Excite@Home Cleaves Customers from Content
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Excite@Home Monday announced that its board of directors has authorized the cable access provider to establish a tracking stock for the media assets of its business.
The move reflects Excite@Home's (ATHM) efforts to develop both its broadband subscription base and media businesses. By splitting their financial reporting structure, Excite@Home enables their media business to operate independently from the subscription side of their business.
The media business will be responsible for the narrowband portal, broadband portal with its associated distribution rights, and advertising and targeting services. Excite@Home's content rights to program the front page of the broadband service will remain unchanged.
The subscription business will focus on residential cable Internet services, commercial Internet access services, customer care, and network management. The business plan to serve millions of users and deliver a variety of service offerings.
"As we rapidly approach 1 million subscribers and set our sights on the next milestone of 10 million, we have a wealth of expansion opportunities both in the subscription and media businesses," Jermoluk said.
"This structure will allow us to simultaneously drive the growth and valuation of each of our businesses in complete alignment with our partners," he added.
Jermoluk said Excite@Home's cable affiliate relationships and exclusive obligations related to the subscription and media businesses will continue unchanged.
"We look forward to working with AT&T, Cox, and Comcast to establish terms of carriage for the post-exclusive period and to support the millions of subscribers we will share at that time" Jermoluk said.
The media side of the business includes its narrowband portal, broadband portal with its associated broadband distribution rights and advertising and targeting services.
C. Michael Armstrong, AT&T (T) chairman and chief executive officer, said the telecommunications company is in total alignment with Excite@Home on this transaction.
"The media business represents a substantial opportunity for Excite@Home, its partners, and its stockholders," Armstrong said. "This structure will allow Excite@Home to aggressively build its media business independently while working with AT&T and its other cable partners to drive the deployment of broadband services to consumers."
Although Excite@Home and AT&T executives have not seen eye-to-eye in the past, Armstrong said that the business split stabilizes the two companies broadband goals.
"Our relationship with has been very positive for AT&T and we will continue to have a strong, durable, and robust relationship under our contract and beyond," Armstrong said.
Brian Roberts, Comcast Corporation (CMCSA) president, said the move was a solid transaction for all Excite@Home partners.
"This transaction represents a step forward for Excite@Home. We are proud of the job that Excite@Home has done to drive the broadband category, Roberts said. "Our joint efforts are the reason hundreds of thousands of consumers can afford broadband today."
David Woodrow, Cox Communications (COX) senior vice president of broadband services, said the divided focusof Excite@Home would further the deployment of broadband access nationwide.
"Providing our customers with a fast and engaging service depends on a deep integration of Excite@Home's and the cable industry's respective expertise," Woodrow said. "We are delighted with Excite@Home's support and are confident in our joint ability to scale our operations to meet increasing consumer demands for broadband access."
Excite@Home plans to issue common stock that will track the economic performance of its media business. A board that will consist of a majority of independent directors, with minority representation of the company's principal cable partners will govern the media business.
The subscription business will remain subject to Excite@Home's existing board governance which gives its principal cable partners special voting rights with respect to board decisions.
Excite@Home expects to issue a proxy statement describing the tracking stock in the first half of 2000 and distribute the tracking stock during the third quarter of the year.