Comcast could get hostile

Aug 6, 2001  •  Post A Comment

Comcast Corp. is struggling to get to square one in its negotiations with AT&T Corp. in its relentless pursuit to buy AT&T Broadband while other suitors begin moving in.
In a filing with the Securities and Exchange Commission late last Thursday, Comcast said it is prepared to take its case directly to AT&T’s shareholders. Comcast said it may seek proxies for shareholders and may register its own stock that it would use in its proposed but previously rejected $58 billion bid for AT&T Broadband.
By filing a preliminary proxy statement to solicit proxies from AT&T shareholders, Comcast has essentially transformed its unsolicited bid into a hostile takeover.
The move came in response to strong-arming attempts by AT&T to control the negotiation and bidding for its cable systems by requiring Comcast and other interested parties to sign restrictive confidentiality agreements. Among other things, the agreements would restrict Comcast from conferring with other potential bidding partners and prevent Comcast from launching a hostile takeover of AT&T Broadband if AT&T Corp. gave the nod to another buyer.
Although Comcast declined comment, sources close to the company said it will not agree to such restrictive “stand-still” provisions.
For its part, AT&T said it would not begin negotiations with Comcast unless the company signed the confidentiality agreement and significantly revised its original bid, which was unanimously rejected by the AT&T board of directors last month. Lawyers for Comcast and AT&T were working to compromise on the wording and terms of a confidentiality agreement late last week. Comcast’s SEC filing indicated that a favorable outcome may not be possible.
Although the companies declined comment, AT&T is seeking an improved price for its systems, along with such considerations as a trading range or “collar” on Comcast stock. It also wants a long-term telephony agreement. AT&T wants Comcast to acquire its troubled stakes in Time Warner Entertainment and Cablevision Systems, which it likely would flip to AOL Time Warner in exchange for long-term carriage pacts for AOL service and Warner Bros. content.
Sources say other interested suitors already have signed confidentiality agreements to begin their due diligence of AT&T Broadband properties. They are believed to include AOL Time Warner, Cox Communications, The Walt Disney Co. and Microsoft Corp. Microsoft, which owns stakes in both Comcast and AT&T, indicated it intends to block any effort made by AOL Time Warner to acquire AT&T Broadband.
In an Aug. 1 quarterly earnings call with analysts, Comcast President Brian Roberts said he is unlikely to sweeten the company’s initial “full and fair” offer for AT&T Broadband or change governance details that would give AT&T shareholders majority ownership but give Comcast’s Roberts family voting control of the new entity.
Mr. Roberts said Comcast’s offer was the only tax-free, regulatory-clear deal AT&T could make with any of the interested companies.