AT&T, Comcast create cable behemoth
By Our Corporate Bureau | 20 Dec 2001
Mumbai: The US cable operator Comcast will merge with AT&T's broadband unit in a deal valued at $72 billion, ending a bidding battle for America's largest cable television operator, BBC has reported.
The tie-up with Comcast would create a giant with 22.3 million subscribers, dwarfing AOL's Time Warner Cable, the second largest, which also submitted a bid. A deal with AOL Time Warner, with 12.7 million subscribers, would probably have faced heavy scrutiny by anti-trust regulators over the combined companies' 26.4 million subscribers.
While scrutiny is inevitable, the deal is expected to be passed after a Supreme Court ruling on 3 December that refused to reinstate restrictions on subscriber numbers for cable companies.
AT&T picked Comcast five months after it first rejected a $41-billion unsolicited bid by the nation's third-biggest cable operator as too low. Comcast will pay about $47 billion in stock and assume about $20 billion in debt while Microsoft will convert a $5-billion worth of stock in an AT&T subsidiary into shares in the new company.
The cable division will be spun off and merged with Comcast, creating the new company called AT&T Comcast. Comcast's bid came when AT&T was about to spin off of its wireless operation into an independent company, the first stage of a break-up into five separate companies.
Cox Communications has also submitted a bid and Microsoft offered to take a stake in with bidder. AT&T shares rose 15 cents to $16.80 in after hours trade on 18 December while Comcast last $1.02 to close at $38.07.
