Time Warner, US West Said to Have Reached Cable Deal

The Time Warner media conglomerate and the US West telephone company agreed Sunday to build a sophisticated cable service offering viewers programs on demand.

The boards of both companies met Sunday and a formal announcement of the agreement was expected today, a source familiar with the talks told The Times late Sunday. The source, who asked not to be named, said “there were lots of discussions and lots of ruptures” in the talks.

The new system will deliver entertainment and information into the home upon demand from a central library, the source said.

One executive close to the talks said Denver-based US West Inc. plans to invest “more than $2 billion” for 25% of Time Warner Entertainment, a limited partnership controlled by Time Warner.

Time Warner, the nation’s second-largest cable operator, owns Warner Bros. and the cable TV channel Home Box Office.

The joint venture would be the largest cooperative effort between a phone company and a cable television concern. Time Warner serves 36 states and has 7 million subscribers. US West, which serves 14 states, is one of seven Bell regional companies. Cable companies are not allowed to own more than 5% of a programming company in their home market.

But the New York Times in today’s editions quoted unidentified executives close to the talks as saying there is relatively little overlap between customers of the two companies.