I wonder what impact this will have on Cube's recent win
Also, there are some interesting relationships disclosed in this report.
Comcast to Buy MediaOne for $60 Bln in Stock, Debt
Philadelphia, March 22 (Bloomberg) -- Comcast Corp. agreed to buy MediaOne Group Inc. for $60 billion in stock and assumed debt, creating the second-largest U.S. cable-television company and continuing an industry consolidation.
Comcast offered 1.1 special Class A shares, or $80.16 in stock, for each MediaOne share, a 32 percent premium to Friday's closing price. Philadelphia-based Comcast, the No. 4 U.S. cable- television company, plans to assume $7 billion in debt of third- ranked MediaOne.
The combined company would have 11 million customers and access to 18 percent of U.S. homes, making it the biggest rival to Time Warner Inc. The transaction, which the companies called a merger, is the industry's largest and follows this month's acquisition of Tele-Communications Inc. for $59.4 billion by AT&T Corp., the largest U.S. phone company.
''The battle lines for local competition are being drawn as cable companies step in as alternative providers of phone services and Internet access,'' said Alan Lyons, an analyst at ABN Amro. ''Cable companies have decided bigger is better.''
Cable-TV companies are seeking to expand their service areas so the costs of marketing and new technology can be spread over bigger customer groups. Comcast shares fell 4 3/4, or 6.5 percent, to 68 1/8 in early trading and the opening of MediaOne stock trading was delayed because of an order imbalance.
Englewood, Colorado-based MediaOne is the latest in a string of purchases for Comcast, which expects to close the purchase of a controlling interest in Jones Intercable Inc. by July. The company also may purchase Prime Communications LLC's cable systems in Washington and Chicago for $1.45 billion, making it the largest cable operator in the Baltimore-Washington area. In February, Comcast agreed to pay $254 million in stock for Greater Philadelphia Cablevision's 79,000 subscriber-system.
MediaOne Transaction
Comcast said it expects to close the MediaOne purchase this year. Together, the companies had more than $8 billion in sales in 1998, and $2.4 billion in earnings before interest, taxes, depreciation and amortization.
MediaOne shareholders will own 64 percent of the combined company, which will have a capitalization of $97 billion when stock, debt and preferred shares are included. Under terms of the transaction, MediaOne cannot solicit other offers and must pay $1.5 billion to Comcast if it accepts a superior bid.
The purchase will make Comcast the largest cable operator in Massachusetts and give it large service areas in Los Angeles; Atlanta; Florida; Detroit; Richmond, Virginia; and Sacramento, California.
''Our cable properties are geographically complementary and should provide the opportunity for meaningful revenue enhancement and operating synergies promptly after closing,'' Comcast President Brian Roberts said in a statement.
Among Comcast's owners is Microsoft Corp., the world's largest software company, which in June 1997 paid $1 billion for an 11.5 percent stake. MediaOne owns a 25 percent interest in Time Warner's cable operations, which have 14.4 million customers.
Consolidation
Consolidation in the cable industry will continue until there are just a few big competitors, analysts said. Larger operations benefit from increased technological expertise, borrowing capacity and more-efficient operations.
Those advantages are becoming increasingly important as cable systems are upgraded for new services, such as high-speed Internet access, telephone service and more channels offered via digital cable.
Cablevision Systems Corp., the largest New York metropolitan- area operator, is a possible takeover target, analysts said. A Cablevision spokesman said the company doesn't comment on ''speculation in the media.''
Internet
Cable networks can transmit music, video clips and other content over the Internet faster than phone lines. Audio and video applications are expected to account for 6 percent of Internet traffic by 2003, three times that of last year, according to U.K. market research company Datamonitor Plc.
''We will develop and provide nationally branded broadband services across our principal lines of video, voice and data,'' Charles Lillis, MediaOne's chairman and chief executive, said in a statement. He will become a vice chairman of Comcast.
MediaOne owns 30 percent of Telewest Communications Plc, the U.K.'s No. 2 cable company by sales. One-2-One Ltd., its joint venture with Cable & Wireless Plc, is Britain's fourth-largest mobile phone company.
Salomon Smith Barney advised Comcast. Lehman Brothers Inc. advised MediaOne.
09:57:24 03/22/1999
For more stories from Bloomberg News, click here.
(C) Copyright 1999 Bloomberg L.P.
|
