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To: Anthony Wong who wrote (2732)	6/24/1998 1:32:00 PM
From: Anthony Wong	Respond to of 11568

This ATT piece mentions WorldCom/MCI: AT&T-TCI merger faces hurdles By Jeff Pelline Staff Writer, CNET NEWS.COM June 24, 1998, 5:50 a.m. PT It's not a done deal, at least not yet. Before getting too excited about AT&T's planned buyout of Tele-Communications Incorporated and all the blue-sky PC-TV convergence scenarios that are sure to be painted, remember that cable and telecommunications providers have tried to merge before--and were unsuccessful. In 1993, John Malone's TCI agreed to sell to Bell Atlantic in a $16.7 billion deal. The deal was hailed as a sign of the long awaited convergence of cable TV and phones into a single business. It also was Bell Atlantic's strategy for attacking local markets outside its own territory. But the deal fell through. TCI and Bell Atlantic ran into philosophical differences and a plan to put a cap on cable prices threatened the economics of the deal. Today's deal between TCI and AT&T isn't expected to run into those problems, but it does face other obstacles. Regulatory agencies including the Federal Communications Commission are likely to closely scrutinize the buyout. In addition, both telco and cable TV competitors may raise objections that the AT&T-TCI merger is anticompetitive. In today's statement, the newly merged companies said they expected to generate 1999 revenue of about $33 billion. The companies think they can close the deal in the first half of 1999. The merger is likely to test regulators' true appetite for telecommunications deregulation, signed into law two years ago. Deregulation was supposed to clear the way for telcos and cable TV companies to enter each other's markets, but that has occurred much more slowly than expected. Now AT&T and TCI are prepared to provide the "one-stop" shop for telecommunications and data services by the end of next year, a concept that has been a goal since the Telecommunications Act was enacted in 1996. Aside from regulatory hurdles, the companies must merge their "corporate cultures." They said they do not expect "significant downsizing" to result from the deal. AT&T, however, is known as a button-down, centralized corporation, while TCI is more free-wheeling. Under its current management, the cable TV giant has decentralized operations. In addition, AT&T has run into problems integrating some of its past acquisitions. The managers named to lead the new company--AT&T president John Zeglis and TCI president Leo Hindery--share similar management styles, however. Zeglis, considered a candidate for AT&T's chief executive before Michael Armstrong was selected, joined AT&T in 1984 as corporate vice president and general attorney. He was named general counsel in 1986. Hindery was elected president of TCI in 1997. He previously was CEO of InterMedia Partners, a cable operator, and before that, chief officer for planning and finance at the San Francisco Chronicle newspaper. Malone is considered more independent-minded, but he is stepping down as an officer in the buyout. Malone will hold a seat on the TCI board. Today's buyout is likely to fuel more consolidation among cable TV and telephone providers. One reason: the ballyhooed convergence of PCs and TVs is starting to occur. The newly merged company, AT&T Consumer Services, faces stiff competition too. On the cable TV side, Time Warner is a powerhouse, and it is a leader in the burgeoning cable Net access field. On the telco side, WorldCom and MCI are proposing to merge, as are some Baby Bells. SBC Communications, for example, has proposed to buy Ameritech; it already has acquired Pacific Bell.