AT&T Gains Room to Maneuver

Suddenly, AT&T is blessed with wiggle room.

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.