Anyone want to buy some cable systems? AT&T;'s having
In an effort to reduce its massive mound of debt, the
nation's leading cable company agreed yesterday to sell a
chunk of its assets to billionaire Paul Allen's Charter
The company also began the registration process to sell its
25.5 percent stake in Time Warner Entertainment to the
public - but insisted it would not take action until March
15. AT&T; said it "plans to continue its ongoing discussions
with AOL Time Warner to reach a negotiated agreement."
Charter will acquire cable systems from AT&T; in four
states for about $1.8 billion.
The agreement comes one day after AT&T; agreed to sell
cable franchises in four states to Mediacom
Communications for $2.2 billion.
And Ma Bell said it may soon sell additional cable
franchises in Colorado, Montana and Wyoming.
AT&T; Broadband President and CEO Dan Somers said
the recent spate of cable transactions is all part of the
"These transactions will further our strategy of clustering in
larger markets," Somers said.
But investors said yesterday the "clustering" strategy is a
whole new idea that strays far from AT&T;'s original plan to
blanket the entire nation with Ma Bell cable boxes.
"That wasn't part of their original plan," said Brian Bruce,
director of global investments at PanAgora Asset
"But as usual, AT&T;'s business-plan-of-the-hour has
changed once again," Bruce continued.
AT&T;'s new plan is to consolidate its cable holdings in
major media markets. In doing so, it hopes to raise more
cash to pay down its debt before the company splits itself
into four parts this year.
Under the new plan, AT&T; will transfer to Charter
574,000 cable systems in the St. Louis area, the Reno,
Nev., area and parts of Alabama. In exchange, Charter will
turn over to AT&T; its cable systems serving 62,000
subscribers in southern Florida. Those cable systems are
valued at about $249 million.
In addition, AT&T; Broadband will receive up to $500
million in Charter common stock and about $1.05 billion in
AT&T;'s Dan Somers said the South Florida systems "will
complement our current cluster there quite well."
But what about AT&T; Chairman Michael Armstrong's
grand plan? He convinced the long-distance phone
company to cough up more than $100 billion to buy the
cable systems. And now he's quietly selling them off.
"I'm not sure they have a firm vision of what they want to
be," said Brian Bruce. "But they do know they're too
But AT&T;'s recent deals have barely made a dent in
AT&T; debt. In the last two days, the company has raised
more than $3 billion in cash - but it's still got about $42
billion to go.
Investors and analysts said they don't expect Ma Bell to get
rid of too much more of AT&T; Broadband.
And that has some investors worried.
"They shouldn't let him," said Bruce. "The problems in
leadership start right with him."
AT&T; shares rose 9 cents to $23. They have fallen 49
percent in the past year.
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