Comcast Corp is offering US$44.5 billion in stock to buy AT&T Broadband in a bid to combine two of the three biggest US providers of cable TV and high-speed Internet access.
Philadelphia-based Comcast said Sunday it was revealing the offer directly to AT&T shareholders because direct talks with AT&T Corp management had failed to produce an agreement.
Comcast is appealing directly to AT&T investors in hopes they'll pressure management to accept the offer before a shareholder vote scheduled for later this month on plans to spin off AT&T Broadband as an independent company.
"It's unfortunate that we were unable to continue our dialogue," with AT&T, Brian Roberts, president of Comcast, saidt.
AT&T issued a statement Sunday evening saying, "We have no current plans to sell our broadband business, including this transaction proposed today by Comcast. We will analyze their proposal and respond in due course."
The bid came the day before the New York-based AT&T's spinoff of its wireless operation into an independent company, the first stage in a plan to break the communications conglomerate into five separate companies.
The biggest of those AT&T units is the sprawling cable operation that AT&T cobbled together with a US$100 billion acquisition spree that began just three years ago. AT&T Broadband is the largest cable company in the US, followed by Time Warner Entertainment and Comcast.
In addition to AT&T's cable systems, Comcast said it was also prepared to buy AT&T's sizable interests in two rival cable operators: a 25.5 percent stake in Time Warner Entertainment and a 30 percent interest in Cablevision.
Comcast said it was willing to buy the AT&T cable business with 1.0525 billion shares of its stock with a value of US$44.5 billion based on its closing price Friday. It also would assume US$13.5 billion in AT&T debt.
The proposed merger would give Comcast 22 million cable TV subscribers.
That combination could lead to higher cable television bills and greater control over programming on cable television,said Gene Kimmelman, the lead lobbyist in Washington for Consumers Union, which publishes Consumer Reports magazine.
"This is a very dangerous combination of cable monopolies which could expand cable's control from TV programming to high-speed Internet services," Kimmelman said.
AT&T's original plan was to use cable TV for a direct link with millions of US homes that might subscribe for bundles of service including AT&T long-distance phone service and high-speed Web connections. The plan unraveled, however, when the long-distance business began decaying faster than expected, eating into the revenue stream AT&T was depending on to acquire and upgrade aging cable systems for interactive services.
The proposed merger would have been unthinkable before a recent court decision that overturned federal limits on the market share any one company can have.
The Federal Communications Commission, however, is expected to propose new limits and could warn cable companies any mergers may be subject to the new rules.
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