Filed by Comcast Corporation Pursuant to
Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: AT&T Corp.
Commission File No. 1-1105
Date: March 5, 2002
The following meeting was held by Comcast at Bear Stearns 15th
Annual Media, Entertainment & Information Conference on March 4, 2002:
Ray Katz: I first met these gentlemen in 1987 when they did business out
of a strip mall in Bala Cynwood Pennsylvania. They had about
$1.1 million subscribers. They had just split Storer Cable with
TCI, which at the time was a very complicated transaction.
Looking back on it, it was fairly plain vanilla. The largest
acquisition they had done in their history I think they about
doubled their size. And they're at it again. They're more than
doubling their size this time with AT&T Broadband. Luckily for
their shareholders, maybe not luckily maybe by design, there's a
management team in place that has a lot of experience in
integrating the acquisitions. This company has been integrating
acquisitions for more than a decade. They've been doing it very
successfully. They're about to undertake probably the biggest
integration that they've ever undertaken. Leading the team to do
that is Steve Burke. Steve is the President of Comcast Cable
Communications and John Alchin will join Steve in telling you
about the company. John is Executive Vice President and
Treasurer and I'll give it over to Steve.
Steve Burke: Thank you, Ray, and good afternoon. When you look at the year
2001 in terms of Comcast's history, it's clearly going to be the
year that we started the process of trying to come together with
AT&T and that we culminated that process on December 19 with a
deal. However, I think it makes sense for us to go back and look
at the year 2001 - how we did with the business that we have -
the 8.5 million subscribers that we have. Both because I think
2001 was a great year for us and also because I think it would
give you some insight in terms of how we look at our business
and eventually when we put these two companies together, how we
might look at Comcast AT&T when we go from 8.5 to 22 million
subscribers. So if you look at our achievements during the year,
you really see four major achievements. The first thing is
essentially completed all of our rebuilds. We're 95% rebuilt at
the end of the year. I think this is like structural
unemployment. You never really get 100% rebuild just as you
never get all the way to 0% unemployment. Ninety-five percent
(95%) for the Comcast footprint is essentially where we would
see ourselves settling in over time. So the rebuild process
really ended for us at the end of 2001 and when you look at our
free cash flow the company's ability to generate compounding
free cash flow it accelerates dramatically in 2002 because we
finished the rebuilds in 2001. Second thing is we feel we had a
very strong year in terms of new service rollouts ending the
year with 2.3 million digital subscribers and close to a million
high-speed data subscribers. That's significantly higher than
our guidance during the year. And we had year over year
quarterly acceleration straight through the four quarters of
2001. At the same time as we did that and at the same time as I
will speak, we integrated some new systems. We maintained the
kind of steady cash flow - operating cash flow growth - that I
think has been one of our primary focuses so that we think was a
major achievement. And while doing all that we integrated two
million subscribers, many of those two million subscribers from
AT&T and I'll show you some slides about how those integrations
have gone. That in the final analysis I think was one of the
things that made us sleep well at night while
signing up to this transaction that if we could do it with the
1.4 million AT&T subscribers that we had successfully
integrated, we could do it with a broader canvas to work on. So
when we look at 2001, those were the key achievements. Here's a
slide that shows the network. We were about 50% upgraded in 1996
going all the way to 95% in 2001. And really the underpinning
behind everything we do is getting this platform in place and
then building on this platform by layering in new products
according to a prudent timetable. That's really what we're all
about - as simple as it sounds. If you look at the first
priority new product that we had it was digital cable. And our
thinking was simple: the vast majority of our cash flow still to
this day despite the success of high-speed data and digital
cable and some of the other businesses we're entering comes from
the old analog cable business. And when you've got $2
billion-plus in operating cash flow from a business and you have
a competitor that can offer 200 channels when you can't, you
have a - we believe a strategic imperative to get digital as
broadly deployed as you can. And you'll see here starting from
essentially no digital subscribers really test subscribers in
1998. You see the end of year '01 at 2.3 million and the end of
year '02 if we hit the mid point in our guidance of
approximately 3 million digital customers. And our philosophy
here is to continue to push that penetration deeper and deeper
into the base. In the beginning, our digital product was a $9.95
stripped down product that had very little product cost margins
in the 90%-plus range. We then after about a year decided it was
time to add a select number of diginets, digital channels. And
