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AOL eyes AT&T cable deal
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September 7, 2001: 6:05 p.m. ET
AOL has made proposal for AT&T's cable business, Liberty's Malone says
By Staff Writer Luisa Beltran
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NEW YORK (CNNfn) - AOL Time Warner has made a proposal to buy AT&T Corp.'s cable business, John Malone, Liberty Media chairman and former AT&T board member, told CNNfn.com Friday.
Speaking on the sidelines of a Liberty investor conference, Malone said that "bid" was too strong a word to describe AOL's proposal at this stage. With a four percent stake, Liberty Media is that largest single shareholder in AOL Time Warner (AOL: down $2.81 to $32.28, Research, Estimates), parent of CNN and CNNfn. Janus Capital Corp. is the largest overall shareholder in AOL, according to filings with the Securities and Exchange Commission.
Malone would also be open to having Liberty join an investor bid for AT&T Broadband, the cable operations that are the biggest in the country and that AT&T, the nation's No.1 long-distance telephone company, is looking to sell.
"We know never to say no to an opportunity," he said.
If a suitable opportunity does present itself, Liberty would join other investors to buy AT&T Broadband, Malone said. However, he is not weighing in on AOL's negotiations with AT&T. "I'm just a friend of the family," he said.
Shares for AOL dropped more than 8 percent Friday, while AT&T shed 3 percent, Liberty Media declined nearly 5 percent, and Comcast fell about 2 percent.
Whoever wins the cable assets of AT&T – either Comcast or AOL Time Warner – it will be good for Malone. Even if AT&T opted to keep the cable assets independent, Malone would be pleased.
"However this thing plays out, I don't think we'd be adversely affected," he said.
Englewood, Colo.-based Liberty Media declined to comment. AT&T Corp., AOL and Comcast also declined comment.
AT&T (T: down $0.66 to $17.70, Research, Estimates) has been entertaining offers for its cable business since rejecting a bid from cable operator Comcast Corp. (CMCSA: down $0.65 to $35.25, Research, Estimates).
Liberty (LMC.A: down $0.55 to $13.80, Research, Estimates), a media conglomerate that holds cable assets around the world, has stakes in more than 100 cable channels such as Discovery Channel, E!, and USA Networks.
Malone, the former chairman of Tele-Communications Inc., sold TCI in March 1999 to AT&T. Up until August, Liberty had been trading as a tracking stock but received its freedom from the nation's No.1 long-distance telephone company.
In April, New York-based AT&T won a favorable tax ruling allowing it to spin off Liberty into a separate company. The split allows Liberty to raise capital on its own, using its stock to buy, merge or partner with other companies.
In July, Malone resigned from AT&T board, one month before he was slated to leave. Malone reportedly decided to leave the AT&T board since he would not be involved in evaluating Comcast Corp.'s $44.5 billion unsolicited stock offer for the broadband assets of AT&T.
A European hunt
Liberty's investor conference comes as the media behemoth closed a deal earlier this week to buy six regional cable television companies from Deutsche Telekom for  5.5 billion ($4.98 billion).
Liberty will now continue scouring Europe for further acquisitions with specific focus on German, Japan, and the United Kingdom.
The current broad market downturn could also work to Liberty's benefit. "If this is the bottom, we are coming out of this period quite liquid. We are in a strong position to be a consolidator," Malone said.
Instead of going head-to-head with rivals such as AOL and Microsoft, Liberty may look to align itself with deep-pocketed partners to consolidate its presence in Europe.
"They would rather play through us than against us," Malone said in reference to AOL and Microsoft.
Liberty, once a tracker of AT&T, is now considering launching its own private tracking stock as well as one of its international units, executives at the conference said.
Malone also has high hopes for News Corp.'s bid for Hughes, which operates DirecTV , the No. 1 satellite television provider. Hughes is battling it out with EchoStar Communications, which has made a uninvited $29 billion offer.
General Motors (GM: down $1.87 to $51.40, Research, Estimates), parent of Hughes, is in talks with both News Corp. and EchoStar.
Liberty holds an 18 percent stake in Rupert Murdoch's News Corp. Malone and Murdoch are also longtime friends and business associates.
If News Corp. is successful in its bid for Hughes, Liberty will have access to the biggest satellite television system in the United States, Malone said. 
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