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Technology Stocks : AUTOHOME, Inc

ATHM 23.23

+0.4%

3:59 PM EST

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To: Jing Qian who wrote (8407)	4/23/1999 2:10:00 AM
From: Peter Y. Hsing	Read Replies (2) of 29970

Let's get some facts straight. - T/TCI is already the largest MSO (pre-UMG) and getting larger w/~15MM subs; TWX is second with ~12MM subs; Comcast is third w/6MM (pre-UMG). - The combined T/TCI/UMG will have roughly 20MM subs or about 28% of all cable subs in the US. - Comcast w/o UMG will only have about 6MM subs as opposed to ~11MM w/UMG. - T does not already own half of RR. T will own less than 25% of RR after the UMG acquisition. - T does own ~71% of ATHM via acquisition of TCI. - T already has a cable telephony deal with TWX. - MSFT owns a 10% (?) stake in Comcast - T loses partial stake in ATHM if it can't cough up some aggressive sub targets (assumes that TCI can't upgrade cable plant quickly enough and spend marketing $$ in time) (Please feel free to correct me on any of the above). So, net-net, I believe that: = T wins: they have reentered the local telephone service via cable telephony in several major markets--these will also feed into their long-distance services, while securing a dominant position for future broadband cable services. T also will now meet renegotiated terms regarding ATHM sub targets. Potential threat is removed as Comcast becomes an ATHM-only shop (CMCSA/K would've had 11MM subs w/UMG). No regulatory hurdles likely at this point--I'm sure that they just reviewed all the potential issues when they did the TCI deal. = ATHM wins in a HUGE way as T/TCI (71% shareholder of ATHM) will utilize ATHM as their broadband cable services platform (with XCIT) = TWX/RR loses--no critical mass/no growth opp unless they make a few cable acquisitions. Could be a small "win" if TWX IPOs RR and use funds from the secondary to make acq. Amount of these funds might be negligible, however = Comcast loses--they certainly can't come up with an offer to top T's and they lose leverage over T b/c now they can't play UMG/RR against T/ATHM. In addition, while they still have attractive assets, they will now be taken over or try to merge with others. Not too many other players w/ >1MM subs and that can offer effective synergies/ clustering. = MSFT loses--Comcast value goes down a bit, RR loses UMG's potential 5MM subs, leaving basically just TWX's 12MM subs = Paul Allen wins--an IPO of Charter Communications may fetch a mega-premium as cable properties get snapped up in the continuing consolidation. Not sure if there is an exclusive arrangement between Charter and HSAC/Pipeline though.

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