Well, it happened: Leo Hindery walked. Or was pushed. Despite an odd silence from
, which I am long, about the circumstances of Hindery's departure and future plans, it's pretty clearly the latter: if in large part, an
Hindery, CEO of AT&T's cable and Internet businesses, was a classic cable guy, a real catch for AT&T. John Malone, proprietor of
, the cable giant AT&T bought last year (and finally closed on seven months ago, in March), was responsible for bringing Hindery, then TeleCommunications' CEO, into the AT&T fold. He almost immediately began clashing with some Web-focused execs, both inside AT&T and in its newly affiliated companies, such as
, the cable-modem-based fast Net access provider that came along with Telecommunications as a kind of dowry.
I've written often
here about the clashes between the Excite@Home people, especially CEO Tom "TJ" Jermoluk, who thought Hindery (a) didn't "get it" about Excite@Home's business, and (b) was out to persuade AT&T boss Mike Armstrong to break the exclusive-carriage deal Excite@Home got as part of that $60 billion merger.
So is this a case of the Excite@Home people "getting" Hindery, sinking a shiv into his back to save their own hides?
No. At least, not directly.
I've been talking this morning with people close to this, and pretty consistently heard that Hindery just reached, and decided to walk, the "IDNT" bridge -- referring to that moment when a successful executive decides "I don't need this" in my life.
I don't doubt that champagne flowed -- discreetly, of course -- in the Excite@Home offices in Redwood City today, over Hindery's departure. A big thorn has been taken out of their sides. Jermoluk's relationship with Mike Armstrong no doubt moved this along, but no one I spoke with said they believed Hindery's walk was the result of "Leo's gotta go" demands by Jermoluk.
One big issue: Hindery's take-no-prisoners denial a week ago that a sale of Excite@Home's Excite portal division to
-- or anyone else -- was in the cards. A lot of us had information to the contrary, and were not surprised when AT&T effectively overrode its Net-businesses CEO's comments a couple of days later with a classic CYA statement that the company was, blah blah blah, always considering its options, blah blah blah.
Hindery didn't like that. And Armstrong didn't like having to sweep up after the elephants in this circus.
What now for Hindery? In August, the
San Jose Mercury-News
leaked that Hindery had put in a bid to buy the
operation of San Francisco's
. Hindery had been CFO of Chronicle Publishing and ran its cable TV systems a decade ago.
This morning Chronicle Books Publisher and President Jack Jensen told me that the Hindery deal was still pending, which I take to mean not yet closed but still alive. A spokesman for
Donaldson Lufkin & Jenrette
, which is handling offers for Chronicle Books for Chronicle Publishing, didn't return calls about the status of the offer.
Hindery will depart AT&T with a pocketful of dough -- by some estimates, as much as $200 million. The prospect of a comfortable return to familiar turf, in a very nice and much less contentious business, may well have been as important a factor in the 51-year-old's departure as the Excite@Home friction.
For AT&T, Hindery's departure comes at a lousy time, for at least two reasons:
- On the heels of yesterday's announced merger between
MCI WorldCom (WCOM) , which I am long, and
Sprint (FON) , AT&T, the No. 1 long-distance company in the U.S., is certain to feel more heat. A combination of MCI WorldCom and Sprint, already the second- and third-largest U.S. long-distance companies, will, if regulatory approval goes through, make for a formidable wireline/wireless competitor to AT&T. AT&T doesn't need distractions right now.
In two days, the
FCC will vote on AT&T's request for a waiver from the commission's rule that a single cable entity cannot serve more than 30% of the U.S. cable TV market. This approval, along with a signoff from the
Department of Justice, is needed to finalize AT&T's pending $53.8 billion purchase of
MediaOne (UMG) . AT&T needs MediaOne to complete its national cable TV infrastructure so it can begin pumping other kinds of services -- think local telephone service and cable-based fast Net access -- down those cable pipes. But the FCC staff report to the commissioners proposes forcing AT&T to spin off many of its cable customers as the price for approving the merger and waiver. This is a very big moment indeed for AT&T, a contest of wills it needs to win, lest its grand plans begin to unravel.
, who was CEO of Media One, and has been nominally Hindery's boss as non-executive chairman of AT&T's cable and Net businesses, will replace Hindery, at least for the time being. Hostetter is another experienced and respected cable business guy, and perhaps a smoother operator than Hindery. My guess is that his direction won't be very different from Hindery's, though Hostetter's personal style, and his choice to be less involved in the merged AT&T, will probably lead him to follow Armstrong's lead, rather than challenge it.
That's not to say Hostetter is a yes-man, but one of Hindery's strengths at AT&T was as a counterfoil to Armstrong, a valuable internal intellectual sparring partner.
An AT&T spokeswoman said the company will conduct an internal and external executive-search drill for Hindery's permanent replacement.
A big question, no doubt, in that search: Should AT&T continue to try to fuse management of its cable assets and its Net initiatives in one job? Or would having a strong traditional cable exec in charge on one side, and a younger, fast-moving Net-savvy exec on the other produce better results? Think about it, Mike.
Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At time of publication, Seymour was long AT&T and WorldCom, although holdings can change at any time. Seymour does not write about companies that are current or recent consulting clients of Seymour Group. While Seymour cannot provide investment advice or recommendations, he invites your feedback at