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Technology Stocks : AUTOHOME, Inc

ATHM 22.15

-2.0%

Jan 9 9:30 AM EST

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To: Peter Y. Hsing who wrote (8466)	4/23/1999 11:42:00 AM
From: ahhaha	Read Replies (1) of 29970

Who said Comcast will be the other bidder? 28% of market penetration doesn't assuage control of 70% of market extent. There is no easy entrance for any other would-be cable competitor now, and if T owned a nascent competitor, it would discourage new entrants, at least through the indirect device of keeping Comcast in the fold and other potential jumpers pacified. The separation of Comcast was the first indication that cable is a separate and distinct market from copper. COX's separation would confirm it through Bork's Rule. This would keep outside telephony interests and the others like AOL effectively out. Instead T exposes its flank by seeking dominance and that would invite common carrier status rulings. Also the FCC must save face. They backed off once and that riled the consumer protectionists. T's lawyers think that this move would escape existing law, but it won't escape FCC review and the attention of Congress. T is threatening to revive Ma Bell in cable and I don't think the FCC wants to wrestle with the children of another break-up. It isn't a direct threat, but the irrational concern will be that it could evolve into one. There are other consortia whose resources are far greater than those of T. If ATHM can sport the valuation it has, certainly UMG can do the same. T isn't buying UMG for RR's existing coverage just like T didn't buy TCI for the quality of their network. Comcast-UMG can go on to become as large as TCI-ATHM especially if COX jumps, so UMG merits the goodwill that ATHM enjoys. The point is that UMG is the jewel simply because they represent the potential competition. This is similar to the railroad wars of the 19th century where a sliver of land would command astronomical prices simply because it was located at a critical juncture.

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