Comcast Wins AT&T's Cable Business

AT&T's Board of Directors approved a deal to combine its AT&T Broadband cable TV unit with Comcast in a transaction valued at $72 billion.

The new company, which will be called AT&T Comcast, will have approximately 22 million subscribers and a presence in 41 states as well as 17 of the 20 largest metropolitan areas in the country. Markets covered by the new company include Atlanta, Boston, Chicago, Dallas-Forth Worth, Denver, Detroit, Miami, Philadelphia and San Francisco-Oakland.

In addition, the new cable giant will have 5 million digital video customers, 2.2 million high-speed data customers and 1 million cable telephony customers.

In conjunction with the transaction, Microsoft agreed to convert $5 billion of AT&T subsidiary trust convertible preferred securities into 115 million shares of AT&T Comcast, AT&T said in a statement.

The merger of AT&T Broadband and Comcast is subject to regulatory review, approval by both companies' shareholders and other conditions. AT&T said it also intends to proceed with other aspects of its previously announced restructuring, including the creation of a tracking stock for its consumer services unit, which is expected to be fully distributed to AT&T shareholders following shareholder approval in mid-2002.

From <a href="http://www.skyreport.com" target=none>SkyReport</a> (Used with permission)

This could be bad news for DBS in the near future. The advantage Dbs has over cable is that the basic infrastructure cost is less. While satellites are expensive, they can serve anyone in the country while cable has to string copper (or more expensive fiber) to achieve bandwidth. Hoever, if that infrastructure for cable can be used for otyher revenue purposes as well - namely telephone and Internet services, the cost is reduced. Furthermore, having a large national cable company means that a couple of large call centers can handle CSR needs rather than having a hundred or so smaller offices with higher overhead.

And then there is "Video on Demand" which can actually reduce the bandwidth needed to each household. How? ... by streaming your program selection for a hub or switch (internet style) rather than sending the entire lineup down the cable.