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 PHILADELPHIA and DENVER, Oct. 13 /PRNewswire/ -- Bell Atlantic Corporation (NYSE: BEL), Tele-Communications Inc. (NASDAQ: TCOMA) and Liberty Media Corporation (NASDAQ: LBTYA) today announced that they have signed a letter of intent to merge, creating the world's premier communications, information and entertainment company.
 "Bell Atlantic, TCI and Liberty Media combine leading telephone, wireless and cable networks in the U.S. and overseas with cutting edge video programming and new interactive, multimedia technologies," said Raymond W. Smith, chairman and CEO of Bell Atlantic. "Together, we will help make the information superhighway a reality.
 "This is the perfect information age marriage. We have an opportunity to create exceptional long-term shareholder value by offering customers convenience and value and a wealth of new services -- when they want them, where they want them and how they want them."
 TCI President and CEO/Liberty Media Chairman John C. Malone said, "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. The growth potential of this combination is truly unlimited for all stakeholders -- customers, employees and shareholders."
 Smith said, "Bell Atlantic is committed to expanding its full service network capabilities quickly within its region. We will complete fiber optic video network capabilities in some areas in 1994 and in our top 20 current markets by 1998. And we will take advantage of the skills and commitment of TCI employees to accelerate construction in major TCI markets, beginning soon after we close this deal."
 "After the merger closes, our new company will blend complementary skills to explore ways to establish mutually beneficial relationships with cable operators that will both conserve capital and promote competition within the industry. We will continue to pursue joint facilities agreements with all cable operators, including the in-region systems of TCI and Liberty."
 Smith will continue as chairman and chief executive officer of the merged Bell Atlantic. Malone will become vice chairman and a director of the corporation, and will play a key role in the new Bell Atlantic.
 The companies expect to close the transaction in the latter part of 1994.
 (Editors: See Sidebar.)
 The new Bell Atlantic will be one of the largest information distribution and multimedia companies in the world, defining a new industry with its considerable programming and delivery resources. It will have a presence in 59 of the top 100 U.S. markets, with more than 22 million current telephone and cable customers. It will have substantial growth opportunities in its existing businesses, as well as in the new multibillion-dollar PCS and interactive, multimedia television markets. It will solidify America's information age leadership, generating jobs and exports well into the 21st century.
 "By combining the strengths of Bell Atlantic, TCI and Liberty Media, we will create a company that provides customers with choice, control and convenience, and shareowners with a growth vehicle now and into the next century," Malone said.
 "Ray Smith and I share a vision that will create a great new company. We are tremendously excited about this combination.
 "One of the reasons this deal makes sense is that Bell Atlantic clearly has evolved into a smart, aggressive competitor that knows how to take care of customers and take advantage of growth opportunities. The real opportunity is that the combination of these companies will ultimately be valued on the kind of growth multiples they deserve. The market may not yet have fully realized this."
 Addressing opportunities to create shareowner value, Smith cited:
 Accelerated revenue growth: "With the growth we will generate from new product development, wireless, international and cable operations -- plus the revenue that will be generated by new full service network platforms, interactive multimedia and telephony -- we believe the new company will produce strong revenue growth building to the 10 percent range."
 Market-focused capital deployment: "Our capital investment strategy will be consistent with that of other growth companies, investing primarily in new market opportunities and revenue-generating technologies."
 Economies of scale: "TCI and Bell Atlantic already are the most efficient operators in their respective markets. The merger should result in continued margin enhancements as we share development, marketing and technology costs."
 Global marketing opportunities: "With the creation of a single identity and a national, even global, customer base, we will make our branded services the industry standard and our video and multimedia products the preferred choice of customers."
 Increasing values for content: "The growing customer demand for content that has fueled rising values for programming will only increase as we build the broadband highway. This transaction will boost those values further, as we marry content with enhanced platforms to create a national network of distribution systems."
 Quality and customer service: "We will enhance the value of both our telephone and cable systems through the widespread deployment of state-of-the-art operational support systems. Delivering the best package of services over the best network in the world is simply a powerful combination."
