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Takeover Time at AT&T?

Ask anyone about the morale at AT&T Broadband these days and you have to conclude that the company is in trouble-and possibly in play.

One little bird told me last week that it might be more serious than that, and that the MSO's woes might actually result in a hostile takeover within the year.

Think about this: Since C. Michael Armstrong announced last October that his empire was shouldering $62 billion in debt, and would subsequently break itself up into four separate parts, there hasn't been a peep about how that would actually be accomplished.

Last fall, that breakup announcement met with widespread skepticism. And many people back then thought AT&T Broadband would eventually go on the sales block.

At the time, most of us dismissed that idea, asking, "Who would have pockets deep enough to undertake such a purchase?"

But a lot of time has elapsed since the breakup announcement, and some think the sharks are circling around this bleeding carcass. Last week, the company made several announcements that were all about trimming the sails, with not a word about expansion and growth for the future.

Numero Uno came when rural cable operator Mediacom Communications Corp. agreed to shell out about $2.2 billion for a slew of AT&T Broadband's smaller systems in Georgia, Illinois, Iowa and Missouri.

Days later, Charter Communications Inc. ponied up $1.8 billion in cash, stock and some of its own systems to relieve AT&T Broadband of systems in Missouri, Nevada and Alabama.

Then came the latest news in AT&T Broadband's long-running dispute with AOL Time Warner Inc. The MSO would take steps to allow AT&T Corp. to register its share in the Time Warner Entertainment Inc. partnership to go up for sale to the public.

That follows a major leak to The Wall Street Journal
in which it was disclosed that Armstrong sees himself ultimately running AT&T Broadband-a job now held by Daniel Somers, who has no title except "acting."

All of those announcements may be signaling that AT&T Corp. could be prettying up the bottom line, with the goal of getting out of cable altogether.

Ever since AT&T took over the troubled Tele-Communications Inc. systems in a deal that closed only in 1999, it's become apparent that the old, sluggish tortoise AT&T is not nimble enough to compete in this landscape.

And there's more. AT&T Broadband has not only cut back jobs, but has put the skids on rolling out telephony in its cable systems, telling vendors to hold off shipment on telecom equipment until at least April. April probably means much later, if at all.

To top that all off, local regulators in some markets say AT&T Broadband is slowing down on its earlier promises to upgrade systems.

So what does all this say? Some in the business said AT&T Broadband is testing the waters for a sale by offering up some systems to see what prices it can fetch-putting up trial balloons.

And, with Mediacom and Charter, it has made some deals. The big question now: Will other MSOs team up to buy the whole enchilada, and then swap systems to flush out their own existing clusters?

It may be way to early to say, but the carcass continues to rot and now there is even talk of a possible hostile takeover of AT&T Broadband on the vine.

Frankly, it's becoming apparent that whether hostile or friendly, what AT&T Broadband needs is someone to save it from itself.