AOL Time Warner has proposed that America’s number one cable television provider AT&T Broadband merge with its own cable interests, according to former AT&T director John Malone.

Rumours of talks between the two have surfaced before [WAMN: 25-Jul-01], though Malone’s comments are the first public disclosure of such negotiations. AOL TW was one of several potential suitors for AT&T’s cable business after the latter received (and rejected) an unsolicited offer from Comcast Corporation [WAMN: 09-Jul-01].

Discussions between the two media giants are believed to centre on a spin-off of a merged cable business to form a separate company. Such a deal would face intense regulatory scrutiny, not to mention opposition from other bidders.

However, Malone’s comments were dismissed by one cynical insider as an attempt to hike the price demanded by AT&T, in which Malone retains a sizeable stake. According to the same spook, any deal with AOL TW is far from imminent.

Media groups such as Walt Disney Company and Cox Communications remain in the running, while Microsoft – desperate to foil AOL TW’s bid – may throw its financial muscle behind a rival offer.

News source: Financial Times