“Onward and upward” is Century Communications Corp.’s new battle cry.
Despite negative publicity about its multimillion-dollar settlement for overcharging customers, the cable company is moving forward with business development plans. Next on its agenda: completing an acquisition, upgrading its cable systems and creating a news channel for Los Angeles.
Cited for overcharging its customers for “basic cable services” since 1995, the Connecticut-based company agreed to a settlement that the Los Angeles City Council approved unanimously last week. The terms of the agreement stipulate that Century will pay $7.5 million in refunds through a 12-month rate-reduction program beginning May 1, as well as $800,000 to the city.
Century executives admitted no wrongdoing in their pricing policy.
“The bottom line is that we are real pleased we worked out our differences and put it behind us,” said Bill Rosendahl, chief operating officer for Century Communications of California, the company’s local operating unit. “We wanted to resolve a legal dispute between us and the city, and to give clarity to our rate schedules.”
There has been some speculation that the settlement was prompted by Century’s pending acquisition of the Southern California operations of Englewood, Colo.-based Tele-Communications Inc. Rosendahl, however, said such an interpretation has no foundation.
“I have heard the rumors that we settled to clean up our books (for the acquisition), but that was not the case from our end,” he said. “We just wanted to resolve the dispute with the city.”
Ben Bender, an analyst and managing director of TD Securities Inc., said Century’s explanation seemed plausible.
“The feeling all around from both TCI and Century is to get this issue past them,” Bender said. “No telecommunication company wants to get on the wrong side of a local or the federal government these days.”
The pending TCI acquisition, announced last December, is expected to close in six to nine months. Under the deal, Century would take over TCI’s Southern Californian cable system and customers. TCI, in turn, would become a 25 percent equity partner in Century’s Southern California operations. The cable companies’ merged customer base in Southern California would total more than 800,000 households, a number that’s expected to climb to more than 1 million by the year 2000.
“With the clustering of customers, economies of scale will kick in that will benefit both us and our customers,” Rosendahl said. “It will allow us to introduce new services at reasonable prices.”
To keep pace with a rapidly evolving industry and competitors, Century plans to expand beyond traditional cable television and offer such high-tech services as cable modems and set-top boxes, and even telephone services. Such services would require Century’s cable system to be upgraded.
“We are currently conducting a massive audit to determine how we will rebuild the cable system or build (a new) system if necessary,” Rosendahl said. “It is too soon to give dates, but we will be upgrading our cable systems in order to support new uses as soon as possible.”
Analyst Bender warned, however, that he does not expect these new services to be available any time soon.
“I think that Century will be among those cable companies that hang back to see how the new technologies play out,” he said.
Century also is developing what it envisions will be a 24-hour channel dedicated to local news, weather and sports. The company has owned and operated such a channel in Orange County, called Orange County News, for more than a year, and describes it as a success.
“(OCN) has given us the experience and confidence to go forward with the channel here, and to offer the types of in-depth news L.A. isn’t getting,” Rosendahl said. “We’re currently in confidential conversations with strategic partners regarding the channel.”
The cable company expects to launch its L.A. news channel after completing the TCI acquisition. Rosendahl added that the company hopes to ultimately lease the channel to other cable systems.
