Cablevision Lawsuit Says Excite Buyout a Violation of Charter

Cablevision Systems Corp., New York City’s largest cable television provider, has sued to block Excite@Home Corp.’s buyout by several of its major investors, including AT&T; Corp. and Comcast Corp.

Lawyers for Cablevision, one of Excite’s investors, filed suit Monday in Delaware Chancery Court to invalidate the company’s agreement with Comcast, Cox Communications Inc. and other investors that’s designed to give AT&T; total control of the largest U.S. provider of high-speed Internet service over cable TV lines.

Cablevision contends that the pact violates Excite’s corporate charter, which requires that all partners agree to changes on voting rights or other corporate powers that allow one investor to assume control of the Internet service.

Excite shareholders were slated to vote on the changes Tuesday. Excite officials agreed, however, not to file papers completing the shareholders’ vote until Friday, while the companies try to work out a settlement, lawyers in the case said Tuesday after a hearing before a Delaware judge.

“The defendants’ [agreement] has obliterated the corporate governance structure of Excite@Home,” Cablevision officials said in the suit.

“Rather than a company that no single shareholder can control in its own self-interest, Excite@Home will be wholly controlled by AT&T;,” they said.

Comcast and Cox officials weren’t immediately available to comment on Cablevision’s suit.

AT&T; officials contended that they don’t need Cablevision’s agreement to ask Excite shareholders to approve changes to its corporate structure and would press ahead with the buyout.

“We believe our offer is fair and reasonable to all Excite stakeholders,” AT&T; spokesman David Caouette said.

Excite@Home, formed in 1999 when Internet provider At Home Corp. bought the Excite Web portal, is controlled by units of AT&T;, Cox and Comcast. AT&T; owns 56% of the Web-based service.

Comcast and Cox agreed in March to allow Excite to deliver Web content over their cable TV systems beyond 2002. In return, AT&T; is giving the companies an option to sell their stakes in Excite for as much as $3 billion.

AT&T;, which acquired its Excite stake with the purchase of Tele-Communications Inc. last year, would boost its voting rights in Excite to 74% under the agreement.

Cox and Comcast also would relinquish their seats on Excite’s board, making it easier for AT&T; to make decisions about the company’s direction.

Cablevision, which wasn’t part of the March agreement, says AT&T;, Comcast and Cox are vying to revise agreements that limit Excite partners’ voting rights to smooth the way for AT&T;’s buyout.

Shares of New York-based AT&T; rose 12 cents to $34 on the New York Stock Exchange. Excite, of Redwood City, Calif., rose 38 cents to $19.06 on Nasdaq.

Bethpage, N.Y.-based Cablevision rose $1.75 to $70.88 and Atlanta-based Cox rose $2 to $49.62, both on the Big Board. Philadelphia-based Comcast fell $1.81 to $34.88 on Nasdaq.