Content area
Full Text
In its bid to buy AT&T's cable operations, Comcast Corp. will need to up the ante if it wants to stay in the game. But doing so could leave it saddled with burdensome debt levels and erode its credit ratings to junk levels.
AT&T Corp.'s board on Wednesday formally rejected Comcast's July 8 bear hug offer.
Comcast, the country's No. 3 cable operator, has said it could handle the additional $13.5 billion in debt it would accrue under its original $53.5 billion buyout proposal of Englewood, Colo.-based AT&T Broadband goes through.
Maybe so, but the Philadelphia company's debt would have more than doubled from $10.8 billion to $24.3 billion.
Those debt figures, of course, would change as the price for AT&T Broadband changed. More to the point, AT&T ostensibly would like to see whoever buys its cable operations also buy its interests in related assets - assets that would cost billions of additional dollars.
Comcast would become the No. 1 cable company in the nation, with 22 million subscribers, if it gets AT&T Broadband.
In a letter to AT&T Chairman C. Michael Armstrong, Comcast Chairman Ralph Roberts and CEO Brian Roberts said: "Given the strength of Comcast's balance sheet we are confident that the new company would have an investment-grade debt rating," and noted that its bankers shared that view.
There is some disagreement on that assertion.
The three major credit-rating agencies - Standard &...