AT&T poised to buy TCI Merger would expand ability to provide fast Internet access

Deal worth $20 billion

Cable provider is 2nd largest in nation, serves Baltimore

June 24, 1998|By NEW YORK TIMES NEWS SERVICE

AT&T Corp. is close to an agreement to acquire the nation's second largest cable television operator, in a deal worth more than $20 billion.

The deal would sharply expand AT&T's ability to provide Internet access and other data services to millions of American homes, an official who was informed of the discussions said last night.

A deal between AT&T and Tele-Communications Inc. could be announced as soon as today, the official said.

TCI is the cable provider for Baltimore.

A merger would represent the biggest sign yet that attempting to deliver high-speed access to the Internet and other advanced services is one of the strongest imperatives in today's business world.

In recent years, the Internet has emerged as new sort of media that could rival radio and television in its impact on the nation's economy and culture.

The technological bottleneck that has kept cyberspace from becoming a true mass medium has been the difficulty in transmitting large amounts of digital data to average homes.

Most consumers access the Internet at speeds a mere fraction of those available to people in modern offices.

That has kept the process of linking to cyberspace a relatively awkward one, akin in some ways to using a ham radio.

But by acquiring Tele-Communications, which serves 14.4 million homes, AT&T would gain the ability to access homes and apartments directly for the first time since the company spun off its local telephone operations in 1984.

Although new telecommunications carriers boast more advanced networks, AT&T retains a vast capacity to transmit information of all sorts from coast to coast at lightning-quick speeds.

By merging with Tele-Communications and gaining its many wires into homes, AT&T would gain an ability to bypass its ornery progeny, the Baby Bell local phone companies.

That could allow AT&T to create an end-to-end network that would allow the company to deliver not only Internet data but also everyday phone calls.

Financial details of the agreement were unclear last night. Speculation about a possible alliance emerged yesterday, and the Washington Post reported in its early edition last night that a deal was imminent.

Shares of all major cable companies rose sharply yesterday on Wall Street rumors of some kind of possible alliance with AT&T.

TCI rose $3 to $38.6875; Cable-vision Systems Corp. rose $7.25 to $62; MediaOne Group Inc. gained $2.125 to a record of $41.25; Cox Communications Inc. increased $1.75 to $46.25, and Comcast Corp. rose $2.375 to a record $39.75.

AT&T's stock price rose $2.3125 yesterday, to $65.375.

The cable industry has been spending billions of dollars to upgrade its lines to offer more options at faster speeds.

TCI in particular has been busy upgrading the capacity and speed of its cable systems.

Its TCI Ventures subsidiary has been testing Internet services as well as digital wireless telephone services, known as personal communications services.

Pub Date: 6/24/98

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