at that point those had become more real in the economics of
offering those became better and we launched this $14.95 digital
product about 18 months ago. But our plan is really to step up
this scale as we drive the penetration deeper. And if you think
about it, as the product lifecycle starts to flatten out, to us
that's a signal that it's time for a new product. Video on
demand we're very excited about. I'll take you through. But
beyond that, the idea is if you think about it we have a rebuilt
plant. We now have - call it 2.5 million digital set top boxes
out there. So we have literally hundreds of millions of dollars
worth of boxes in place and how do you take that platform which
is there and continue to build on it? That's really the
strategy. As much to make money on the new services that you add
to digital as to just drive digital deeper in the base to
protect your customers from going anywhere else but staying with
you. If you look at the digital platform, I think one of the
things that we're excited about at this point that I think
people have underplayed is that finally we believe
high-definition television is something that the cable industry
should push. And I want to caution everyone - we don't see this
as being a large cash flow generator any time in the next year
or two but we do think strategically particularly for the 1, 2,
or 3% of our customers that are really the high-end customers
who would be most likely to go satellite that the time is now to
offer high def. We started offering high-definition television
in the Philadelphia area with a fairly modest upfront capital
investment this side of a million dollars. And what we found we
had 1,000 demo boxes from Motorola. We sold through all thousand
of those boxes with no advertising at all in about a two or
three month period. Essentially what we do is we passed through
HBO and Showtime and whatever local broadcasters we have deals
with and our feeling now is that we should replicate that in the
other major markets. So we'll be making an announcement in the
not too distant future that we'll be doing the same thing in
Baltimore, Washington, Detroit and the rest of the major markets
that we operate in. In Philadelphia, Baltimore and Washington
we're also going to be broadcasting about 100 games in each of
those markets on our Comcast SportsNet in high def. And we're
going to have a truck that's going to go back and forth between
the cities. But basically our feeling is that the more def
product we can have the more of a competitive differentiator we
can have ultimately against satellite. It all comes back to
competition and being ready for competition. We don't think
satellite can offer high def local signals in market after
market after market. We think we can and we want to preserve our
high-end customers. So that's another example of using this
digital platform to launch new products and get deeper in the
market. Moving on to high-speed data, we ended the year with
about 950,000 customers. We planned to add about 400,000 to
500,000 customers during 2002. This is the fastest growing
business we have and the business right now that is consuming
the most of our time that we're most excited about. If you look
at our high-speed data business, we have
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completed the transition from Excite@home over to our own
network, Comcast.net, which has been a difficult transition, but
one that has a variety of very positive benefits to us and we're
glad that that's behind us. Basically this transition allows us
first of all to get control of our own destiny. We never want to
be in a position again where our fastest growing, most important
product is a product that we don't control. So we get back all
of everything that control means in terms of service
reliability, the ability to launch new products, so on and so
forth. And then very importantly, we take our costs down very
dramatically. We were paying @home 35% of sales, which worked
out to about $12 - $13 per month. Granted, we're two months into
the process of taking back the network, but we think our costs
are going to be around $7 - $8 resulting in a savings of about
$5 per customer per month, 12 months a year, $60 a year, a
million customers. The math starts to get very compelling. So
we're pleased to have that behind us. We glad we did it when we
had a million customers and not when some day we have four
million customers and we can concentrate on building that
business now that that transitional period is behind us. What's
particularly exciting about the high speed data growth, you can
see on this slide while we have 2.3 million digital customers
and only a million high-speed data customers, because high-speed
data customers pay us $40.00 plus per month and digital
customers pay us more like $15.00 a month, the revenue lines
actually crossed and you can see high-speed data ramping very
dramatically. The same thing is happening - excuse me, let me go
back to that slide - the same thing is happening in terms of the
cash flow side of the equation. We went back and looked at one
of our original five-year plans for the high-speed data
business. And it's interesting how much better this business is
turning out to be than the original five-year plan. Our
penetration - we're now in year three of that five-year plan.
