The spurned potential buyers of some former AT&T Broadband systems filed a lawsuit last week, claiming their higher bids lost out when systems were sold to buyers from within cable's "elite" in 2001 and 2002.
The plaintiff, Black Education Network Inc., described in the lawsuit as an African-American/minority-owned enterprise, asserted that it lined up $3.1 billion to buy systems with 1.2 million cable subscribers spread across eight states after AT&T Broadband offered them up for sale in late 2000.
Ultimately, the systems were sold in two separate transactions. Mediacom Communications Corp. bought 840,000 subscribers, for about $2.2 billion, in 2001; then Bresnan Communications bought 317,000 subscribers for an estimated $675 million in 2002.
BEN's suit, filed in U.S. District Court in Colorado, claims the group offered more than the eventual sale price for both transactions.
BEN claimed that after it disputed the outcome of the 840,000-subscriber sale, then-AT&T Broadband CEO Daniel Somers replied in a letter that a factor in BEN's bid not prevailing was that the company "has little or no experience in large cable system acquisitions."
In the lawsuit, BEN interpreted that to mean AT&T and Daniels "would not sell large blocks of systems to anyone but those in the elite of cable-
systems ownership, thus totally and intentionally precluding racial and ethnic minority ownership."
The suit seeks unspecified damages and names AT&T Broadband; its current owner, Comcast Corp.; and deal-broker Daniels & Associates as defendants.
The operators and broker were accused of civil rights violations; fraud; misrepresentation; breach of covenant of good faith and fair dealing; interference with prospective economic advantages; and negligence.
A Comcast spokesman declined comment, citing the pending litigation. Calls to Daniels were not returned.
BEN wanted to buy the systems to program its own brand of positive African-American targeted programming, president Michele Clark Jackson said in an interview last week.
The complaint said BEN's potential management team at the end of 2000, was to have included Michael Marcovsky, a former CEO of Nostalgia Network, and Nyhl Henson, the former Nickelodeon general manager and ex-CEO of Country Music Television. The managers had "extensive experience and expertise" in cable and telecommunications, the lawsuit asserted.
Henson did not respond to a call for comment and Marcovsky could not be located by Multichannel News.
Asked about the management team, Jenkins cut off the question, saying those named in the complaint were to be interim management. "They're not the issue. The issue is who we are as a purchaser," Jenkins said.
According to the lawsuit, investment bank Nedder, Moore & Associates LLC and Robinson-Humphrey Co. LLC, a subsidiary of Salomon Smith Barney Inc., worked with BEN to arrange financing for the bids.