TCI Bumps Channels, Cuts Rates

Reflecting the growing competition for channel space, Tele-Communications Inc. said Thursday that it will reduce coverage on its systems of several channels--including E! Entertainment Television, Comedy Channel, VH1 and two superstations--to make room for growing networks such as the Cartoon Network, Home and Garden and Discovery’s Animal Planet and Learning channels.

The nation’s largest cable operator also outlined plans to allow customers to lower their monthly bills by paying only for the services they want--moving to a more a la carte pricing system from a packaged approach.

“The assumptions that a channel has guaranteed shelf space on the system forever is no longer correct,” said Robert Thompson, senior vice president of communications and policy planning at TCI.

Cable operators this year for the first time have been knocking off channels to make room for new ones because of a shortage of space on their systems. The trend is expected to continue as digital satellite services offer higher quality pictures and more channels, and telephone companies enter the business.

For TCI, the moves are also part of an initiative to prop up its sagging stock price. Chief Executive John Malone told analysts last week that he intended to lower programming costs, raise subscription rates and cut capital expenditures to improve cash flow and pay down TCI’s huge debt.

But cable programmers who heard the press briefing Thursday accused the company of making room for channels in which it holds interests or that it’s being paid to carry. This fall, TCI bounced several channels to fit News Corp.’s news channel, in which it has an option to purchase equity.

Thompson insisted that TCI is in compliance with federal rules that require at least 60% of its programming to be supplied by independent parties in which it holds no economic interest.