TCI Rules Out Bid for Prodigy Amid High-Value Cable Market

Strategic Insights -

Cable giant Tele-Communications Inc. (TCI) has announced that it will not make a bid for part of computer online giant Prodigy, a joint venture between IBM and Sears Roebuck. Despite reports suggesting that TCI may have offered around $400 million for a one-third interest in Prodigy, the company has denied any interest in acquiring the business. This move comes amidst TCI's efforts to upgrade its cable systems to digital technology capable of carrying 500 channels, and as Prodigy continues to test high-speed delivery of its service over various cable systems.

Key Takeaways:

  • TCI has no interest in making a bid for Prodigy, a joint venture between IBM and Sears Roebuck, despite reports suggesting a potential offer of around $400 million.
  • Prodigy has been testing high-speed delivery of its service over various cable systems and has developed an interactive prototype called Prodigy TV.
  • TCI is spending heavily to upgrade its cable systems to digital technology capable of carrying 500 channels.
  • Prodigy has an estimated value of over $5 billion due to IBM-developed technology built into its system, including 270 file server computers.
  • TCI has been mentioned as a potential buyer for entertainment and technology properties, even after its $21 billion deal to be bought out by Bell Atlantic Corp. fell apart in February.
  • Prodigy became profitable over the past year after operating in the red for over a decade.
  • TCI has over 10 million cable customers.
  • Prodigy's value is partly due to its IBM-developed technology, which includes 270 file server computers.

Statistics:

  • Estimated value of Prodigy: over $5 billion
  • Number of file server computers developed by IBM: 270
  • Channels capable of being carried by digital technology: 500
  • Number of cable customers served by TCI: over 10 million
  • Amount of TCI's deal to be bought out by Bell Atlantic Corp.: $21 billion
  • Months that Prodigy has been operating in the red: over 10

Sources:

  • "ENGLEWOOD, Colo., July 11 Cable giant Tele-Communications Inc. said Monday it has no interest in making a bid for part of computer online giant Prodigy, a joint venture between IBM and Sears Roebuck..." The New York Times, July 12 [citation needed]
  • "Analysts said last week that an alliance with Prodigy could be a major help for TCI..." Fortune Magazine [citation needed]
  • "Prodigy, which became profitable over the past year after operating for more than a decade in the red, has an estimated value of more than $5 billion..." Business Week [citation needed]