Company Town : Pacific Telesis to Acquire Wireless Cable Company : Telecom: Firm says the $175-million deal with Cross Country of Riverside will bring 100 channels to Southland homes.
Aiming to speed its entry into the television business, Pacific Telesis Group said Monday that it will acquire Cross Country Wireless Inc., a Riverside-based wireless cable company, in a deal valued at $175 million.
Pacific Telesis said the acquisition, which requires Federal Communications Commission approval, would enable it to offer more than 100 channels of television service to 5 million Southern California households by the end of 1996. Cross Country Wireless currently serves about 42,000 customers in Riverside County.
Wireless cable, a relatively new digital technology, delivers video over the air via a series of transmitter towers, each of which serves homes within a 40-mile radius. Though it eliminates the need to lay cables, it requires investment in transmitters, antennas and digital receivers--and many consider wireless cable an interim technology because it cannot provide fully interactive services and other features of advanced cable networks.
Michael J. Fitzpatrick, general manager of Pacific Telesis, said the move into wireless cable does not represent a lessened commitment to building an advanced fiber-optic cable network. Pacific Telesis still aims to connect 5 million California homes to its new fiber network by 2000, with another 5 million to be added by 2010, he said.
But wireless would enable the phone giant to begin offering TV service much sooner. Like all local phone companies, Pacific Telesis is eager to compete with cable companies in delivering both traditional TV programming and new interactive services. Fitzpatrick said the wireless services would be offered to households in Los Angeles and Orange counties, Riverside and San Diego at prices equal to or slightly less than those for existing cable service.
Pacific Telesis, based in San Francisco, would acquire 4-year-old Cross Country Wireless for $120 million in stock and would assume another $55 million in debt. It hopes to generate $100 million a year in revenue by the end of the decade.
Currently, Time Warner Inc., Cox Enterprises Inc. and a number of small cable operators serve the homes to be targeted by Pacific Telesis, as does Hughes Electronics Corp. with its DirecTv satellite service. Pacific Telesis intends to offer more than 100 channels and “near video on demand,” in which a particular movie is transmitted every five to 15 minutes on separate channels, giving consumers a better choice of viewing times than a standard movie channel such as HBO.
“We’ll have a cable-plus offering at a very competitive price,” Fitzpatrick said.
He said the company does not expect any problems with regulatory approval.
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