Organizational Structure and Design Case study Tele Communications Inc: Accelerating Digital Deployment Submitted By: Abhijoy Dasgupta (U109101) Anuj Das (U109107) Dipanwita Mahapatra (U109114) Rakesh Das (U1091 26 ) Sushma M Rao (U1091 45) Zarine Ali (U109151 ) 1 | P a g e Tele Communications Inc: Accelerating Digital Deployment Organizational Structure and Design Case study Tele communications Inc: A Brief Background Principally, TCI is a cable company. More specifically, TCI is a diversified corporation that holds a variety of interests through its subsidiaries, TCI Communications ("TCI-C"), Liberty Media Group("Liberty Media"), and TCI Ventures Group. TCI-C is one of the largest providers of cable television service in the United States. Through its subsidiaries, TCI-C delivers a wide range of video programming, including local broadcast stations; national, regional, and local cable programming services; premium movie and pay-per-view channels; and sports programming services to homes and businesses nationwide. TCI-C controls a number of subsidiaries that together provide cable television service to approximately 12.7 million customers, passing approximately 20.9 million homes. TCI-C also holds minority interests in, or has joint ventures with, other cable television operators. These operators collectively provide cable television service to approximately 7.5 million additional customers, and pass approximately 13.2 million additional homes. In 1997, revenues from TCI-C's cable services operations totaled approximately $5.8 billion, which constituted 76% of TCI's total annual revenue. TCI's Liberty Media Group subsidiary is an investor in, and manager of, entities engaged in the production, acquisition, and distribution of entertainment and informational programming and software, including multimedia products. The various business interests fall into four categories: movie services; general entertainment and information services; electronic retailing (which includes direct marketing, advertising sales relating to programming services, infomercials, and transaction processing); and sports programming services. TCI's third subsidiary is TCI Ventures Group, a wholly owned subsidiary that is composed of an array of telecommunications investments. Through this business unit, TCI holds its non-cable, non-programming and international assets, including, of particular relevance to this proceeding, its investments in @Home and Sprint Corporation ("Sprint"). TCI Ventures Group holds a 39% equity interest and a 71% voting interest in @Home, which provides content-enriched, high-speed Internet services over cable television infrastructure. @Home began its commercial operation in September of 1996. Its primary offering allows residential subscribers to connect their personal computers via cable modems to their cable operator's hybrid fiber-coaxial cable ("HFC") network and receive data at higher speeds than are available with typical dial-up access services offered over standard analog lines of local exchange carriers. @Home transmits data between the cable plant and the public Internet using a proprietary backbone network that enhances the speed of transmission. @Home has reached affiliate agreements with 18 cable companies worldwide to deliver its high-speed Internet services. Considering other current and pending affiliations, @Home has potential access to more than 50 million homes, or approximately 50% of all homes passed by cable television plant in North America. As of December 31, 1998, @Home served more than 330,000 cable modem subscribers across North America. Through TCI Ventures Group, TCI currently holds approximately 23.8% of the equity and approximately 2.38% of the voting interest in a class of Sprint stock that tracks the value of Sprint's personal communications service operating group ("Sprint PCS tracking stock"). On August 31, 1998, after a public notice period, the Commission approved Sprint's unopposed application for re-organization, whereby Sprint issued shares of this newly-created Sprint PCS tracking stock to TCI in exchange for TCI's partnership interest. This re-organization includes an initial public offering of additional shares of the Sprint PCS tracking stock. 