After months of speculation, Rule Breaker Portfolio holding AOL Time Warner
As part of the pact, AOL Time Warner will transfer all of its cable television operations, including its share of Time Warner Entertainment's (TWE) cable operations, to a new subsidiary, Time Warner Cable. AT&T
AOL Time Warner plans for a Time Warner Cable IPO as soon after the deal closing as market conditions permit, expected in the first half of 2003. The first $2.1 billion raised from that IPO would pay down Time Warner Cable debt that will have funded the $2.1 billion cash to AT&T. It's unclear how much AOL debt will be transferred to Time Warner Cable, though it should be transparent to shareholders. AOL must consolidate financials from its majority-owned new company.
Key for AOL shareholders is this: Within two years after AT&T Broadband and Comcast complete their proposed merger, they will offer AOL Time Warner high-speed broadband Internet service to over 10 million homes, and another 9 million after that, "subject to the parties' mutual satisfaction with the arrangements." Sources have said AOL will pay AT&T Comcast $35 to $40 a subscriber for access and a share of any advertising revenue, reputedly higher than what Earthlink
Another wrinkle? Microsoft
Jubilant investors drove AOL Time Warner shares up 7.26%, AT&T's 8.86%, and Comcast's a whopping 15.26%. Are they right? Take our poll on the AOL discussion board.