AT&T appears one step closer to being off the hook from its promise to sell major cable systems, a pledge it made to win government approval to buy MediaOne Group last year.
The FCC late Friday voted to suspend the company's May 19 deadline for selling enough cable investments to get below the 30% cap on one company's share of pay-TV subscribers. Three of the FCC four commissioners were convinced that their hands were forced by a March 2 District of Columbia federal appeals court decision striking down the current cable cap. The FCC is currently amending its cable ownership limits to account for the decision.
"The D.C. circuit tore the guts out of the FCC's divestiture order," said Precursor Group analyst Scott Cleland. "This means AT&T no longer is a forced cable seller and, if it is financially able, could be a buyer again."
FCC Chairman Michael Powell, however, cautioned against reading too much into the decision. "Our action should not be read as eliminating the condition, but only as suspending the established benchmarks for compliance pending further consideration," he said in a statement.
Commissioner Gloria Tristani, who voted to hold AT&T to the divestiture deadlines, complained that her colleagues' action "effectively eliminates" any check on the company's growth. "The commission's action once again sends the signal that it cares more about the interests of large corporations than it does about maintaining a vibrant and diverse marketplace of ideas," she said.
Although many industry players believe the court's decision calls into question the viability of other FCC media ownership limits, particularly the 35% cap on a broadcast company's household reach, the commission refused to go that far Friday and denied Viacom's petition for a suspension of its May 4 deadline for identifying stations it plans to sell to get under the broadcast cap.
The suspension of AT&T's deadline is one more indication of Powell's pledge to deregulate the industry. Viacom's request was turned down, however, because the FCC still has not decided whether the court decision extends beyond the cable industry. - Bill McConnell