offer telephone and Internet services over the same fiber-optic, coaxial cables that carry video images to cable television customers. It promised to expand service into Hillsborough County but never did.

Now the company believes it can eventually offer the same package of services over copper telephone lines using Digital Subscriber Line (DSL) technology.

"We're banking on twisted copper to bring video images to our customers," says Verizon spokesman Bob Elek.

Because DSL allows data and video images to be transmitted across traditional telephone wires at high speed, Verizon sees no need to hang on to its cable subsidiary, Elek says.

Elek says GTE americast is a profitable business and that he does not expect Verizon will have a problem selling it. But Elek says Verizon will try not to sell the subsidiary to americast's principal competitor in the region, cable provider Time Warner Inc.

If Verizon is unable to sell the subsidiary, Elek says he did not know what will happen. "We would have to evaluate other options," he says. But Elek says he did not think Verizon would shut down the cable operations.

If that were to happen, cable rates would doubtless rise in the neighborhoods where there is now competition because Time Warner would be free to charge monopoly rates. Time Warner, which is by far the bay area's leading cable provider, has repeatedly raised rates in those areas where it does not go head-to-head with GTE americast.

Says Elek: "We want to keep competition alive."

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