Failed venture benefits Comcast


PHILADELPHIA - Comcast Corp.'s president, Brian Roberts, stands to benefit the most after AOL Time Warner Inc. and AT&T; Corp. agreed to end a media venture, investors said yesterday.

AOL Time Warner will pay AT&T; $3.6 billion in cash and stock, plus ownership in cable systems, to restructure their Time Warner Entertainment venture. Comcast, the third-largest U.S. cable-television company, will inherit the proceeds and the 21 percent stake in Time Warner Cable when it acquires AT&T;'s cable unit, expected by next year. AOL also will pay Comcast for cable line access to sell a fast America Online Internet service.

The agreement raises cash for Comcast to reduce debt, expected to reach $30 billion after the AT&T; Broadband acquisition, and might help the company avoid a potential credit ratings cut, analysts and investors said. The AOL pact also will boost revenue and help Comcast shoulder some of the costs for promoting its high-speed Web service, they said.

"Roberts accomplished exactly what he wanted to do in a very difficult market," said Morris Mark, president of Mark Asset Management, which owned 1.15 million Comcast shares and 1.56 million AOL Time Warner shares as of June 30. "He enhanced the liquidity and cash position, and simplified an entity that would have been very convoluted."

Special Class A shares of Philadelphia-based Comcast rose $3.32, or 15 percent, to close at $25.08 yesterday on the Nasdaq stock market.

New York-based AOL Time Warner, the world's biggest media company, rose 97 cents, or 7.3 percent, to $14.33, and AT&T;, the biggest U.S. long-distance telephone company, added 99 cents, or 8.9 percent, to $12.17.

Comcast is seeking regulatory approval to complete the purchase of AT&T; Broadband. The acquisition, worth $72 billion when it was announced in December, calls for Comcast to assume $20 billion in AT&T; debt as cable-customer growth begins to slow. That had helped trigger a 41 percent drop in Comcast shares this year.

Roberts has said the acquisition will give Comcast unrivaled access to the nation's homes, allowing the cable operator to deliver advanced services such as video on demand. The deal with AOL increases Comcast's position in the video and broadband market, investors said.

"Overall, it's positive for Comcast," said David Baker, principal of North American Management Corp., whose clients own about 100,000 Comcast shares among the $750 million managed by his firm. "They increase the value of their pipe into the home."

AOL will be able to sell a high-speed version of America Online to about 10 million homes served by AT&T; and Comcast in cities such as Boston and Seattle. That represents about 30 percent of the homes to which the two cable companies' services are available, AOL Time Warner spokesman Ed Adler said. Financial terms weren't disclosed.

AOL will pay the combined AT&T; Comcast $35 to $40 for each customer it signs up for the service, The Wall Street Journal reported, citing someone familiar with the matter. Earthlink, the third-largest Internet service provider, pays AOL's cable unit less than $30 for each subscriber, the Journal said.

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