Cable Operator Pictures Better East Valley Service

The information superhighway may finally arrive in the east San Fernando Valley when a new cable TV operator takes over the 94,400-subscriber franchise now run by Tele-Communications Inc.

Or so says a senior executive of Century Communications Corp., Southern California’s oldest cable operator, which will become majority owner and manager of the East Valley franchise with a territory extending from the San Diego Freeway to San Fernando, Sun Valley, North Hollywood and parts of Universal City. The transfer from TCI to Century will take place within six months, if all goes according to plan and Los Angeles city regulators approve.

The operative word here is “if,” given the ever-changing Southern California cable-television landscape.

While Century and TCI were announcing recently that they had signed a definitive agreement to combine their Southern California operations, there were other deals and potential deals out there with the prospect of stirring things up.

Chief among them: AT&T; has a pending agreement to acquire TCI.

And Century is the subject of persistent rumors that it’s for sale, although Century executives deny it. Century is well established in the San Fernando Valley--serving parts of Encino, Sherman Oaks, Tarzana and Woodland Hills--and also serves much of the Westside, Eagle Rock and operates in many other cities across the country.

The changing of the guard with TCI and Century is a milestone in the Los Angeles cable television marketplace. In contrast to most major metropolitan areas, where there are one or two dominant providers, Los Angeles has long remained fragmented, with more than 30 cable operators throughout the region.

Now that’s changing. Local cable companies are forming clusters, in a consolidation that they maintain is necessary to achieve economies of scale to justify the enormous investments necessary to deliver new high-tech services. Cable companies see high-speed Internet access, digital television and telephone service as vital new revenue sources. It’s particularly important given the competition cable faces in its television business from fast-growing satellite services, such as DirecTV.

“The telecommunications industry is in transition right now, expanding and consolidating at the same time,” said telecommunications industry analyst Jeffrey Kagan. “The future of a one-service stand-alone company is limited. It’s critical for companies large and small to expand beyond their core business.”

Century and TCI originally announced plans to form this partnership nearly a year ago. As part of the deal, TCI is exchanging the east San Fernando Valley cable system for Century’s Northern California cable systems in four San Francisco Bay Area communities.

Bill Rosendahl, Century’s senior vice president of operations, said Century intends to invest heavily in the east San Fernando Valley operation, planning to offer advanced telecommunications services--such as high-speed Internet access and telephone service--in addition to its multichannel TV lineup.

At present, TCI of East San Fernando Valley offers 78 channels for expanded basic service at $27.43 a month. About a year ago, it introduced a new digital tier in which customers can receive 145 channels (including 30 music channels) through a set-top box for an extra $10 a month.

“Once the TCI property becomes part of the Century systems, we will upgrade so the plant will be capable [of handling] both telephone service and [TV] cable,” Rosendahl said. Century has a $100-million Southern California building plan in place for the next three to five years, he said.

TCI will retain a 25% stake in the East Valley operation as part of its partnership with Century.

That appears to mean that AT&T--which; is expected to merge with TCI in about six months--will eventually be a minority partner with Century in the East Valley.

“From our point of view, it’s a very positive development for Century,” Rosendahl said, giving Century “a partner that’s one of the premier phone operators in the world.”

Rosendahl, a producer and host of local public affairs programming for Century for 11 years, said Century will bring Valley subscribers more programming that tackles issues of special local interest.

Some Valley residents want to secede from Los Angeles, in part, “because the local media is deficient and irresponsible in engaging people in a dialogue on the issues of the day,” Rosendahl said. “Without it, people feel isolated and separated.”

Century’s long-range plans include offering additional channels with region-specialized news, weather and sports, he said.

The transfer will have to pass muster with local regulators. Paul Janis, telecommunications regulatory officer of the Information Technology Agency, which oversees cable franchises for the city of Los Angeles, expressed skepticism about Century’s talk of improving service. “In a general way, they have been suggesting this for years,” he said.

In Southern California, Century has been dogged by a reputation for poor customer service and high prices. After years of consumer complaints, Century reached a settlement with the city in April in which it agreed to pay $12.3 million in refunds and reduce rates for 135,000 customers.

Century has been redoubling efforts to improve customer service, but problems linger, according to the city watchdogs. “The complaint statistics still show them to be among the highest among cable operators here,” Janis said.

Janis pointed to continuing speculation that Century, based in New Canaan, Conn., and controlled by aging entrepreneur Leonard Tow, may be for sale.

Tow “had this [franchise] a long time and had little incentive in investing in the system,” Janis said. “It needs to have an owner who’s interested in staying with it long-term.”

Rosendahl denies Century is for sale. “We have no intentions of selling. Our chairman is a young, robust 70-year-old Leonard Tow. He enjoys his entrepreneurial focus. . . . We don’t see any buyer on the horizon.”

A few months ago, rumors were rampant that Century might sell to billionaire investor Paul G. Allen, co-founder of Microsoft Corp., who’s been paying top dollar for cable systems. But those talks apparently ended. Allen had already bought Marcus Cable and Charter Communications, establishing himself as a local cable player with about 300,000 Los Angeles subscribers.

“Paul who?” was Rosendahl’s response when asked about Allen’s interest in its Southern California operations.

“As far as we’re concerned, he’s out there appreciating and envying our incredible pieces of real estate,” Rosendahl said. “He can line up.”

Allen’s representative did not return calls for comment.

At present, it’s impossible to say what effect the changeover will have on TCI’s approximately 200 East Valley employees in Van Nuys. “That hasn’t even been discussed,” said Kurt Taylor, general manager of TCI of East San Fernando Valley.

Rosendahl had hopeful words for the workers, however. Century has “always been lean and mean,” with no surplus of senior managers, and he foresees few changes in the ranks, he said. “Whether the service is branded TCI or Century, those people need to be served,” he said. Rosendahl said Century will probably beef up technical training of maintenance and service personnel.

“We’re not planning any kind of restructuring until we’re all part of the same group,” Rosendahl said.