AT&T sells cable units to Comcast

$2.75 billion deal adds subscribers in Md., 5 other states

Nearly 600,000 viewers

43,000 of them are in Cecil County, Ocean City and Del.

May 02, 2001|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Comcast Corp., the cable TV giant, said yesterday that it completed a multibillion-dollar acquisition of AT&T cable systems that will bring it nearly 600,000 new customers in six states, including Maryland.

The acquisition bolsters the cluster of cable systems Comcast holds from Northern Virginia to Delaware, adding customers in Cecil County and Ocean City.

"It adds to their critical mass of subscribers," said David Lee Smith, a senior analyst who follows Comcast for Dain Rauscher Wessels. "Obviously, the more the merrier."

For the cable systems, Comcast paid AT&T 63.9 million shares of AT&T stock, valued at $2.75 billion, that the Philadelphia cable company owned.

Comcast, with about 8.4 million subscribers, has spent $16 billion in the past three years buying cable systems, mainly in the Northeast.

AT&T has 14.9 million subscribers. The New York company has been selling cable systems for cash needed to pay down debt, which went up 81 percent last year to $65 billion.

Through the acquisition, Comcast gains about 43,000 customers in Ocean City and Cecil County in Maryland and in Delaware; 46,000 in New Jersey; 119,000 in Pennsylvania; 312,000 in Tennessee; and 75,000 in New Mexico, according to the company.

Comcast also is acquiring the cable system in Baltimore City, but that deal has not been completed.

"Comcast prides itself on state-of-the-art systems and top-notch services, and we will continue to bring our customers that all around the region, including these new systems now," said Kirstie Durr, a Comcast spokeswoman.

It hasn't been determined yet whether channel lineups will be affected by the deal, Durr said.

Because Comcast acquired cable systems in places where it already has customers, Smith said it will be able to roll out more services - such as digital video - more efficiently.

"The more clustered a cable company can be, the better it is," he said.

Clustering also helps with advertising, because it's easier to sell ad time to companies if the audiences are large blocks of viewers, Smith said.

Also, customers could see an improvement in their overall service as a result of the deal, Smith said.

"Comcast is very good at what they do," Smith said, "and that will benefit their customers going forward."

The deal announced yesterday has been in the works for years. Comcast said in May 1999 that it planned to acquire AT&T cable systems. But Smith said it's not unusual for these deals to be lengthy.

And the buying may not be over. Smith said Comcast is expected to gain about another 100,000 subscribers from AT&T in the next couple of months.

Shares of Comcast Class A Common Stock rose 65 cents yesterday to close at $43.80. Shares of AT&T closed at $23.08, up 80 cents.

Bloomberg News contributed to this article.

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