STOCKHOLDERS OVERWHELMINGLY APPROVE FORMATION OF AT&T COMCAST
Despite several complaints to SEC about how merged company would be managed, shareholders overwhelmingly approved corporate marriage of AT&T Broadband and Comcast. If ultimately approved by FCC and Dept. of Justice (DOJ), as well as local franchise authorities, merger would form nation’s largest cable company, with 22 million subscribers. Comcast said deal, currently valued at about $50 billion, was expected to close in 4th quarter. Approvals were announced at separate shareholder meetings in Charleston, S.C., (AT&T investors) and in Philadelphia (Comcast). Although analysts had expected votes to favor deal, several institutional investors in AT&T had objected to corporate governance structure of deal. Provisions keep Comcast Pres. Brian Roberts in place as CEO of new company until 2010 unless 75% of board -- 9 of 12 of members -- vote to oust him. Originally, corporate structure didn’t contemplate board elections until 2005, 2-1/2 years after deal was scheduled to close, but investor outcry prompted move to hold elections in 2004 instead. There also were objections to provision that would bar anyone from amassing more than 10% voting power without first getting board approval, but in end that plank passed along with deal.
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Approval by Comcast shareholders came as no surprise since Roberts and his family had 86% voting control of company, including 100% of Class B stock. In terms of equity, Roberts’ holdings are 2% but in merged company his voting stake would be 33.3%. AT&T CEO Michael Armstrong would become chmn. of combined company and, like Roberts, any attempt to oust him would require vote of 75% of board. Board would be composed of 5 members from Comcast’s existing board, 5 from AT&T’s board and 2 jointly appointed. Comcast said 99.8% of its shareholders approved merger and its corporate governance, vote that Roberts said represented “a major step forward towards the creation of this new company.”
AT&T said that of its outstanding shares, 69% voted in favor of merger and only 2% against. Company said 92% approved corporate governance. Shareholder proposal to require separate stock owner vote on future restructuring matters for AT&T was rejected, with 60%-40%. “With their votes, shareowners have demonstrated their strong support for AT&T’s restructuring,” Armstrong said. But Ann Yerger of Council for Institutional Investors, which was among those filing complaints with SEC, said she believed most investors withheld their objections only because they were so eager for AT&T to complete value-enhancing transaction. “Many of our members are holding their noses and voting for the governance proposal. A few are lodging protest votes,” Yerger said.
Meanwhile, members of Media Tank, Philadelphia Community Access Coalition and other groups held news conference outside hotel where Comcast meeting was held but didn’t disrupt meeting. Demonstrators contended that merged company would lead to higher prices for consumers and monopoly on Internet access. “We would like to see that Comcast guarantee open access to its broadband network and commit to have public access TV mandatory on all the cable systems it operates,” said Joy Butts of Kensington Welfare Rights Union. “Recent events on Wall Street dictate to all of us that we can’t leave it to the market to decide what is best for the public.”