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News > Deals
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AOL in for AT&T Broadband
graphic December 5, 2001: 7:03 p.m. ET

World's biggest media company has made bid for AT&T Broadband, Levin says
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  • Microsoft may back AT&T broadband bidders - Dec. 4, 2001
  • Parsons to succeed Levin as AOL CEO - Dec. 5, 2001
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    NEW YORK (CNN/Money) - AOL Time Warner has made a bid to acquire AT&T Corp.'s cable television business, departing CEO Jerry Levin told Lou Dobbs Moneyline Wednesday.

    "We made a submission and I think we'll now see what the next step is," Levin said. "We have seat at the table because of a lot of interesting relationships, including a partnership with TWE."

    However, Levin declined to forecast who would win the race for AT&T Broadband. Levin announced Wednesday he will retire as CEO of AOL Time Warner in May 2002, and co-chief operating officer Richard Parsons will succeed him. AOL is parent of CNN/Money.

    Levin's confirmation comes as Microsoft Corp. has offered AT&T up to $5 billion to keep the unit independent, sources familiar with the situation told CNN/Money.

    Microsoft CEO Steve Ballmer also said that the nation's No. 1 software maker is providing financial backing to rival bidders of the AT&T Broadband, a company spokeswoman confirmed.

    Redmond, Wash.-based Microsoft (MSFT: up $2.10 to $68.10, Research, Estimates)  is talking to all potential bidders, except AOL Time Warner, Ballmer said. Microsoft has agreed to support the competitors in an effort to ensure it retains access to AT&T Broadband, Ballmer said in an interview with the Washington Post.

    Microsoft's financial support is an attempt to ensure that its fiercest rival, AOL Time Warner, does not succeed in acquiring AT&T Broadband, a transaction which would combine the nation's top two cable concerns.

    "This I don't understand," Levin said of the bitter rivalry with Microsoft. "There is a certain paranoia that is probably not justified. There is this jockeying for position which is not surprising in our marketplace."

    Of Microsoft's powerful Chairman and Chief Software Architect Bill Gates, Levin said simply: "Bill does a lot of good things," he said.

    CNN/Money reported Tuesday that the No. 1 software maker is providing financial support for Cox Communications and Comcast. Each company is submitting competing bids for AT&T Broadband, the nation's largest cable TV business.

    AT&T's board is expected to meet Saturday and decide the fate of the broadband business.

    Microsoft and AT&T declined comment. Comcast also declined comment. AOL declined to comment.

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    Microsoft's investments in Cox (COX: up $0.19 to $39.59, Research, Estimates) and Comcast (CMCSK: up $1.01 to $40.18, Research, Estimates) are an attempt to block AOL (AOL: up $1.08 to $35.83, Research, Estimates) from acquiring the AT&T cable business. Microsoft is also offering financial of $4 billion to $5 billion to AT&T (T: down $0.02 to $17.57, Research, Estimates) if it spun off the broadband business into an independent company, sources said.

    "The goal of Microsoft is to prevent AOL from dominating the broadband space," said analyst John Corcoran, of CIBC World Markets Corp.

    A combined AOL and AT&T Broadband would have about 27 million subscribers, or more than a third of the U.S. cable market. Such a deal would give AOL increased power to set content distribution, analysts said.

    At the minimum, AOL's bid for AT&T Broadband will give it leverage to get back its stake in Time Warner Entertainment, which is owned by AT&T, analysts said. graphic

      RELATED STORIES

    Microsoft may back AT&T broadband bidders - Dec. 4, 2001

    Parsons to succeed Levin as AOL CEO - Dec. 5, 2001





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