AT&T: Buying Back its Monopoly
AT&T is the
After the passage of the 1996 U.S. Telecommunications Act by congress, AT&T was freed to move into most other communications businesses. In the hopes of establishing a “synergy” between using phone and cable lines together to reach the maximum number of American homes and sell phone service, cellular, internet and pay TV as one package, AT&T made an ill-fated foray into the cable TV business, buying TCI, the nation’s largest cable system owner in 1998. In 1999 AT&T bought MediaOne, another large cable system owner. AT&T also bought a 2.5% stake in DirecTV.
Because this “synergy” did not excite the buying public, and the massive run-up in values of entertainment properties after the 1996 Telecom act meant that AT&T had rung up enormous debt in buying cable systems that were not worth those prices, AT&T’s stock took a huge dive. Several other major media firms that had expanded rapidly through debt-financed purchases in the 1990’s also soon wrote off billions of dollars in value. These firms included AOL-Time Warner, Vivendi Universal, Clear Channel radio, Qwest and MCI Worldcom. In 2001, AT&T sold its cable systems to Comcast, creating the
Ironically, the weakened AT&T sold itself to SBC in 2005, and SBC later that year bought BellSouth, re-creating the massive AT&T of before.
SUMMARY OF ACQUISITIONS:
-1983 AT&T is split up; parent company will be AT&T long distance and Bell Labs phone equipment firm. Newly spun-off local phone service companies are Ameritech, Bell Atlantic, Pacific Bell, U.S. West, BellSouth,
-7/1990 AT&T buys
-1991 AT&T buys NCR for $7.5 billion
-8/1993 AT&T merges with McCaw Communications (#1 in
-9/1995 AT&T spins off its Bell Labs phone equipment business as Lucent Technologies (now known as Alcatel-Lucent) and also spins off NCR computer and cash register biz.
-1/1998 SBC buys independent Southern New England Telecom for $4.4 billion
-6/1998 AT&T buys TCI for $43.5 billion in stock. In deal, TCI’s former owner John Malone will retain control of TCI’s Liberty Media division and its interests in over 90 cable channels as a tracking stock of AT&T. AT&T will get TCI’s 111 million subscribers, and TCI has partnerships with other cable system owners that bring its reach up to half of US subscribers. AT&T will also get control of TCI’s @home internet service.
1/1999 SBC merges with Ameritech for $85 billion. Will sell off its
-4/1999 AT&T bids $58 billion for MediaOne cable systems outbidding Comcast.They become part of AT&T Broadband. AT&T agrees to sell off 2 million subscribers of MediaOne to Comcast. In the deal, AT&T gets 25% stake in Time Warner’s cable systems. Time Warner protests the deal.
-10/2000 facing a loss of half its stock value in past year, AT&T splits into 3 companies: cable, wireless, and long distance phone and business services. The costs of upgrading TCI cable to broadband were underestimated at $2 rather than $10 billion. AT&T also controls
-11/2000 AT&T board votes to spin off Liberty Media and its stakes in
1/2001 AT&T plans to sell its stake in E Channel, Food Network, Outdoor Life and Speedvision, Digital Cable Radio, Fox Sports New England, In Demand, National Cable Communications and the Sunshine Network which were acquired as part of MediaOne deal
-7/2001 AT&T Wireless is spun off to shareholders. AT&T will keep 7.4% stake, other holders include NTT DoCoMo of Japan with 17.4% and AXA financial firm with 6.7%
In 12/2001 AT&T sells cable broadband systems to Comcast for $52 billion in stock; giving existing AT&T shareholders 66% stake in Comcast. Comcast also gets 25% stake in Time Warner Entertainment, which owns HBO, Warner Brothers studio and TW’s cable systems, plus gets $20 billion or ½ of AT&T’s debt.
-2/2004 Cingular wireless, owned 60% by SBC and 40% by Bellsouth, bids $41 billion for AT&T Wireless. With purchase, Cingular will have 30% of
-1/2005 SBC buys AT&T long distance for $15 billion. AT&T had been weakened by rise of cell phone use, appeals court ruling in 2004. SBC changes its name to AT&T. FCC and California's PUC require SBC to offer stand-alone DSL to customers
-3/2005 AT&T agrees to pay $67 billion in cash for BellSouth, and assume $22 billion in debt, giving it ownership of 4 of the original 7 Baby-Bells that were ordered spun-off in 1983 to settle monopoly issues.