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FCC approves AT&T deal
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June 5, 2000: 6:35 p.m. ET
Telecom giant can buy MediaOne; must divest other cable television interests
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NEW YORK (CNNfn) - The Federal Communications Commission Monday approved AT&T Corp.'s proposed $54 billion bid to buy cable television company MediaOne Group Inc.
But in granting approval for the merger, FCC Chairman William Kennard said AT&T must divest itself of either MediaOne's interest in Time Warner Entertainment, the Liberty Media Group, or 11.8 million existing cable subscribers so that the combined company does not capture more than 30 percent of the total U.S. cable subscribers.
MediaOne has a primary interest in Road Runner, a high-speed Internet service provider, along with Time Warner Entertainment. It is that portion of MediaOne's business that AT&T may choose to divest as a condition for merger approval.
AT&T has a year to complete the divestiture and six months to choose which option it prefers.
Time Warner Entertainment is a division of Time Warner Inc., parent company of CNNfn.
"We are looking forward to seeing the benefits that the combination of AT&T and MediaOne will bring, and we will vigilantly enforce the conditions and requirements in the context of this order," Kennard said. "And we will be continuing to work hard to open up bottlenecks in this dynamic marketplace wherever they appear."
 Had AT&T's original application been approved, the combined companies would have reached more than 40 percent of the market, Kennard said during an afternoon press conference in Washington, D.C.
AT&T has been awaiting the FCC's approval in order to complete the purchase of the Englewood, Colo.-based MediaOne Group (UMG: Research, Estimates), but the acquisition still awaits shareholder approval.
"This merger will mean a real choice and lower prices in local phone service, faster Internet access and better cable TV," said C. Michael Armstrong, AT&T's chairman and chief executive officer.
The merger will add five million cable subscribers to the company and give AT&T a presence in six of the top 10 cable markets, Armstrong said.
The merger helps AT&T reach its goal of offering high-speed Internet access, local phone service and television programming over cable TV lines. That would allow AT&T to bypass phone networks owned by the Bell companies.
Kennard said the FCC denied AT&T's position that the 30 percent ownership rule did not apply to its proposed merger with MediaOne, and also denied the company's request for 18 months to comply with ownership limits.
"We believe that consumers should have a choice among alternate broadband providers. The only question is, how do we bring them that choice - through government fiat or through marketplace choice?" Kennard said.
Shares of AT&T (T: Research, Estimates) closed up 1 to 36-1/8 Monday. MediaOne shares closed up 1-11/16 to 68-11/16. 
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