MSFT attempts cable rescue
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July 5, 2000: 10:52 a.m. ET
Software firm's new proposal seeks to save $3B purchase of Telewest stake
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LONDON (CNNfn) - Microsoft Corp. made a last-ditch attempt Wednesday to resurrect its acquisition of a £2 billion ($3 billion) stake in U.K. cable operator Telewest Communications PLC.
The software firm, facing a veto by the European Commission of its plan to buy a 29.7 percent holding in Telewest, said Wednesday it had submitted a new proposal to the Commission, the European Union's competition watchdog. It didn't give details of the latest proposal.
The Commission recently circulated a draft of its likely decision to the relevant parties. Wednesday was the last day for a written proposal from Microsoft, with the Commission set to deliver its definitive ruling by Aug. 4.
"This is by no means the end of the matter," Microsoft (MSFT: Research, Estimates) spokesman Spencer Wilson told CNNfn.com, "discussions with the Commission will continue".
The watchdog's concerns center on the possibility that Microsoft will come to dominate the market for the software used in the digital decoders that facilitate cable access to television and Internet services, in the same way it dominates software that runs personal computers.
Broadband cable is expected to become a key feature of the way people access the Internet in future, thanks to its high-speed capabilities.
Telewest (TWT) stock rose 1 percent to 228.25 pence in afternoon trading in London. Microsoft shares fell 3/4 to 79-1/4 early Wednesday in New York.
The stake in Telewest is being sold by MediaOne, after that company was acquired by AT&T Corp (T: Research, Estimates). The issue is muddied by a recent deal whereby Liberty Media, another unit of AT&T, sold its 25 percent holding in Telewest to United Pan-Europe Communications NV. UPC is an ally of Microsoft, and Microsoft owns an 8 percent stake in the Netherlands-based cable operator.
Microsoft is also being investigated by the European Commission because of its alleged dominance of the personal computing software market. That investigation is similar to a Department of Justice lawsuit in the United States, which resulted in a Federal court ordering the company to break itself in two and change some of its business practices. Microsoft is appealing the ruling.
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