T to divest either ATHM or RR
Wednesday March 8, 7:45 pm Eastern Time
AT&T, MediaOne offering cable Internet divestiture
By Aaron Pressman
WASHINGTON, March 8 (Reuters) - AT&T Corp. (NYSE:T - news), bidding to become the largest cable television operator with its proposed purchase of MediaOne Group Inc. (NYSE:UMG - news), is offering to divest a cable Internet service to appease federal antitrust regulators, people familiar with the deal said on Wednesday.
AT&T, by virtue of its completed acquisition of Tele-Communications Inc., owns a large stake in high-speed cable Internet provider Excite AtHome Corp.(NasdaqNM:ATHM - news) MediaOne is a joint owner with Time Warner Inc. (NYSE:TWX - news) in the similar Road Runner service.
The potential combined ownership of stakes in the only two significant high-speed cable Internet services has been a stumbling block with antitrust regulators at the Department of Justice.
After resisting a divestiture for some time, the companies are now willing to shed one of the stakes, people familiar with the deal said. They did not specify which service would be divested.
Such a move would likely speed Justice Department approval, but would have little effect on the Federal Communications Commission's separate and independent review that has focused on other issues.
The issue has become increasingly convoluted following America Online's (NYSE:AOL - news) proposed acquisition of Time Warner. Road Runner has an exclusive contract with Time Warner and MediaOne requiring that their customers use its Internet service, but AOL has said it will seek to end the exclusivity as soon as possible.
AT&T, MediaOne and Excite AtHome declined to comment.
A spokeswoman for the Justice Department said only that the agency's antitrust review was continuing.
At the end of 1999, Excite AtHome had about 1.15 million subscribers to its high-speed Internet service that reaches cable customers of AT&T, Cox Communications (NYSE:COX - news) and Comcast (NasdaqNM:CMCSA - news). AT&T owns 26 percent of Excite AtHome but a 58 percent voting stake. Comcast and Cox have the ability to veto major decisions, however.
Road Runner, which is not publicly traded, has about 550,000 subscribers in cable systems owned by Time Warner and MediaOne. |
