Report: AOL Time Warner makes bid for AT&T cable division

AOL Time Warner has made an offer for AT&T Broadband and Cox Communications also may be considering a bid for AT&T’s cable unit, according to a report in the Wall Street Journal.

Already the subject of an unsolicited $40 billion bid by Comcast in July, AT&T Broadband’s future has been debated during the last two months. Reports of AT&T Chairman C. Michael Armstrong speaking with top executives of several high-powered has generated considerable speculation, but many analysts say it will be difficult for AT&T to find a bidder willing to trump Comcast’s offer and that the rumored interest by other suitors may be nothing more than a ploy to get Comcast to bid against itself.

An AOL Time Warner bid would propose the merger of the two largest cable operators in the U.S., a fact that could result in significant regulatory hurdles as content providers such as Walt Disney object to one entity controlling the distribution channels to more than 40% of pay-TV subscribers.

Although a recent appeals-court ruling essentially nixed the FCC’s rule prohibiting any cable operator from serving more than 30% of pay-TV subscribers, regulators would be expected to question whether AOL Time Warner should control so much distribution while also being a major content provider.

--Donny Jackson, news editor