Liberty's Malone Expects Rivals to Bid for AT&T Unit (Update3)
By Adam Levy and David Evans
Sun Valley, Idaho, July 13 (Bloomberg) -- John Malone, who quit AT&T Corp.'s board Tuesday and remains one of its biggest individual shareholders, said Comcast Corp. will have competitors in its unsolicited $53.2 billion bid for AT&T's cable-TV unit.
``I expect that AT&T will be seeing alternative proposals and improved proposals,'' Malone said in an interview at Allen & Co.'s annual conference in Sun Valley, Idaho. AOL Time Warner Inc. ``is not going to sit on its hands. There are a number of others that won't. So I think we're early in the game.''
Comcast President Brian Roberts on Sunday made the stock-and- debt bid for AT&T's cable systems after talks between the companies ended. Chairman C. Michael Armstrong, who spent more than $100 billion to make AT&T Broadband the biggest U.S. cable provider, and the board are expected by investors to reject the offer at a meeting next week, opening the door to rival bids.
``It would not surprise me at all to have somebody else come in'' and make a bid, said Brian Bruce, money manager at PanAgora Asset Management, which owns AT&T shares. ``The board will probably reject (the bid) next week, if nothing more as a negotiating tactic.''
The board of New York-based AT&T is giving ``serious consideration'' to Comcast's bid, Armstrong said Wednesday. Malone resigned from the board Tuesday, one month earlier than planned, saying he wouldn't participate in its discussions to consider the Comcast proposal.
Paul Allen Factor
Malone said Paul Allen, the billionaire who controls No. 4 U.S. cable operator Charter Communications Inc., also may become a bidder.
``He's studying the situation like every prudent guy who has cards in this game,'' Malone said.
Bill Savoy, who manages Paul Allen's investments, declined to comment. Gerald Levin, chief executive of AOL Time Warner, also declined to comment. AOL Time Warner is the second-biggest U.S. cable operator. Allen wasn't immediately available to comment. All three executives are at the Allen & Co. conference.
AOL Time Warner and Charter also may be interested in buying pieces of AT&T cable systems that Comcast might shed to reduce costs. Ann Miletti, associate portfolio manager at Strong Capital Management, estimated that Comcast might sell systems reaching as many as 4 million customers for $18 billion.
``You'll see big positions owned by each company in each region,'' Miletti said. Strong holds shares of AOL Time Warner, AT&T, Comcast and rival cable operators. ``It could mean more consolidation.''
AT&T shares today fell 58 cents to $20.87. Comcast Special Class A shares rose 4 cents to $37.74. Liberty Media fell 5 cents to $15.70.
Cox, Charter
Roberts' bid for AT&T Broadband may encourage Cox Communications Inc. and Charter to consider merging, AOL Time Warner to buy Cablevision Systems Corp. and Adelphia Communications Corp. to sell, Miletti and other investors say.
The nine largest U.S. cable companies are AT&T, AOL Time Warner, Comcast, Charter, Cox, Adelphia, Cablevision, Mediacom Communications Corp. and Insight Communications Co. Officials at those companies declined to comment or couldn't be reached.
``Four guys are going to control the market,'' said Uri Landesman, chief investment officer of AFA Management Partners, which owns Cablevision and Comcast shares. ``We're at a major inflection point here.''
Sun Valley Meeting
Roberts flew to Sun Valley and briefed about 50 money managers and industry executives at the five-day invitation-only conference. Roberts, according to some at the meeting, discussed how he would run AT&T Broadband more efficiently than AT&T.
``At this stage, he (Roberts) is just hoping to get AT&T to negotiate,'' Malone said, adding that Comcast will boost its bid. ``He's going to have to change it, better tailor it; that's what negotiations are about.''
The 60-year-old Malone became an AT&T shareholder and joined the company's board after it bought his Tele-Communications Inc., Liberty Media's parent, in 1999 for $59.4 billion. Liberty, along with AT&T Broadband, is based in Englewood, Colorado.
Malone yesterday filed to sell 5 million shares of AT&T worth $107 million. He owned 25.3 million shares as of June 11, according to the Washington Service.
Malone met today with Paul Allen and Barry Diller, chief executive of USA Networks Inc., a media and electronic-commerce company. Allen is a director of USA Networks.
``I've been summoned to a meeting,'' Diller said a few minutes earlier as he left a panel he was scheduled to appear on and walked away from the conference center accompanied by Victor Kaufman, his company's vice chairman.
Diller said later he used the Sun Valley conference for a USA Networks board meeting. ``Lots of things get discussed here,'' he said. ``I wouldn't think about anything revolutionary from us.'' |
