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.
Tom Jermoluk, Excite@Home chairman and chief executive officer, said the company
intends to be the driving force behind accelerated of broadband access in
order to bring new high-speed services to consumers.
“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.
