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Today's report from Web Editor Susan
Rush
• Excite@Home Sings The
Bankruptcy Blues
• Comcast, AT&T Ink Confidentiality Agreement
• HSA Takes Charter Offer, Mulls Future
• Microsoft, CinemaNow In VOD Pact
• 3G Hits Japan, cdma2000 Celebrates Anniversary
• We're In Compliance, Says Williams
• Broadband Briefs
Excite@Home Sings The
Bankruptcy Blues
Broadband ISP Excite@Home
has finally done what many viewed as inevitable: filed for Chapter 11
bankruptcy protection from creditors. AT&T Corp. hopes to snatch up
assets of the company's broadband access business for $307 million in cash.
Excite@Home has been plagued with cash flow problems all year and had taken
several steps to reduce costs, including selling off some of its business
units and reducing staff. The company believes the Chapter 11 filing will
enable it to continue to offer broadband and other related access services
while the asset sale goes through the approval process.
AT&T, which already owns a stake in Excite@Home, plans to use the assets
to develop a more robust network and improve its high-speed Internet access
business. AT&T's purchase is not assured, however, Ma Bell could lose
out to a higher bidder.
Debtor-in-financing was not part of the AT&T offer because Excite@Home
maintains it has enough cash to remain operational throughout the closing
period.
The Nasdaq halted trading of Excite@Home shares this morning for "additional
information requested." The shares last traded at 14 cents at 9:30 a.m.
EDT.
Related Stories:
Excite@Home
Cleans House Again, 9/26/01
Outlook
Gets Bleaker At Excite@Home, 8/20/01
Comcast, AT&T Ink
Confidentiality Agreement
As expected Comcast
Corp. signed a confidentiality agreement with AT&T
Corp. that should jumpstart discussions between the two regarding Comcast's
bid for AT&T Broadband.
The reciprocal confidentiality agreement will permit the exchange of
information between the two parties, according to Comcast. The agreement
also will restrict "certain" discussions between Comcast and third
parties relating to the broadband unit, unless it has AT&T's approval.
Comcast made an unsolicited bid for the broadband unit in July. Ma Bell
rejected the original bid -- a $44.5 billion stock swap and $13.5 billion in
debt assumption -- as too low. Since the bid, the industry has speculated
that several potential bidders have come out of the closet, including AOL
Time Warner, Walt Disney Co., Cox Communications Inc., Microsoft Corp. and
Charter Communications, but no official bid has been put forth by any of
these companies. But although the names of other industry heavyweights are
being tossed around, many in the industry have touted Comcast as being in
the best position to acquire the unit.
Related Stories:
Reports:
The AT&T Saga Continues To Unfold, 9/28/01
Comcast
Bids For AT&T Broadband, 7/9/01
HSA Takes Charter Offer, Mulls Future
After two months of deliberation, High Speed Access Corp. has agreed to sell a lion's share of its cable modem assets to
Charter Communications Inc.
The agreement announced today calls for Charter to buy substantially all of the HSA's assets used to operate cable modem service in Charter territory for an estimated $81.1 million in cash. Charter made an unsolicited bid Aug. 1 for the assets, which include headend equipment, leased devices in customers' homes and the network operations center in Louisville, Ky. Final price will be determined at closing in late November or December and will be subject to federal regulators' approval.
In addition, Charter is canceling 75,000 shares of HSA Series D senior convertible preferred stock acquired as part of a joint $75 million investment it made in December with fellow Paul Allen company Vulcan Ventures Inc.
Charter and HSA have signed a management agreement for the transition, and it is expected about 70 percent of HSA employees will be transitioned over to Charter management. That and the sale price made it a good deal at a bad time according to HSA CEO Dan O'Brien.
"We carefully analyzed the assets that they wanted to acquire and what the impact would be on our other assets and obligations and liabilities that we
have. We have been able to get what we think is a very good and fair price in an extraordinarily difficult environment," he
tells Broadband Week senior editor Karen Brown. "You combine that outcome also with having 70 percent of our workforce maintaining employment, and we are quite pleased with the outcome and we think shareholders will be, too."
Meanwhile, HSA has been winding down the rest of its turnkey cable modem business with some 57 other MSOs. O'Brien expects that process to be complete by the end of the month, with most partner MSOs opting to similarly buy HSA assets and take over their cable modem service.
Once that is complete, all that will remain is a cash-positive international business.
HSA has a contract with Callahan Associates International to provide IP and network design
for its German Kabel Nordrhein-Westfalen cable system.
What is not clear is what HAS will do after the Charter transaction closes. O'Brien
says the company is still looking at three options, which include taking all of the proceeds and reforming a business, doling out some of the proceeds to shareholders and continuing with its existing international operations or closing down entirely.
"We don't actually have a current inclination or proclivity, so it is something we will be deliberating and assessing for the near term between the signing and the close," O'Brien
says.
