AT&T and Comcast Corp. announced on Wednesday their intention to merge the AT&T Broadband division with Comcast in a deal valued at $72 billion. If approved by respective company shareholders and federal regulators the merger will create one of the U.S.s largest broadband services companies.
The new company, to be called AT&T Comcast Corp. with headquarters in Philadelphia and offices in New York City, will have a presence in 41 states with approximately 22 million subscribers. Included among those subscribers, said AT&T and Comcast, are approximately 5 million digital video customers, 2.2 million high-speed data customers, and one million cable telephony customers.
Comcast was originally rebuffed in its bid for AT&T Broadband back in July, a $58 billion hostile takeover effort. Executives from both companies discussed the deal in the ensuing months and came to a better understanding. Comcast then beat out AOL Time Warner and Cox Communications, which had expressed interest in AT&T Broadband.
The new company plans to aggressively market new services, such as AT&Ts pet project of delivering competitive local telephone service over cable lines, as well as new applications in video on demand and interactive television.
“We are particularly excited about the telephony prospects,” said Brian L. Roberts, Comcasts president, in a prepared statement. “The size of our telephony footprint, combined with AT&Ts expertise and leadership in the telephony space, will enable us to accelerate the deployment of telephone services to many new markets.”
A spokesperson for the new company could not comment on any additional products that might be marketed to enterprise customers.
AT&T Comcasts assets will include both companies cable TV systems, AT&Ts interests in cable television joint ventures and its 25.5 percent stake in Time Warner Entertainment, and Comcasts interests in QVC, E! Entertainment, The Golf Channel, and other entertainment properties.
AT&T Chariman C. Michael Armstrong, who had planned to retire from AT&T in May 2003, has now been named AT&T Comcasts chairman and will take on the job after the merger closes at the end of next year. Brian Roberts will be the companys chief executive officer.
AT&T shareowners will receive new shares in the merged company giving them a 56 percent economic stake and a 66 percent voting interest. They will retain complete ownership of AT&Ts traditional communications business. The Roberts family, which owns Comcast Class B shares, will control one third of the new companys outstanding voting interest.
Microsoft, which held $5 billion in debt from AT&T Broadband, has agreed to convert it into approximately 115 million shares in the new company.