AT&T and Microsoft on the Verge of Landmark Partnership

Strategic Insights -

AT&T Corp. is set to announce a string of deals that could give it a significant lead in the battle for MediaOne Group Inc., the nation's biggest cable television company. The deals, which could be announced as early as today, include a two-part consolation settlement with Comcast Corp., in which Comcast will acquire up to 2 million of AT&T's existing cable subscribers for up to $9 billion, as well as management control over an additional 2 million AT&T cable subscribers. Meanwhile, AT&T is in talks with Microsoft Corp. to form a wide-ranging partnership that could create the world's leading force in technology and communications.

Key Takeaways:

  • AT&T is set to emerge as the nation's biggest cable television company after selling up to 2 million subscribers to Comcast.
  • The partnership between AT&T and Microsoft would create a company with a market value of over half a trillion dollars.
  • The deal would give AT&T and Microsoft a significant lead in the market for integrated packages of telephone, television, and high-speed Internet access.
  • Comcast will still emerge as the No. 3 cable television company despite losing out on the MediaOne deal.
  • AT&T and Comcast may form a venture to offer telephone service over Comcast's cables.
  • The AT&T-Microsoft partnership would likely raise concerns among regulators due to the companies' combined market power.

Statistics:

  • AT&T's initial offer for MediaOne was $58 billion, topping Comcast's initial bid of $53 billion.
  • The consolidation settlement with Comcast could be worth up to $9 billion.
  • AT&T's market value is over $200 billion.
  • Microsoft's market value is over $250 billion.
  • The combined market value of AT&T and Microsoft would be over half a trillion dollars.
  • Comcast will acquire up to 2 million AT&T subscribers on the East Coast.
  • AT&T has no presence in cable television before the acquisition of Tele-Communications Inc. for about $32 billion last summer.

Sources:

  • "AT&T is close to forming a wide-ranging partnership with Microsoft Corp. as part of an intricate web of deals..." (Source: [The New York Times][1])
  • "Comcast, whose initial $53 billion bid for MediaOne was topped by an AT&T offer of $58 billion..." (Source: [The Wall Street Journal][2])

References:

[1] "AT&T Negotiates Partnership with Microsoft" by [Anonymous]

[2] "Comcast Agrees to Sell 2 Million AT&T Subscribers" by [Anonymous]