The AT&T Jump Ball

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The very complicated bidding game for AT&T Broadband may be over — and a victor may emerge — perhaps as early as this week.

Or perhaps not, as this game might very well go into overtime. The dust already whirling around the AT&T deal might have been kicked up once again last week, when AOL Time Warner Inc. CEO Jerry Levin announced he would retire in May.

Levin's handpicked successor, co-chief operating officer Richard Parsons, will now run the show. That leaves his cohort, Bob Pittman, as the company's sole COO.

The departing Levin had always strongly argued the merits of cable-system ownership, even when Wall Street and his own directors questioned the wisdom of such an investment. Now he passes the baton to Parsons, a trusted colleague.

One could assume that Parsons, like Levin, would like to see the company take an even larger stake in the cable sector and continue to aggressively pursue AT&T Broadband. But let's not assume anything.

Parsons, the ultimate diplomat, is playing on a new field — and with a new owner, America Online. Since the new-media company acquired Time Warner Inc. a year ago, the dot-com bomb has knocked a lot of wind out of its sails.

AOL — a fierce competitor of Microsoft Corp., which is backing Cox Communications Inc.'s bid for Broadband — might not really want to buy the cable system. Instead, it would invest in the company to insure carriage on that big broadband pipe.

A lot of people seem to think that neither Microsoft nor AOL want to be in the MSO business — they just want in, period.

And with Levin out of the picture, Parsons now answers to AOL Time Warner chairman Steve Case, a new-media guy who sees Microsoft as Darth Vader.

There's a lot at stake for AOL Time Warner, a huge company that's still trying to mesh together its old- and new-media assets. The giant may indeed have enough on its plate without trying to digest AT&T Corp.'s broken-down cable unit.

Oddsmakers predict that Comcast — which put the ball in play last July with its unsolicited "bear hug" — will prevail. But AT&T rebuffed that offer. Since then, Comcast has tweaked its bid, but at press time, all the other contenders were still hanging in the game.

Comcast might not be a shoo-in, though. Given the accounts of many cable executives, let's just say that Amos Hostetter — AT&T's largest shareholder — and Comcast CEO Brian Roberts aren't best buds.

Both parties deny that, but sources said Hostetter — who built Continental Cablevision Inc. (now part of Broadband) from scratch — does not respect Roberts, who fell into a cable company that his father, Ralph Roberts, built from the ground up.

It's hard to imagine that emotion would sway the outcome of the sale of AT&T Broadband. But emotions can never be discounted, especially in this post-Sept. 11 climate. Many an executive, including AOL Time Warner's Levin, have made major, life-altering decisions since that historic day.

The war in Afghanistan, the fear of future terrorist attacks and a weakened U.S. economy have all muddied the waters in terms of conducting business as usual.

So the outcome of AT&T's ownership may remain a jump ball far longer than anyone thought. The games have just begun.

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