AT&T; Would Shed TWE On Tax Ruling
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WASHINGTON — AT&T; Corp. said it would sell its interest in Time Warner Entertainment if it does not receive a favorable tax ruling to spin off Liberty Media Group to comply with conditions of its MediaOne Group Inc. purchase.
AT&T; told the Federal Communications Commission it probably would sell Liberty Media, but it was prepared to put TWE in a trust to comply with the conditions of its merger if it cannot complete the spinoff, according to a letter to the FCC made available Wednesday.
The FCC asked AT&T;, the nation’s biggest cable company, to clarify its Dec. 15 letter that outlined its plans to spin off Liberty Media or insulate itself from TWE to fall below the 30% federal cap on ownership by one company in the cable market.
“We are actively taking the steps necessary to comply with the cable ownership conditions . . . and we are on track to fully satisfy those conditions on or before May 19, 2001,” AT&T; counsel Jim Cicconi said in his response to the FCC.
FCC spokeswoman Michelle Russo said the agency is reviewing AT&T;’s letter.
AT&T; must put the assets it plans to sell in a trust if it cannot make the deadline, but because it cannot put Liberty Media in a trust, the company said it would put the TWE interests in a trust instead.
Liberty Media is essentially an investment vehicle that owns stakes in programming assets such as USA Networks Inc. and QVC Inc. and trades as a tracking stock on the New York Stock Exchange.
The sale is dependent on a favorable tax ruling because Liberty Media was part of the tax-free acquisition of Tele-Communications Inc. last year and whether it will win such a ruling is still unclear.
AT&T;’s other options to comply with the cap were to sell its stake in Time Warner Entertainment, but because its joint-venture partner Time Warner Inc. was the only likely buyer, the two were not expected to reach an agreement on a price.
The third option was to shed 9.7 million cable subscribers, but that would have defeated the purpose of acquiring MediaOne in June.
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