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AT&T's @Home grip slips
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April 8, 1999: 8:17 a.m. ET
Yields some control of Internet service after TCI misses subscriber targets
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NEW YORK (CNNfn) - AT&T will yield some of its control over @Home Corp., the high-speed Internet provider, because its Tele-Communications Inc. cable unit failed to meet its target for subscriber sign-ups, according to a report published Thursday.
The Wall Street Journal reported that Comcast Corp. (CMCSA) and Cox Communications (COX) will get more say in @Home's operations as a result of TCI's failure to sign up the tens of thousands of subscribers it promised.
The Journal said AT&T (T) will continue to exert great influence on @Home because it owns 71 percent of its stock as a result of the merger with TCI earlier this year. But that control was almost unchallenged until the shortfall in subscriptions.
Under terms of a revised agreement the Journal said will be filed soon with the Federal Communications Commission, AT&T will pay financial penalties to Cox if it fails to meet a new set of subscriber targets.
@Home is seen as part of AT&T's effort to become a dominant force in providing Internet service. The Journal said $1.7 billion of AT&T's $54 billion purchase price for TCI was to cover its stake in @Home, which provides its services via cable modems rather than telephone modems.
The Journal said TCI's failure to meet the subscriber targets was due in large part to the antiquated nature of much of its cable TV lines. An effort to upgrade the lines, led by a former TCI president who now heads AT&T's cable unit, failed to make sufficient improvement.
AT&T stock closed Wednesday at 84-7/8, up 4-3/4. Comcast 'A' stock was up 2 to 65-1/2, and Cox Communications shares were up 15/16 to 78-15/16. 
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