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To: freeus who wrote (15476)	5/6/1999 11:58:00 PM
From: Mary Baker	Respond to of 41369

At&T CEO Turns Bargaining Table Into Round Table By Brendan Intindola NEW YORK (Reuters) - AT&T Corp. (NYSE:T - news) Chairman and chief executive officer C. Michael Armstrong's negotiation of the $58 billion MediaOne Group Inc. takeover has woven most of the opposing camps chasing MediaOne into a band of AT&T allies. In a takeover situation over the past two weeks that could have devolved into a nasty bidding war, AT&T devised an appeasing subscriber swap with Comcast Corp. (Nasdaq:CMCSA - news), MediaOne's jilted merger partner, and turned Microsoft Corp. (Nasdaq:MSFT - news) into a major AT&T investor and technology provider. Software titan Microsoft last week had entered into a confidential talks with MediaOne, the nation's third-largest cable company, at Comcast's request. Comcast, the nation's No.4 cable company, was then searching for backers with pockets deep enough to top the offer from AT&T, which became the nation's No. 2 cable operator with the recent $55 billion purchase of Tele-Communications Inc. (Nasdaq:TCOMP - news) But early Thursday, Microsoft said it would instead take a $5 billion stake in AT&T, the No. 1 U.S. long-distance company, and enter a technology alliance to speed the delivery of voice, video and Internet services into millions of American homes. Under that non-exclusive pact, which confirmed widespread expectations, AT&T will increase the use of Microsoft's Windows CE-based operating system software in its digital set-top boxes, through which AT&T expects to manage its high-capacity cable links to customers. Online services provider America Online Inc. (NYSE:AOL - news), however, was not part of the post-AT&T victory toast. AOL also last week had entered talks with MediaOne but later dropped out after weighing the merits of joining the fray. Overall, analysts applauded the corporate cooperation. ''This is one of those interesting situations where everybody has won. Armstrong has constructed a deal where there wasn't a soul who lost in this deal. Comcast won, Microsoft won, MediaOne won and AT&T won,'' said Frank Dzubeck, president of industry consultants Communications Network Architects. He attributed AT&T's successful bargaining to the combination of Armstrong and AT&T President John Zeglis, who as AT&T's long-time corporate counsel shepherded the company through the government-ordered break-off of the regional Bell operating companies from AT&T in 1984. ''I have seen Mike's tracks for a long time in a lot of things. He is a very skillful negotiator and has put together a good partnership with Zeglis. What you are seeing here is some very innovative, brilliant moves of somebody who understands the computer and communications businesses (Armstrong) and some brilliant moves of a lawyer,'' Dzubeck said. The Comcast agreement with AT&T reached Tuesday gives Comcast up to two million cable subscribers from a combined AT&T-MediaOne for between $8.7 billion and $9.2 billion and allows AT&T to send telephone service over Comcast's cable network. ''This is a different outcome than our MediaOne proposal, but it is an elegant win-win result,'' said Brian Roberts, Comcast president, of the truce with AT&T. The agreement resulted in Comcast giving up its desire for all of MediaOne, which had been temporarily satisfied with their merger agreement announced March 22. Comcast was to swap 1.1 Class A special common shares for each MediaOne share in an all-stock deal worth about $48 billion. In a conference call this morning, Armstrong even left open the door for the one party left out of AT&T's circle of deals formed over the last week. ''If AOL would like to sit down at the table and negotiate a commercial arrangement, we would welcome that. If others wish to ride (on our systems), we are open to that,'' he said in a conference call with analysts and reporters. Regarding a deal with AOL, the chairman said, ''We stop and we start. Every time we start, there seems to be an event that stops us, and they get on the other side'' he said. ''We welcome getting together again,'' Armstrong said.