The new company will be called AT&T Comcast Corporation. Brian Roberts, Comcast's president, will take over as CEO, and C. Michael Armstrong, AT&T's chairman and CEO, will postpone his planned May 2003 retirement to become chairman of the new company.

"This [merger] is a leap forward in realizing a vision that thousands of AT&T people have worked toward -- bringing greater choice in affordable broadband video, voice, and data services to even more American homes," Armstrong said in a statement.

"AT&T Broadband and Comcast can accomplish more together than we could alone, [and] our shareowners and employees will both benefit from the industry-leading growth we will achieve," Armstrong said.

A Family Affair

The announcement, which came after unanimous agreement by AT&T's board of directors, capped Comcast's five-month pursuit of AT&T's Broadband unit. The combined company would become the largest cable company in the U.S., pending approval by government regulators.

According to the terms of the agreement, AT&T shareholders will own 56 percent of the new company and about a two-thirds voting interest, while the Roberts family will control the remaining third of the new company's voting interest.

Roberts' father, Ralph J. Roberts, founded Comcast nearly 40 years ago, and according to Giga Information Group researcher Lisa Pierce the family has a deep history in the cable business and a keen interest in the industry's future.

From a business standpoint, the potential for expanding broadband's capabilities looks to be more sound because cable has been Comcast's only business, Pierce told NewsFactor Network.

Revenge Makes Good Business

Pierce added that analysts expected the merger to happen and that revenge was involved on some level.

AT&T outbid Comcast for two cable properties, TCI Corporation and MediaOne, and it was clear that the Roberts family had wanted the TCI property for a very long time. But when AT&T found itself saddled with massive debt from its acquisitions, it became vulnerable to its onetime rival.

Meanwhile, Gartner G2 analyst Laura Behrens told NewsFactor that AT&T was surprised by Comcast's original offer last summer.

"But since then, [AT&T] explored several possibilities for the future of the broadband unit," said Behrens. "Comcast was enthusiastic, shall we say, but this is not a hostile takeover."

Regulatory Obstacles (continued...)

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