AT&T Broadband is one of the US's biggest cable operators with 14m subscribers. Last month, parent AT&T rejected a $58m (£39.9m) hostile bid for the division from rival cable firm ComCast, protesting that the bid "did not reflect the value of the business".
Walt Disney is understood to have held talks with Microsoft about a possible joint bid for the company. Microsoft is believed to want to prevent AOL Time Warner from buying the company.
AOL Time Warner, which already owns one US cable network with 12.7m customers, entered into talks with AT&T at the end of last month.