GAME OVER: AT&T, Comcast ink deal
Phone giant and Comcast avert bidding
war over cable firm MediaOne
May 4, 1999: 9:27 p.m. ET
NEW YORK (CNNfn) - In a surprise move, Comcast
Corp. and AT&T Corp. have agreed to divvy up
MediaOne Group Inc. between themselves, according
to sources close to the negotiations.
The deal averts a bidding war between the two
communications titans and allows Comcast to walk
away with a kill fee of $1.5 billion and a substantial
number of new cable customers.
Under the terms of the deal reached late Tuesday,
Comcast will receive 2 million cable subscribers from
AT&T and MediaOne. AT&T must close its $58 billion
buyout of MediaOne for the deal to work.
Also as part of the agreement, Comcast has agreed
to re-sell branded AT&T local phone service across its
cable lines much like a recent accord between AT&T
and Time Warner Inc. Time Warner is parent to CNN
and CNNfn.
AT&T and Comcast are expected to release a
statement about their agreement on Tuesday evening.
The terms of the AT&T buyout deal, which
MediaOne's board approved Saturday -- in effect
rejecting Comcast's $48 billion offer -- have not
changed.
The complete details on the swaps of cable
properties were not immediately available. But a source
close to MediaOne said that the deal between AT&T
and Comcast was "natural."
"At some point it made sense for these two to get
together," the source said.
Reuters reported that Comcast will receive $1.5
billion in breakup fees that it was entitled to as part of its
March 22 deal for MediaOne.
Philadelphia-based Comcast had mounted
behind-the-scenes talks to improve its $48 billion offer,
which was rejected by the board of MediaOne over the
weekend. Other suitors such as Microsoft and America
Online spoke with Comcast as well.
Sources close to Comcast said Microsoft is aware of
the deal between the cable company and AT&T, but
that talks between AT&T and Microsoft are continuing
-- particularly about Internet-related issues.
AT&T has agreed to sweeten the terms of its
set-top box agreement with Microsoft, if the software
company agreed to pull out of the deal, a source told the
Los Angeles Times on Tuesday. |
