AT&T, CVS Sign Marketing Deal - Company Business and Marketing

AT&T Corp. has finally snagged a telephone deal with a cable operator. But it's not exactly what Ma Bell has been promising investors for a year now.

AT&T and Cablevision Systems Corp. (of which AT&T owns 33%) will jointly market cable and telephony services to customers in the New York metropolitan area. The companies will offer Cablevision customers additional free pay channels or pay-per-view movies in exchange for subscribing to AT&T's long-distance and/or local phone services.

AT&T already offers local phone service to some 175,000 residents in New York, according to an AT&T spokesman. So it doesn't really need to share or lease the broadband pipe from the MSO to offer local telephony. The marketing arrangement between Cablevision and AT&T could eventually become more entwined in the future, said Cablevision SVP-product management/sales Pat Falese, including melding the cable and phone bills into one invoice and even sharing network facilities. But for the time being, the two will remain separate.

The long-distance giant has been trying -- unsuccessfully -- to reach deals with various MSOs to share facilities to offer local phone services in areas where it doesn't own cable systems. So far, AT&T has announced some definitive deals -- Comcast Corp., for instance, agreed to a phone agreement if AT&T can cut a deal with Time Warner Inc. first -- but Cablevision's joint marketing arrangement is the telco's first real contract. The AT&T/Cablevision promotion is expected to roll out this spring with a bang that'll include TV, radio, outdoor, newspaper, telemarketing and direct mail ads.

Customers subscribing to all of Cablevision's myriad tiers will be eligible for free programming if they also subscribe to AT&T services, Falese said. For now, customers will only receive programming benefits from the cable side of the partnership. AT&T isn't offering any discounts or added services for customers taking both Cablevision and AT&T services.

Financial terms of the deal weren't disclosed, but Cablevision and AT&T will both be financially responsible for the costs of the promotion and free programming, Falese said. Who pays what for the program, which is expected to last for at least several months, has yet to be fully determined, she said.

"We're confident the benefits to our customers will be significant and will more than offset the costs associated with the promotion," Falese said.

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