Word: tci
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Dates: during 1990-1999
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What to do? One road led through cable guy John Malone, the deal-happy boss of Tele-Communications, Inc. What better way for AT&T to provide local calling--plus a full package of communications and entertainment services--than to scoop up TCI, the second-largest U.S. cable operator after Time Warner? Never mind that the final price of $31.5 billion in AT&T stock was a lofty $8.5 billion premium over TCI's market value. Or that Malone's cable-TV wires, which run through neighborhoods with 33 million homes (about a third of all U.S. households), were mostly...
Armstrong's vision of the new AT&T is simple enough: hooking up AT&T and TCI (1997 revenues: $7.6 billion) "will enable us to offer a full portfolio of services with one connection from one company. And this is a big deal." So big, in fact, that there was a hint of desperation about the merger, which sped to a conclusion after just eight days of talks in the Manhattan offices of Wachtell, Lipton, AT&T's legal counsel. "Time was closing in on us," says Armstrong, who at 59 remains a man in a hurry who relaxes...
...drubbing was partly a response to the complexity of the deal, which calls for AT&T to bundle its consumer operations and TCI's cable systems into a new subsidiary, called AT&T Consumer Services that John Zeglis, who now serves as AT&T president, will run as chairman and CEO. The unit will issue a separate "tracking stock" that will let investors place bets on the consumer-related businesses of the new AT&T. A similar tracking stock already exists for Liberty Media, TCI's cable-programming arm, whose holdings include the Discovery Channel and Black Entertainment Television. Malone...
...markets should the deal go through. So far, Washington has barred the Bells from offering long-distance service to their own local customers on ground that they have not yet opened their "loops" to such rivals as AT&T. But to stick to that stricture after an AT&T-TCI marriage would be "like protecting the wolves from the sheep, and it's just absolutely wrong," says Jerry Brown, a spokesman for US West...
...move isn't risk-free, of course. AT&T has a habit of buying things just to keep up with the Joneses. It swallowed NCR to get into computers, which was a disaster. But Kadlec says the TCI purchase simply extends the company in a natural direction -- allowing it to re-enter the lucrative local phone market that it once dominated. "AT&T has finally solved a strategic problem that brought down its last two CEOs," said Kadlec. Whatever happens, TCI stockholders ought to be happy today: Shares jumped another $4 to $42 on Wednesday's confirmation of the deal...