Our penetration is actually higher today than we thought it was
going to be two years from now. Secondly, we had assumed that
our prices would have to come down over time for a variety of
marketplace factors. And in reality Comcast, AT&T, Time Warner,
a lot of the big MSOs have actually increased their prices from
$40 to $45. And as I mentioned, the key variable cost per month
has gone down from $12 to $13 to $7 to $8, very different than
our base cable business where we have programming costs,
inflation that is higher than we wish it would be. So there are
a variety of very positive things going on in our high-speed
data business that we think bodes well for the future. If you
then look at building on these platforms, the digital platform
and the high-speed data platform, we think the next big step for
us is video on demand. It is something that satellite can't do -
again, coming back to what can we do to start to take the
technical high road versus satellite. Something that satellite
can't do. It is the ability, I think, to drive penetration
another five or ten or fifteen points deeper into our subscriber
base that I think is the most appealing to us. Obviously we'd
like to make money on every movie rented but really the
strategic imperative is if digital would have plateaued at a
certain level can you get a booster rocket and push it another
five, ten, or fifteen percentage points deeper. We have I think
fairly quietly gone out and downloaded software into about 3
million homes. We have 13 million homes in the Comcast footprint
pre-AT&T. About 3 million of the 13 million homes right now have
VOD software in those home's boxes represents about 500,000
boxes. And each of those customers can call up VOD as they wish.
We have not gone out and marketed aggressively as of yet. We
plan to do that the second half of the year. We would take our
footprint up from 3 million homes to about double that and we
believe that we're very close to getting a couple more studios
to make their product available. And we're continuing our tests
on SVOD versus VOD. Our feeling is you only get one time to come
out of the box the right way. And if you look at how we started
with high-speed data, how we started with digital, we were quite
prudent and careful until we got the product right and then we
went very, very quickly. We would anticipate that happening with
video on demand the second half of this year. Good news is a lot
of the technical difficulties related to this business are now
behind us - the going integration with the guides with the video
on demand companies. The servers are in place. We spent the
money so now it's the fun part of making sure that the customer
proposition is tweaked and that we have all of the product and
then we can get going in the second half of the year. If you
look at cash flow coming from these businesses you can see that
digital cable still contributes more cash flow than high-speed
Internet access but we
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would anticipate these lines crossing at some time in the not
too distant future. I mentioned beyond new product success one
of the things that we're proud of this year as has been the case
over the last five years is our ability to continue to bring in
all of the growing - the systems we've gotten through
acquisition and also trades and swaps. And what you'll see here
is the bar chart is EBITDA, which is accelerating through
internal growth and new products but also accelerating because
we've done a lot of acquisitions and swaps. And the orange line
across the years here is our margin. And what you'll see is that
our margin has stayed in the 42 to 43% range straight through
all that acquisition and swap activity. We started with 4.5
million subscribers. We now have 8.5 but in reality the number
of new systems has actually been more than 50% because we
swapped out and swapped in. So the level of integration work
that our company has done over the last five years and the
ability to maintain our margin is something that we're very
proud of. And in many ways when you look at a company like
Comcast what you're really looking at are about 200 executives
who really run the systems. And in each system a General
Manager, a financial person, an engineering person, a marketing
person - those are the people who really run the business. Brian
and I like to think we have something to do with it but in
reality it's those 200 people who day in and day out run the
business. And many of those people have now been through five or
seven or ten integrations over the last five or ten years. We
know exactly how to do it and those are the people, I think,
that we're going to be relying on heavily along with some folks
from AT&T when we put the two companies together. If you look at
the next slide and now I'll talk with an eye toward the future
and the challenge that is going to be facing us later this year
after we come together with AT&T Broadband. Whenever we take
over new cable systems what we try to do is follow the same
roadmap. It's fairly simple but it's one that's worked for us
time and time again. The first thing we try to do is set clear
priorities. And this sounds very simple but sitting down and
saying priority number one is cash flow growth. Priority number
two is prudently rolling out new products in a way that doesn't
jeopardize priority number one - making sure that everybody
knows that those are the two primary financial goals. We would
obviously have goals in terms of service and in terms of how we
run the business - integrity and how we hire people, etc. But in
terms of financial goals making sure that everybody understands
that we think is the most important thing. And it's interesting.
