MediaOne's Cable Systems Attracting Fewer Bidders

Strategic Insights -

MediaOne's highly anticipated sale of its coveted cable systems has taken an unexpected turn, with Microsoft and America Online (AOL) increasingly unlikely to challenge AT&T's bid. Comcast, the current bidder, has until Thursday to come up with a more compelling offer, but analysts are growing less optimistic about a competing bid emerging. The lack of interest from Microsoft and AOL is attributed to their reluctance to become deeply invested in the cable business, unlike AT&T, which has already made significant commitments to the industry through its purchase of TCI and alliance with Time Warner.

Key Takeaways:

  • MediaOne has announced that it will accept AT&T's offer, worth $55.8 billion in stock and cash, over Comcast's bid of $48 billion in stock.
  • AOL has reportedly pulled out as a possible Comcast partner, while Microsoft remains silent on its intentions.
  • Comcast has until Thursday night to present a revised offer, but analysts believe a competing bid is unlikely.
  • Microsoft and AOL may not be interested in becoming cable companies, as it would require significant investments and potential alienation of AT&T, which already has access to the two biggest cable systems.
  • The lack of interest from Microsoft and AOL is attributed to their interests competing with AT&T's in the cable industry.
  • A bidding war between AT&T Chairman C. Michael Armstrong and AOL's Steve Case, and Microsoft Chairman Bill Gates, was a tantalizing prospect but is now unlikely to materialize.

Statistics:

  • AT&T's offer is valued at $55.8 billion in stock and cash.
  • Comcast's bid is worth $48 billion in stock.
  • MediaOne's stock fell 2.3 percent to $79.11 on the New York Stock Exchange.
  • AT&T's stock rose 1.8 percent to $51.06 on the New York Stock Exchange.
  • Comcast's class A common stock rose 4.8 percent to $65.19 on the Nasdaq Stock Market.

Sources:

  • "CNBC report" (exact date not specified)
  • Tom Vanderslice, managing director for media corporate finance at CIBC Oppenheimer (exact date not specified)
  • Thomas Eagan, a cable industry analyst for Paine-Webber Group (exact date not specified)
  • MediaOne's press release announcing the acceptance of AT&T's offer (exact date not specified)
  • "RJR Nabisco bidding war" (1989)