The board of AT&T Corp. is expected to meet tonight to discuss various options for the telecom company's cable-television operations, including a proposal to merge its cable assets with those of AOL Time Warner Inc. and a separate plan to line up investors, including Walt Disney Co., to help with a spinoff of AT&T Broadband, people familiar with the situation told The Wall Street Journal.
AT&T Chairman C. Michael Armstrong and other top executives have spent the past several weeks talking to potential suitors in the wake of an unsolicited -- and rejected -- $40 billion stock-swap offer from Comcast Corp. (CMCSA, CMCSK) Mr. Armstrong and his advisers are expected to present various proposals to board members at a two-day board meeting, which begins with a dinner this evening in New Jersey.
However, no deal is imminent and the board isn't expected to take any major action at this week's meeting. The board is also gathering to review AT&T's various business units and get an update on how they are performing.
While companies such as AOL (AOL) and Disney (DIS) have expressed interest in AT&T Broadband and submitted preliminary proposals, AT&T (T) hasn't received any formal bids other than the rejected offer from Comcast, according to people familiar with the situation. AT&T declined to comment.
Cox Communications Inc. (COX), which signed a confidentiality agreement with AT&T to review the broadband business, has yet to make a bid, according to a person with knowledge of the situation. While Cox could still make an offer, this person said, last week's terrorist attacks may prompt Cox to forgo any deal because of fears that the economy will weaken further as a result of the attacks. Cox is majority controlled by a family that, even in the best of times, is loath to be a minority investor in any firm.
In order to make a deal with AT&T Broadband tax-free, AT&T shareholders would have to own at least 51% of any merged entity. A Cox spokeswoman declined to comment.
Mr. Armstrong may also ask the board for more time to explore additional options, such as finding investors for a spinoff. AT&T has been in talks with Disney and Microsoft Corp. (MSFT) about major investments, including $4 billion from Disney and a sizable amount from Microsoft, according to people familiar with the situation.
The money would be used to keep the cable business intact, and AT&T would then take the business public with the involvement of one or both companies, these people said.
If no suitable alternative emerges, people close to AT&T said the company could wind up back in talks with Comcast. While AT&T's board rejected Comcast's offer as too cheap and poorly structured, Comcast could rework its offer in a way that is more palatable to AT&T. As of right now, however, Comcast still hasn't signed a confidentiality agreement -- something AT&T is requiring that it do before engaging in any talks.