Related Story:
HSA
Explores Options, 8/1/01
Microsoft, CinemaNow In VOD
Pact
With the help of Microsoft
Corp., CinemaNow Inc. is looking to
make Web-based video-on-demand services a secure, money-making opportunity
for licensed content distributors.
The technology dubbed PatchBay is designed to simplify the creation of
Internet-based VOD networks. PatchBay is built on Windows operating
systems-based technologies and incorporates support for Windows Media audio
and video technologies. Content distribution is not limited to Windows
operating system-based PCs -- the application supports IP-based devices,
including Macintosh computers, handheld devices and set-top boxes.
To offer distributors security, Windows digital rights management software
has been incorporated into the technology. Other added features include
territorial distribution rights, rights based on time or the number of
viewings and payment options.
The application manages all aspects of IP-based VOD, according to the
companies, including content distribution, content syndication, digital and
territorial rights protection, user profiling, demographically targeted
advertising, pay-per-view and subscription services, e-commerce management,
detailed report generation and integration of other third-party components.
VOD is the next logical step for CinemaNow, which recently launched a
downloadable pay-per-view service. The company also provides streamed
content. More than 250 feature-length films using Windows Media Player on
pay-per-view, subscription and ad-supported bases are streamed on the
CinemaNow site.
CinemaNow has yet to strike a distribution deal with one of the Hollywood
major studios. The company says it is actively negotiating with other
content owners and technology companies around the world to license
PatchBay.
Related Stories:
Murdoch
And The Mouse In VOD Deal, 9/6/01
In
Demand Inks Another VOD Deal, 8/29/01
Major
Studios Embrace VOD, 8/17/01
3G Hits Japan, cdma2000
Celebrates Anniversary
After a four-month trial, NTT
DoCoMo has fulfilled its promise of being the first to commercially
launch 3G phone services.
The high-speed, next-generation wireless service dubbed FOMA debuted in
Tokyo on Monday. The service originally was scheduled to launch in May, but
the Japanese wireless carrier pushed the date back to make time for
additional testing. NTT DoCoMo has teamed with PacketVideo
Corp. to deliver real-time video streaming services over DoCoMo's 3G mobile
network without the need to install streaming media software in the
terminals.
The company plans to expand its service offering to the Osaka, Kyoto and
Nagoya areas by December and the rest of Japan by the spring of 2002.
Separately, Korea's SK Telecom is celebrating the one-year anniversary of
its commercial deployment of cdma2000, which offers multimedia data services
at speeds up to 144 kilobits per second. The technology is considered the
backbone of 3G, according to the CDMA
Development Group (CDG).
SK Telecom offers the advance service to its customers in Seoul and Inchon.
Other global operators have committed to conducting cdma2000 trials or commercial
deployments of the technology, CDG says.
Related Stories:
DoCoMo
3G Phones Get Live Streaming Video, 8/28/01
3G
Hits Japan, Well Some Of It, 5/30/01
We're In Compliance, Says
Williams
Williams
Communications Group declares it has met all covenant requirements for
its bank credit facility and publicly traded bonds for the third quarter and
is moving forward with its financing plan.
The broadband service provider also is in compliance with the bank credit
facility covenant that requires the company to generate cash of at least
$700 million from the sale of its solutions segment and interest in Algar
Telecom Leste by Sept. 30. In a letter to shareholders back in August,
Williams' chairman and CEO Howard Janzen said the company is funded into
2004, and expects to be free cash flow-positive by the end of 2003. Williams
shares slid 2.5 percent to $1.15 in early trading. The company's stock has
traded as high as $21.12 in the last 52 weeks.
Earlier this year equity analyst at Merrill Lynch downgraded Williams'
intermediate and long term rating to Neutral from Accumulate citing the
company's "depressed levels of its equity and debt."
Related Stories:
WorldCom,
Williams Forge Tentative 3-Year Deal, 9/21/01
Merrill
Lynch Downgrades Williams, 6/22/01
Broadband Briefs:
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Internet infrastructure services provider Genuity
Inc. has raised $1.15 billion in a bond offering. In addition, Verizon
Communications has agreed to increase the amount of its credit facility
with Genuity to $2 billion, and to extend the maturity to 2005.
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TVN Entertainment Corp.
inks a five year deal as the primary video-on-demand content provider
for Adelphia Communications Corp.
As part of the deal, Adelphia will make an undisclosed equity investment
in TVN.
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Verizon Communications
is selling Linksys four and
eight-port EtherFast routers to its small business DSL customers. The
routers will enable broadband networking in the offices. There is a
one-time fee for the router, but there is no additional monthly charge
to hook up more computers to the DSL line, Verizon says.
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Morgan Stanley downgraded Cox
Communications Inc. to from "Strong Buy" to
"Outperform."
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WorldCom and Sun
Microsystems Inc. team to deliver managed hosting services to
enterprise customers. The companies will team on sales opportunities and
leveraging their combined capabilities, products and services.
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