Door Slams on At Home10/13/2006 8:00 PM Eastern
The long, tortuous saga of cable Internet-service provider At Home Corp. may finally have come to a close, as the U.S. Supreme Court last week declined to hear a case brought by the defunct high-speed data service provider against former cable affiliates Comcast and Cox Communications.
The company's beef apparently stemmed from a 2000 agreement by Comcast and Cox to sell their interests in At Home — a provider of network high-speed data service to several major cable-operator affiliates — to AT&T Broadband for about $3 billion in stock of parent AT&T Corp. AT&T Broadband already had an interest in At Home, through its 1998 acquisition of Tele-Communications Inc.
AT&T bought control of At Home — increasing its voting control to 74% from 56% — in 2000 for $3 billion in AT&T stock. At Home shareholders opposed the deal, though, because it gave Comcast and Cox the option of dropping the service before its contracts were up.
About a year after the deal was sealed, in 2001, At Home filed for bankruptcy.
At Home had claimed the two cable companies reaped a combined profit of $600 million from its demise. At Home, basically a holding company, planned to use proceeds from the suit to pay bondholders and creditors.
Cox argued in its brief for the court that the transactions, which involved so-called “hybrid” derivatives, took place over a period of more than a year and therefore fell outside the six-month window specified in law.
The Supreme Court's decision not to hear the case appears to have closed the books on the five-year old saga of At Home.
At Home — then known as Excite@Home — was the main supplier of high-speed data service to cable operators in the infancy of the product. But as big cable companies began to balk at the price of offering the service, and as their own networks became capable of handling high-speed data traffic, At Home's fortunes waned.
At Home began to crumble shortly after the Cox and Comcast deal; it ceased operations in 2002. The company, which received no benefit from the Cox and Comcast deal, claimed the two cable companies knew At Home was on the ropes and used that inside information to negotiate a deal favorable to them.
The company claimed in its lawsuit that Comcast recorded a profit of $296.3 million from trades of At Home stock and Cox recorded a gain of $307.4 million.
The lawsuits started to fly in 2002. AT&T settled one lawsuit — which claimed it breached its fiduciary duties and misappropriated the defunct ISP's trade secrets in connection with the building of an AT&T high-speed network to replace At Home's network — in 2005.
As part of that settlement, AT&T agreed to pay $400 million that was placed in a trust for bondholders. Comcast footed about half of the AT&T settlement — $170 million — because it had purchased AT&T Broadband in 2002.
The lawsuit against Cox and Comcast first surfaced in 2002 in U.S. District Court in Wilmington, Del., which ordered the case moved to U.S. District Court for the Southern District of New York in 2003.
In 2004, the New York court dismissed the case. The Supreme Court appeal was apparently At Home's last hope.