RealTime IT News

Thy Deal Be Done

Shareholders this week approved the AT&T Corp. and Excite@Home deal that grants the telecom giant a 74 percent voting stake in the cable network.

In addition to the realignment of executive leadership, the current board quickly extended the cable access contracts between AT&T , Cox Communications, Inc., and Comcast Corp. through 2006.

Based on the original agreements reached in March, Excite@Home and AT&T extended their working relationship through 2008.

Excite@Home's exclusive relationships with AT&T, Cox , and Comcast will continue through the currently scheduled expiration date of June 2002, unless the Federal Communication Commission steps in with a national broadband policy that states otherwise.

The chance that federal regulator's would move to establish such a policy regulating access to cable headends remains slim. AT&T moved to appease the FCC with its December 6, 1999 agreement to allow MindSpring to become a third party cable access provider by June 2002. Preliminary tests of its shared access system start in November.

After the summer of 2002, Excite@Home will simply be the cable platform provider of choice for its principal partners. The deal also requires that the Excite@Home portal Excite.com search be featured on the cable partners' high-speed Internet service start pages.

Additionally, Excite@Home will work with AT&T to deliver services to consumers via advanced TV, narrowband initiatives and wireless services, subject to negotiation with AT&T Wireless Group.

Overall, the new arrangements expand upon Excite@Home's current business model and represent a significant opportunity for the company to provide cable connectivity and content distribution services to its partners.

George Bell, Excite@Home chairman and chief executive officer said the approval paves the way for continued broadband expansion.

"We are more committed than ever to using our broadband network for the consumer and commercial deployment of broadband services," Bell said. "With these deals firmly in place, we are primed to take advantage of each and every broadband opportunity that is presented."

C. Michael Armstrong, AT&T chairman, chief executive officer, and Excite@Home board member, said the deal is all about extending the reach and accelerating the availability of the Internet.

"Working together, Excite@Home and AT&T will bring high-speed Internet services to millions of homes and businesses and seize a great growth opportunity," Armstrong said.

Excite@Home must convert about 50 million of AT&T's Series A shares into Series B shares, each of which has 10 votes. As a result, AT&T will own approximately 25 percent of the economic interest in Excite@Home and 74 percent of the voting interest. Before the deal was done, AT&T held a 24 percent economic interest and 56 percent voting interest in Excite@Home operations.

The new governance and economic structure take effect in September, while the resolution of pending litigation between Excite@Home and Cablevision Systems Corp. , which lost operating control in Excite@Home, is settled out of court.

AT&T is free to begin consolidating Excite@Home into its financial results in September, rather than October as previously anticipated.

The Company's new board will consist of six members designated by AT&T, four independent members and o