U.S. telecommunications giant AT&T Corp. announced Wednesday that it would spin off Liberty Media Corp. to comply with regulatory rules on its cable ownership.
In June, the U.S. Federal Communications Commission (FCC) approved AT&T’s US$58 billion merger with U.S. cable television and Internet access company MediaOne Group Inc., provided AT&T would either divest Liberty Media, sell MediaOne’s stake in Time Warner Entertainment, or let go of individual cable systems to diminish its market share.
AT&T said Wednesday in a statement it has “the option of deciding to use the spin-off of Liberty Media to comply in large part with one of the three conditions set forth by the Federal Communications Commission.”
Clearly referring to its merger with MediaOne, AT&T said in the statement that the spin-off will “alleviate the competitive and conflict of interest concerns that arise from the differing business directions of AT&T and Liberty Media and reduce regulatory concerns arising from the FCC’s interpretation of its new cable ownership and attribution rules.”
Last month, AT&T unveiled a plan to restructure into four different companies. Divesting Liberty Media is part of that strategy, the carrier said.
Wholly owned by AT&T, Liberty Media has stakes in cable television operators worldwide, it became part of AT&T through the acquisition of Tele-Communications Inc. (TCI) in March of 1999.
Liberty Media tracking stock will be converted into an asset-based security. AT&T expects to launch Liberty Media Group as an independent, publicly traded company in the second quarter of 2001. The new security would be issued to current holders of Liberty Media tracking stock.
AT&T said Liberty Media would benefit from the spin-off. It will be easier for the markets to value Liberty Media and the company will be better equipped to raise capital and use its stock as currency in acquisitions and mergers, the carrier said.
The spin-off is subject to a tax ruling. AT&T said it intends to seek rulings from the U.S. Internal Revenue Service (IRS) on the issue that the Liberty Media spin-off will be tax-free to AT&T, Liberty Media and their shareowners. AT&T said it is confident that it will receive all necessary approvals.
AT&T, in Basking Ridge, New Jersey, can be reached at http://www.att.com/. Liberty Media, in Denver, can be contacted at http://www.libertymedia.com/.