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Excite-UPC deal folds
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December 5, 2000: 10:02 a.m. ET
Excite@Home and Dutch IPC call off high-speed Internet access joint venture
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LONDON (CNNfn) - High-speed Internet operator Excite@Home and United Pan-Europe Communications NV of the Netherlands have called off a joint-venture plan to form the largest cable-based Web access provider outside the United States.
Excite@Home (ATHM: Research, Estimates) announced late Monday that the Dutch cable operator had told it that due to changes in market conditions, it was unable to continue under the original proposal to form Excite Chello, as the joint venture would have been called.
UPC had asked Excite@Home to consider alternative proposals, but the Redwood City, Calif.-based company said this could make the deal too complex and hindered the company's international growth plans.
"We do not feel any pressure to run out and do another deal," said Mark McEachen, Excite@Home chief financial officer.
UPC, Europe's second-largest cable operator, said it would increase cooperation with its media business and might eventually combine it with chello broadband, the high-speed Internet access arm that had been slated to merge with Excite@Home.
John Malone, chairman of U.S. long-distance phone company AT&T Corp.'s television programming arm Liberty Media Group, said in a statement the company remained supportive of chello and related media opportunities in Europe. Liberty Media (LMG.A: Research, Estimates) had been committed to a  200 million ($177 million) investment for the Excite Chello joint venture.
"We expect a similar level of commitment from Liberty in the new situation," UPC spokesman Bert Holtkamp told CNNfn.com.
Excite@Home and UnitedGlobalCom, which owns 52.6 percent of UPC, were each to have contributed 100 million ($89 million) to the joint venture.
Shares in UPC fell 13.7 percent to 11.00 on the Euronext Amsterdam exchange, after earlier falling to as low as 10.82.
"UPC is much more risky long term," said asset manager Krijn Moens of Eureffect, a Dutch-based investment company. "When people start buying (technology stocks) again, they will look for market leaders...this news puts into question chello's ability to lead in the European market."
Excite@Home shares rose 3.7 percent early Tuesday to $6.09 on Nasdaq. AT&T Corp. (T: Research, Estimates) has a 25 percent stake in Excite and 74 percent of the voting rights.
Amsterdam-based UPC had 6.4 million subscribers as of Sept. 30 and its chello unit provides Internet services in Europe, New Zealand and Chile. Microsoft Corp. (MSFT: Research, Estimates) owns about 8 percent.
AT&T said last month it would spin off Liberty media.
--from staff and wire reports 
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