AT&T Broadband has added yet another former Continental Cablevision Inc. executive to its revamped management team and has doubled the size of a bond offering earmarked to pay down its debt.
Last week, the 13.7-million-subscriber MSO hired former Continental executive Kevin Casey as executive vice president of operations. At the same time, it retooled its management structure.
Casey — who was with Continental and its successor company, MediaOne Group Inc., for two decades — will report to new chief operating officer Ron Cooper. Casey spent the past 18 months at Pilot House Ventures, the Boston-based investment firm that was the former home of Broadband's top three executives — CEO William Schleyer, Cooper and chief technology officer David Fellows.
Pilot House is controlled by former Continental chairman and current AT&T Corp. director Amos Hostetter. Schleyer, Cooper and Fellows are also former Continental executives.
Schleyer cut out a layer of management last week, namely the heads of Broadband's East and West divisions. Broadband West president Teresa Elder had already resigned to spend more time with her family. Last week, Broadband East president Jim Mazur said he would resign effective Nov. 30 to pursue other opportunities.
"We believe these layers generally add cost and complexity, and we can simplify our structure with this move," Schleyer said in a memo to employees.
Parent AT&T Corp. also hiked a planned $5 billion bond offering to $10 billion, and will use the proceeds to pay off debt.
The telecom giant had wanted $5 billion to help pay off about $6.7 billion in commercial paper debt. Sources said the offering was popular enough to double it.
"They definitely had a good demand for the deal," UBS Warburg investment-grade bond analyst Philip Olesen said. The money will still go to pay down debt.
Olesen said the bond deal won't have a big impact on AT&T Corp.'s total debt load, but it would let the company get more from commercial paper at a later date.
He also said he thought the management changes would help Broadband keep its options open, aside from an outright sale.
"If they choose not to proceed down that road, which would be a combination of AT&T Broadband with another entity, then they better put together a credible alternative plan that they can convince the market will generate greater value than a sale of the business," he said. "A big part of that is having people in place that know what they're doing on the operating side and have the support of the investment community."
One source close to AT&T called the moves another indication that Schleyer, Cooper and Fellows are in for the long haul.
"This answers the question whether the new team was going to roll up their sleeves and really get involved in the day-to-day process, or were they just going to dress it up," said the source familiar with AT&T. "It's pretty obvious that they are here to get involved."
It had been speculated that the new team was hired to get AT&T Broadband ready for sale.
AT&T Corp. has rejected the only formal offer made so far for the cable unit, a bid from Comcast Corp. But the MSO's fate is expected to be decided by the end of the year. There could be a sale, a partnership with another company or a spinoff.
The case for independence got another boost from the restructuring. The source familiar with AT&T said more changes are coming.
"This is the first in a series of steps," the source said. "They are looking at what the next step will be."
Several executives at Broadband's Denver headquarters who had reported to the president now answer to Cooper. They are: senior vice president of human resources David Brunick; senior vice president of media services Judi Heady; senior vice president of marketing and sales Nancy McGee; and senior vice president of programming Allan Singer.
On the field operations side, reporting to Cooper are: senior vice president Joyce Gab-Kneeland, in Chicago; David Grain, in Boston; and Don Schena, in the San Francisco Bay Area.
Casey will be responsible for five other markets. These senior vice presidents report to him: Kelvin Fee in Florida; Curt Henninger in Portland, Ore.; LeAnn Talbot in Seattle; Paula Trustdorf in Dallas; and Steve White in Atlanta.
AT&T is looking for another operations leader to report to Cooper. Until then, senior vice presidents Randy Bang (Rocky Mountain region); Gary Boles (Salt Lake City); Jeff Harkman (Central California); Jeff Harshman (Pittsburgh); Debi Picciolo (Los Angeles); Joe Stackhouse (Denver) and Tom Unglaub (Midwest Region) will also report to him.