 In the merger, Bell Atlantic would issue a new Class B Bell Atlantic common stock which is not expected to pay dividends for five years, allowing internally generated funds to be used for additional growth investments.
 Bell Atlantic brings to this merger expertise in switching, landline and wireless network design and deployment, enabling the company to provide advanced intelligent network services to its 13 million cellular, consumer, business and government customers. Bell Atlantic is regarded as the most forward-looking U.S. telecommunications company in the development of interactive multimedia services. It also has extensive international interests, including a significant ownership stake in Telecom Corporation of New Zealand, and it offers network services and consulting to telephone authorities throughout the world.
 TCI is the largest cable television provider in the world, serving more than 20 percent of the U.S. cable customer base. Its 1,200 cable systems serve over 10 million subscribers in 49 states, Puerto Rico and
Washington, D.C. The company also holds interests in cable operations in the United Kingdom, Norway, Sweden, New Zealand, Israel and Ireland. In addition, it owns substantial interests in such programming ventures as Turner Broadcasting and the Discovery Channel.
 Liberty Media has extensive programming 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 three million subscribers.
 (Editors' Note: There will be a press conference today (Wednesday, October 13, 1993) at 10 a.m. at the Hudson Theatre at the Macklowe Hotel, 145 West 44th Street, New York, New York. The press conference will be broadcast to the Hyatt Regency Hotel, Regency "A" Suite, 400 New Jersey Avenue, N.W., Washington, D.C. and also will be available via teleconference at: 1-800-424-9750. The teleconference will be rebroadcast at noon and at 3 p.m. over the same number.)
 Last week, TCI and Liberty Media announced their intent to combine the two companies. Today's announcement does not affect that transaction or its terms.
 Under the Bell Atlantic letter of intent, the goal of this transaction is to merge substantially all of the combined TCI-Liberty Media assets -- except for cable properties in Bell Atlantic's telephone service area and certain other assets -- with Bell Atlantic.
 The parties have agreed that the cable properties to be merged into Bell Atlantic would be valued at 11.75 times annualized cash flow for the three months prior to the closing. The merger would also include programming and other assets at public market value at closing, with no additional premium.
 However, because of the consent decree that broke up the Bell System, Bell Atlantic cannot provide interLATA long distance service. Since TCI's and Liberty Media's programming interests involve some incidental long distance service, Bell Atlantic must obtain a waiver from the decree court before acquiring these assets; the company will move quickly to seek the waiver.
 If the waiver and other appropriate regulatory approvals are obtained before closing, Bell Atlantic would acquire all TCI and Liberty Media assets except the in-region cable operations and other prohibited assets, which would be distributed to Bell Atlantic's shareowners or sold.
 However, if there are delays in the transfer of the programming and certain other assets, then programming properties and in-region cable would be distributed to TCI-Liberty's shareowners, creating a new publicly traded company. Bell Atlantic would provide $1 billion to this new company and receive a 5 percent, five-year note, and warrants to acquire 19.9 percent of the stock of the new company, exercisable at a price fixed at the time of the initial closing. Bell Atlantic and this new company would also enter into an arrangement which would result in Bell Atlantic acquiring the new company on a deferred basis, when applicable constraints are eliminated, at a price calculated to reflect the then current market value.
 In addition, Bell Atlantic and this new company would form a joint venture, owned equally by each partner, which would: create and acquire programming and interactive multimedia services; operate a national video-on-demand server network; and provide digital video server- based networks to video system operators and information providers.
 The parties would continue to work to resolve any remaining issues to complete the merger as originally intended.
 Bell Atlantic would accomplish the merger by issuing a new Class B Bell Atlantic common stock, which is not expected to pay dividends for five years. After that period, the Class B stock would carry the same dividend as Bell Atlantic's present class of common stock, which will be redesignated as Class A. The Class B stock would be convertible into Class A shares after the end of five years. For the purpose of this transaction, the Class B shares would be valued at $54 each. The deferred purchase referred to above is also expected to be paid in the form of Class B stock, at the then market value. Both transactions would provide a premium of 10 percent for the Class B shareowners of TCI and Liberty over their Class A shareowners.
