| Bad deal for consumers, good for MicrosoftI hate this deal with a passion. I really think it sticks it to the consumer and the timing of the deal, so close to the collapse of Excite@Home, makes it suspect. A little bit of trivia here; AT&T and Comcast signed a non-disclosure agreement to enter into talks on the day Excite@Home filed for bankruptcy.
Anyway, here's a story I wrote in February about Microsoft's role in this deal:
M'SOFT WINS IN COMCAST DEAL
By Ben Silverman
DotcomScoop.com - The New York Post
2/25/02
THE pending merger of Comcast and AT&T Broadband will create the nation's largest cable company. It will also create a huge opportunity for Microsoft.
According to Comcast's preliminary proxy statement, filed with the Securities & Exchange Commission on Feb. 11, Microsoft is reaping the benefits of its previous dealings with AT&T.
One such benefit is a deal with Comcast whereby Microsoft's interactive television platform will be offered to Comcast subscribers.
"In connection with the exchange agreement, Microsoft and Comcast Cable Communications Inc. have entered into a three-year agreement pursuant to which the parties will conduct a trial during 2002 of an interactive television platform, including set-top box middleware," the filing says.
"If the trial results meet agreed technical standards, the platform meets defined competitive requirements and a launch would meet Comcast Cable's reasonable business objectives, Comcast Cable has agreed that it will commercially launch the Microsoft platform to at least 25 percent of its newly installed middleware customer base."
Microsoft previously had an arrangement with AT&T Broadband to offer its interactive television products, but the deal eventually fizzled out.
As the filing states, the interactive television deal is in connection with exchange agreement. That agreement calls for Microsoft to exchange $5 billion in debt owed to it by AT&T in exchange for common stock in the newly created AT&T Comcast.
The disclosure isn't very startling unless you look back at what Microsoft and Comcast said at the time the Comcast and AT&T Broadband merger was announced last December.
When the merger was announced, Comcast CEO Brian Roberts said the exchange agreement had "no strings attached."
Microsoft's public relations machine simply noted that it hoped to have a relationship with the new company. A relationship, indeed.
Comcast declined to comment.
Microsoft did not return calls seeking comment.
The proxy statement also reveals that Microsoft gets what amounts to a most-favored nation status when it comes to offering Internet service over AT&T Comcast's cable line.
"Until the fifth anniversary of the exchange transaction, subject to the completion of the exchange transaction, AT&T Comcast has agreed that if AT&T Comcast offers a high-speed Internet access agreement to any third party, then it will be obligated to offer an agreement on nondiscriminatory terms with respect to the same cable systems to Microsoft for its Internet service provider, The Microsoft Network," the proxy says.
This means that if another Internet service provider such as EarthLink or AOL wanted to offer its services over AT&T Comcast's lines, Microsoft would have to be offered the same deal.
That's good news for Microsoft, which lags far behind its competitors in offering high-speed Internet access.
In the end, the merger of AT&T Broadband and Comcast may benefit Microsoft more than any other single party.
And all it cost them was $5 billion.
Copyright 2002 NYP Holdings, Inc. All rights reserved.
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Ben Silverman
Publisher, Dotcom Scoop |
