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Thursday, 20 December, 2001, 22:21 GMT
AT&T and Comcast create cable giant
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After six months of talks Comcast secures AT&T Broadband
US cable operator Comcast will merge with AT&T's broadband unit in a deal valued at $72bn.

The move ends a prolonged bidding battle for America's largest cable television operator and creates a giant with 22.3 million subscribers.

This dwarfs AOL's Time Warner Cable, the second largest operator with 12.7 million subscribers, which also submitted a bid.

If there had been a deal with AOL Time Warner, it would probably have faced heavy scrutiny by anti-trust regulators over the combined companies' 26.4 million subscribers.

While scrutiny of the Comcast deal is inevitable, it is expected to be passed after a Supreme Court ruling on 3 December refused to reinstate restrictions on subscriber numbers for cable companies.

On Wall Street news of the deal sent AT&T's shares up $1.05 to $17.85 by the close of trade on Thursday, while Comcast fell $2.28 to $35.79.

AT&T break-up

AT&T picked Comcast five months after it first rejected a $41bn unsolicited bid by the nation's third biggest cable operator as too low.

Comcast will pay about $47bn in stock and assume about $20bn in debt.

Microsoft, which had said it would take a stake with whichever bidder won, will convert $5bn worth of stock in an AT&T subsidiary into shares in the new company.

The cable division will be spun off and merged with Comcast, creating the new company called AT&T Comcast.

Comcast's bid came as AT&T was about to spin off of its wireless operation into an independent company, the first stage of a break-up into five separate companies.

Cox Communications had also submitted a bid for the broadband division.

The BBC's Ben Morris
"The bid was backed by Microsoft"
See also:

10 Dec 01 | Business
AT&T tests cable TV options
19 Jul 01 | Business
AT&T rejects Comcast offer
28 Sep 01 | Business
AT&T seeks sale of units
25 Jul 01 | Business
AT&T in cable talks with AOL
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