At the same time AT&T Broadband snubbed its nose at [email protected] negotiating tactics and left the bankrupt Internet service provider high and dry last week, the telecom company saw its own takeover attractiveness grow when Microsoft Corp. backed rival bidders to AOL Time Warner Inc.
Microsofts backing of Comcast Corp. and Cox Communications Inc. in the bid for AT&T Broadband, of Basking Ridge, N.J., illustrates the value of the network to content providers. The future of broadband access to tens of millions of households across the country pegs them squarely against each other.
"If AOL Time Warner purchased AT&T Broadband, that would make access to those 15 million subscribers that much more difficult for Microsoft," said Mike Paxton, an analyst at Cahners In-Stat Group, in Scottsdale, Ariz. "Thats a chance they dont want to take. Its in their interest to have AT&T do anything but become part of AOL."
Seen by many as almost a pre-emptive strike, the interest Microsoft, of Redmond, Wash., has in AT&Ts broadband link to millions of subscribers extends beyond connectivity. "Anybody that has anything at all to do with the desktop, Microsoft will go after," said Robert Rosenberg, president of The Insight Research Corp., in Parsippany, N.J. "They will do everything they can to foil AOL. They are monopolists."
Although AT&T had made what was widely seen as a reasonable offer for [email protected], of Redwood City, Calif., it was not willing to play by the terms dictated by the bankrupt service provider. "[email protected] was playing high-stakes poker," Paxton said. "It turned out to be a horrible call."
Even though AT&T may lose some [email protected] customers in the process, analysts said it will likely be less expensive for the company to acquire new customers than pay the subscriber fees [email protected] demanded.