AT&T to Acquire Excite@Home

As expected, Excite@Home has announced that AT&T will purchase the broadband Internet access business and services assets of the Internet service provider for $307 million.

Excite@Home serves about 3.2 million broadband subscribers but has been hurt by lagging advertising revenue. The company announced earlier this week that it would lay off close to 25 percent of its staff and make large cutbacks to its portal services. AT&T previously held a 23 percent stake in the company, and industry analysts expected the telecommunications giant to acquire the remaining shares of Excite@Home.

In addition to selling off its assets, Excite@Home is filing for relief under Chapter 11 of the U.S. Bankruptcy Code in a San Francisco court. The sale of Excite@Home assets hinges on the court's approval of the sale and whether another company makes a higher offer, according to a statement by Excite@Home.

The sale should make it possible for customers to continue using the Excite@Home service, company officials say in the statement.

Earlier this week, Excite@Home had announced it was discontinuing many of its online offerings. It announced it was ending some partnerships with shopping sites, and closing its MatchLogic subsidiary.

MatchLogic provided interactive marketing services for Excite@Home and was one of the parts of the company hardest hit by the slowdown in advertising spending, according to an Excite representative.

While speculation about Excite@Home's fate has run rampant for months, analysts noted that too many companies depend on its services to let it die outright.

A total of 21 cable companies, including national giants such as AT&T Broadband, Comcast, and Cox Communications, rely on Excite@Home equipment and network management services to help provide Internet service. The cable companies simply can't let Excite@Home's services go away--they need them.

In August an AT&T Broadband spokesperson noted that 1.35 million of its customers access the Internet via cable modem, and the vast majority of them do it through services provided in part by Excite@Home. "AT&T Broadband is committed to providing uninterrupted service to our customers," she added.