2 | P a g e Tele Communications Inc: Accelerating Digital Deployment Organizational Structure and Design Case study Tele Communications Inc: A Chronology 1956 Cattle-rancher Bob Magness builds cable television system in Memphis, Texas 1957 Expands system to Plainview, Texas 1957 AT&T sells Canadian Northern Electric (later Nortel) 1958 Magness sells Texas holdings 1958 Magness, Jack Gallivan, George Hatch and Brian Glasmann establish Western Microwave network in Montana 1962 Magness buys Collier Electric cable group 1968 Western Microwave merges with Community Television cable system and becomes American Tele- Communications, with Western Tele-Communications (WTCI) and Community Tele-Communications (CTCI) subsidiaries 1968 Parent company's name changed to Tele-Communications Inc. (TCI). Headquarters moved to Denver, Colorado 1968 FCC allows non-Bell equipment to be conected to AT&T network 1969 Microwave Communications International (MCI) establishes private long distance network 1970 TCI listed on stock exchange and is 10th largest US cable network operator 1972 John Malone joins TCI from electronics manufacturer General Instrument 1973 TCI buys Foote Cone & Belding cable operations 1974 WTCI becomes second-largest US microwave common carrier 1975 CTCI becomes second-largest US cable operator, with 149 systems 1976 Time lends TCI money for terrestrial stations to receive HBO satellite transmissions 1982 TCI becomes largest US cable operator with 2 million subscribers 1982 AT&T has one million employees 3 | P a g e Tele Communications Inc: Accelerating Digital Deployment Organizational Structure and Design Case study 1983 Bell Canada becomes Bell Canada Enterprises (BCE) 1983 AT&T buys 25% of Olivetti for US$260m 1984 AT&T local operations spun off as seven Regional Bell Operating Companies (RBOCs), aka 'Baby Bells' 1985 Forms Rogers Cantel with Rogers 1987 TCI takes major stake in Turner Broadcasting System 1987 Buys much of Westinghouse's Group W cable operations 1988 Buys part of Storer cable group from KKR 1990 McCaw Cellular Communications acquires 52% interest in LIN Broadcasting 1990 Liberty Media formed as TCI's programming arm 1991 TCI buys Cooke Cablevision 1991 AT&T buys NCR for US$7.4bn 1991 Liberty Media floated, with Malone having 22% of equity (41% of votes) 1991 Liberty becomes partner in SportsChannel Chicago and SportsChannel Pacific 1992 Malone forecasts 500 channel universe in speech as Anaheim 1993 TCI subsidiary QVC makes unsuccessful bid for Paramount, subsequently acquired by Viacom 1993 TCI US$35 billion merger with Bell Atlantic abandoned 1994 TCI and Guinness Peat Group (GPG) pay $117m for Australian satellite tv licence and $216m for microwave tv licences across Australia 1994 McCaw acquired by AT&T for US$11.5bn 1994 LIN broadcasting stations spun off as LIN TV 1995 TCI swaps stake in Turner for 7.5% of Time Warner 4 | P a g e Tele Communications Inc: Accelerating Digital Deployment Organizational Structure and Design Case study 1996 Death of Magness, succeeded by John Malone 1996 Liberty Satellite established to sell satellite dishes 1996 TCI, Packer and Lenfest (later Comcast subsidiary) participate in unsuccessful rescue of Australis pay TV in Australia 1996 AT&T spins off Bell Laboratories as basis of Lucent Technologies 1996 Sells NCR 1996 Sells AT&T Capital Corporation (leasing unit) for US$1.8bn 1997 TCI buys newspaper and cable group Kearns-Tribune (which had 7% stake in TCI) 1997 AT&T sells Submarine Systems unit to Tyco for US$850m 1997 Liberty sells Southern Satellite Systems to Time Warner for US$213m 1999 Buys 31% stake in Astrolink (promoted as the "first global wireless broadband venture") for US$425m 1999 Liberty Media takes stake in News Corporation 1999 AT&T buys cable group MediaOne (which had absorbed the Providence Journal Co's cable operations) for US$62bn 1999 TCI bought by AT&T for US$54 billion, with Liberty Media combined with TCI Ventures Group (technology investment unit) under effective control by Malone 1999 Liberty Media gains control of TCI Music (renamed Liberty Digital) through share swap of minor internet businesses 2000 Liberty takes stake in Cendant 2000 Liberty sells stake in BET to Viacom for US2 billion 2000 Liberty sells 21% stake in Gemstar-TV Guide International to News, increasing News' holding to 43% 2000 Liberty and Paul Allen's Vulcan Ventures take US$190m stake in priceline.com 5 | P a g e Tele Communications Inc: Accelerating Digital Deployment Organizational Structure and Design Case study 2000 Liberty buys Video Services Corporation for US$125m 2000 Buys 9% stake in IDT 2000 Pays US$200m for 5% of Primedia 2000 Buys Ascent Entertainment Group 2000 Sells Ascent's Denver Nuggets NBA team, Colorado Avalanche team and Denver Pepsi Center for US$450m 2000 Liberty takes direct stake in United Pan-Europe Communications NV, subsidiary of Amsterdam- based UnitedGlobalCom 2000 Liberty buys film processor Todd-AO, renamed Liberty Livewire 2001 Liberty Media spun off by AT&T 2001 Liberty takes US$1.4bn stake in UnitedGlobalCom/United Pan-Europe Communications cable group 2001 Liberty buys nine German regional cable networks from Deutsche Telekom for US$5bn 2001 Buys Deutsche Bank's Tele Columbus and SMATcom AG cable subsidiaries for US$1bn 2001 Agrees to sell its 20% of USA