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Fortune Investor Data
NEW YORK: AT&T got the bride -- but it's letting Comcast share the dowry. In a string of deals announced late Tuesday, the former Ma Bell became the nation's No. 1 cable company when it finally won MediaOne's hand. Comcast, for stepping aside, gets to buy 2 million of AT&T's cable subscribers to further solidify its current position as a regional powerhouse and national No. 3. Not to mention $1.5 billion in deal-breaker fees from MediaOne (AT&T will foot that bill). So Comcast is happy. MediaOne's stockholders are definitely happy. And the groom? "This deal, along with the TCI purchase, is one that AT&T needed to make," says TIME senior economics reporter Bernard Baumohl. "Now they're at the vanguard of the next thing in telecommunications." In fact, it's so in love that it's already hired someone to look after its Internet-friendly kids: Microsoft.
According to the New York Times, AT&T is close to inking a partnership with the House of Gates in which Microsoft, for $5 billion, would get a 2 to 3 percent slice of AT&T. More important, Microsoft would get the only thing it likes better than cash: market share, via a commitment from AT&T to use Windows software in every set-top Internet/phone/cable box that AT&T will be running wires into. Is the new Ma Cable moving a little too fast? Not if the deal was Microsoft's price for staying out of Comcast's corner. Plus, a $5 billion check -- especially with Bill Gates's name on it -- helps dispel investor fears that AT&T's headlong rush into cable is burying the company in debt. "AT&T has made a very smart move," says Baumohl. "They get a little cash, plus they've presumably locked up the software to go with their new hardware." After all, lots of young couples start out with big mortgages.