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AT&T acquiesces on Comcast vote

The phone giant agrees to let shareholders cast separate votes on selling its cable TV unit to Comcast and on the merged company's governance structure.

AT&T said Tuesday that it agreed to let shareholders cast separate votes on selling its cable TV unit to Comcast and on the merged company's governance structure.

AT&T originally wanted shareholders to vote on those issues together, but investor activists and politicians had argued that the company could not bundle separate issues in one vote.

In December, AT&T agreed to sell its cable television unit, AT&T Broadband, to smaller rival Comcast for about $37 billion. The combined company, AT&T Comcast, will be the No. 1 U.S. cable TV operator with more than 22 million subscribers.

Some shareholders have slammed the structure of the deal, saying it gives too much power to the Roberts family, which controls Comcast, and makes it difficult to fire the top executives.

Under the deal, the Roberts family will have one-third of the voting power in the combined company despite having only a 1.5 percent ownership stake. Also, at least 75 percent of the board must support the firing of either the chairman or chief executive until the 2010 annual meeting.

By having two votes, AT&T shareholders can separately weigh the overall merger plan and the proposed governance structure.

"The people who are Comcast shareholders bought in knowing (what the governance was). The people who are AT&T shareholders did not buy into AT&T knowing this would happen to their investment," said Charles Elson, chairman of the Center for Corporate Governance at the University of Delaware.

AT&T, however, stressed that in order for the deal to proceed, shareholders must support both proposals because the Comcast pact is contingent on the proposed governance structure.

"If the shareholders demand a different governance structure through their vote...then there won't be a deal. So what? That's up to the shareholders," Elson said. "The shareholders should not buy into a deal that's flawed from a governance standpoint, because in the long run, if the governance is flawed, then the transaction may not have the value they want," Elson said.

Shareholders will vote on July 10 at the company's annual meeting in Charleston, S.C. Shareholders also will vote on the creation of a tracking stock for its AT&T Consumer unit, and a one-for-five reverse split of AT&T's common stock.

Story Copyright  © 2002 Reuters Limited.  All rights reserved.