AT&T; Investor Won’t Make Offer

Cable maverick John Malone, AT&T; Corp.’s largest individual shareholder, said Wednesday that he will not launch a competing bid for the company’s cable television unit and indicated that Comcast Corp.’s merger proposal has merit.

Speculation that Malone might launch a competing bid for AT&T; Broadband swept Wall Street when the cable magnate abruptly resigned as an AT&T; director after being locked out of board deliberations involving the Comcast proposal.

Since Comcast made its unsolicited bid Sunday, AT&T; has insisted that the cable unit is not for sale. But underscoring the conflict about strategy Malone continues to have with AT&T; Chairman C. Michael Armstrong, he told Bloomberg News on Tuesday that “the deal would make a lot of sense.”

But in a brief telephone interview Tuesday with The Times, Malone would not say whether he will back the $40-billion Comcast bid.

“I’ll decide how I vote once the board decides what they are going to do,” said Malone, who is attending the Allen & Co. annual media conference this week in Sun Valley, Idaho.

In his first public remarks since the Comcast bid, Armstrong said Wednesday that his board is giving “serious consideration” to the Comcast bid.

Comcast’s bid “recognizes at least some” of AT&T; Broadband’s value, Armstrong said in a speech to the Greater Boston Chamber of Commerce. “The question is whether it recognizes the right value.” Armstrong has spent about $110 billion on two cable acquisitions to build AT&T; Broadband.

People close to the AT&T; board said directors are looking for a bid of at least $60 billion.

In his board resignation letter, Malone called the Comcast offer “inadequate.” But he would not elaborate Wednesday on what would be an adequate price.

Sources close to Malone, however, said Comcast would need to add cash to its bid. Comcast is offering $40 billion in stock and the assumption of $13.5 billion in AT&T; debt.

By adding $10 billion to $15 billion, Comcast could help AT&T; pay down its $47 billion in debt. “I certainly think that would help AT&T;,” Malone said.

Wall Street sources said Brian Roberts, Comcast president and son of its founder, Ralph Roberts, also was in Sun Valley on Wednesday, possibly looking for a partner for the deal.

Several mentioned Microsoft Corp. as the most logical because of its interest in selling software for cable set-top boxes. Microsoft has invested heavily in cable and satellite operators in exchange for supplying software for television set-top boxes.

The company invested $1 billion in Comcast in 1997 and put $5 billion into AT&T; two years ago to help it outbid Comcast for MediaOne Group. Microsoft also has committed about $3 billion to back News Corp.’s bid for DirecTV.

Microsoft has been disappointed by the Comcast investment because the deal never required the cable company to buy any software, although the stock has appreciated significantly. Backing Comcast’s bid for AT&T; would come with such strings attached, analysts speculated.

AT&T; shares eased 14 cents to $20.50 on the New York Stock Exchange Wednesday, after surging in recent days. Comcast’s most actively traded shares fell 52 cents to $38.39 on Nasdaq.