t to the company's books, but AT&T's net debt would still be only a modest 22 percent of its total capitalization. Don't Let Plugging Leaks Become an Obsession However, when Armstrong met with Malone at AT&T's airport hangar in Morristown, New Jersey, in early June, neither of them dis- cussed such numbers. They discussed the strategic logic of a merger, and they grew SO excited about its potential that they took turns pass- ing a yellow legal pad back and forth as they sketched out how the merged companies would work. At the end of the meeting, they agreed to charge AT&T's CFO, Dan Somers, and TCI's president, Leo Hindery, with working out the details in absolute secrecy. What had started as a conversation about joint ventures turned into one of the biggest corporate acquisitions of 1998. The BT discussions had traveled exactly the opposite path. BT's chairman, Iain Vallance, had felt personally defeated when his pro- posed merger with MCI had been trumped by WorldCom. It had been the second time he had failed to gain entry to the largest communica- tions market in the world-the United States-and he was still smart- ing. (Ironically, AT&T had been the first spoiler when it acquired McCaw Cellular, in which BT had a 20 percent interest that it hoped to increase when U.S. law allowed.) Vallance proposed a full merger almost from the first meeting. Teams of lawyers and bankers from both sides of the Atlantic worked on a potential deal, but it soon became clear that combining the two companies was likely to create a huge tax liability for AT&T shareown- ers. So the talks turned from a full merger to a joint venture, with John Zeglis leading the AT&T team. I was aware of both sets of discussions, but not the details. In fact, Armstrong asked me to consider which deal I would announce first if we had a choice. I think I would have gone with the BT joint venture first, but while I was tossing it around in my head one Friday after- noon, my phone rang. It was Somers, and from the noise in the back- ground, I knew he was