SF,
ATHM on fire due to AT&T buyout of Media One and the deal with Comcast.
Check out the snip from the Street.com below. AT&T get $4500 for each customer it gives over to Comcast, AND gets to use Comcast's entire cable network. This is HUGE for AT&T hence ATHM. Need to figure out how many households AT&T and ATHM can reach now over cable. I heard figures of 60-80%... WOW - I took a long lunch and didn't look at anything. AT&T at it's high of the day up almost 11% - haven't seen that before. Looks like the street loves this deal...
The most obvious gain for Comcast is the cable-system swap with AT&T.
Managing geographically scattered cable networks is a pain, and
uneconomical. By engaging in a "rationalization" exercise with T,
swapping systems to produce regional continuity, Comcast winds up
with about 2 million more subscribers, net -- and pays a pricey but
increasingly typical $4,500 each, about $9 billion (mainly in new stock,
apparently) -- and a more profitable system. A fair number of those new
subscribers lie in the New York-Philly corridor, where Comcast is already
strong, so economies of scale could be significant.
Less evident but at least as important is the "most favored nation" deal
Comcast struck with AT&T to sell phone service over Comcast's cable
systems. Without investing a dime, Comcast gets the additional dough
from its revenue-sharing deal with AT&T on that phone service. Plus,
AT&T promised Comcast to get that phone service up and running "on an
expedited basis." Given T's present troubles with its other
voice-over-cable commitments after the TCI buyout, I wonder just how
truly "expedited" that offering can be. But the sooner the better, from
Comcast's perspective.
Finally, in a less-heralded step, AT&T is buying the Lenfest family's
cable systems (for about $2 billion more), also centered in and around
Philadelphia, and is handing those over to Comcast to manage.
Aggregating more and more customers is a key in the cable business to
increase leverage with content suppliers, so Comcast will have an even
stronger hand in negotiations with present cable-channel providers and
newcomers seeking carriage with these managed (but still AT&T-owned)
systems
For AT&T? The deals are unqualified wins. AT&T becomes in one fell
swoop the nation's largest cable provider. It gains access to the entire
Comcast cable network as a medium for its home telephone services. It
cleans up problems with its plans to shuffle its @Home (ATHM:Nasdaq)
assets.
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