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Bell Atlantic keeps its options open


Like a jilted bridegroom who is secretly relieved, Bell Atlantic Corp. expressed deep regret yesterday at the failure of its

merger talks with the nation's largest cable television operator, all the while looking to a bright future.

Bell Atlantic, whose territory includes Maryland, made it clear that the termination of the $30 billion deal with Tele-Communications Inc. would not stand in the way of its plans to become a national player in advanced communications services, including long distance. Nor would it slow the company's plans to upgrade its regional network and offer video-on-demand services, Bell Atlantic executives said.

"Bell Atlantic strategy does not change," said Stu Johnson, president of the company's business information service group.

In separate telephone news conferences from Washington and Denver, executives of Bell Atlantic and TCI both pointed to the Federal Communications Commission's vote Tuesday to roll back cable rates an average of 7 percent as the proximate cause of the merger's collapse Wednesday night.

But in the end, what scuttled the deal was the companies' differences over money. TCI President John Malone and Bell Atlantic Chairman Raymond Smith met Tuesday in New York, and they did not see eye to eye.

"They were unwilling to go forward at the price that was on the table three days ago, and we were unwilling to do any reduction in the price," said Mr. Malone.

Bell Atlantic President James G. Cullen and Mr. Malone both professed mutual admiration and denied there was any clash of personalities or cultures.

But signs of strain could be seen on both sides.

Where Mr. Malone denounced the FCC's action Tuesday in ringing terms, Bell Atlantic began backing away from the finger-pointing tone of Wednesday night's announcement.

Where Mr. Cullen diplomatically suggested that TCI's valuation of itself wasn't realistic in light of changing circumstances, Mr. Malone boasted: "We don't scare easily."

And there was this bit of bravado from Mr. Malone: "I will bet you anything that TCI will outperform Bell Atlantic stock for many years to come."

Despite Mr. Malone's confidence, analysts said there were more concerns about the debt-laden TCI than the cash-rich Bell Atlantic.

"Bell Atlantic's fine. The question is how is TCI going to survive," said Mark Roberts, a telecommunications analyst at Alex. Brown & Sons. "TCI needs a partner more than Bell Atlantic does."

The stock market seemed to agree. Bell Atlantic stock yesterday rose $1.75, to close at $54.50. TCI shares fell $1.875, to close at $22.375.

Bell Atlantic said it wouldn't let heartbreak over TCI keep it from dating.

"We still feel alliances are necessary," Mr. Cullen said. "We're going to have to look for opportunities for smaller-scale alliances to do the same thing."

Analysts who follow Bell Atlantic weren't exactly torn up about the failed merger either.

"I think this is a real boost for Bell Atlantic," said Liam Burke, telecommunications analyst at Ferris Baker Watts in Baltimore.

Michael Balhoff, an analyst at Legg Mason, said Bell Atlantic probably had developed some misgivings about the deal since it was announced last October.

Indeed, Mr. Cullen indicated that Bell Atlantic had been unpleasantly surprised by the impact of an earlier rate cut imposed by the FCC in September.

Mr. Balhoff said that Bell Atlantic had probably learned a lot about the cable television business by studying TCI over the last five months.

Now he expects Bell Atlantic to build networks where it cannot buy them.

"My best guess is that Bell Atlantic will be able to have this same end at lesser cost," Mr. Balhoff said.

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