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AT&T to spin off Liberty
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December 15, 2000: 3:51 p.m. ET
Company to spin off TV programming arm to get MediaOne merger OK'd
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NEW YORK (CNNfn) - AT&T will fully spin off its television programming unit Liberty Media to get approval for its MediaOne merger from the Federal Communications Commission, but the move is contingent on a favorable tax ruling.
AT&T (T: Research, Estimates) said it would also take other steps with Time Warner Entertainment programming interests to ensure approval.
The company officially submitted its decision to the FCC Friday. AT&T announced its intention to spin off Liberty (LMG.A: Research, Estimates) on Nov. 15. But the company will not pursue the spin-off if it fails to convince the Internal Revenue Service that it had a material business reason for the sale, thus avoiding a tax penalty.
The spin-off was one of three options the FCC gave AT&T for clearance of its purchase of cable company MediaOne.
The company also had the option to sell its 25 percent stake in Time Warner Entertainment or sell cable television systems with around 10 million subscribers, bringing it within federal limits.
AT&T said it would also be taking steps to make certain programming interests in Time Warner Entertainment "non-attributable" to the company, meaning AT&T will have no ownership in the eyes of the FCC.
Options for this could include a sale, putting assets in a trust or change to non-voting interest, but the company did not say what course it would take.
If for some reason AT&T can't complete these moves, it will sell its minority interest in TWE or put it in an irrevocable trust pending a sale.
"We're diligently following through on what we said we'd do," said Jim Cicconi, AT&T general counsel, in a statement. "We will be in compliance with our obligations under the merger conditions and, as required, we've given the FCC an insurance policy to make sure it gets done by committing to put our TWE interest in trust if need be."
MediaOne accepted a $58 billion buyout bid from AT&T in May 1999.
Shares of AT&T fell 88 cents to $21.12 in late trading on the New York Stock Exchange. Liberty Media fell 75 cents to $14.25. 
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