Word: mccaw
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...merger turned out to be the richest -- and luckiest -- deal in McCaw's life. The two companies had first spoken of the arrangement last November when AT&T agreed to acquire 33% of McCaw Cellular of Kirkland, Washington, for $3.8 billion. Negotiations stalled, however, over the issue of how to divvy up strategic decisions and future profits. The solution of buying all of McCaw, rather than just part of it, might not have been possible a few months ago. Fortune intervened, however, when the value of AT&T's stock rose 46%, or $26.5 billion, between November and two weeks...
...McCaw is itself the product of a series of acquisitions. The company grew out of a string of cable-television businesses that was put together in the 1960s by J. Elroy McCaw. After their father's sudden death in 1969, Craig and his brothers built a cable empire that they finally sold in 1987 to Jack Kent Cooke for $755 million. The McCaws had switched their focus to cellular, becoming initial bidders for cellular-telephone licenses after the Federal Communications Commission opened up that business to competition in the early 1980s. McCaw's big break came in 1986, when...
...most valuable commodity of McCaw Cellular is Craig McCaw. Soft- spoken and unassuming, McCaw is a demanding chief executive who drives a 10-year-old car and wears a $30 plastic digital watch. A licensed pilot, he relaxes by flying his De Havilland-Beaver seaplane to remote lakes in the Pacific Northwest. The McCaw family, including Craig and his brothers, owned 20% of their company's stock. When the AT&T purchase is completed, their holdings will be worth a combined $2.8 billion, making the McCaws AT&T's largest independent shareholders. Craig, who will become an AT&T board...
...cost of McCaw's visionary expansion is a staggering debt load of nearly $5 billion and losses of $715 million in the past two years. Even with that burden, McCaw is expected to play a crucial role in AT&T's quest to conquer the emerging field of wireless communications. Almost all calls now originate or terminate on conventional wall-jack telephones (even if they are cordless within the home). But analysts predict that cellular-type phones will gradually replace hard-wired sets. That could mean trouble for local telephone companies, whose monopoly depends on phones remaining tied down...
...McCaw could turn out to be the Trojan horse that lets AT&T into the rigidly fortified local telephone business. Under the terms of the 1984 court-ordered breakup of the Bell System, AT&T is barred from re-entering that market. But with McCaw in hand, AT&T could skirt the restrictions, bypassing the local telephone network completely to provide long-distance cellular service directly to customers. If it succeeds, AT&T can sharply reduce the access fees it must pay the local carriers for the right to connect to their networks. Last year it paid $14 billion...