Bell Atlantic-TCI May Invest in Hollywood Studio : Television: Move would be aimed at ensuring constant supply of cable programming for prospective merger partners.

Bell Atlantic Corp. and cable TV giant Tele-Communications Inc. may invest in a Hollywood studio as a way to help ensure a supply of programming for their developing information superhighway, Bell Atlantic Chief Executive Raymond Smith said Thursday.

But the prospective merger partners are not interested in acquiring outright ownership of a studio, he said.

Smith, who made his remarks while attending a cable industry convention here, said that “owning a studio is not in our business plan and is not appropriate.” As an alternative, he said, Bell Atlantic-TCI may enter into a “relationship” with a studio to gain access to programming for video-on-demand services over its cable systems and phone lines.

Bell Atlantic has agreed to acquire TCI in a deal valued at about $32 billion, making it one of the largest mergers in corporate history. In recent weeks, TCI Chief Executive John C. Malone has met with executives from Matsushita Corp., the parent company of MCA, to discuss the possibility of the cable company making an investment in the Hollywood studio.

TCI and Bell Atlantic are among many telecommunications companies in discussions about forming alliances or making investments in studios. “Everybody is talking to everybody,” he said.

Smith also said that Bell Atlantic was moving forward with its $15-billion, five-year capital expenditure program to build full-service networks capable of carrying voice, data and video over neighborhood phone lines.

In addition, Bell Atlantic is accelerating plans to expand its full-service networks within its mid-Atlantic service area, and will pass 1.25 million homes by the end of 1995, and more than 8 million homes by the turn of the century.

The full-service networks will allow customers to order a wide variety of movies “on demand” and give them access to other interactive services, such as home shopping. Smith said the fiber-optic networks will also soon be able to deliver electronic games and allow users to “point cast” by sending video between homes, just like making a phone call.

Furthermore, Smith predicted that Bell Atlantic-TCI would begin to see a “positive impact on the bottom line” three years after the merger is completed in early 1995. “Beyond the fifth year, we start to see that embarrassing, explosive growth that we are not willing to characterize yet,” he said.

Smith was one of the star attractions at the cable TV convention in Anaheim because of the rapidly converging technology of the cable TV and telephone industries. Once fierce rivals, the telephone and cable companies are now joining forces to help lay the foundation for the 500-channel electronic superhighway that many in the industry predict will be widely available within five years.

But several hurdles still exist, including design and deployment of an economically viable box for TV sets that can process the digitally compressed signals coming over the fiber-optic lines.

The design and deployment of that box, Smith said, “will depend on how fast the applications will grow.”