I must be confused-how does this help shareholders? Creditors, maybe, equityholders no way. Here is my (quite possibly flawed) understanding. First of all, ATHM doesn't "own" the customers, the MSO's do. Second, ATHM doesn't own the most valuable part of the network (the access). The MSO's own that as well. What ATHM owns is the backend, starting at one side of all of the CMTS units and linking them to the necessary Internet NAPs, and of course there is that valuable content (VBG) and the e-mail addresses. That's about it, as far as I can see. ATHM has the exclusive right to provide the backend linkage under the contracts they signed with the MSO's, and in return get a portion of the amount paid by the MSOs' customers (used to be $12/month, recently increased to $20/month). What the judge just said was that the contracts could be terminated, which means ATHM no longer has to provide the backend links, but the MSO's are no longer required to use ATHM either. What I expect will happen is that there will be new contracts, paying more than $20/month to ATHM, but without the exclusivity provisions and with a rolling termination clause, similar to the agreements which other companies sign with colo and ASP hosting firms all the time. The MSO's will then feverishly continue the buildout of their own backend networks, and as they feel confident in doing so will migrate their customers from the ATHM network to their own, perhaps leaving some traffic on the ATHM network for load balancing and disaster recovery purposes (again, similar to the approach companies take in setting up their ASP relationships).
The MSOs can build a replacement network for a fraction of the cost of building the ATHM one, given that colo space, equipment, bandwidth, and the necessary people are all available instantly at a fraction of what ATHM paid, and the MSO's have no choice but to build their own given the recent actions by ATHM. So I have a hard time seeing how a more viable long-term ATHM results from the recent creditors' actions. I can see how the creditors anxious for the chance to have first pick at the carcass may benefit, but after they are done, what viable business will remain? |