Different companies have had different priorities. There was a
time when AT&T had priority number one - let's get 500,000
telephone customers or let's get a million telephone customers.
We always flip that and we say your number one responsibility is
to generate cash flow according to the budget that we've all
agreed upon and to continue to launch new products and set
yourself up for the future. The second thing we would do is make
sure that we had very strong local management and this is where
our job at times gets very tedious but we plan on going to every
single AT&T system. They have sixteen major clusters and we
would go to every single one, interview every single executive,
get a chance to know everybody, try to find the best between the
two companies. And typically in the budgeting process we would
spend two full days in every major cluster of over 500,000
subscribers and make sure that first of all the people who are
in place to drive the results are people that we're comfortable
with - who understand the business and have a proven track
record of doing that. We would then ask those people to budget
locally and give them a six to eight week period to do that and
we would then come back and review those budgets. And what we
found is the quickest way to make sure that the budgets show
financial improvements is to require any acquired system to show
a P&L. Let's say it's a system with 500,000 subscribers. To show
their P&L stacked up line by line versus a Comcast system with a
45% margin that also has 500,000 subscribers and we make every
budget meeting start with those slides and you'd be surprised
how fast the local management will figure out ways to at least
address anomalies between the business that we're acquiring and
the systems that we have. We would be there for each of those
line by line reviews. We do all of our budgeting in the field
and if they have sixteen major clusters in AT&T - that means 32
days on the road myself and my senior most six or eight people
going through line by line by line. Half way through it you
forget where you are but we think this process is really what
results in budgets, which really allow us to drive the business
and make sure that we get the improvement. And then we do
monthly P&L reviews
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with every system and manage by exceptions. So that's the
overall process. The results that you get from that process -
I'll give you some examples. These are the 1.4 million AT&T
Broadband subscribers that we acquired January `00. So we've had
these systems for a little over a year, about fourteen months.
And what you'll see - I'll bring your attention if I could - to
operating cash flow margin. The average system that we acquired
had a 31% margin - 31.6% margin. In 2001 we brought that up to
37.7% and this year our budgets and our estimates and we're
tracking right on this would be to bring those systems up to
40.6% margins. One of the questions we get asked frequently is
okay, what are the five things you do when you come in and you
see one of these systems? So I thought what I'd do is break down
this slide into a little bit more detail and here we have a
specific system. This breaks down to 1.4 million. Is this Ann
Arbor or Royal Oak? Okay, this would be Royal Oak, Michigan,
which was a TCI system. And what you can see here is that we
have been able to go from a 24% margin up to a 40% margin and
the major way we've done it here is with revenue. We have
brought revenue from 41 to 51 to 58. What we've found is that in
a lot of the TCI systems the businesses tended to be
under-marketed. The call centers were not used in a sales
oriented way so one of the things we tried to do in addition to
getting the system rebuilt so that you can launch the new
products - is make sure that we were aggressively selling, that
we were selling packages as opposed to just selling units, that
we're spending the appropriate amount on marketing. I believe in
this system we actually added people as opposed to reducing
people. We have another system, which happens to be Ann Arbor,
Michigan, which is not all that far away from Royal Oak with
about 134,000 subscribers. Here the story was very different.
This is a system that we bought from AT&T but it was an old
Media One system and here we reduced the headcount. We had
layoffs immediately upon taking over the business. And really
took a lot of costs out of the marketing side of the business.
