Deal with AT&T may close as early as next month
NEW YORK — Comcast Corp. bumped up its estimate for the closing date of its $72 billion tie-up with AT&T Broadband to next month, the Philadelphia-based cabler said during its third-quarter earnings announcement.
Deal, which is expected to get the greenlight from federal regulators any day now, was previously seen closing by the end of this year. The merged company will boast more than 22 million subscribers nationwide — dwarfing its nearest rival, Time Warner Cable, which has 13.7 million.
Meanwhile, Comcast swung into the black in the third quarter, as subscribers flocked to in high-margin services like digital cable and broadband Net access.
However, cabler’s modest $75.6 million profit — which follows a $106.8 million loss in the same quarter a year ago — fell short of Wall Street’s more ambitious expectations.
Market watchers fretted that stiff competition from satcasters EchoStar and DirecTV may stunt the cable industry’s growth potential going forward. Those fears were mitigated somewhat, however, when the Federal Communications Commission roundly rejected plans for the two satcasters to merge.
Comcast revenues climbed just under 13% from the prior quarter to $2.71 billion. Basic subscriber numbers edged 0.7% higher than 2001 to 8.5 million but slipped marginally from the second quarter.
Goldman Sachs cable guru Richard Greenfield was bullish on the long-term potential of a combined AT&T/Comcast, noting that the sheer scale of the nascent cable giant should generate substantial cost savings and boost cash flow.
The new company also will face a tough task in modernizing AT&T Broadband’s antiquated network hardware so it can sell more profitable digital services across the entire system.
“Beyond closing, we believe investors will be highly focused on (Comcast)’s initial execution in improving the underperforming AT&T Broadband assets,” Greenfield said in a research note. “While little can be done in Q4, we believe Q1 ’03 will need to show the beginnings of an improvement.”
So far, so good: Investors nudged Comcast shares up 1.3% to close at $24.15 on Monday. AT&T Broadband parent AT&T, which reported earnings last week, also edged 0.82% higher to close at $13.45.