7
Filed by Comcast Corporation Pursuant to Rule 425
under the Securities Act of 1933 and deemed filed
pursuant to Rule 14a-12 under the Securities
Exchange Act of 1934
Subject Company: AT&T Comcast Corporation
Commission File No. 333-82460
Date: June 13, 2002
The following slide presentation was shown at Merrill Lynch's 5th Annual
Media & Entertainment Conference on June 13, 2002:
Merrill Lynch 5th Annual
Media & Entertainment Conference
cable commerce content
June 13, 2002
[COMCAST LOGO]
Safe Harbor
Caution Concerning Forward-Looking Statements
This presentation contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. In some cases, you can
identify those so-called "forward-looking statements" by words such as "may,"
"will," "should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," or "continue," or the negative of those words and
other comparable words. Comcast Corporation ("Comcast") wishes to take
advantage of the "safe harbor" provided for by the Private Securities
Litigation Reform Act of 1995 and you are cautioned that actual events or
results may differ materially from the expectations expressed in such
forward-looking statements as a result of various factors, including risks and
uncertainties, many of which are beyond the control of Comcast. Factors that
could cause actual results to differ materially include, but are not limited to
(1) the effects of legislative and regulatory changes; (2) the potential for
increased competition; (3) technological changes; (4) the need to generate
substantial growth in the subscriber base by successfully launching, marketing
and providing services in identified markets; (5) pricing pressures which could
affect demand for Comcast's services; (6) Comcast's ability to expand its
distribution; (7) changes in labor, programming, equipment and capital costs;
(8) Comcast's continued ability to create or acquire programming and products
that customers will find attractive; (9) future acquisitions, strategic
partnerships and divestitures; (10) general business and economic conditions;
(11) other risks described from time to time in Comcast's periodic reports
filed with the Securities and Exchange Commission; and (12) with respect to
statements relating to the proposed combination of Comcast and AT&T Broadband,
factors that could cause actual results of the combined businesses of Comcast
and AT&T Broadband to differ materially from expected results for such
businesses, including failure to integrate the businesses successfully or to
achieve the expected combination benefits.
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
Financial Reputation
Fully Reviewed Comcast 10-K in Connection with the
Filing of Merger Proxy
o No Ratings Triggers
o No Commercial Paper Issuance Concerns
o No Material Off-Balance Sheet Debt
- $200MM Performance Guarantee of an Affiliate Fully Disclosed
o No Unusual Capitalization Policies
NO NONSENSE
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
1Q02: Strong Operating Performance
Cable QVC Content
$ in Millions 13.5% 11.4% 33.6%
$600 X $200 $60
X
X X $55 X
$550 X X X
X X $175 X $50 X
X X X X X
$500 X X X X X
X X X X $45 X
X X X X X
$450 X X $150 X X $40 X X
1Q01 1Q02 1Q01 1Q02 1Q01 1Q02
Consolidated Revenue Growth: 12%
Consolidated OCF Growth: 18%
Merrill Lynch Note: Pro Forma Results
June 13, 2002 [COMCAST LOGO]
[COMCAST CABLE LOGO]
Today
o 3rd Largest U.S. Cable Operator
[PHOTO]
o 8.5 Million Subscribers
o Pending AT&T Broadband Transaction
[PHOTO] o 22 Million Subscribers
o Largest U.S. Cable Operator
o Upgraded Broadband Network
[PHOTO]
o Growth in New Services
Leveraging an Upgraded Network
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIALS.]
Homes Passed
(in Millions)
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
550MMz 3.4 2.5 1.3 1.9 1.3 0.7
550MHz to 750MHz 1.9 1.6 1.7 2.1 1.7 2.1
750MHz or More 1.6 3.0 4.4 5.5 9.7 11.0
---- ---- ---- ---- ---- ----
Total 6.9 7.1 7.4 9.5 12.7 13.8
50% 95%
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
Leveraging an Upgraded Network
--> Strong Demand for New Services
Comcast digital cable
Comcast High-Speed Internet
--> Double-Digit OCF Growth
o 10% in 2000
o 12% in 2001
o 12-14% in 2002E
--> Significant Free Cash Flow
o Consolidated: $800 million - $1.0 billion in 2002E
Upgraded Network + New Services + Double-Digit OCF Growth
= Significant Free Cash Flow Generation
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
Strong Operating Performance
Free Cash Flow Generation
Decrease in cable capital expenditures
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIALS.]
