interesting article posted on T thread...
AT&T PUTS GUN TO HEAD AT ALTAR—
BUT IS IT AIMING AT REST OF INDUSTRY?
by Bill McCarthy
It was a dramatic wedding ceremony at the county courthouse. In the midst of saying its vows to cable giant Tele-Communications, Inc., the groom, AT&T Corp., whipped out a pistol and held it to its own head.
It sounds like bad daytime television, but AT&T's tactic of threatening: "One false move and the idiot gets it," as it stands before city councils and county commissions nationwide, appears to be working.
The company has resorted to threatening suicide — not to upgrade TCI's soon-to-be-put-out-of-its-misery-via-satellite, already-out-of-date technology — if city councils across the nation dare to challenge its ability to exclusively assign @Home as the gateway to the Internet when the long-distance giant and cable giant consummate their marriage of convenience.
And just in case you little town board members across the nation missed it: their attorneys want you to know the company filed suit against the city of Portland for its audacity in questioning whether "open access" would be a better way to grow local business and provide a competitive diversity of services.
This battle is not really about who will control TCI's little coax fiefdoms. This is more likely a symptom of TCI's debt, the tremendous cost to upgrade an archaic system and the length of time that it will take to show stockholders a return on investments.
That AT&T is pouring money into making itself a converged communications giant and desperately seeking last mile access is not a bad thing. Nor is it a bad thing that AT&T needs a return on its investment to its stockholders. What is a problem is AT&T and TCI's willingness to invite future regulatory intrusions that all players will regret, as well as misleading the public and sacrificing the goals of a ubiquitous, competitive environment for large and small players. This leaves a number of industry insiders scratching their heads and asking, Bugs Bunny-style, "Was this trip really necessary?"
First let's remember who dug this trench. AT&T will triple its debt in this deal. It will take on TCI's annual losses of $500 million and pay $3,000 a subscriber. In spite of the overhead, John C. Malone personally makes $1.5 billion to $4 billion on the deal and retains ownership and control of the profitable Liberty Media Group. At this wedding, Malone is the calculating daddy drooling over the dowry.
Liberty Media Group, TCI's programming arm, will be combined with TCI Ventures Group. The new company will be called New Liberty Media Group (NLMG), which will be a wholly-owned subsidiary of AT&T. Malone will have a wide range of control over this new company. Not only will he control the company's board, but he will also have the authority to transfer the assets of the company into an LLC if the "incumbent directors (and their successors) cease to constitute a majority" of Liberty's board or even if it seems "likely to occur," according to the proxy.
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