LOS ANGELES, Calif. -- GTE Corporation has signed a definitive agreement to join The Walt Disney Company, Ameritech Corporation, BellSouth Corporation and SBC Communications Inc. as an equal partner in a venture designed to provide video programming and interactive services for millions of American households, officials of the venture announced today. Disney and the three Bell companies originally announced the creation of the home entertainment venture in April 1995.
GTE's involvement strengthens the venture by greatly increasing its combined reach from 50 million to 68 million access lines in 32 states, adding lucrative markets such as Los Angeles, Tampa/St. Petersburg, Dallas and other Sunbelt cities, and giving the venture a presence in the Northwest, Southwest and Southeast. The Los Angeles-based venture, funded collectively by the partners with $500 million over a five-year period, will initially provide entertainment and interactive programming for distribution by the communication partners.
"With Disney's unique creative prowess and the communications partners' collective technological leadership, this venture meets GTE's programming needs precisely," said Charles R. Lee, chairman and chief executive officer of GTE. "GTE is now positioned to deliver world-class interactive services and video programming to our customers."
"This is an important step forward for the venture," said Michael D. Eisner, Disney chairman and chief executive officer. "GTE will help introduce the venture's programming into new growth areas of the country. This means more people in more places will be entertained and informed by the venture programming."
According to officials of the venture, the inclusion of GTE, the largest U.S.-based local telephone service provider, will be helpful in the acquisition, purchase and delivery of programming; assist with creation of a national brand name; and help increase the reach of the venture's operations to a national audience by adding such key markets as Los Angeles, Honolulu, Portland, Seattle and Tampa/St. Petersburg. Ameritech, BellSouth, GTE and SBC now provide communications services to some of the fastest growing regions of the nation. These include major markets such as Atlanta, Chicago, Cleveland, Dallas, Houston, Miami, Raleigh/Durham, St. Louis and a large portion of Southern California.
The venture will develop, acquire, package and market entertainment, educational and interactive programming of a nationwide basis. The venture also will develop services such as video-on-demand, home shopping and networked video games. In addition, the venture will develop and support a navigator -- software that creates an on-screen viewing environment to help guide consumers to programming and services among a broad menu of offerings.
GTE, as the three other communications partners, will distribute video programming through its local broadband networks. GTE will handle regional marketing, production and acquisition of local programming, local advertising sales, billing and customer service throughout its operating area. In addition, GTE will invest in the necessary equipment--local servers and set top units--to deliver programming to its customers.
What follows is a description of each communications partner's plans for broadband network creation and programming distribution.
Ameritech is building a two-way video communications network to bring a new generation of interactive television services to consumers across the Midwest. The company has franchise agreements to provide cable TV services in three Detroit suburbs. Ameritech is in discussion with many Midwestern communities and plans to reach about 1 million customers by the end of 1996 and 6 million by the year 2001.
Specific program offerings will be announced in early 1996 in selected communities. Ameritech has 13 million access lines in five states.
BellSouth Corporation was recently awarded its first cable franchise, allowing it to provide cable television programming to 7,000 homes on Daniel Island, in Charleston, S.C. The company also won court approval last year to provide video programming in the nine Southeastern states where it provides local telephone service and is in the process of finalizing plans to build interactive networks in selected major markets in those states. BellSouth will launch an interactive TV trial early next year in Chamblee, Ga., an Atlanta suburb. The trial network will reach 12,000 homes and will give customers a choice of cable TV and new interactive services, including movies on demand, interactive games, home shopping and access to on-line computer services. BellSouth has 20.5 million access lines in nine states.
In 1994, the company announced plans to build video networks in 66 key markets over the next 10 years. When completed, the new network will pass 7 million homes and provide cable and interactive television programming. In a January 13, 1995 ruling, the United States District Court for the Eastern District of Virginia declared that GTE Telephone Operations has the right to provide video programming to the company's in-franchise customers. GTE has more than 17 million access lines in 28 states.
SBC Communications Inc.
SBC is building a traditional cable network in Richardson, Texas that will be in service in the fourth quarter of this year. It also is constructing a broadband network that will allow the company to offer cable and interactive services to up to 47,000 Dallas area households in 1996. SBC may provide video-on-demand -- as well as a host of other interactive services such as home shopping, education programs, and interactive games -- to those 47,000 households. SBC, which recently won court approval to provide video programming in its telephone subsidiary's five-state territory, is working with Microsoft, Lockheed and others to develop the delivery system. Through its subsidiary, SBC Media Ventures, SBC offers cable television to more than 400,000 households in Maryland and Virginia. Internationally, it participates in cable properties in Israel, United Kingdom, France and Chile. SBC's Southwestern Bell Telephone subsidiary has 13.6 million access lines in five states.