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AT&T Pursues Spinoff of Liberty Media Group Amidst Regulatory Obligations

Strategic Insights

— 1 min read

AT&T Corp., a multinational telecommunications conglomerate, has announced plans to pursue a spinoff of its Douglas County-based Liberty Media Group subsidiary despite warnings from the Federal Communications Commission (FCC) that the move may not satisfy regulatory obligations. This decision comes as the company prepares to comply with the FCC's orders related to its merger with MediaOne Group last June. AT&T has stated that it will also place its Time Warner Entertainment (TWE) assets in an irrevocable trust, thereby satisfying the FCC's requirements.

Key Takeaways:

  • AT&T plans to pursue a spinoff of Liberty Media Group, a subsidiary that holds its cable TV programming arm.
  • The company will also place its TWE assets in an irrevocable trust, as ordered by the FCC, to comply with the merger agreement.
  • The FCC had warned that the spinoff alone may not be sufficient to meet regulatory obligations, and AT&T must petition the FCC with a letter by January 15 explaining why the move is in the public's best interest.
  • AT&T has resisted selling the TWE assets due to a lack of competition, which could lead to an unfair price.
  • The company's leader, John Malone, has been pushing for the spinoff of Liberty Media Group, while CEO Mike Armstrong has expressed concerns about the tax implications.
  • The FCC has accused AT&T of ambiguity in letters sent on December 15 and 19, which led to the order to place the TWE assets in trust.

Statistics:

  • The FCC told AT&T to spin off Liberty Media, divest the TWE assets, or get rid of 1 million subscribers within one year.
  • The FCC determined that AT&T's merger with MediaOne Group gave the company too much control over the subscription television industry.
  • The TWE assets include cable systems, networks (including HBO), and the Warner Bros. studio.
  • AT&T's stake in TWE is 25.5%.

Sources:

  • The New York Times
  • AT&T Corp.
  • Federal Communications Commission (FCC)
  • Time Warner Entertainment
  • Consumers Union

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