AT&T Gains Room to Maneuver
Suddenly, AT&T is blessed with wiggle room.
After months of feeling cornered by federal regulators, rival operators, investors and its own employees, the worlds largest cable company can actually take a breath and study its options on several critical issues.
Having won a major court victory that lifted federal limits on cable ownership, AT&T may actually have a chance to control more than 30 percent of the U.S. market, the limit previously imposed by the Federal Communications Commission.
That victory, in turn, strengthens AT&Ts hand in negotiating the sale of its 25 percent stake in rival cable operator Time Warner Entertainment, an investment acquired with last years purchase of cable giant MediaOne Group. AT&T had been under pressure to sell the stake by the FCCs May deadline to satisfy the ownership limits. That deadline has been lifted. While AT&T is still negotiating the sale of the investment with Time Warner Entertainment parent AOL Time Warner, side deals possibly involving telephone service could be included.
Even if new ownership limits are imposed, AT&T will carry a significantly lighter load of cable property in the near future. Last week, AT&T won the right to spin off Liberty Media, tax-free. Liberty Chairman John Malone, the former Tele-Communications Inc. chairman who sold AT&T Chairman C. Michael Armstrong on cable, will leave the AT&T board after the split. Although sometimes a thorny presence on the board, Malone recently said he always supported Armstrongs plans, including the pending breakup of AT&T.
AT&T also plans to reduce its 45 percent stake in Cablevision Systems, the New York-heavy cable company that once spurned Armstrongs efforts to sell telephone service through other cable systems.
"These are all positive developments for AT&T," said an AT&T spokesman. "Were pleased with the court decision on the ownership caps and continue to work on our debt reduction strategy."
AT&T also recently won a break from its union when the Communications Workers of America withdrew a lawsuit aimed at preventing the companys division into four parts. The CWA had challenged the charter amendment proposed for AT&Ts May 23 shareholders meeting that would have required only a simple majority to approve the breakup.