Same story in terms of margin getting them from 23% up to 38%
but much more of a cost driven story and really tried to take
the business and introduce new products but at the same time
make sure that the cost side of the business was in place. But I
think in both of these cases taking the margin during a 24-month
period up from where it was to more of a Comcast norm. If you
then look at the next slide one of the issues that obviously is
going to be facing us as we look at AT&T is the fact that AT&T
will have 1.5 to 1.7 million telephone subscribers when we put
the two companies together. We happened to inherit telephony in
Michigan again going back to Michigan to keep all of the
examples on tract about 200,000 subscribers AT&T Media One had
already launched telephony. When we took the systems over about
twelve months ago - looking back to 2000 cash flow was minus
$3.7 million and there were about 12,000 telephone customers.
We've actually grown that business taking the business up. A lot
of people have questioned whether we would continue to support
the circuit switch phone business. We've actually grown that
business from 12,000 customers to 20,000 and plan to end this
year with 28,000. But most importantly for us we've taken the
cash flow per subscriber from minus 3.7 to plus 2 to next year
plus 4. So we believe that the things that we've done in this
particular area granted on a much smaller scale are things that
would be applicable as we expand the business putting AT&T and
Comcast together. So those are some of the things that we've
done in terms of integrating and continuing to roll out the
business. We are very optimistic about what happens when you put
these two companies together. It's now been a couple months
since we signed the deal and I think our optimism remains very
high. We think that first of all the ability to take the AT&T
margins up a Comcast level - we'd like to give ourselves three
years as opposed to the two year track record that we've had
with new acquisitions just given the size of the business. We
think three years is a prudent timeframe rather than two, but we
think that represents a very attractive opportunity and then
beyond that getting the scale economics that come when you go
from 8 million subscribers to 22 million subscribers. And then
ultimately the ability to have a 22 million subscriber - 38
million home footprint and use that footprint to drive all sorts
of new businesses whether it's advertising, whether it's
interactive television, new programming channels, content,
interactive television, etc. we think is a tremendous
opportunity. So we look at 2001 as being a great year for our
company - 2002 we're anxious to get going. We're anxious to get
the
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deal done and John will touch on that in his section of the
presentation but we're very optimistic and welcome the chance to
tell you about it. John -
John Alchin:
Thanks a lot, Steve. What I'd like to do just in wrapping this
presentation up is to take a quick look at the consolidated
numbers, spend a minute or two on both QVC and our content
division, drill down into our balance sheet as it stands today,
and give you a bit of a preview of what the combined balance
sheet will look like pro forma for the merger with AT&T
Broadband. Bottom line on a consolidated basis for last year all
of our business including cable did extremely well reporting
$9.9 billion of revenue up 10.2% over the previous year and
12.3% growth in the operating cash flow finishing the year at
$2.9 billion. I think Steve has given you a very solid preview
of the various elements of the cable business. What I would
emphasize just by way of wrap up is the outlook for this year -
12 to 14% cash flow growth up from 12.1% last year and I think
we've had a history that's been demonstrable of putting out
very, very conservative guidance feeling very comfortable with
the numbers. In the area of RGUs last year in cable we increased
guidance a couple of times and still beat the numbers that we
put out there. So we feel comfortable with the numbers that we
have here for estimates in '02. In QVC just another great year
last year and despite the tragedy of September 11 still a great
quarter in the fourth quarter for QVC. They reported 24.4%
growth in cash flow in the fourth quarter despite the disruption
and being off the air. In the fourth quarter last year they had
their best day ever on December 8 I believe it was - when they
reported sales world wide of $80 billion - $80 million - sorry.
