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Malone Watchers Stay Busy

AT & T Corp. is considering a series of moves aimed at advancing its sluggish stock, including asset sales to Liberty Media Group chairman John Malone and a possible merger with U.K. telephony giant British Tele- communications plc, according to published reports.

A flurry of news stories hit the streets last week, all citing unnamed sources who mapped out several different scenarios for AT & T.

At the heart of the matter is AT & T's stock, which has dropped 37 percent this year and which is more than 40 percent off its closing price when the company completed its purchase of Tele-Communications Inc. last year.

According to reports last week in the New York Post and The New York Times, Malone is either maneuvering to buy AT & T outright in order to get the cable assets or to buy AT & T's long-distance business and combine it with Liberty.

The Wall Street Journal reported last Friday that AT & T was exploring a possible merger with BT.

Malone has been outspoken about AT & T's lagging stock lately, urging the company to issue tracking stocks for business services and cable units to unlock hidden value.

AT & T's largest individual shareholder, Malone has lost about $1 billion on paper from his AT & T holdings this year.

While AT & T and Liberty declined to comment on the market rumors, some analysts believe the reports may be a series of trial balloons by Malone to boost AT & T's shares.

"Malone has the most to gain," The Yankee Group analyst Brian Adamik said.

Adamik doubted that Malone would seriously want AT & T's long-distance assets. While they generate $8 billion in cash flow per year, the business is declining.

At least for the moment, the reports haven't helped AT & T's stock much. Between last Monday and Thursday, the stock inched up a total of $1.06 per share to $32.19. It was down 19 cents last Friday morning.

A common theme in the reports was an insistence by AT & T brass that the company's parts were worth at least double the current market cap of about $101 billion.

AT & T spokesman David Caouette declined to comment.

In a conference call with analysts last week, Liberty CEO Dob Bennett declined comment on the Malone speculation. But he did address a possible Liberty divestiture. Following AT & T's acquisition of Media- One Group Inc., AT & T either has to divest Liberty, a stake in Time Warner Entertainment or 9 million cable subscribers.

"As a result of the MediaOne acquisition, it appears that AT & T has some decisions to make," Bennett said. "We are comfortable that whatever the outcome, Liberty shareholders are protected."