"Starting to like AOL"
10:38 ET ******
America Online (AOL) 108 1/8 +4 1/16 : Let's precisely examine everything regarding the AOL/Excite@Home/AT&T rumors. First, all AT&T (T 43 3/16 -5/16 )and Excite@Home(ATHM 45 +3 9/16) have done today is issue ambiguous statements that they have been engaged in talks of some kind with unnamed parties. This is being read to mean that comments by Leo Hindery, President and Chief Executive Officer of AT&T broadband and Internet services, were too concrete in denying that AT&T was selling Excite@Home. But Leo's statement referred specifically to the issue of selling all of AT&T's stake to a single player, AOL. So now the speculation is flying that someone is going to buy part of Excite@Home. But the LA Times is reporting that Cox Communications rejected a proposal submitted by AT&T to the Excite@Home board to break up Excite@Home into content and infrastructure components. So, let's look at it from AOL's point, for a moment. What AOL needs is cable distribution. They don't need content. If AOL pays a premium for only the Excite side of view of Excite@Home, Briefing.com would view it as foolish. Wrapping the Excite brand name into AOL would be dilution of the AOL brand. The more likely scenario, if AOL is talking to AT&T, is that AOL wants to be carried on the AT&T cable broadband system, whatever it takes. AT&T is contractually bound to carry only Excite@Home as a content provider. AT&T wishes this contract didn't exist. So what kind of deal makes sense? The only tea-leaf kind of reading we can make is that AOL would pay to get Excite @Home to change the terms of the exclusivity contract. Such a deal would cost a fortune, but we doubt AOL would buy the entire Excite side of the Excite@Home network, then kill it, just to get carriage on the AT&T system. Why do that, when the Feds might give AOL carriage for free, with a mandate for open access? As long as the Portland decision is unresolved, it makes any premium payment potentially unnecessary. Even an temporary injunction, forcing AT&T to carry all others would be a win for AOL, as long as the injunction is in force until Excite@Home's exclusivity contract runs out. - RVG
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