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AT&T weighs cable bids
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September 10, 2001: 1:29 p.m. ET
Company expects to evaluate offers at its board meeting next week
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NEW YORK (CNNfn) - More than one suitor has made a proposal to buy the cable assets of AT&T Corp., a source familiar with the situation told CNNfn.com.
The offers being considered do not include the rejected bid made by Comcast Corp., the source said. AT&T will review the proposals at its board meeting late next week but a definitive decision is still months away, the source said.
"Everything is on the table," the person said. "But nothing is imminent."
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VIDEO
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 CNNfn's Deborah Marchini, takes a look at a possible cable deal between AOL and AT&T and what it would mean for consumers, investors and the cable industry. |
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Last week, CNNfn.com reported that AOL Time Warner had made a proposal to buy AT&T Broadband, the nation's largest cable company. Such a merger would combine the No. 1 and No. 2 cable operators in the United States, that will serve about 25 million customers, or about a third of the cable market.
Press reports Monday said that Cox Communications Inc. may also be preparing a bid. But Cox, the No. 5 U.S. cable operator, is seen making a bid with Walt Disney Co.
AT&T Corp. Chairman Mike Armstrong has been in talks with Disney regarding the cable assets. AT&T is also rumored to be in discussions with Microsoft Corp.
New York-based AT&T Corp. (T: down $0.07 to $17.63, Research, Estimates) declined to comment. "We continue to explore strategic and financial alternatives for the broadband business," a spokeswoman said.
AOL and Cox each declined comment. Comcast, which was rejected in its unsolicited $44.5 billion offer for AT&T's cable unit, could not be reached for comment. Microsoft and Disney (DIS: down $0.54 to $23.57, Research, Estimates) also could not be reached for comment.
Shares for AOL (AOL: up $2.17 to $34.45, Research, Estimates), which dropped more than 8 percent Friday, rebounded Monday gaining more than 4 percent in early afternoon trading. AOL Time Warner is the parent company of CNNfn.com.
AT&T and Cox (COX: down $0.34 to $38.76, Research, Estimates) stock remained unaffected.
AOL-AT&T combo to pass?
A merger of AOL and AT&T broadband assets would likely stir regulatory scrutiny. But such a combination may not require AOL to sell any assets, one analyst said.
Last week, a U.S. Court of Appeals indicated that the Federal Communications Commission would have to reconsider its broadcast ownership rules. Currently, the FCC restricts television networks from owning stations that cover more than 35 percent of a national audience.
The new administration will likely take a friendlier stance to such regulations and relax such policy. Now many in the industry consider the de facto market cap to be around 40 percent which would allow AOL to merge its cable assets with AT&T, said analyst Pat Comack of Guzman & Co.
"AOL would do everything in their power to get [the merger] through," Comack said. "It would sell as much as possible. But they might not have to sell anything."
A combination of AOL and AT&T's cable assets would come right up to the 40 percent cut off, Comack said.
However, any prediction of the FCC's future policy is premature, said M&A attorney Ken King of law firm Skadden Arps Slate Meagher & Flom.
The U.S. Court of Appeals did not rule last week when three networks –CBS, Fox and NBC – argued that FCC prohibitions violate freedom of speech under the First Amendment.
"The whole area is quite fluid," King said. "It's always dangerous to decide where court is going."
To further its cause, AOL also would argue that it is competing not only against other cable companies, but satellite companies and in the future telephone companies.
"It's going to be an all-out war," Comack said. "But this deal definitely can be done."
But some think that a relaxation of policy is overdue. Laws governing cross ownership were developed when only three networks existed and are now outdated, an industry watcher said.
"In a world of huge outputs, both through Internet and cable, these limitations that were originally conceived for limited media outlets have gone by the wayside," the source said. 
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