MediaOne a telecom target?

The cable Net access company is the only attractive merger partner remaining for a company that wants to be a force in the convergence market.

2 min read
NEW YORK--Broadband service company MediaOne Group is the only attractive merger partner remaining for any major telecommunications outfit that wants to be a player in the coming convergence of personal computers and television, influential industry analysts speculated at a conference here today.

"You have to look across the industry and ask who are the potential sellers and who are the ones that won't be selling," Tom Wolzien, senior media analyst at Sanford C. Bernstein & Company, said at a panel discussion about high-speed cable Net access.

Concluding that Time Warner and Comcast are unlikely sellers, Wolzien said: "If you want to be a dominant player in cable, you have to own MediaOne."

Added Alan Gould, senior vice president at Gerard Klauer Mattison, "[MediaOne] is the largest player without a single party having a controlling interest."

Software giant Microsoft's CEO Bill Gates once was rumored to be a MediaOne suitor, but that scenario is now unlikely, analysts agreed. "Microsoft is not in a position to take a look at buying more stakes in the cable industry given the scrutiny it faces from the Justice Department," said Gould.

But Microsoft cofounder Paul Allen could step into the picture as a potential buyer, the analysts speculated. "Paul Allen may up his stake to 5 percent," Gould said.

Allen has previously stated that he believes in the power of coaxial cable and the possibilities for using it to deliver high-bandwidth data and video. He recently acquired Charter Communications so that he could merge it with Marcus Cable, which he bought in April. The deal marked his largest personal investment outside of Microsoft to date. (Allen is an investor in CNET: The Computer Network, publisher of News.com.)

MediaOne's domestic cable business already reaches 5 million customers in 17 states, including California, Florida, a small portion of New York, and other states in the Midwest and Northeast. The company promises Internet access via cable modems at speeds up to 50 times faster than today's standard 28.8-kbps dial-up connections through phone lines. The service now has about 41,000 subscribers.