Struggling AtHome, best known for its Excite@Home brand, suffered its second major setback this week as cable system owners Cox Communications and Comcast Cable Communications notified the company that they would terminate their distribution agreements, effective June 4, 2002.
AtHome operates a cable modem network that serves some 3.6 million residential users. If Cox and Comcast follow through on their planned termination, AtHome will be left with only one major cable partner: AT&T. AT&T owns a controlling interest in AtHome, with a 23 percent ownership stake and a 74 percent voting interest.
Comcast Cable decided to exercise the exit provision in its contract "in light of the recent published reports regarding Excite@Home's financial condition," said President Steve Burke via a spokeswoman, in a prepared statement. "We have been and continue to be in discussions with Excite@Home about how we might structure a different relationship. That being said, we will have 950,000 customers by year's end, and we need to insure that they continue to be well served."
The spokeswoman declined further comment on the termination. Representatives of Cox could not immediately be reached for comment.
AtHome has been struggling with large losses and a mountain of debt. The company recently fired its auditors, Ernst & Young, after that firm expressed doubts about At Home's survival. AtHome maintains that its change in auditors was unrelated to Ernst & Young's grim evaluation.
AtHome said Monday that it is facing a Friday deadline for a $50 million payment to Promethean Investment Group, which manages two funds that invested in At Home earlier this year. Promethean maintains that AtHome has breached some terms of those investments. AtHome disputes that claim, and says it won't pay the $50 million.
AtHome had $154.28 million in cash and cash equivalents on hand as of June 30, the end of its most recent fiscal quarter.
Separately, AtHome said it plans to retain an investment banking firm to assist the company in restructuring and "exploring its options." Those options are likely to include a sale of the company's Excite.com portal, if a buyer can be found for the money-gobbling site. AtHome said earlier this year that it intends to exit all businesses that don't support its sale of broadband services.
AtHome's shares were down 23.1 percent, at $0.40, in midday trading on the Nasdaq exchange.
Stacy Cowley writes for the IDG News Service.
