Comcast putting pressure on AT&T

Potential combinations put Adelphia, Cablevision in play

The rest of the cable industry is getting antsy about Comcast's long-running attempt to buy AT&T's broadband unit.

The possibility of several subscriber-heavy companies merging has “sparked a lot of speculation on different combinations that would lead to consolidation,” said Adelphia Communications Chief Financial Officer Tim Rigas during a second quarter earnings conference. Adelphia, he said, continues to “talk to other operators our size [and] smaller.”

Long Island-based Cablevision, which refused comment, could fit that bill, said Keith Kennebeck, analyst for The Strategis Group. “If Cablevision were to seriously think about selling itself, the first thing that would come to my mind is AOL Time Warner snatching that up.”

The second would be Adelphia, which Kennebeck called “a good fit.” An AOL Time Warner deal would kill any chance of an AOL Time Warner-AT&T package, which according to Michael Goodman, senior analyst for The Yankee Group, isn't likely anyway.

AOL Time Warner has regulatory and tax issues and would provoke Microsoft to “jump onto the Comcast bandwagon so fast your head would spin. They wouldn't want to see AOL controlling 40% of cable subscribers,” Goodman said. “Comcast is in the catbird seat.”

Comcast, nevertheless, is becoming impatient for action. Treasurer John Alchin broke the company's silence when he told the Philadelphia Inquirer that AT&T has had “adequate time” to mull over Comcast's $50 billion-plus bid and that “we would hope that soon after Labor Day we will have heard from AT&T.”

Alchin did not return phone calls seeking elaboration, but a company source emphasized he wasn't setting a deadline.

“There isn't really a next step,” said the source. “AT&T is going to have to make a decision about whether they're going to sell.”

Things likely will heat up as the weather cools down.

“Nobody has stepped up to the plate and said anything serious besides Comcast,” Kennebeck said.

Cable players Cox Communications and Charter and outsiders Disney and Microsoft also have been said to be considering action, but “I think they're all AT&T smokescreens,” Goodman said.

Which leaves Comcast, and, with the exception of Alchin's outburst, it's not talking publicly.

“We've had a lot of conversations [with other potential players] from the first day we announced this,” the Comcast source said. “We're talking to everybody.”