Comcast post-merger strategy under way

Jul 15, 2002  •  Post A Comment

Comcast Corp. has wasted no time working on a post-merger plan, sending its executives into AT&T cable systems to assess necessary changes there and moving key parts of its advertising operations to New York to court Madison Avenue.
The moves are among many the company began making after last week’s overwhelming approval from shareholders of Comcast and AT&T, and from 92 percent of their combined franchises. Most of the heavy post-merger planning will be under way in August as Comcast and AT&T officials say their deal could soon receive regulatory approval and close as early as October.
Grabbing a bigger piece of advertiser spending is a top priority for the merged company, which will have 40 percent of all U.S. cable customers-or the penetration and reach of a major broadcast commercial network, with comparable viewer demographics and programs in 21 of the top 25 markets. “We’re trying to establish an advertising presence in New York and get ahead of that by hiring a Charlie Thurston,” said Comcast President Brian Roberts, who will be president and CEO of the new company. Mr. Thurston was hired earlier this year from Adlink to spearhead ad sales for Comcast. The Roberts family will have 33 percent voting control and 1 percent economic stake in the new company.
AT&T-Comcast also is preparing to launch a new string of services including telephony, offerings for children, streaming media, gaming, home network and security offerings, sources said.
The fact that only half of AT&T’s cable systems offer high-speed Internet access could slow down some of the most lucrative, in-demand offerings, sources said.
To protect its ability to generate a projected $3 billion in cash flow by 2004, according to analysts, Comcast also is expected to aggressively reduce headcount. It will start by eliminating more than half of the estimated 4,000 employees at AT&T Broadband’s Denver headquarters, sources said. Comcast is expected to retain engineers and operating personnel. AT&T Chairman C. Michael Armstrong will become chairman of the merged cable company under the terms of a special deal, which provides a bevy of stock options and other benefits and is ironclad to 2005.
AT&T Broadband Chairman Bill Schleyer, formerly of Continental Cablevision, and other well-regarded executives who signed on with him late last year to more cost-effectively manage the company’s lagging cable systems, are not expected to remain with the newly merged company, which will be headquartered out of Comcast’s offices in Philadelphia, sources said. Comcast executives declined comment.
The merged company could spend an estimated $200 million on severance packages, according to its recently filed proxy. However, it is expected to dramatically reduce overhead by closing many AT&T call and regional service centers, and much if not all of AT&T’s corporate headquarters.
The merged company will be structured by division much as Comcast currently is structured, sources said.