CNET también está disponible en español.

Ir a español

Don't show this again

Christmas Gift Guide
Culture

AT&T weighs deals for Excite@Home stake

AT&T confirms that it is considering possible business deals involving its interest in cable Internet company Excite@Home.

AT&T confirmed today that it is considering possible business deals involving its interest in cable Internet company Excite@Home.

The statement follows days of rumors that AT&T was negotiating to sell all or part of its Excite@Home stake. AT&T owns 26 percent of Excite@Home but controls a 58 percent voting stake.

The content portion of the company has been in play for some time, according to industry sources, but no one--including Yahoo and Microsoft--has found the Web portal enticing enough as of yet to step forward and take it off AT&T's hands.

Yet AT&T continues to dangle Excite as the key that could allow any potential suitor access to its high-speed cable network, according to sources. That network is considered to be an important component in the future of a high-speed Internet.

"Everybody's been talking for months," one industry source said. "Nobody wants Excite, but they're willing to take it to get access" to the high-speed network.

Publicly, AT&T has offered little insight on any specific plans regarding the portal. "We have periodically explored, and we continue to explore, many alternatives with respect to our Internet strategy and our ownership interest in Excite@Home," the company said in its statement today.

These alternatives include "internal options" as well as "discussions with third parties," the company added. "The exploration of alternatives remains at the very preliminary stage, and at this time, AT&T has not made any decision to pursue any particular alternative or transaction. There is no assurance that any transaction will occur," it said.

A statement released by Excite@Home echoed AT&T's comments. "Like all companies in the Internet industry, we are continuously assessing various forms of strategic relationships," the Net-over-cable firm said. "There is no certainty that any transaction will occur."

Excite@Home's stock jumped 13 percent yesterday on speculation that AT&T was planning to split the company in two.

Cost scaring potential suitors
AT&T executives have been increasingly vocal about their desire to exit Excite@Home's proprietary content business and use the company's cable infrastructure for data or other Internet traffic. AT&T's reluctance to follow the cable Net company's original vision of linking content and high-speed Net access has thrown some uncertainty into Excite@Home's business plan.

Puppet masters: Who controls the Net Other companies are balking at an Excite deal because of its high cost, according to sources. The $7.2 billion merger of Excite and @Home closed in late May.

As a result, no one has stepped forward to take Excite off AT&T's hands, though the Web portal has been on the market for some time, according to sources.

Among the potential suitors are industry giants Microsoft and Yahoo, though how a possible deal would be structured remains unclear, sources said. America Online has also been reportedly interested in a business deal.

In an interview with Reuters, however, AT&T broadband division president Leo Hindery denied that the company was talking to AOL.

Excite@Home president George Bell weighed in this morning with comments refuting the notion that Excite was "in play," according to Bloomberg.

Company moves
Still, recent moves made by Excite@Home have bolstered the idea that an acquisition or division of the company could be near.

On Monday, the company reorganized, splitting itself into two divisions--one concentrating on media and marketing, the other on the core business of the cable infrastructure and on gaining new subscribers.

"I think that plays into their ability to split the company," said John Segrich, an Internet content and commerce analyst at CIBC World Markets. "I think it's really a critical step that clears the way to split the company into two."

But AT&T's cable partners, which include Cox Communications and Comcast, have been more optimistic about Excite@Home's future.

"We think content and distribution bundled together make sense. That's why we set it up that way and we're in support of that," said Cox Communications spokeswoman Amy Cohn. "We are committed to content online."

Opposition by Cox would likely make any AT&T effort to change Excite@Home's business model difficult.

The skirmishing between AT&T, its partners, and "third parties" interested in buying into the high-speed cable Net company does put Excite@Home in a fragile situation.

"There are some huge elephants fighting here," said Tom Wolzien, a media and Internet analyst with Sanford Bernstein. "And Excite@Home is maybe closer to being a violet on the ground than it is to being one of the elephants."