The law firm of Creighton, Bradley and Guzzetta LLC — consultant to Nashville, Tenn., and a slew of Midwestern hamlets — has reviewed new information on the AT&T Broadband-Comcast Corp. merger but stands by its original, if singularly held conclusion: it must be rejected.
Communities advised by the Minneapolis firm have delayed their merger-related franchise-transfer votes, rather than voting to deny the transfers. This was done so Comcast could negotiate with the consultant in hopes of reversing the recommendation.
But when the consultant sent clients a supplemental report late in June, the firm reiterated its conclusions.
The supplemental report compares the transaction that would create AT&T Comcast Corp. to the "unbridled corporate growth" — and subsequent meltdowns — of Tyco International Ltd., Global Crossing Inc. and Enron Corp. Those companies gobbled up others to become giants by assuming debt, then used illicit accounting practices to disguise it.
While there is no evidence of non-standard accounting in the cable deal, the law firm said it has still not been supplied with projected revenues and the assumptions supporting them; projected expenses and their assumptions; or cash-flow projections for the merged company.
Instead, the "new information" included positive reports by other consultants and Wall Street sources including Bear Stearns & Co., Merrill Lynch Inc. and Sanford Bernstein & Co., added to the approximately 5,000 pages of documents already submitted by the company.
"The fatal flaw remains Comcast and AT&T's steadfast refusal to provide a business plan from which [local franchising authorities] can extrapolate a picture of the potential for harm to subscribers and LFAs as a result of this transaction," according to the supplemental report obtained by Multichannel News.
"We believe the that the CBG report does our community partners an unfortunate disservice by relying on a factually inaccurate and misleading financial analysis," said Comcast spokeswoman Jenni Moyer.
The firm displays a "trust me, I'm right" attitude ignoring all other views, she noted, adding the company has a significant investment in the communities it serves. Comcast hopes to continue those relationships, she said.
But the consultant contends that his peers and Wall Street sources did not delve deeply enough into the financial issues.
He still faults some of the merged company's basic assumptions.
AT&T Comcast will reduce debt by selling AT&T Corp.'s share in Time Warner Entertainment L.P., but the consultant believes the company will end up actually swapping systems to get out of the partnership with AOL Time Warner Inc.
The company also relies on selling more products at higher prices, a "reckless and dangerous assumption," according to the supplemental report.
The firm's Tom Creighton was out of town and did not return calls for comment by deadline.
Nashville, the consultant's largest client, has delayed a vote on the transfer until August.