 The parties estimate that if the merger of the cable properties -- other than those in the Bell Atlantic telephone service area -- were done today with current cash flows, Bell Atlantic would issue approximately 220 million Class B shares. This stock-for-stock transaction would be worth $11.8 billion, and Bell Atlantic would assume approximately $9.6 billion of TCI and Liberty Media
debt. Based on this number of Bell Atlantic B shares and approximately 620 million outstanding A and B shares of TCI and Liberty Media after their announced merger is consummated, each A share would receive approximately 0.35 of a Bell Atlantic B share. If historic trends continue relative to subscriber and cash flow growth, this conversion rate could increase to approximately 0.40 Bell Atlantic B shares by the end of 1994.
 At this time, Bell Atlantic believes that the initial cable property acquisition would result in earnings per share dilution in the first year after closing in the 30-35 percent range, with goodwill amortization accounting for approximately one-third of that amount. Operating cash flow dilution for the first year would be approximately 15 percent. The impact on free cash flow after capital expenditures would be positive. Growth in earnings per share is expected to be well in excess of 10 percent per year for the five-year period after the close, while operating cash flow growth should approach 10 percent per year.
 If the transaction is accomplished in two stages, TCI shareholders will receive, in addition to Bell Atlantic B shares, shares in the new public company, which will have a value reflecting the underlying assets comprised of in-region cable operations (which serve approximately 1.6 million subscribers today), programming and other assets of TCI and Liberty.
 If Bell Atlantic is permitted to acquire all of the TCI-Liberty assets at the closing, the total value to TCI shareholders will be provided by the issuance of Bell Atlantic Class B shares. TCI-Liberty estimates that, based on its current estimate of cable cash flows and the value of the other assets at the closing, each TCI-Liberty Class A share would receive approximately 0.65 of a Class B Bell Atlantic share.
 Upon completion of the transaction, Bell Atlantic would focus on new growth opportunities, using its internally generated funds for business investment and development. Accordingly, Bell Atlantic intends to maintain its dividend at the current $2.68 per share annual level.
 The terms of the transaction are subject to the negotiation and execution of a definitive agreement. In addition, the transaction will require the approval of the boards of directors and shareholders of Bell Atlantic, TCI and Liberty Media, as well as certain regulatory and other approvals, and other customary conditions.
 PHILADELPHIA, Oct. 13 /PRNewswire/ -- Bell Atlantic Corporation (NYSE: BEL) said today it has hired an investment banker to evaluate strategies for exiting its financial services business. This is in line with the company's previously stated intention to de-emphasize non- strategic holdings.
 "As we focus more intensely than ever on our core strategic businesses, we need to focus our financial resources, as well, on core businesses," said William O. Albertini, Bell Atlantic vice president and chief financial officer.

"Current public and private market conditions are favorable for such a transaction."
 Bell Atlantic's financial services businesses include diversified leasing, computer leasing and real estate companies.
 Bell Atlantic Corporation, based in Philadelphia, is the parent company of New Jersey Bell, Bell of Pennsylvania, Diamond State Telephone (Delaware) and the Chesapeake and Potomac Telephone Companies of Maryland, Virginia, West Virginia and Washington, D.C., companie ?which provide a full array of local exchange telecommunications services in the mid-Atlantic region.
 Bell Atlantic also is the parent of one of the nation's largest cellular carriers and of companies that provide software, systems integration, hardware and software service and support throughout the U.S. and internationally. In addition, Bell Atlantic International offers network services and consulting to telephone authorities throughout the world and owns an interest in Telecom Corporation of New Zealand.
 -0- 10/13/93
 /CONTACT: Bell Atlantic, 215-963-6363 or 703-974-1720/

CO: Bell Atlantic Corporation; Tele-Communications Inc.;
 Liberty Media Corporation ST: Pennsylvania, Colorado IN: TLS SU: TNM

LJ -- PH002 -- 1469 10/13/93 07:59 EDT
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Publication:PR Newswire
Date:Oct 13, 1993

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