|
Despite the abrupt termination of its exclusive contract with parent Time Warner Inc. and a major ownership restructuring, Road Runner hasn't hit a dead end. But it is definitely taking a different path into a competitive world of cable modem service with a single owner and a new boss.
The long-anticipated ownership restructuring of Road Runner stemmed partly from AT&T Corp.'s need to dump assets to comply with Federal Communications Commission orders in its acquisition of cabler MediaOne Group.
Under the reorganization, Time Warner Cable and Advance Newhouse assume control of AT&T's stake in Road Runner and buy out the 20 percent share owned by Compaq Corp. and Microsoft Corp. Time Warner and Advance/Newhouse reportedly will pay $570 million for the restructuring, with a lion's share going to buy out Compaq and Microsoft's shares.
AT&T, meanwhile, will get about approximately 345,000 Road Runner subscribers in its MediaOne territories. It will support the Road Runner brand and services in those territories for up to 15 months, after which it will move the subs over to its own system now run by the AT&T-controlled Excite@Home service.
AT&T and Time Warner also will divvy up the 21 Road Runner regional data centers based on which company is the primary user of each facility.
Given that Advance/Newhouse has only an indirect ownership of Road Runner through its partnership with Time Warner Entertainment, Time Warner effectively would gain full ownership and management of Road Runner.
The end of the joint ownership arrangement also spells the end of Road Runner's exclusive contract to provide high-speed service for Time Warner. That agreement was terminated a year ahead of its scheduled December 2001 expiration, clearing the way for rival ISPs such as Earthlink and Time Warner acquirer America Onlne to start offering service using the MSO's cable plant.
While there is speculation the reorganization and the terminated exclusive contract is the beginning of the end for Road Runner's run, that is not the case, according to Mike Luftman, spokesman for Time Warner Cable. With consolidated ownership, Road Runner can accelerate its high-speed business.
"We are highly motivated to support and grow the business and the service," he says. "Suffice it to say we support the Road Runner brand and the business."
Road Runner service is available to 12 million of Time Warner's 12.6 million-subscriber domain, he adds, and plans are in the works to complete the rollout to the remainder.
In a related move, Time Warner is moving Jeffrey King to take over as president and CEO of Road Runner from William T. Gordon III. Gordon, named to the post in February, will stay on during the transition.
King was instrumental in turning up Road Runner service in New York state and has recently served as president of the service's Texas division.
|
