AT&T to Tweak Digital Again


Just five months after initiating a major overhaul of its digital-cable
strategy, AT&T Broadband is set to do it again.

'We're going to refine our digital-video strategy,' CEO William Schleyer told
analysts at Salomon Smith Barney's Global Media and Entertainment Conference in
Scottsdale, Ariz.

'AT&T Broadband has had some bad [press] around its [cash] margins
relative to its peers,' he continued. 'A lot of that can be explained through
telephony and some out-of-market contracts, but a big chunk -- almost three
[percentage] points -- can be explained because its digital-video strategy,
relative to its peers, is not producing the cash flow it should.

He added, 'We've identified the problem. We have a number of solutions we can
choose from.'

While Schleyer would not elaborate on the changes, AT&T Broadband
spokesman Andrew Johnson said they would likely involve packaging and pricing of
the digital product. He said those modifications are still being worked out and
he declined to specify them.

AT&T Broadband's last digital-cable packaging overhaul was in August,
when the MSO said it would split the service into four tiers called 'Digital
Value Packages.'

The packages started with 'Digital Bronze' at $39.99 per month, which bundled
core analog programming with digital basic, Encore, three Starz Encore Group LLC
thematic movie channels, expanded pay-per-view access, digital music and an
electronic programming guide.

'Digital Silver,' 'Gold' and 'Platinum' each add multiple feeds of Starz!
movie channels, plus one, two or all available premium services, respectively,
including Home Box Office, Showtime, The Movie Channel and Cinemax.

At the conference, Schleyer said the 'full impact' of the new digital
strategy won't be felt until the second half of 2003.