This is the one time I'm not allowed to use billion and that
momentum continues into the first quarter of this year. On
January 24 they had another gold sales day - an event that they
have a number of times through the year - $28 million worth of
sales that day. The number of dollars sold is not as important
as the number of new names - 5,200 new names, 334,000 units sold
in that one day. Again, guidance for this year very consistent
with what they reported last year - 16% increase in cash flow
last year. Mid-teen outlook for 2002. They will continue to
perform well. In the content sector we reported revenue up 17%
to $743 million in cash flow up 45% on a pro forma basis to $189
million. We expect mid teen growth here again with all segments
performing well. E! reported 15% increase in subs last year to
76 million. They'll continue to expand not just in the core
channel but in their spin off channel style. They're currently
in about 10 million homes - 15 million homes with contracts
taking them over the next couple of years up to fully 40 million
homes. Also the Golf Channel 19% increase in revenue to $130
million and operating cash flow up 28% to $43 million. This is a
channel currently in 46 million homes. We'll see further growth
and despite softness in the advertising market they continue to
be a niche advertiser sought out by households with incomes in
excess of $75,000 so one of the most desirable segments to the
advertising sector. With this type of performance then out of
the various units one of the things we've seen on a consolidated
basis as a company is a growing ability to generate free cash
flow, the combination of increasing operating cash flow offset
by decreasing capital expenditures. Last year as we show on the
left hand side of the slide here was a peak year for investment
across our various sectors, most notably in the cable sector
with total capital expenditures of $2.2 billion - $1.85 of that
$2.2 was invested in the cable plant to reach the levels of
plant rebuild that Steve described in his part of the
presentation. That meant that after paying all interest, taxes,
and even after meeting the extraordinary amount of $140 million
additional that we paid for the transition of Excite@home we are
at about a break-even level. So about $100 million prior to that
amount. As you look at Ray Katz's estimates for 2002 with the
reduction in cable capital expenditures from 1.85 down to 1.3
for the year and further augmented by increasing cash flow in
line with that shown on the previous slide estimates for the
year range right around the $800 million that Ray is estimating
we'll generate for this year. When you look then at the balance
sheet and the ratings that we have behind these numbers we
finished the year last year with leverage of 3.6 times, an
interest coverage of 4.0 times. This is - these numbers are
solidly investment grade with maturities in the near term, very
manageable - $450 million this year that will be met out of cash
flow that's generated the $800 million of excess cash flow. And
if we wanted to draw down we have unused lines of credit
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amounting to $3.25 billion dollars and readily accessible
investments in excess of $4 billion. Some of that stands behind
- about $1.5 billion stands behind the zones security so $2.5
billion of that is readily accessible. So that's the Comcast
picture - very, very strong operational performance and very
strong financial foundation. Let's then look forward to the AT&T
Broadband merger. As Steve described what we're giving ourselves
here is additional time to complete what we've already done any
number of times. He gave specific examples of the 1.4 million
AT&T subs that we integrated in 2001. What we're saying to
ourselves here to be more conservative is rather than achieving
the operational parity in a matter of 12 to 24 months we're
saying that if we were to do this in a three year period
following closing through the end of '05 and achieve margins
that are more industry-like by the end of '05. This is not to
say we can't do it any faster but if we were to do that and if
we were to grow our own cable base at a very, very conservative
number - this is not guidance. This is for illustrative purposes
only of only 11% and if we were to achieve over that period of
time through the end of 2005 synergies that scaled in over that
time and reached only a peak of $500 million - we think that's
readily achievable. Then we would have managed to grow cash flow
each year - '02, '03, '04 and '05 at at least 20% across that
entire period for each and every year. We think this is a very,
very doable scenario. If we then look at that's what we can do
operationally - again, what would the combined balance sheet
look like? Again, just as with the parent level solidly
investment grade. You may recall that under the terms of the
deal we agreed to take in $25 billion of debt. Five of that we
converted from debt from the preferred security that AT&T had
issued to Microsoft, convert that to equity through the issuance
of 115 million shares of the new entity. So right off the bat
