|
Cox, AT&T in $2.8B swap
|
 |
July 7, 1999: 1:49 p.m. ET
Cable outfit gets half million subscribers for returning AT&T stock
|
NEW YORK (CNNfn) - Cable TV operator Cox Communications, seeking to shore up its customer base in several South Central states, said Wednesday it will trade its stake in AT&T for 495,000 of the phone company's cable subscribers in a deal worth about $2.8 billion.
The arrangement will solidify Atlanta-based Cox's position as the fifth-largest U.S. cable company, with about 5.5 million subscribers. It reflects the industry's ongoing effort to swap cable assets to allow each company to dominate certain geographical regions.
"This will create a major, heavily concentrated regional cluster that is similar in size, importance and potential to our significant presence in the Southwest," Cox CEO Jim Robbins said in a statement.
Cox (COX) shares gained 1-9/16 to 38-1/8 by early Wednesday afternoon. AT&T (T) rose 11/16 to 57-5/16. Based on Tuesday's closing price of AT&T stock at $56.625, Cox valued the deal at $2.8 billion, or $4,230 per subscriber.
Cox acquired its 1.4 percent stake in AT&T last year when the No. 1 U.S. phone company acquired local phone carrier Teleport Communications Group, which was partly owned by Cox and other cable companies. Cox now will swap its 50.3 million shares to gain AT&T's cable customers in Oklahoma, Arkansas, Louisiana, Texas and New Mexico and other states west of the Mississippi.
In addition to Cox, AT&T has been in asset-swap talks with cable operators including Adelphia Communications Corp. (ADLAC), Comcast Corp. (CMCSA), and privately held Charter Communications. AT&T aims to swap assets so the bulk of its customers are in major markets.
AT&T's cable chief, Leo Hindery, recently said he expected AT&T's swap deals to be announced by mid-July.
AT&T made an aggressive push into the cable industry with its $55 billion purchase of Tele-Communications Inc., which was completed in March, and its planned $58 billion acquisition of MediaOne Group Inc. (UMG). AT&T plans to use cable TV wires to provide local phone service and Internet access directly to its customers instead of using the networks run by local carriers.
Under the terms of the Cox-AT&T deal, Cox also will gain control of Peak Cablevision, which is jointly owned by AT&T and operates in Oklahoma, Arkansas, Utah and Nevada. In addition, Cox will acquire AT&T's 20 percent stake in a partnership with TCA Cable TV for customers in Louisiana, Texas and New Mexico. Cox announced in May that it will buy TCA in a $4 billion deal.
Cox also will receive $750 million in other compensation, including cash.
The deal helps AT&T satisfy some potential antitrust concerns by regulators in the wake of its deal with MediaOne, Credit Lyonnais Securities analyst Richard Read told Reuters.
AT&T "does have some regulatory concerns with the MediaOne deal and this helps them get some subs (customers) off their books," he said.
The deal, which has been approved by the boards of both AT&T and Cox, remains subject to regulatory approval. It is expected to close by the end of the first quarter of 2000. 
-- staff and wire reports
|
|
|
|
|
|
Cox Communications
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
