Jacking in from the "Can't Touch This" Port:
Washington, DC -- Bell Atlantic and TCI announced late Wednesday that they had just put up detour signs in the fast lane of the information superhighway. The companies jointly tossed their proposed $26 billion merger into the toilet.
The companies stock holders have been bloodied by plummeting share prices since the deal was announced last October. In an effort to avert an all out bloodbath, the companies have parted ways, promising to work on "other deals."
The move, while surprising, has been grist for the insider rumor mill for months. After Bell Atlantic and TCI blew three deadlines intended to ink the final agreements, Wall Street's second largest deal in history is history.
"We are, of course, disappointed," said Ray Smith, Chairman of Bell Atlantic, "but the unsettled regulatory climate made it too difficult for the parties to value the future today. Smith said that the parties had resolved their major differences, but that the Federal Communications Commission's decision to roll back cable rates another 7 percent made reaching agreement on a transaction of this magnitude impossible.
John C. Malone, President of TCI, said, "Given market and regulatory uncertainties, Ray and I concluded that this is not the time to bring our companies together. We are discussing other ways of working together, including possible joint ventures to build full service networks, and joint investment in programming."
Smith had reveled in his 15 minutes of fame and for good reason. His company stood to gain extraordinary power, gulping down the nation's largest cable operator that has some 10.5 million subscribers, about 25% of all cable subscribers.
Bell Atlantic insiders said during negotiations, Malone lived up to his hard ass reputation, despite his public claims that he was tiring of the limelight and simply wanted to pursue other ventures. During negotiations, Malone reversed field several times, Bell Atlantic source said, pushing Smith to renegotiate the tentative agreement.
Industry analysts openly derided Bell Atlantic's gutsy move, claiming the company would have had to eat billions in the cost of upgrading TCI's cable network to handle advanced services. Profits were pipe dreams; customers were penciled in under the heading "field of dreams."
Malone, accustomed to making fast deals and moving on, grew weary the pending regulatory hurdles, sources said. He seized on the FCC decision to cut rates as a handle to parachute out of the deal, TCI sources said.