(Billions)
1998 1999 2000 2001 2002E
------ ------ ------ ------ -------
Cable $0.711 $0.739 $1.248 $1.855 $ 1.3
Consolidated $0.187 $0.154 $0.388 $0.326 $ 0.196
------ ------ ------ ------ -------
Total $0.898 $0.893 $1.636 $2.181 $ 1.496
....leads to significant FCF generation
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIALS.]
1998 1999 2000 2001 2002E
---- ---- ---- ---- -----
FCF $66.3 $402.6 $266.6 $110.1 $800
Free Cash Flow = EBITDA - Cap Ex - Interest Expense - Cash Taxes. Excludes
One-Time Tax Payments, OCF losses from Business Telephony Initiatives and
High-Speed Internet Transition Costs
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
[COMCAST LOGO] digital cable
YE98 YE99 YE00 YE01 1Q02 YE02E
---- ---- ---- ---- ---- -----
Subscriptions (000s) 78 515 1354 2335 2539.5 3MM+(*)
Penetration 5% 10.2% 18.7% 27% 30.2% 34.8%
* 2002 Guidance: 600-700,000 net additions.
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
[COMCAST LOGO] digital cable
Strong and Profitable Growth
o Positive Contribution Since Day One
o Incremental Revenue: $10.61 per Box
o Incremental OCF: >80% Margin
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
Building on the Digital Platform
100% +
^
Subscription /-\
Penetration /
| /
| / Interactive TV
| /
| / Extended VOD / PVR
| /
| / High Definition TV
| /
| / Video-On-Demand
| /
| / Digital Plus
| / $14.95
| /
| / Digital Classic
| / $9.95
|
----------------------------------------
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
Building on the Digital Platform
Video-On-Demand
o Drives Digital Penetration
o Leverages Existing Box
o Competitive Advantage
Digital --> Parity
VOD --> Superiority
o Scalable Architecture for Future
Services
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
VOD . . . More Than Movies
Movies + Time Shifted Programming
| |
---------------- -----------------------------------------
| | | | |
Impulse Subscription "Best of"
Cable and
HBO Showtime STARZ! Broadcasting
[GRAPHIC OMITTED]
News
Sports
Kids
Shopping
Prime Time
Cable
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
Building on the Digital Platform
High-Definition Television
o Today: Available to 1.3MM
Customers in Philadelphia
and New Jersey
o YE 2002: Expand Offering in Mid- [GRAPHIC OMITTED]
Atlantic Super Cluster and
to Other Key Markets
o Programming: ABC, NBC, HBO, and Showtime
o 2003: Comcast SportsNet
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
[COMCAST LOGO] High-Speed Internet
YE98 YE99 YE00 YE01 1Q02 YE02E
---- ---- ---- ---- ---- -----
Subscribers (000s) 51 142 400 948 1040 1.4MM+(*)
Penetration 3% 5% 7% 9.1% 9.2% 11.6%
* 2002 Guidance: 400-500,000 net additions.
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
[COMCAST LOGO] High-Speed Internet
o 1Q02 ARPU: $40, up from $35 in 4Q01
o Significant Cash Flow Improvement [GRAPHIC OMITTED]
o Designed to Support Multiple ISPs
o First ISP Deal: Juno and NetZero
o Juno Broadband Launched in Nashville and
Indianapolis on May 30, 2002 [GRAPHIC OMITTED]
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
Leveraging the Cable Modem Platform
Over the Next 12 - 24 Months:
o Music
o Photo Sharing
[PHOTO]
o Gaming
o Short-Form Video
o Video Chat
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
[GRAPHIC OMITTED]
[COMMERCE LOGO]
Revenue Growth
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIALS.]
($ in Billions)
CAGR: 15%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Base + iQVC 0.78 0.91 1.1 1.2 1.4 1.572 1.737 2.083 2.339 2.695 3.051 3.373
UK 0.047 0.099 0.189 0.273 0.328 0.301 0.271
Germany 0 0 0.012 0.042 0.102 0.138 0.197
Other 0.029 0.021 0.0421 0.0466 0.074
---- ---- --- --- --- ----- ----- ----- ----- ------ ------ -----
Total 0.78 0.91 1.1 1.2 1.4 1.619 1.836 2.313 2.675 3.1671 3.5366 3.915
Merrill Lynch
June 13, 2002 [QVC LOGO]
Operating Cash Flow Growth
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIALS.]
