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HIGHLY LEVERAGED COMPANIES MOST AFFECTED BY CABLE REREGULATION FITCH SAYS -- FITCH FINANCIAL WIRE --

 NEW YORK, April 2 /PRNewswire/ -- Yesterday's decision by the Federal Communications Commission (FCC) to roll back cable service rates will result in slower near-term cash flow growth for companies whose past rate increases are deemed excessive, Fitch says. The rate rollback resulted from cable reregulation passed by Congress last fall.
 Smaller, non-investment grade cable companies with limited free cash flow generating ability and limited access to the capital markets will be the most affected by the rollback. Less affected will be investment grade cable operators such as Tele-Communications, Inc. ('BBB-' senior debt) and Time Warner, Inc. ('BBB-' senior debt), which have substantial free cash flow and a strong ability to obtain investment capital from diversified sources. These factors will assist them in making required capital expenditures and maintaining their strong competitive position versus the regional Bell operating companies (RBOCs).
 This regulator-induced slowdown in cash flow growth comes at a time when cash flows of highly leveraged companies are already being absorbed by substantial interest expense and capital spending. Although a number of cable companies have taken steps to reduce leverage, many still have significant amounts of debt on their balance sheet, and as a result, continue to carry a significant interest burden.
 In addition, the remainder of the decade will witness stepped-up capital expenditures of both cable television companies and the RBOCs. Neither industry believes it can afford to be second in the race to reach the residential market with a switched broadband transmission system relying on fiber optic cable to provide video, data, and voice service.
 For most cable operators, the deployment of broadband technology will require external financing. Access to capital markets will play an even more important role with respect to a cable company's ability to compete with the RBOCs and capture the cash flow growth associated with new technologies and service offerings. To the extent capital markets are unwilling to finance the cable industry in this contest, some cable operators' long-term ability to compete with the RBOCs may be compromised.
 -0- 4/2/93
 /CONTACT: Keith B. Foley, 212-908-0572, or Stuart M. Rossmiller, 212-908-0639, both of Fitch/


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Date:Apr 2, 1993
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