AT&T in new talks over its broadband service

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The Independent Online

AOL Time Warner, Disney and other multimedia heavyweights are holding preliminary talks with AT&T to buy its broadband cable service after the US long-distance carrier recently rejected an unsolicited $40bn offer from Comcast.

Initial reports of merger negotations with AOL Time Warner yesterday were followed up by a flurry of names disclosed to various media organisations by sources close to the talks. By last night, the names of possible suitors circulating on Wall Street included Disney, Cox Communications, Cablevision Systems and Charter Communications. A new bid from Comcast was also mooted, although it is not currently in talks with AT&T.

AT&T's chairman, Mike Armstrong,fuelled speculation of a deal with Disney by hinting he could be holding informal discussions with its chief operating officer, Robert Iger, on a forthcoming salmon fishing trip.

The speculation triggered a flurry of buying interest in AT&T stock, which closed up 69 cents at $20.15.

AT&T Broadband is already the biggest television cable company in the US, with 22 million subscribers, and holds unlimited promise for the future as cable-based internet use grows and new, multimedia information systems are developed to integrate television, hi-fi and online services.

AT&T has not yet ruled out its original plan to spinoff the broadband service into a separate independent company. It rejected Comcast's offer a week ago, saying the $40bn stockpurchase, plus the assumption of $13.5bn in debt, was too low.

Any purchase of AT&T Broadband would involve a viper's nest of tax and anti-trust problems. Many of the companies reported to be interested have previously been involved in talks to buy up bits of other interested parties in what could be a highly complex realignment of multimedia assets.

All the companies named as possible buyers of AT&T Broadband declined to comment.