($ in Billions)
CAGR: 38%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Base + iQVC 21 136 164 193 209 261 304 361 426 512 612 726
UK -6 -4 9 30 41.8 20 25
Germany -32 -20 -19.3 -12 -7
Other 4.3 -1.3 -22
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total 21 136 164 193 209 255 300 338 436 538.8 618.7 722
Merrill Lynch
June 13, 2002 [QVC LOGO]
Customer Growth
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIALS.]
(in Millions)
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
2.5 3.0 3.4 3.7 4.2 5.2 5.6 6.3 6.9 7.8 8.4 9.1
Merrill Lynch
June 13, 2002 [QVC LOGO]
QVC Delivers...In One Day!
12/2/01: $65MM in Computers [GRAPHIC OMITTED]
1/19/02: $18MM in Computers
[GRAPHIC OMITTED] 4/30/02: $18MM on Cooking Day
5/11/02: $23MM on Fashion Day [GRAPHIC OMITTED]
Merrill Lynch
June 13, 2002 [QVC LOGO]
International Expansion
o 5MM Homes
o Launched 4/1/01
o 28MM Homes o 2001 Revenue: $14MM
o 2001 Revenue: $198MM o 2001 OCF: ($19MM)
o 2001 Revenue: $271MM o 2001 OCF: ($7MM)
o 9MM Homes [GRAPHIC OMITTED]
o 2001 OCF: $25MM [GRAPHIC OMITTED]
[GRAPHIC OMITTED]
[QVC LOGO] [QVC LOGO] [QVC LOGO]
THE SHOPPING CHANNEL DEUTSCHLAND JAPAN
Merrill Lynch
June 13, 2002
[GRAPHIC OMITTED]
CONTENT
Value Creation Through Content
Value Today
-----------
[GRAPHIC: QVC] o More than Tripled OCF in 7 years $13 - $15Bn
o $209MM in 1994 to $722MM in 2001
[GRAPHIC: o 50% subscriber growth in 4 years $1.5 - $2.5Bn
E! ENTERTAINMENT o 46MM in 1997 to 71MM at YE01
TELEVISION]
[GRAPHIC: STYLE] o 17MM subscribers today growing to 40MM by YE04 $300 - $500MM
[GRAPHIC: THE o 25% subscriber growth in 1 year $1.0 - $1.5Bn
GOLF CHANNEL] o 36MM in 2000 to 46MM at YE01
[GRAPHIC: OUTDOOR o 135% subscriber growth since 1998 $500 - $700MM
LIFE NETWORK] o 17MM in 1998 to 41MM at YE01
[GRAPHIC: COMCAST o Regional sports network covers 8.3MM $300 - $500MM
SPORTSNET] subscribers and entire Mid-Atlantic customer base
---------------
$16.6 - $20.7Bn
Source: Wall Street equity research estimates.
Value represents 100% of the equity for each entity.
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
[COMCAST LOGO]
Continuing to Deliver
o Accelerating Cash Flow Growth
o Free Cash Flow Generation
o Strong Balance Sheet
o Long-Term Shareholder Value
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
AT&T COMCAST (R)
CORPORATION
A Powerful Platform for Growth
o National Reach: 22 Million Subscribers
38 Million Homes Passed
o New Services Leadership
o National Advertising Platform
o Content Creation Opportunity
o Value Creation Through Synergies
o Cash Flow Growth Exceeding 20%
o Financial Strength and Flexibility
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
AT&T COMCAST (R)
CORPORATION
2003 2004 2005
---- ----- -----
AT&T Broadband OCF
Margin Improvement(1) 26% ----------------------> 36%
Operating Synergies(1) (Millions) $300 $400 $500
Comcast Cable OCF Growth(1) 11% ----------------------> 11%
OCF Growth Exceeding 20%
(1) For Illustrative Purposes Only. Not Indicative of Guidance
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
Integration Success: Acquired Systems
AT&T Broadband: 1.4MM Subscribers Acquired January 2001
2000 2001 Growth 2002E
---- ---- ------ -----
Revenue (Millions) $831.3 $878.2 5.6% $964.6
Cash Flow (Millions) $262.5 $330.9 26.1% $391.3
OCF Margin 31.6% 37.7% 6.1 pts. 40.6%
Annual OCF/ Avg. Subscriber $179.7 $224.3 24.8% $262.3
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
Integration Success: Acquired Systems
2000 2001 Growth 2002E
---- ---- ------ -----
Revenue (Millions) $ 4.6 $ 10.7 132.6% $ 15.5
Cash Flow (Millions) $ (3.7) $ 2.0 N/A $ 4.0
Telephone Subscribers 12,776 20,768 62.5% 28,020
Homes Passed (000) 176 188 6.8% 230
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
AT&T COMCAST (R)
CORPORATION
Merger Funding In Place
o $17 Billion of Bank Facilities
o Funding Requirement at Closing: $11-$14 Billion
o Includes Repayment of AT&T Intercompany Debt,
Free Cash Flow Deficit and Other Near-Term
Liquidity Needs for AT&T Comcast
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
Commitment to Deleveraging
AT&T Comcast debt(1)
($ in Billions)
QUIPS $5.0 $5.0----
$1.1
-------- -------
New $0.5
AT&T Comcast $6.5
Borrowings $12.5 $10.7 ------
$4.2
Existing