we've taken the burden away to the extent of $5 billion leaving
us with a number of $20 billion to be added to our own debt
number, net of the zones of $10 billion. This in relation to a
consolidated cash flow number of almost $6 billion - $5.9
billion if you look at the aggregate of the guidance from AT&T
Broadband and ourselves $5.9 billion. You net from that number
the assets that we have said repeatedly are non-strategic. The
(inaudible) asset, our own AT&T shares, our own PCS shares that
are not associated with our zone security and you come up with
an opening balance sheet of 3.6 times debt to cash flow. This
number de-leverages rapidly with very conservative assumptions
in line with those shown on the previous slide into the mid 2
range - 2.5 times debt to cash flow by 2004. If we move to the
next slide the structure that we have decided to adopt to put in
place the financing that's needed to meet the debt that will be
required at close of the merger is illustrated in this
particular schematic. What we've decided to do to equalize all
credits, our own and those of the entities that we'll be
acquiring under AT&T Broadband, namely Media One and AT&T
Broadband LLC, the old TCI group is illustrated here with cross
guarantees, up stream guarantees, and down stream guarantees
from the new issuer which will be AT&T Comcast Corporation. As
of Friday afternoon of last week we were successful in arranging
the underwriting of $10 billion out of the $12.5 that will be
needed at closing with a group of five underwriters. Included in
that group are our three advisors, Morgan Stanley, Merrill
Lynch, and J.P. Morgan Chase augmented by two additional
co-underwriters B of A Securities and Citicorp SSB. So we have
arranged 80% of the funds that will be needed at close. We
estimate that the funding requirement at close would be
somewhere around the 11 to 12 billion mark - could go as high as
$14 billion if in fact additional bonds may be put to us at
close. We will arrange the $12.5 billion and augment that with
about $3.25 billion of availability that remains out of the part
of the $4.5 billion existing bank facility, which will flow into
the new issuer. So we'll have a total funding pool of about $16
billion to meet what we think will be a realistic need in the
$12 billion range that could grow as high as $14. Even if it
grew to the high end of that range we have still $2 billion of
additional availability. We feel very good about the fact that
we've been able to put this in place in a marketplace that has
been relatively tight for new issuers. There was tremendous
interest in the early syndication part of this facility and
we'll have the entire facility syndicated within a matter of
about two to three weeks. I think with that we're ready to open
the floor to any questions. (Pause)...No questions? Steve, we
convinced them.
7
Unknown: This morning your merger partners made a presentation stressing
quality of customer care and their intense level of interest in
the business. And it seemed like they were installing in place
an added management group, a positive management group in the
old MediaOne. Number one - to what degree can you and do you -
are you allowed to and can you and do you communicate with them?
And number two - would you be happy if some of these people
stayed or rather would you have your own people?
Steve Burke: Well, it's an interesting thing. The day that Bill Schleyer and
his group were appointed was a very bad day for us because we
felt that that was a pretty firm indication that AT&T was going
to try and go it alone. But in hindsight that was one of the
best things that ever happened to us because it put in place a
senior management team that looks at the world almost exactly
the way we do. In answer to your question - how often do we
speak to them? I speak to Bill Schleyer probably two times a day
every day - weekends, weekdays. We talk all the time. In terms
of the interaction - most of our interaction is post merger
planning. It's very difficult for us to get and very dangerous
for us from a regulatory point of view to get too intertwined
too quickly nor do we think that's right. I mean the fact of the
matter is Bill and Ron and that team know what they're doing and
for us to come in and second guess them or in any way take the
momentum away from the business we think would be unwise. We
would hope that in that senior management team we could convince
a good chunk of those people to stay with us. This is obviously
a big undertaking and as many good people as we can find we're
going to want. But we have nothing but praise for the direction
they're taking. We've talked about things like how much they're
going to spend on rebuilds. We've been cheerleaders when they
were talking about taking some costs out of their centralized
overhead in Denver. That's exactly what we would have done, so I
think one way to look at it is we get twelve months of work done
on the business that we would have done ourselves done with this
team. And we would hope that they'd give us a chance and a good
chunk of them would stay post deal. Is that it? Thank you very
much.
8
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