|
Microsoft backs AT&T bids
|
 |
December 4, 2001: 4:20 p.m. ET
Hoping to block AOL, software maker backs Cox, Comcast broadband unit bids.
|
NEW YORK (CNN/Money) - Microsoft Corp. is providing financial backing to two rival bidders for AT&T Corp.'s cable television business, sources familiar with the situation told CNN/Money.
The No. 1 software maker is providing a financial support for Cox Communications Inc. (COX: up $0.66 to $39.40, Research, Estimates) and Comcast Corp., (CMCSK: up $0.81 to $39.17, Research, Estimates). Each company is submitting competing offers for AT&T Broadband, the nation's largest cable TV business, the sources said.
Microsoft's investments are an attempt to block its fiercest rival AOL Time Warner, from acquiring the AT&T cable business, said analyst Drake Johnstone, of Davenport & Co.
If AOL bought AT&T Broadband, the nation's largest cable TV business, then AOL would have more than 25 million cable subscribers, including the 13.7 million from AT&T.
"Microsoft would do whatever they can to keep AT&T from going to AOL," Johnstone said.
This past summer, AT&T rejected Comcast's $44.5 billion unsolicited bid for the broadband business. Comcast has since change its original bid, and is cutting its voting stake to 35 percent from the original range of 45 to 49 percent, a source said.
Cox is seen giving AT&T's current CEO and Chairman Michael Armstrong a role in the combined companies. Cox's stock offer also gives AT&T a premium, a source said.
AT&T's (T: up $0.15 to $17.59, Research, Estimates) board is expected to review the bids Saturday, and could decide on a winner as early as next week, the Wall Street Journal said.
"AT&T hopes to have a decision by the end of year," a company spokeswoman said, who declined further comment.
Microsoft (MSFT: up $1.23 to $66.00, Research, Estimates), Cox and Comcast each declined to comment. AOL (AOL: up $1.17 to $34.75, Research, Estimates), parent of CNN/Money, could not be reached for comment.
Of the prospective bids, a Cox-lead offer would have the best chance of succeeding since the deal could provide some sort of a role for Michael Armstrong, current chairman and CEO of AT&T Corp.
However, AT&T could just as likely choose to spin the broadband business off into a separate company for an initial public offering. In early November, AT&T CEO Michael Armstrong told CNN/Money.com that the company had yet to decide whether to sell its cable TV business or float an IPO.
AT&T shelved the IPO plans last summer when Comcast made its unsolicited offer for the cable unit.
The likelihood of Comcast succeeding in its effort to buy the unit are slim, Johnstone said. Comcast's offer was rejected in its original attempt this past summer which spurred AT&T to shop the cable unit to various suitors, most notably AOL Time Warner and Cox. Comcast rejoined the bidding in September when it agreed to sign a confidentiality agreement.
"Comcast was very aggressive in highlighting how poorly run AT&T was," Johnstone said. "Comcast was very 'in your face' in terms of the first offer."
AOL's chances of winning the unit are the least likely, he said. The world's biggest media concern is already parent of Time Warner Cable, the nation's second largest cable company, with more than 12.7 million customers. A combined AOL-AT&T would likely raise regulatory scrutiny, since the two companies together would access more than 40 percent of households in the United States. 
|
|
|
|
|
 |
|