AT&T Bonds $8.4 $8.4 $8.4
Existing
Comcast Debt $9.9 $9.4 $9.4
--------------------------------------------------------------------------------
Total Debt $30.8 $28.5 $22.0
--------------------------------------------------------------------------------
Rural Cable Estimated
System TWE value
Sales/ (after-tax)
Liquid Share
Monetization
o QUIPS conversion to equity represents a $5.0BN (face value) reduction in
total debt and preferred
o Within two years, AT&T Comcast expects to monetize TWE ($6.5BN+,
after-tax(2))
o An additional after-tax value of $1.1BN in highly liquid assets will also
be monetized in the next year
o On April 5th, AT&T Broadband reached an agreement with Bresnan
Communications to sell 320,000 subscribers in Montana, Wyoming and Colorado
for $735MM in cash
o On May 21st, Comcast sold 42MM shares of AT&T stock for $540MM in cash
- Reducing opening debt balance
(1) Net of AT&T Broadband Exchangeables and Comcast ZONES
(2) Preliminary valuation for illustrative purposes based on Wall Street
estimates
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
AT&T COMCAST (R)
CORPORATION
Financially Strong and
Positioned for Growth
o Free Cash Flow Generation
o Investment Grade Rating
o Building Long Term Shareholder Value
Unlimited Opportunity
Merrill Lynch
June 13, 2002 [COMCAST LOGO]
Comcast (R)
Note: The following notice is included to meet certain legal requirements:
FORWARD-LOOKING STATEMENTS
The enclosed information contains forward-looking statements within the
meaning of the "safe harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995. Investors are cautioned that such
forward-looking statements with respect to revenues, earnings, performance,
strategies, prospects and other aspects of the businesses of AT&T Corp.
("AT&T"), Comcast Corporation ("Comcast") and, after the completion of the
proposed transaction between AT&T and Comcast, AT&T Comcast Corporation ("AT&T
Comcast") are based on current expectations that are subject to risks and
uncertainties. A number of factors could cause actual results or outcomes to
differ materially from those indicated by such forward-looking statements.
These factors include, but are not limited to, risks and uncertainties set
forth in AT&T's, Comcast's and AT&T Comcast's filings with the Securities and
Exchange Commission ("SEC"), including risks and uncertainties relating to:
failure to obtain and retain expected synergies from the proposed transaction,
delays in obtaining, or adverse conditions contained in, any required
regulatory approvals, changes in laws or regulations, availability and cost of
capital and other similar factors. Readers are referred to AT&T's and Comcast's
most recent reports filed with the SEC. AT&T, Comcast and AT&T Comcast are
under no obligation to (and expressly disclaim any such obligation to) update
or alter their forward-looking statements whether as a result of new
information, future events or otherwise.
ADDITIONAL INFORMATION
In connection with the proposed transaction, AT&T, Comcast and AT&T
Comcast have filed a joint proxy statement/prospectus with the SEC. INVESTORS
AND SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE JOINT PROXY
STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION BECAUSE IT CONTAINS
IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of
the joint proxy statement/prospectus and other documents containing information
about AT&T, Comcast and AT&T Comcast, without charge, at the SEC's web site at
http://www.sec.gov. Free copies of AT&T's filings may be obtained by directing
a request to AT&T Corp., 295 North Maple Avenue, Basking Ridge, N.J. 07920,
Attention: Investor Relations. Free copies of Comcast's and AT&T Comcast's
filings may be obtained by directing a request to Comcast Corporation, 1500
Market Street, Philadelphia, Pennsylvania 19102-2148, Attention: General
Counsel.
AT&T, Comcast and their respective directors, executive officers and other
members of their management and employees may be soliciting proxies from their
respective stockholders in connection with the proposed transaction.
Information concerning Comcast's participants in the solicitation is contained
in a filing made by Comcast with the Commission pursuant to Rule 14a-12 on July
9, 2001.