Interactive Network Accuses TCI of Plot to Take Over Company

Interactive Network, a Sunnyvale, Calif., company that has been struggling for years to promote an interactive television system, has filed a lawsuit against its leading investor, cable giant Tele-Communications Inc., accusing it of carrying out a secret plot to take control of the beleaguered company.

The complaint, filed in Alameda County Superior Court, charges TCI with breach of fiduciary duty, abuse of control and fraud.

TCI had invested $30 million, giving it 37% ownership of Interactive Network.

Interactive Network Chairman and Chief Executive David Lockton said TCI broke a promise it made last year to provide the company with $95 million in financing for expansion.

Interactive Network, which enables subscribers to play along with games via a special hand-held console, has 5,000 subscribers in San Francisco, Sacramento, Chicago and Indianapolis, Lockton said.

According to Lockton, TCI said it would loan Interactive Network $50 million, a deal Lockton agreed to last September. “We’re in default of the loan and they’re going to foreclose,” Lockton said.

Foreclosing would give TCI control of Interactive Network’s patents, Lockton said. “They’re going to take these assets and make a fortune out of them.” he said. TCI could not be reached for comment.

Since it started in 1988, Interactive Network has raised $130 million, including $70 million for three public offerings.