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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: ELIAS DEEB who wrote (13794)	4/28/1999 10:09:00 PM
From: Peter Y. Hsing	Respond to of 41369

For facts on ATHM, check out the ATHM thread. What you have stated are both TRUE: - UMG has ~5MM cable subs for its basic service - ATHM has ~460K subs for its broadband service However, UMG's subs are not comparable to ATHM's subs. The disconnect is that: - UMG's broadband service is offered under RoadRunner, which is a JV between TWX, UMG, MSFT, CPQ, and Advance/Newhouse (varying shareholding %). RoadRunner has about 200k-250k subs for its broadband service. Its shareholders w/cable ops have a combined cable subscriber base of ~17MM (incl. UMG's 5MM subs) - ATHM's current shareholders alone, which include T/TCI, CMCSA/K, COX, and CVC (in essence) have about 28MM combined cable subs. This figure does not include several other major U.S. and Canadian MSOs, e.g. Falcon, Lenfest and Intermedia (US) and Rogers and Shaw (CDN), that ATHM has also successfully signed up. Broadband is ramping quickly and it will eat AOL's lunch--I believe that AOL MUST GET BROADBAND CABLE ACCESS. This can happen either via a direct investment in RoadRunner via helping CMCSA acquire UMG or through some less direct structure, say a JV w/RoadRunner. Or, regulators can step in and open up cable just like they did with the long distance telephone business--I wouldn't hold my breath for that to happen and I don't think Case will either. On the other hand, doing a deal with RoadRunner now will obviously weaken their lobbying efforts in Washington to get open cable access AS WELL AS pit them against ATHM (missing out on an est. 60MM+ total households that ATHM's shareholders' cable systems pass). Stay tuned--the outcome in the fight for UMG will likely have a strong impact on AOL's future, directly or indirectly.