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

To: Bruce Cullen who wrote (835)	5/2/1999 10:04:00 PM
From: Jerry Miller	Read Replies (2) \| Respond to of 891

Sunday May 2, 9:01 pm Eastern Time MediaOne Calls Off Comcast Merger By NOELLE KNOX AP Business Writer NEW YORK (AP) -- MediaOne Group Inc. will announce today plans to accept an offer to be acquired by AT&T Corp. (NYSE:T - news), abandoning a previously agreed upon deal with Comcast Corp. (Nasdaq:CMCSA - news; Nasdaq:CMCSK - news), according to a person familiar with the negotiations. Comcast has until Thursday to make a better offer, or the Denver-based MediaOne will be sold to AT&T Corp. for $55.79 billion, said the source, who would only speak on condition of anonymity. The fight over MediaOne is attracting some of the biggest names in the cable, telephone, computer and Internet industries. Microsoft Corp. (Nasdaq:MSFT - news) and America Online Inc., for example, may join Comcast to help the company beat AT&T's bid. At stake are MediaOne's 5 million U.S. cable TV subscribers and 8.9 million overseas subscribers, who could be converted into lucrative, high-speed Internet subscribers. Cable access to the Internet is expected to replace telephone access because cable allows the bits of voice, video and data to travel faster. So whoever controls MediaOne could have more control over the potential riches of the Internet. On one side: AT&T chairman C. Michael Armstong has joined forces with the co-founder of Continental Cablevision (which later became MediaOne), Amos Hostetter. On the opposite side: Comcast president Brian Roberts is trying to forge a stronger bid with Bill Gates chairman of Microsoft, and Paul Allen, a Microsoft founder who left the company in 1983, as well as Steve Case, chairman of America Online. If the AT&T team wins, the No. 1 long-distance company will also be the No. 1 cable company, having access to 60 percent of the U.S. homes wired for cable. Hostetter would be the nonexecutive chairman in charge of cable assets, in effect retaking the helm of his former company. If the Comcast team wins, Comcast will be a stronger No. 3 in the cable business, while America Online, the largest Internet service provider, could have guaranteed high-speed Internet links to millions of homes. Meanwhile, Microsoft could sell the software that makes it all happen. A spokesman for MediaOne and a spokeswoman for AT&T declined comment. Comcast could not immediately be reached for comment Sunday. On Friday, MediaOne confirmed that it had signed confidentiality agreements with America Online and Microsoft to allow the two companies access to MediaOne's internal financial information as part of the due diligence process. Several press reports said Allen also was interested in saving Comcast's bid. Comcast, based in Philadelphia, originally offered to use its stock to buy MediaOne, but AT&T trumped that bid with a superior cash and stock offer. AT&T's offer, however, lost $1.7 billion of its value last week as the company's stock price slid from $59.50 to $50.50 on investor concerns that staid Ma Bell was becoming Ma Cable and diluting the value of its shares. Under terms of the deal, the decline in share price means that AT&T will have to spend $36.55 in cash and $47.975 in stock for each MediaOne share, a marked difference from the $30.85 in cash and the $56.525 in stock it originally offered. America Online could help strengthen Comcast's hand. But with only $1.8 billion in cash, AOL is in a better position to lend its high-flying stock price. Microsoft, which is sitting on $22 billion in cash, could give Comcast's side several billion dollars to tempt MediaOne executives and shareholders. A spokesman for the Seattle-based software company declined comment.