TCI PART OF TELEPHONE-CABLE MERGER

A new communications giant is being formed by the merger of Bell Atlantic Corp., Tele-Communications Inc. -- the nation's largest cable TV systems operator -- and Liberty Media Corp.

The three companies announced Wednesday they have signed a letter of intent to merge. The transaction would be one of the biggest corporate mergers ever.

The companies did not specify the value of the stock-swap deal but published reports today estimated it at up to $33 billion, including assumed debt.

The deal dramatizes the rapidly changing communications landscape which is being reshaped to deliver voice, video and computer data through a single connection into the home.

It could also help QVC Network Inc. succeed in its $9.5 billion battle to acquire Paramount Communications Inc. TCI is backing QVC, which is competing with Viacom Inc. to take over the movie and publishing conglomerate.

"This is the perfect information-age marriage," Raymond W. Smith, chairman and chief executive of Philadelphia-based Bell Atlantic, said in a statement announcing the deal.

Smith will continue as chairman and chief executive of the merged company, while John Malone, the chief executive of TCI and one of the cable industry's most powerful figures, will be vice chairman.

"By combining the skills and resources of these three great teams we will make full-service networks a reality, creating exciting new products and services," Malone said in a prepared statement.

Smith said Bell Atlantic would complete fiber optic video network capabilities in some areas in 1994 and in its top 20 current markets by 1998.

The new company, with combined assets of $60 billion, would be No. 6 on the Fortune 500 list of the biggest American companies, behind General Motors, Exxon, Ford, IBM and General Electric.

The move will have an effect on all of TCI's cable systems, including the one serving Cape Girardeau and Jackson. Locally, TCI Cablevision of Missouri Inc. serves 13,000 subscribers.

"We will be able to use their (Bell Atlantic's) technologies, switching and stuff like that in our systems," said Roger Harms, local cable manager.

"We will be able to offer all the telephone-type services ... but at what date and time I have no idea," he said.

Denver-based TCI serves more than 10 million cable subscribers in 49 states.

TCI's pending acquisition of Liberty Media Corp. would boost its number of cable subscribers to more than 13 million, or 23 percent of the nation's cable TV households. In 1992, TCI reported revenue of $3.5 billion and operating income of $956 million.

Liberty Media has extensive program holdings, including interests in the Black Entertainment Network, Prime Network, Family Channel, QVC, Home Shopping Network and many sports programming ventures. Liberty Media also holds interests in 17 cable companies serving approximately 3 million subscribers.

Philadelphia-based Bell Atlantic, one of the regional phone companies formed out of the 1984 breakup of American Telephone & Telegraph Co., serves six mid-Atlantic states and Washington. It reported 1992 revenue of $12.6 billion and net income of nearly $1.4 billion.

Southwestern Bell, which serves customers in a multi-state region that includes Southeast Missouri, is not involved in the transaction.

But Edward E. Whitacre Jr., chairman and chief executive officer of Southwestern Bell Corp., said Wednesday: "Today's announcement should convince any doubting Thomases that competition in all areas of telecommunications and other multimedia services has arrived and is intensifying."

In the release, the merging companies said Bell Atlantic would issue 220 million new Class B shares for the merger and estimated the stock-for-stock transaction would be worth $11.8 billion. But the New York Times reported Wednesday the stock portion of the deal is valued at more than $23 billion.

Bell would also assume $10 billion in debt, pushing the value of the deal to somewhere between $21.8 billion and $33 billion.

The biggest corporate takeover deal to date was the 1989 leveraged buyout of RJR Nabisco Inc. for nearly $25 billion in cash and about $5 billion in assumed debt.

Until recently, it had been presumed that telephone companies and cable TV system operators would be opponents in the scramble to combine the delivery of TV, telephone and interactive shopping and other services into the home. But regulatory actions have enabled the two sides to become allies.

Current law bars telephone companies from owning cable systems in their own territory. But Bell Atlantic has already won a federal judge's ruling that the law is unconstitutional. That case is on appeal.

And the Clinton administration appears to favor removing such barriers to force competition in the cable industry. Still, the Justice Department and the Federal Communications Commission are certain to study the proposed merger.

(Some information for this story was provided by The Associated Press.)