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Is this real? AOL to Buy AT&T Cable for 9 Billion

1505 Views 9 Replies 4 Participants Last post by  James_F
First off I am not trying to violate copyright. This was sent to me in email, I am trying to find out if this story is real or not.

The article said it came from AP, but I have searched and can find nothing on it, leading me to believe its bogus.

If it is true this is big news. Anyone know the scoop?

NEW YORK (AP) -- AOL Time Warner Inc. is buying out AT&T Corp.'s stake in their cable television, moviemaking and programming partnership for an estimated $8.5 billion to $9 billion, and said it may sell a stake in its cable TV operations in an initial public offering as early as next year.

The deal announced Wednesday involves the decade-old Time Warner Entertainment partnership, which includes most of AOL Time Warner's cable TV systems and its Warner Bros. film studio, its Home Box Office pay-TV service and other programming businesses.

The two sides have been in discussions for some time on unwinding the partnership known as TWE. AOL Time Warner owns about 72.4 percent of the partnership, and AT&T owns the rest.

The deal gives AT&T cash and readily saleable assets, while AOL Time Warner avoids have to buy its partner out for cash at a time when it is struggling under a heavy debt.

Under the terms of the deal, AT&T gets $2.1 billion in cash and AOL Time Warner stock valued at $1.5 billion, as well as a 21 percent stake in the Time Warner Cable Inc. business in exchange for its stake in TWE.

While AOL Time Warner didn't affix a value to the cable stake, The Wall Street Journal said it would boost the total value that AT&T is getting in the deal to between $8.5 billion to $9 billion.

For its part, AOL Time Warner gets full ownership of Warner Bros. and HBO and stakes in the TV channels Comedy Central, Court TV and The WB Network.

In addition, AT&T and Comcast have agreed to make America Online's high-speed version of its Internet service available on Comcast's cable systems. That type of arrangement could give AOL access to more customers.

The stake in the cable business should benefit Comcast Corp., which is buying AT&T's cable TV businesses and would inherit AT&T's stake in TWE. The former Time Warner created the TWE partnership in 1992.

The cash, AOL stock and Time Warner Cable shares will go to Comcast if that company completes its AT&T cable operation before year's end, which is expected.

AT&T and Comcast will get an immediate influx of cash and will be able to sell its stakes in both AOL Time Warner and the new cable business in the future to generate more money.

AOL Time Warner chief executive Dick Parsons said the deal was "the best possible outcome for our investors" and will simplify its overall structure.

"AOL Time Warner will recapture total ownership and control of its content businesses, enabling us to manage this portfolio of assets for maximum value. And all of the company's state-of-the-art cable assets will be combined for the first time into a well-capitalized, pure-play cable company," he said.

AOL plans to conduct an initial public offering of part of its stake in the Time Warner cable business soon after the restructuring in completed in early 2003.

That would enable it to pay down the debt incurred in making the $2.1 billion cash payment to AT&T, AOL said.

"The fact is that AOL or Time Warner has had managerial control of all of the assets within TWE since 1999," said Katherine Styponias, an analyst at Prudential Securities. "So it's not as if being completely owned by AOL is going to mean things are going to change radically. Nevertheless, it's one less thing to worry about when trying to put a value on the company."
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AT&T owns part of TW Cable. AOL TW is buying AT&T out so that Comcast won't own any part of TW Cable.
Remember its not AOL buying AT&T, its AOL buying AT&T shares that they own in TW Cable.
Cable companies, AOL.

Wow. It just seems like a prefect fit. 2 antiquated delivery systems, offering a watered down, inferior product, run by a group of incompetent morons.

I just wish the content side of AOL/TW was required to break of from the provider side before the merger. Its always a bad idea when one company holds that much control.
Well they are going to spin off TW Cable into its own company...
This is just to dissolve the entity known as "Time Warner Entertainment".

Time Warner Entertainment is about 75 percent owned by AOL Time Warner, and about 25 percent owned by AT&T.

By dissolving the Time Warner Entertainment partnership, AOL would get full ownership in their parts of the Warner Bros. Studio, The WB, and HBO, and will leave AT&T with a smaller part of Time Warner Cable.

This is simply a restructuring deal, to move many of the content assets out of the TWE partnership, to AOL.
Correct me if I'm wrong, but wasn't the Warner Bros. studio at one point partially owned by Toshiba (and Columbia/Tri-Star by Sony)?
Sony owns Columbia/Tri-Star


Warner Brothers and Toshiba entered a joint venture to "produce and distribute movies and television programs for the Japanese and world markets".

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