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AT&T boosts Excite stake
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March 29, 2000: 11:44 a.m. ET
Series of deals keeps portal on AT&T's high-speed Internet service until 2008
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NEW YORK (CNNfn) - AT&T Corp. increased its ownership stake in Excite@Home Inc. Wednesday and agreed to extend its distribution agreements with the Internet access provider, accelerating the company's push into the high-speed Internet market.
The agreement expands the current distribution agreement between AT&T (T: Research, Estimates), the nation's No. 1 long-distance provider, and Excite@Home to 2008 and calls for the Web portal to be featured on AT&T's high-speed Internet service start page for the length of the agreement.
Excite@Home (ATHM: Research, Estimates) also agreed to help provide connectivity services to third party Internet Service Providers looking to deliver AT&T's broadband services to consumers.
In a separate deal, cable providers Comcast Corp. (CMCSA: Research, Estimates) and Cox Communications Inc. (COX: Research, Estimates), which each own an approximately 8 percent stake in the Internet company, agreed to give up certain veto rights they have with the Excite@Home board and entered an agreement to sell their shares to AT&T at a fixed price.
Both Cox and Comcast likewise extended to 2006 current agreements to use Excite@Home as their featured portal and to provide connectivity services, but each company gained the right to end an arrangement whereby Excite@Home serves as their exclusive portal as early as June 2001.
"We believe that as we move into the next phase of leading the broadband revolution, we have the necessary assets to be the leaders in delivering broadband to consumers with our cable partners and wholesale services to third-party Internet service providers," said Tom Jermoluk, Excite@Home's chairman, in a prepared statement.
AT&T increases voting rights to 74 percent
Under a complicated set of agreements, AT&T will retain the right to purchase up to 25 million Excite@Home class A and class B shares each, giving it a 25 percent economic interest in the company and 74 percent of the company's voting rights.
Accordingly, AT&T will have the right to elect a majority of the company's board, which will no longer contain representatives from either Cox or Comcast. AT&T will also begin reporting Excite@Home's financial results with its own, which will result in an additional $400 million in revenue this year, but reduce operational earnings by approximately 5 cents.
 AT&T also reached an agreement with Cox and Comcast to purchase the 30 million Excite@Home shares they each own for a minimum price of $48 per share between Jan. 1, 2001 and June 4, 2002.
That price can be increased if Excite@Home shares grow beyond that $48 per share level either 15 days before or 15 days after either company exercises its right to sell, but AT&T's total purchase obligation is capped at $3 billion.
In late morning trading, Excite@Home shares rose 2-3/4 to 37-1/6, while AT&T shed 1-5/16 to 58-9/16. Cox shares gained 1-1/2 to 46-1/2, while Comcast trimmed a 1/16 to 36-1/2. 
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