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Technology Stocks : UMG - MediaOne Group -- Ignore unavailable to you. Want to Upgrade?

To: TheSlowLane who wrote (806)	3/22/1999 6:52:00 AM
From: Jeff R	Read Replies (1) \| Respond to of 891

Good news for all UMG holders: LONDON (CNNfn) - U.S. cable giants Comcast and MediaOne Group announced a $60 billion merger Monday to create the world's largest broadband communications group. Comcast, which controls the home shopping channel QVC, and MediaOne are the third- and fourth-largest domestic cable providers and together serve 11 million customers in 18 million homes. Comcast/MediaOne will have a combined capitalization of $97 billion and focus on the video, voice and data markets. "The new company will have the size and scope to lead the evolving broadband environment," said Comcast president Brian Roberts. MediaOne (UMG) shareholders will control around 64 percent of the merged entity after the all-stock deal, receiving 1.1 Comcast (CMCSK) shares or $80.16 for each MediaOne share. The deal represents a 32 percent premium on MediaOne's $60.75 closing price on March 19. Its stock has surged 50 percent since January. Comcast president Ralph Roberts will become chairman of Comcast/MediaOne while Brian Roberts is to become president of the new entity. MediaOne chairman Charles Lillis will be vice-chairman of the group. Comcast has focused on its core cable business after selling its cellular phone business to SBC Communications (SBC) in January. MediaOne has been seeking a media partner after being spun off by telecom operator U.S. West at the end of last year. The company recently consolidated its Internet business with a joint-venture with Microsoft (MSFT) and Time Warner (TWX) to provide content for a high-speed cable-modem venture called Road Runner. The deal has been approved by both boards and, subject to shareholder approval, is expected to close before year-end. -- from staff and wire reports home \| deals \| hot stories \| contents \| search \| stock quotes \| help

To: TheSlowLane who wrote (806)	3/24/1999 4:54:00 PM
From: bananawind	Read Replies (1) \| Respond to of 891

Excellent writeup of the key parts to the UMG/CMCSK combination. DCR Comments on the Merger of Comcast and MediaOne CHICAGO, March 24 /PRNewswire/ -- Comcast Corp. (Comcast) and MediaOne Group, Inc. (MediaOne) recently announced that they had entered into a definitive agreement to merge. Duff & Phelps Credit Rating Co. (DCR) currently rates Comcast's senior subordinated debt 'BBB-' (Triple-B-Minus) and its recently issued PHONES 'BB+' (Double-B-Plus). Likewise, DCR has a senior unsecured rating of 'BBB-' (Triple-B-Minus) on Comcast Cable Communications (Comcast Cable). DCR has a senior rating of 'BBB' (Triple-B) on MediaOne Group, MediaOne of Delaware and MediaOne Group Funding. DCR also has a TOPrS rating of 'BBB-' (Triple-B-Minus) for MediaOne Finance Trusts. All these ratings will be reviewed, as more information is available from the companies. However, DCR views the merger as a positive credit event for both companies. DCR recognizes the revenue and cost synergies that can be obtained from the combined larger company. The key revenue synergies focus around the greater customer base that can drive advertising revenue potential as well as a complementary product portfolio. Key cost synergies will include improvements in programming rates as well as typical clustering efficiencies related to call center consolidation, inventory warehousing, marketing, advertising and billing. Likewise, the combined company will be able to reduce corporate expenses where there are redundancies. The company has indicated that an early estimation of these synergies could result in approximately $500-635 million of additional EBITDA annually after the completion of the merger. The combined company will also have a subscriber base of approximately 11 million and pass approximately 18 million homes which would position it as nearly the same size as Time Warner and AT&T, which is the largest of the cable companies in the industry. Another key benefit is the amount of outstanding marketable securities and the potential for additional cash from non-core asset sales. The combined company will have significant non-core equity positions in AirTouch, Sprint PCS, AT&T and NTL that would represent a market value of more than $7.5 billion. If outstanding cash and MediaOne's expected TWE distribution is combined into this total, the companies will have more than $9 billion of non-core marketable securities and cash available for investment or other purposes prior to the sale of any international assets. It is expected that international non-core asset sales could have a value of more than $7 billion. In total, the combined company will be well funded to pursue other growth investments in broadband. From a new service perspective, the merger entity will have leading customer totals in high-speed data access, enhanced analog/digital cable and telephony. The growth prospects from these services are good which should lead to increased revenue growth and ultimately higher EBITDA levels for the company. Other assets that are very strategic to this combination are MediaOne's Telewest and TWE ownerships, and Comcast's controlling stake in QVC's operations. MediaOne owns 25.51 percent of the equity of TWE and 29.9 percent of Telewest. Telewest is a leading broadband company in the UK that provides telephony and pay television. Telewest produces material levels of EBITDA and is growing rapidly. TWE has approximately 10 million subscribers and MediaOne's equity stake also includes the operations of Home Box Office (HBO), which is the largest source of pay television programming with more than 23 million subscribers. This programming position complements Comcast's E! Entertainment and Comcast-Spectacor interests. QVC is the leading provider of electronic retailing that continues to grow rapidly and produce strong results both domestically and internationally. QVC's largest market presence is in the United States, UK and Germany. Prior to any rating action, DCR will meet with management to receive more information from the company on placement of the merged operations within the existing Comcast subsidiary structure as well as financial and investment expectations. Nevertheless, DCR views this merger positively and believes that it will have a strong domestic and international market position and good long-term financial prospects. MediaOne Group provides cable television services to approximately 5 million customers and its networks pass approximately 8.5 million homes. The company has ownership stakes in TWE, and various international ventures most notably UK cable operator Telewest and UK wireless operator One 2 One. Pro forma for its acquisitions, excluding MediaOne, Comcast has approximately 6 million customers and passes more than 9 million homes. Comcast owns a controlling stake in QVC, a leading provider of electronic retailing; E! Entertainment, a cable programming provider; and Comcast-Spectacor, a regional sports programmer. Related research material on the companies can be accessed on DCR's web site at dcrco.com under Telecommunications\Credit Analysis. SOURCE: Duff & Phelps Credit Rating Co.