Even before the Tele-Communications Inc.-AT&T Corp.
deal closes, the two companies are talking about co-branding their cable and telephone
services in their pitches to subscribers.
In giving the deal the thumbs-up, cable marketers pointed
to the advantages that AT&T Consumer Services will have against competitors in its
ability to market products, thanks to a sterling brand name, an unprecedented package of
bundled services and capital resources that other cable operators can only dream about.
MSO executives also applauded the deal as a triumphant
vindication of cable's role as a broadband provider, which will enhance the image of
the industry among consumers.
"AT&T has a tremendous brand name," said Char
Beales, president of CTAM, cable's marketing trade group, on the eve of its annual
conference, "and it has vast experience in competitive markets. TCI will now have the
resources to improve its product and its marketing."
Consultant Howard Horowitz voiced the sentiments of most
marketers when he said, "The importance of this deal for marketing comes down to two
words: bundled services. If it goes through as planned, the world will change."
Lee Clayton, vice president of marketing for Rifkin &
Associates Inc., cited the value of TCI's and AT&T's "combined database
and information on customers," which, she anticipated, would be utilized for selling
bundled services via targeted marketing.
Cable television, she noted, gives AT&T a "very
direct, cost-effective way" to communicate with consumers who are not currently
AT&T phone or Internet customers.
Conversely, she added, consumers who are AT&T phone
customers but not TCI cable subscribers can now be reached in a "very cost-effective,
direct-marketed way, with a very intriguing bundled offer."
Scott Ferris, former marketing executive at U S West Media
Group (now MediaOne Group) and an architect of MSO MediaOne's broadband strategy,
predicted that the new company would employ a base-protection strategy and target high-end
customers who are vulnerable to being lured away by either another phone company or a
direct-broadcast satellite service.
Ferris also thought that AT&T Consumer Services would
"focus on homes passed" and go after consumers who have never subscribed to
cable. Ferris noted that AT&T paid a premium for the homes passed, saying that the new
company needed to increase its subscriber base, "even if it's a
On the satellite side, analysts and executives predicted
little near-term impact from the merger, given the time that it will take to close the
deal and to upgrade all of the systems.
Many expect DBS to take full advantage of its window of
opportunity. And some even saw DBS benefits from the AT&T deal.
"This will impact positively how Wall Street looks at
any subscription-television business," said Stanley E. Hubbard, president and CEO of
U.S. Satellite Broadcasting, pointing to the high value placed on TCI's subscribers.
"If you're interested in crystal-clear pictures,
you can call your local cable company for the next five years and not get the service you
need," said Bob Berzins, senior vice president with Lehman Bros. Inc.
And Lou Kerner, vice president at Goldman Sachs & Co.,
said all multichannel-video providers will benefit from the extra advertising that
AT&T will bring to the marketplace.