AT&T, Comcast Need Franchise OKs


Sources at AT&T Corp. and Comcast Corp. last week confirmed that both companies will need to transfer franchises to complete their $72 billion merger, announced last month.

Soon after the companies agreed to merge, officials at AT&T and Comcast were unsure whether one or both MSOs would need to obtain transfers.

Both MSOs will have to seek local approval based on the structure of the new company, which is being billed as a Comcast takeover of AT&T Broadband, with former AT&T shareholders owning a majority of the stock, sources said Tuesday. The new outfit will be called AT&T Comcast Corp.

Comcast and AT&T sources were quick to note that it's possible that not all of the franchises had to be transferred.

The companies were looking at individual franchise agreements to determine whether changes in control due to the merger are franchise transfers that trigger local consent.

"We are looking to determine what consents we are going to need. But I don't have any numbers," AT&T spokesman Jim McGann said.

Comcast spokeswoman Karen Buchholz said the MSO needed to transfer a "portion" of its franchises, but said she didn't know a specific number.

After the merger, AT&T Comcast will serve at least 22 million subscribers in 41 states. Both companies have hundreds of franchise agreements.

One source familiar with the franchise issue said as many as 3,000 franchises would be involved in the merger.

When AT&T acquired Tele-Communications Inc. and MediaOne Group Inc., a few local governments tried to peg franchise transfers to commitments from AT&T to carry multiple Internet-service providers. Those efforts largely failed.

Some local officials might revive that effort in the AT&T-Comcast deal in reaction to the bankruptcy of Excite@Home Corp., which briefly interrupted service to both companies' high-speed-data cable subscribers.