Locked in talks over the fate of their joint venture of Time Warner Entertainment, AT&T and AOL Time Warner agreed on Monday to ask Bank of America to withhold its opinion on how much AT&T's stake is worth, according to executives close to the companies. The request was a sign that the companies expect to reach a settlement within weeks on dissolving the venture.
While AOL has tried to persuade AT&T to swap its 27.3 percent of Time Warner Entertainment for a stake in a newly created Time Warner Cable operation, AT&T wants at least $1 billion in cash and billions of dollars in stock in the parent AOL Time Warner in addition to a stake in the cable subsidiary, according to people close to the negotiations.
AT&T has been trying for years to convince the company that is now AOL Time Warner to buy out its stake in Time Warner Entertainment, a complicated partnership that includes the HBO pay-television operation, the Warner Brothers film studio and most of AOL Time Warner's cable-TV systems. AT&T's stake is estimated to be worth from US$7.5 billion to US$9.5 billion. AT&T has threatened to make the unit a public company, a path that AOL hopes to avoid, because it wants to retain control of HBO and Warner Brothers.
Unable to come to terms, the companies asked the Bank of America to estimate the value of AT&T's investment. If the two companies are unable to reach a settlement, AOL would have to either allow Time Warner Entertainment to go public or buy out at least a part of AT&T's stake for the price set by the bank.
The bank was scheduled to deliver its decision on Monday but the two companies told it to "not open the envelope," in the words of one executive close to the decision.
Instead, the companies felt that they were close to a deal, the executive said, adding that the figurative envelope could be unsealed later if the companies reached an impasse. In addition to AT&T and AOL Time Warner, Comcast, the No. 3 cable company, is a crucial participant in the talks because it has an agreement to acquire AT&T's cable operation, including its stake in the entertainment unit.
In recent months, AOL Time Warner has tried to persuade AT&T to swap its interest in Time Warner Entertainment for shares in a newly created Time Warner Cable operation, which AT&T could then sell. That would let AOL regain sole control of HBO and Warner Brothers and part with AT&T without using any cash.
If there is a deal, however, it will not be so simple. First, AT&T wants at least US$1 billion in cash up front from AOL Time Warner to help protect AT&T from the risks of trying to sell a big block of cable shares at a time when stocks are slumping. Second, and perhaps more important, people close to the negotiations said, AT&T wants shares in the parent AOL Time Warner in addition to shares in the new Time Warner Cable.
For instance, the companies may decide that AT&T's stake in Time Warner Entertainment is worth US$8 billion. In that case, one possibility is that AT&T would receive US$1 billion in cash upon signing the deal some time in August, US$3.75 billion in AOL Time Warner shares over the next few months, and another US$3.75 billion in Time Warner Cable shares to be sold in a public offering some time next year, for a total of US$8.5 billion. AT&T would agree to sell the parent company shares within, say, a year.
AT&T appears to want shares in the parent AOL Time Warner for a couple of reasons. First, AOL shares are a security that AT&T knows it could sell at any time, while it could take until next summer for a Time Warner Cable offering to reach the market. Second, AT&T may be thinking that AOL Time Warner's shares, which closed Monday at US$11.58, are cheap right now. If the shares rose in value, AT&T could profit.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique