Armstrong: No AT&T Broadband Decision


Despite speculation that recent moves to revamp its AT&T Broadband unit's
management team are a signal that the MSO is favoring remaining an independent
company, AT&T Corp. chairman C. Michael Armstrong said no such decision has
been made.

AT&T Broadband named former Continental Cablevision Inc. president
William Schleyer as president and CEO of the unit earlier Tuesday. Joining
Schleyer are two other former Continental execs -- Ron Cooper as chief operating
officer and David Fellows as chief technology officer.

In a telephone interview, Armstrong said it was never the intention of the
AT&T board to sell the cable business, but he added that if a proposal came
about that would enhance the unit's value, the company would consider it.

Comcast Corp.'s $51 billion unsolicited bid for AT&T Broadband in July
put the MSO in play, with several companies expressing interest afterward in
doing a deal.

Although AT&T rejected Comcast's bid in August and it was rumored to have
talked to AOL Time Warner Inc., The Walt Disney Co. and Cox Communications Inc.,
no clear-cut bidder has emerged.

'We have two options -- to do something strategic in some combination, or to
stay the course and continue to build this into the biggest and best
communications company that we can,' Armstrong said. 'This announcement of this
new leadership will not deter nor defer that process. It is our hope that we can
conclude the process by year-end.'

Armstrong said he began to consider reshuffling the management team in the
summer, after the company began to show results following a period of intense
investment, consolidation and integration.

'It was then that we began to think through really focusing on taking
ourselves to the next level of operating management and operating leadership,
not just investment, not just consolidation, not just integration,' Armstrong
said. 'I contacted Bill [Schleyer] in the summer, and now we're making the

Armstrong said he went through AT&T nonexecutive chairman and board
member Amos Hostetter -- Schleyer's old boss at Continental -- to set up a
meeting. However, he added that Hostetter would not play an expanded role in the
AT&T Broadband unit.

'For the past year-and-a-half, I've tried to motivate Amos to have an
increased role,' Armstrong said. 'He's had zero interest.'

Schleyer admitted that there was a fair amount of uncertainty as to how long
his new job would last -- especially if the unit finds a buyer -- but he said it
was an opportunity he could not pass up.

'No one knows if there will be a deal or what kind of deal it would be,' he
said. 'The opportunity is here and it's here today. With this collection of
assets, this was a unique opportunity to come in and continue to build on what
[former AT&T Broadband chairman] Dan [Somers] has done and develop
broadband. It was a pretty easy decision.'

Schleyer said his first order of business is to continue the work Somers has
started and continue to grow the operation.

Somers has been under fire for the past few months, as AT&T Broadband has
reported some of the lowest cash-flow margins in the industry. Although those
margins are growing -- they rose to 25.2 percent in the third quarter, up 6
points from the second quarter -- they still lag behind the industry average of
between 40 percent and 45 percent.

'I think the time had come,' Somers said. 'Mike and I have had some
conversations about this for some time, that the time had come to pass the baton
of leadership. I had been with AT&T for four-and-a-half years, and I really
need to pursue some other things in my life.'

Somers had been chief financial officer of AT&T for two years before
being named to head up AT&T Broadband in October 1999.