AT&T, Comcast, Create Cable Behemoth

  • by December 20, 2001
Five months after being rejected in its bid to buy AT&T's cable division, Comcast Corp. convinced AT&T's board to approve a $52 billion deal to create a cable behemoth.

The merger is the largest announced in 2001 and would create a combined company with 22.3 million cable subscribers - much bigger than AOL's Time Warner Cable, which has 12.7 million subscribers. The new company will have cable subscribers in 17 of the country's 20 largest metropolitan areas and a presence in 41 states.

New York-based AT&T will spin off its cable division and simultaneously merge it with Philadelphia-based Comcast.

The deal also includes AT&T's 25 percent stake in Time Warner Entertainment and the assumption of $20 billion in AT&T debt. Microsoft Corp.'s $5 billion stake in AT&T Broadband will be converted into shares of the new company.

The deal ended a bidding contest for AT&T Broadband that started five months ago when No. 3 cable operator Comcast mounted a $41 billion hostile bid for AT&T's cable unit. Offers from bidders AOL Time Warner and Cox Communications were rejected by the AT&T board.

Michael Armstrong, AT&T's chairman and chief executive, will serve as chairman of the new company - to be named AT&T Comcast Corp. - instead of retiring from AT&T in 2003 as planned. Brian Roberts, Comcast's president, will be the combined company's chief executive.

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