Comcast → AT&T Broadband
Five months after AT&T rejected its unsolicited $58bn offer, Comcast won AT&T Broadband in an auction at an aggregate value of $72bn, making the Roberts family's Philadelphia company the largest US cable operator and ending AT&T's expensive attempt to turn itself into a cable company.
About $47bn of stock plus $25bn of assumed debt, making Comcast the largest US cable operator with 22 million subscribers.
- Value
- $72B
- Announced
- December 2001
- Completed
- November 2002
- Sector
- Media
- Deal type
- acquisition
- Acquirer
- Comcast (United States)
- Target
- AT&T Broadband (United States)
Why it mattered
AT&T had bought Tele-Communications Inc. in 1999 and MediaOne in 2000, paying about $4,100 a subscriber, largely in its own stock, and the debt from those deals pushed it to plan the separation of AT&T Broadband as a standalone company. Comcast's Ralph and Brian Roberts sought talks from December 2000; AT&T declined, and on 8 July 2001 they published an offer of $44.5bn in Comcast shares plus $13.5bn of assumed debt — $58bn for the core cable business. AT&T's board rejected it on 18 July and opened an auction to three bidders, Comcast among them. One of AT&T's objections was Comcast's multi-class voting structure, built around the Roberts family's Class B shares.
Comcast gave ground on control. The agreement of 19 December 2001 capped the family's Class B shares at one-third of the votes and gave AT&T shareholders 56% of the economic interest and about 66% of the voting power, receiving about 0.34 new shares, worth $13.07, for each AT&T share. The $72bn valuation — about $4,500 a subscriber — included nearly $20bn of debt and other liabilities and $5bn of AT&T securities held by Microsoft, which agreed to convert them into 115 million shares. Michael Armstrong of AT&T would be chairman and Brian Roberts chief executive of a group with about 22 million subscribers in 41 states.
What it left behind
The deal closed on 18 November 2002 and the company kept the name Comcast rather than AT&T Comcast. Scale in distribution became a platform for content: a $54bn bid for Disney in 2004 was rejected, but Comcast took control of NBCUniversal in 2011, bought the rest in 2013 and acquired Sky in 2018, while its attempt to add Time Warner Cable collapsed in 2015 under regulatory opposition. AT&T, having separated both its wireless and cable businesses, was itself bought in 2005 by SBC Communications for $16bn, and SBC took the AT&T name. When the seller's shareholders are paid in the buyer's stock, the buyer's governance is part of the price: capping the founding family's votes was as much a term of the deal as the exchange ratio.