While industry speculation runs rampant about the imminent
departure of AT&T Broadband & Internet Services CEO Leo J. Hindery Jr., the man
who has been rumored to be replacing him said Hindery is here to stay.
After Hindery suggested to analysts during the National
Show that he was wrapping up his assignment at AT&T Broadband, speculation within the
company had former Continental Cablevision Inc. chairman Amos Hostetter stepping in after
he left.
But Hostetter -- who will become nonexecutive chairman of
AT&T Broadband after AT&T Corp.'s $58 billion acquisition of MediaOne Group
Inc. closes -- said the whole premise is faulty. For one thing, Hindery is not planning to
exit, he added.
"It's a senseless rumor," Hostetter said.
"I'm reluctant to even dignify the rumor by commenting on it. I expect Leo to be
running AT&T's cable operation for a considerable period of time."
Hostetter added that he was content with being nonexecutive
chairman at AT&T Broadband.
That role, he said, "is to be there as a sounding
board and supporter for the CEO. I'm delighted to do that. I have a great deal of
affection for the man [Hindery]. He single-handedly has transformed TCI
[Tele-Communications Inc.] and, in many respects, the industry."
Speculation that Hindery was maneuvering to jump ship --
despite his five-year employment contract with AT&T -- was fueled mainly by comments
he made during a private session with analysts at the National Show in Chicago.
According to several analysts that were present, Hindery
hinted that his days at the company were coming to a close. "[Hindery] said he has a
job to finish," one analyst said. "He certainly seemed to give a strong
indication that he was leaving."
But according to one source who asked not to be named,
Hindery has a huge incentive to remain with AT&T -- money.
"Leo is very heavily back-end-loaded as far as
compensation goes," the source said. "[A total of] 90 percent of Leo's net
worth is dependent on him staying for a number of years. He vests over five years, and the
first three-fifths vests after the third year."
Hindery was said to be traveling, and he could not be
reached for comment.
AT&T Broadband spokeswoman LaRae Marsik said the
company would not comment on rumor and speculation. "Leo has a tremendous role in
this company and a lot of work in front of him," Marsik said. "He will continue
to fulfill that role."
But Hindery's comments at the National Show
weren't the only fuel for the fire. AT&T chairman C. Michael Armstrong has also
hinted to analysts that his top lieutenant might be leaving.
"Armstrong has been saying something like, 'Leo
is expensive. I hope I can afford to keep him,'" one analyst said.
Although Hindery's financial package with AT&T
requires him to stay at least three years, that doesn't mean he wouldn't try to
renegotiate his contract. However, at least one analyst dismissed the idea that Hindery is
using the media to cut a better deal.
"He's pretty critical [to AT&T
Broadband]," Janco Partners analyst Ted Henderson said. "If he wanted to
renegotiate his deal, all he would have to do is walk into Armstrong's office and
say, 'Let's renegotiate.'"
Henderson added that given Hindery's renowned work
ethic, he's entitled to be a little exhausted.
"This speculation is all based on the assumption that
the guy is tired," Henderson said. "So, the guy is tired. It's legendary
how hard this guy works."
Hindery shuttles weekly between his home in suburban San
Francisco and his offices in Englewood, Colo., and New York, in a private jet equipped
with its own bed, often entering the office at 5 a.m. and leaving well into the night.
Most analysts do not expect Hindery to exit until after
AT&T completes its deal to acquire MediaOne, finishes several swap deals to divest its
cable partnerships and negotiates telephony agreements with other cable operators.
Some analysts speculated that Hindery could give up his
post in as soon as four months or as late as one year. The deciding factor appears to be
just how long it will take him to finish what he started out to do.
"If you had a strong operating guy step in, it might
not be that bad," said one analyst who asked not to be named. "In three or four
months, it will be less of a deal story and more of an execution story."
Meanwhile, sources at the company said Carl Vogel, former
chief operating officer at EchoStar Communications Corp. under CEO Charles Ergen, is close
to joining AT&T Broadband in an executive role at the company's broadband-data
operations.
"Hostetter definitely softens the blow if Leo
leaves," added another industry source who requested anonymity. "I honestly
don't expect [Hindery] to stay. He was kind of fed up last year -- he and [former TCI
chairman John] Malone weren't seeing eye-to-eye. But I don't think anything is
imminent. He has all of those swaps to get through. I think maybe the [National Show] next
year will be his last."
