Post of the Day
January 11, 2000

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Excite@home

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Subject:  Check/Not Checkmate
Author:  netanalyst

The race is on. The coming year will clearly define the winners in broadband access.

First advantage AOL. AOL leveraged its superior brand, large user base and lofty market value to achieve a merger in which AOL maintains controlling interest with Time Warner, a media rich company with ownership of broadband pipes (Roadrunner) to a minority share of US households.

AOL is paying lip service to its dedication to open access. This makes sense for AOL since it still has a minority of homes passed, is dealing from strength with respect to brand awareness, and Roadrunner is behind ATHM in terms of development of its service. The deal won't be consumated for several months so AOL can continue to posture (holding back ATHM) without actually opening its pipes.

In my opinion, this merger kicks off another very exciting round of development in broadband access. Its a message to the world that broadband media access will indeed be very very big. As in the development of television, there is room here for two, three or even four substantial players. Aol will be one of them, ATHM is a leading contender to be another (perhaps even more powerful player).

"One thing is for sure, there is little time to waste. The answer as to ATHM's fate is coming soon."

There are still plenty more media powers NBC, CBS, ABC, Fox, Viacom etc. These companies can not afford to be shut out of broadband by AOL/TWX. More deals will almost certainly follow.

Microsoft will not want to be left out in the cold, Paul Allen's cable empire suddenly has more value. Yahoo may wish to leverage its market value. ATHM's cable partners will certainly realize that owning the pipes is not good enough. Content does matter.

ATHM can not allow other media giants to get away. However, ATHM also does not have the market capitalization to effect a merger such as AOL's, Although Yahoo does. I'm expecting (in relatively short order) one or both of the following:

1) A possible consolidation of interests among ATHM, Microsoft, Worldnet, Mindspring (maybe) to achieve a larger combined user base fast. Perhaps Yahoo comes into the picture as well. These events in conjunction with...

2) A merger or (more likely) JV with a consortium of media rich companies.

The race is on. Paul Allen is a wild-card in this race as is Yahoo. ATHM and others will need to move fast or face the possibility of being toast. The value of ATHM's exclusivity will now be tested. Perhaps this announcement from AOL (dressed up as bad news) will in the end be the catalyst we have been waiting for.

One thing is for sure, there is little time to waste. The answer as to ATHM's fate is coming soon.

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