Hartford, Conn. -- AT&T Corp. executives made
public-appearance rounds last week in what some analysts said was a clear effort to boost
the company's pending acquisition of MediaOne Group Inc.
AT&T has lobbied -- privately and publicly -- to ease
ownership-attribution rules that the combined company would exceed. And the
telecommunications giant wants to pump up its sagging share price to avoid having to pay
MediaOne shareholders more to make up the difference.
Last week, AT&T chairman C. Michael Armstrong, AT&T
Broadband & Internet Services president Leo J. Hindery Jr. and nonexecutive chairman
Amos Hostetter were all on the lecture circuit.
Armstrong gave the keynote at an investors' conference
in Manhattan; Hindery spoke on a panel in Washington, D.C., and lectured in Hartford,
Conn.; and Hostetter spoke to the Cable Club in Washington.
The venues changed, but the message was clear: If the
federal government wants true competition in the telephone market, it had better relax the
On Oct. 8, the Federal Communications Commission is
expected to vote on those rules, which cap the percentage of households a single cable
operator can control at 30 percent.
With the MediaOne merger and its various affiliations,
AT&T would have access to more than 40 percent of total U.S. cable homes by the
AT&T has been divesting partnerships to pare down. And
last week, Cablevision Systems Corp. -- of which AT&T owns about 35 percent -- said it
might sell or swap systems with about 714,000 subscribers.
Hindery told reporters after his Hartford lecture that he
didn't feel that AT&T would have to make any more moves in order to get the
MediaOne deal done.
But there is still the question of the company's
stock, which has been on a downward slide since the MediaOne deal was struck in May.
AT&T assured MediaOne that if AT&T's share price dipped below $51.30, it
would pony up as much as $5 per share in cash as compensation. Because AT&T planned to
issue 626 million shares in the deal, the additional cash could add up to $3 billion.
"The stock is committed [to the MediaOne deal],"
SG Cowen Securities Corp. analyst Gary Farber said. "They definitely want to be more
visible. They have a lot of issues in front of them -- MediaOne and cable attribution.
[The sudden visibility] is a combination of that, plus the weakness in the stock."
AT&T's stock price was about $43 last week,
compared with around $59 when the MediaOne deal was first announced.
So far, the public appearances haven't helped the
Armstrong, speaking at the PricewaterhouseCoopers Global
Convergence Summit, addressed the stock price but blamed it on investor tendencies to
value stocks based on price-to-earnings ratio.
"The problem is that in the past 14 months, we have
invested $140 billion into a number of growth businesses, and in the most fabulous growth
industry: communications," Armstrong said. "When you make these kinds of
investments, in the early years, they can only be measured on a cash-flow-multiple basis.
We have one of the most successful wireless businesses in the country, but we have zero
value in our stock price for that."
Armstrong also said there was "too much regulation
across the board in America."
Hindery kept to the company line in his speech at Trinity
College in Hartford. He spoke of the social commitment AT&T has to provide advanced
communications to all -- avoiding the creation of information haves and have-nots -- but
he added that regulation could keep AT&T from reaching that goal.
Before the speech, Hindery talked to some economics
students, offering insight into the culture clash between AT&T and Tele-Communications
Inc., his former company.
"AT&T is more comfortable in a staff-centric,
consensus-driven environment," he said. "That's where the clash has
occurred. It's working out, and it's working out well."
He added, "The clash never occurred because they are
big and I'm small. I had 35,000 employees. The clash occurred in how we came up as an
industry. I borrowed money, wasn't established, nascent. As industries mature, it
gets harder to run them. The cable industry is 50 years old. AT&T is 100 years old.
Therein lies the clash."
Hindery said the solution to solving the clash of cultures
"You have to acknowledge that you were acquired,"
Hindery said. "You can't deny the obvious. It becomes incumbent upon me to
modify our practices to meet their expectations and to modify their practices to meet our
Hostetter, meanwhile, called on federal regulators to adopt
flexible cable-ownership rules to allow AT&T to achieve the scale it needs to compete
in local phone markets against the Baby Bells.