Sources: No Malone Bid for AT&T6/22/2001 9:04 AM Eastern
Sources close to the situation denied Thursday night's published reports that
Liberty Media Group chairman John Malone and former AT&T Broadband CEO Leo
J. Hindery Jr. were looking to make a run at AT&T Corp.
According to a report from Cable World posted on Inside.com -- which
is owned by Cable World parent Brill Media Holdings Inc. -- both Hindery
and Malone were looking for partners to help them take over the telephone giant
for about $78 billion. The report also cited Microsoft Corp. and regional Bell
operating company Verizon Communications as likely allies.
Hindery declined to comment on the rumors, but sources close to him said
there was 'no substance' to the reports. AT&T Broadband refused to
'This is complete speculation, and we can't comment on speculation,' Liberty
Media spokeswoman Julie Gleichmann said.
Verizon spokesman David Frail also declined comment, citing the company's
policy of not commenting on speculation.
At the National Show in Chicago earlier this month, Microsoft TV division
senior vice president Jon DeVaan tried to put any cable-takeover rumors by his
company to rest by denying the software giant's interest in owning cable
'We're a software company,' DeVaan said.
Sources close to both Hindery and Malone didn't put much credence in the
'I think it's kind of ridiculous,' said one investment banker, who asked not
to be named. '[Malone] has got a lot on his plate already without AT&T.'
Janco Partners Inc. analyst Matt Harrigan, who follows Liberty, said that
even though anything is possible, his feeling is that Liberty is concentrating
on its European assets at the moment, and not on making any large domestic
Earlier this week, Liberty agreed to spend $4.7 billion for Deutsche Telekom
AG's German cable operations, with about 3 million subscribers.
'I think Liberty is very occupied with Europe right now,' Harrigan said.
Other sources voiced surprise that Hindery and Malone would launch a takeover
of the entire company, including its consumer long-distance and
business-services units, which have been in decline. AT&T's wireless unit is
scheduled to be spun off next month, which would eliminate it from any deal.
'It's like holding water in your hand,' the investment banker said of the
other AT&T assets. 'They're not going to be there in a little while.'
And AT&T Broadband has had problems of its own.
Although it's the largest cable operator in the country, with 15.3 million
subscribers, the MSO's 16 percent cash-flow margins are the lowest when compared
to the 38 percent to 47 percent cash-flow margins of its peers in the
AT&T Broadband CEO Dan Somers has said the company is working to turn its
cash-flow performance around.
Last October, AT&T disclosed plans to split into four separate parts --
broadband, consumer, business and wireless. The company said it will issue a
tracking stock for its AT&T Broadband unit Aug. 10. About one year later,
AT&T plans to make the MSO unit a separate, asset-based company.
Rumors of AT&T Broadband's ultimate fate have been swirling ever since
AT&T announced its breakup plans. Comcast Corp. was also said to be
assembling a group to take over the unit -- a rumor company president Brian
Roberts flatly denied.