Comcast Corp.'s freshly minted deal to take over AT&T Broadband is
prompting a shift in the company's hesitance toward the cable-telephony
business, with Comcast saying it will step up its commitment to the product.
'They have a focus on telephony that we don't have,' Comcast president Brian
Roberts said Thursday at a press conference in New York. 'We're almost like an
incremental customer because they've already done the work.'
Comcast had balked on launching telephone service on its cable systems partly
because its systems needed rebuilding and partly because newer technology --
Internet-protocol telephony -- promised a much better return on investment than
the more traditional circuit-switched technology pursued by AT&T Broadband
and Cox Communications Inc. AT&T Broadband currently counts about 1 million
Comcast intends to continue its current strategy of rolling out a new
broadband product every 12 to 18 months, Comcast Cable Communications Inc.
president Steven Burke said.
The company is rolling out video-on-demand services in 2002, and it then
plans to move toward telephony. 'It's serendipity that when we need a new
product, the merger will be going through,' Burke said.
AT&T Corp.'s board voted unanimously Wednesday night to sell its cable
assets to Comcast.
The $72 billion merger will create AT&T Comcast Corp., the country's
largest MSO, with 22 million subscribers in 41 states. AT&T will
simultaneously spin off its cable division and merge it with Comcast.
AT&T chairman C. Michael Armstrong will stay on as chairman of the new
AT&T Comcast Corp., and Comcast president Brian Roberts will be CEO.
The merger is expected to take nine to 12 months to complete, and it is
subject to regulatory approval.
Four key AT&T and Comcast executives -- Burke, Comcast executive vice
president Lawrence Smith, AT&T Broadband president and CEO Bill Schleyer and
AT&T chief financial officer Charles Noski -- will comprise a transitional
team. Their duties and titles have not been specified.
Comcast triumphed over other suitors AOL Time Warner Inc. and Cox.
Comcast's play for AT&T Broadband started this past summer, after the
company made an unsolicited $54 billion bid. AT&T balked, opening the door
for AOL Time Warner and Cox to enter the bidding. AT&T also considered
holding onto its cable assets.
Philadelphia-based Comcast did not significantly increase its valuation of
AT&T's cable systems. Comcast sweetened its offer by raising its bid several
billion dollars and taking on more debt.
It also agreed to reduce the voting stake of Comcast's controlling Roberts
family. The family, which controls 86 percent of Comcast, will have 33 percent
voting interest in the new venture.
Comcast will assume $20 billion in debt. Microsoft Corp., which infused $5
billion into AT&T Broadband, will receive a $5 billion equity stake in the
AT&T Broadband is holding onto a $10 billion piece of Time Warner
Entertainment, and Armstrong said Thursday that the asset will be put back up
for sale. Plans to sell it were tabled after AOL Time Warner joined the bidding