sunw now mentioned in ATT/Comcast deal... as possible MSFT rival that ATT&T might choose over MSFT for hardware to run set top boxes... this may have been posted...
Report: MediaOne, AT&T have deal
Can titans AOL, Microsoft help save Comcast bid?
By Jeffry Bartash, CBS MarketWatch
Last Update: 1:20 AM ET May 3, 1999 NewsWatch
Media Report
Telecom Report
WASHINGTON (CBS.MW) -- MediaOne Group's board of directors approved a $62 billion buyout offer from AT&T over the weekend, Comcast Treasurer John Alchin said in published reports.
The move gives rival Comcast Corp. until Thursday to make a better offer.
MediaOne's decision may set off a bidding war for the Englewood, Colo.-based cable company among telecom, Internet and cable titans.
Today on CBS MarketWatch
Economic checkup ahead
Clueless Investor: Glenayre falls with paging industry
Genentech to open defense in U.C.S.F patent case
Paul Erdman looks at mounting Kosovo cost
StockWatch: Europe Net use hinges on phones
More top stories...
CBS MarketWatch Columns
Updated:
5/2/99 4:36:48 PM ET
A spokeswoman for AT&T declined comment. Comcast could not immediately be reached for comment Sunday.
On Friday, it apeared American Online and Microsoft would join the effort to help Comcast fend off the higher bid from AT&T.
Friday, MediaOne confirmed it had signed confidentiality pacts with AOL and Microsoft, under which the companies can discuss a potential alliance.
Microsoft officials could not be reached.
AOL and Microsoft's maneuvers came just a week after AT&T submitted a surprise $62 billion bid for Media One, topping Comcast's (CMCSK: news, msgs) $48 billion offer put forth in March. While the value of the deals have fluctuated with changes in the companies' stock prices, AT&T's bid was about $6 billion higher.
AOL and Microsoft consider high-speed data and Internet service vitally important to their future. They worry that AT&T could gain too much control and block them from lucrative new opportunities.
T
NYSE
Last Chg.
50 1/2 -2 5/8
% Chg. Vol.
-4.94% 18,625,400
Day Lo. Day Hi.
50 1/16 54
Open Prev.
53 15/16 53 1/8
As of
May 03/99 7:31 am ET
Last Trade
53 1/8
20 MIN. DELAY
Still, even if those industry heavyweights decide to step into the ring with AT&T, analysts doubt Ma Bell is going to retreat to its corner. It could turn into a knock-down, drag-em-out fight.
Shares of MediaOne (UMG: news, msgs) rose 2 1/4 to 81 5/8. AOL (AOL: news, msgs) climbed 1 3/8 to 142 3/4. Microsoft (MSFT: news, msgs) dipped 3/4 to 81 5/16. AT&T (T: news, msgs) slipped 2 5/8 to 50 1/2. And Comcast (CMCSK: news, msgs) declined 1/16 to 65 11/16.
The clock is ticking
If AT&T (T: news, msgs) were to acquire MediaOne, it would gain access to more than half the country via cable TV wires, which can carry more traffic at greater speeds than phone wiring. AT&T already bought Tele-Communications Inc., the second largest U.S. cable operator, and has a deal with the largest cable provider, Time Warner, to offer high-speed service over its network.
AOL is especially fearful that its customers won't be able to reach AOL via Ma Bell's cable lines, at least not without paying a hefty markup above current monthly fees. That could drive its customers to choose a lower-priced AT&T-affiliated online service such as At Home (ATHM: news, msgs), AOL worries.
UMG
NYSE
Last Chg.
81 5/8 +2 1/4
% Chg. Vol.
+2.83% 5,578,200
Day Lo. Day Hi.
79 3/4 81 13/16
Open Prev.
81 79 3/8
As of
May 03/99 7:31 am ET
Last Trade
79 3/8
20 MIN. DELAY
While AOL has struck deals with several Baby Bell local phone carriers to offer high-speed service over so-called DSL-type lines, cable is far faster and seen as the best bet in expanding high-speed access to a mass market.
"One of the things AOL has struggled with is how to exploit the broadband network," said David Levy, an online analyst at Furman Selz. It makes sense, he said, for the company to at least explore its options.
Where do you want to go today?
Microsoft, meanwhile, recently paid $1 billion for a 5 percent stake in Comcast and doesn't want to see its investment go awry, industry observers say.
More important, Microsoft wants its software to run the souped-up cable boxes atop TV sets. It's worried that AT&T could choose rival software from Microsoft's archenemy, Sun Microsystems (SUNW: news, msgs). The market for the new cable boxes, "intelligent" equipment geared to act as communications control centers for consumers, is expected to be quite lucrative.
"Microsoft's main mission is to find out how to become a major player in information delivery," said analyst Thomas Hensel of Everen Securities. "They have been held back by lack of bandwidth."
While analysts have been skeptical that Comcast could beat AT&T's offer, the latest news could portend one of the biggest takeover battles ever, pitting the country's leading phone carrier, software maker and online service against each other.
MSFT
NASD
Last Chg.
81 5/16 -0 3/4
% Chg. Vol.
-0.91% 29,279,300
Day Lo. Day Hi.
79 7/8 83 3/4
Open Prev.
82 3/4 82 1/16
As of
May 03/99 7:31 am ET
Last Trade
82 1/16
15 MIN. DELAY
Ironically, AOL and Microsoft appear to be teaming up for a scrap with AT&T at the same the pair are crossing swords on another front.
As part of its defense against antitrust charges, Microsoft lawyers will grill three AOL executives, including Chairman Steve Case, about the AOL-Netscape merger and alliance with Sun Microsystems. In testimony earlier in the trial, Netscape CEO James Barksdale said Case had referred to Microsoft as the "enemy" and the "Axis," while calling AOL, Netscape and Sun executives "FDR," "Churchill" and "Stalin."
Key deal for AT&T
Aggressive AT&T chieftain C. Michael Armstrong is not likely to be deterred by AOL and Microsoft's involvement, analysts say. The long-distance behemoth is determined to gain access to as many cable lines as it can in an effort to bypass the monopoly the Baby Bells hold over local phone lines in homes and businesses.
The carrier's goal is to become a "one-stop" provider of telecom services, including TV, local and long-distance and especially profitable data and Internet access.
CMCK
Last Chg.
N/A
% Chg. Vol.
N/A N/A
Day Lo. Day Hi.
N/A
Open Prev.
N/A N/A
As of
May 03/99 7:31 am ET
Last Trade
Thus, the advanced state of MediaOne's cable systems, which already offer phone service in some markets, is a perfect strategic fit with with AT&T. In addition, MediaOne owns a 25 percent interest in Time Warner's cable arm, Time Warner Entertainment, the acquisition of which would give AT&T stronger influence with the nation's largest cable operator while removing Comcast as potential threat.
AOL worries AT&T will use that influence to push a merger between potential rivals At Home and RoadRunner, the two dominant cable-based Internet service providers. AT&T owns a controlling interest in At Home, while Time Warner controls Roadrunner.
If Comcast were to win a bidding war with AOL's help, however, that would create a cable system with potential access to nearly a quarter of all U.S. households. AOL would likely be granted favorable terms to access customers through Comcast's cable lines, greatly easing their anxiety about broadband access.Microsoft, for its part, would be able to sell its cable set-top software to Comcast.
Jeffry Bartash is a reporter for CBS MarketWatch. The Associated Press contributed to this report.
|
