Telephone Companies Forge TV Alliances
DOES television belong on your telephone?
Telephone companies certainly hope so. They have been forging alliances with media companies for the past year, hoping to deliver everything from digitized magazines to TV shows over their telephone lines.
Last week, MCI Communications Corporation announced it would join the party. It plans to invest up to $2 billion for a share of Rupert Murdoch's News Corporation, even though it is paying a premium for the shares and will have no effective voting power in the company.
In a separate move, US West Inc., with its partner Philips Electronics NV, won control Friday of a Dutch cable-TV firm. US West already has stakes in local cable firms in France, Sweden, Norway, Hungary, Belgium, as well as the United States.
Such moves please some analysts.
''The convergence of entertainment and communication is technologically possible and dictated by the market,'' says Alan Pearce, president of Information Age Economics Inc., a Washington, D.C., research and consulting company. ''I feel very positive about that.''
Other analysts support the general strategy but see only a small gain in the MCI-News Corporation linkup. ''I question what exactly they're getting,'' says Richard Klugman, telecommunications analyst with PaineWebber Inc. in New York. ''What does owning a portion of a studio mean to a telephone company?''
MCI's strategy derives from the fact that its long-distance telephone business is a slow-growing industry. To boost traffic more quickly, it wants to offer consumers a slew of new services over its network. In March, for example, it began offering access to the global network of computers, known as the Internet, and an on-line mall where consumers can shop using their computers.
Now, with a planned 13.5 percent stake in News Corporation, MCI suddenly has access to worldwide newspapers, several magazines, HarperCollins books, and television programming such as Fox TV in the US, Sky Television in Britain, and Star TV in Asia.
How all this fits together is still something of a mystery. MCI officials did hint that their own Internet service would somehow be joined with News Corporation's Internet provider, Delphi Internet Services. But they gave no details. Beyond that, MCI's Executive Vice President Timothy Price said the company might offer an on-line fan club for popular Fox TV shows.
MCI is certainly in good company in pushing beyond the telephone business. All the regional Bell telephone companies are doing the same. Three of them -- Ameritech, BellSouth, and SBC -- have joined forces with Walt Disney Company. Another three -- Bell Atlantic, NYNEX, and Pacific Telesis -- have formed Tele-TV Venture, which will create some TV shows and acquire others. Besides its budding interest in European cable TV, US West owns 25 percent of Time Warner's entertainment unit.
The one standout from this crowd is AT&T. Instead of providing content, or programming, the long-distance company is quickly becoming the powerhouse of global corporate communications. It has linked up with powerful telephone partners in Europe and Asia, and hopes to sign on global corporations as customers. AT&T's pitch: It can offer companies one-stop shopping, setting up telecommunications service almost anywhere.
''It really doesn't need to be in the content business,'' says Mr. Pearce. ''What it is doing is putting together a masterful global strategy that I think is miles ahead of any other telecommunications company, bar none.''
MCI and its part-owner, British Telecommunications PLC, are trying to create a similar international presence, at least in Europe. But it is signing up nontraditional telephone carriers, such as a Munich-based utility and banks in Spain and Italy.
''The risks are higher but if there are profits, they will be greater,'' Pearce says.