AT&T Corp. shareholders, in a rare moment of solidarity,
voted unanimously Wednesday to turn down a bid by Comcast Corp. to take over AT&T Broadband.
At the board meeting, directors also announced their plans to continue with
its decision to spin AT&T Consumer, with its own tracking stock, and AT&T
Business away from its broadband entity.
Board members said that after careful analysis and advice from financial
investors, the Comcast bid did not reflect the full value of AT&T
Broadband, which owns the largest cable network in the nation.
Comcast officials were unavailable for comment on the decision at press time.
The decision is vindication for C. Michael Armstrong, AT&T chairman and
chief executive officer, who struck down a similar bid after talks failed
recently. Rumored to be a contentious round of talks, Comcast executives
sought to work around AT&T management by making a direct appeal to AT&T shareholders.
Board members were surely aware of that fact when they assigned Armstrong
to notify Comcast of its decision, a duty he likely relished.
In a letter to Ralph and Brian Roberts, Comcast chairman and president
respectively, Armstrong relayed the concerns of board members over terms of
the takeover proposal.
“Our board of directors today considered your July 8, 2001, proposal to
acquire AT&T Broadband and unanimously voted to reject it,” Armstrong’s
letter read. “Further, the board is concerned that Comcast’s multi-tier
voting structure would put AT&T shareholders at a disadvantage in matters
of corporate governance.”
The board also gave notice to its concerns over the future of AT&T
Broadband. The company recently announced its plans recently to expand its
role in digital subscriber line (DSL) service, which is in direct
competition to cable.
Plans to develop a voice over DSL (VoDSL) network have been on the AT&T
wish list for years now, but have run into difficulties. A decision to
speed up its DSL deployment as an Internet service only gives the company
the impression of not knowing what it wants, cable or DSL or any number of
other options.
After spending the past two years and more building up AT&T Broadband with
$125 billion purchases of cable companies like MediaOne and
Tele-Communications, Inc. (TCI), officials haven’t given a clear indication
which direction they intend to compete. It’s purchase earlier this year of
now-defunct NorthPoint Communication’s DSL gear for $135 million further
muddied the waters.
