AT&T may turn to the public markets to liquidate its 26% stake in Time Warner Entertainment if it can't come to terms with AOL Time Warner.
AT&T and AOL are under regulatory pressure to separate their TWE partnership, which controls such valuable Time Warner operations as Time Warner Cable, Warner Bros. and Home Box Office. But the two companies have been talking about a buyourt for 18 months with no success.
AT&T CFO Chuck Noski said Monday that the company is studying an alternative: registering the stock and selling it to the public. Under the partnership agreement, AT&T has a two-month window ending Feb. 28 to register the stock.
AT&T wouldn't necessarily have to sell in a conventional initial public offering, which would be difficult without substantial cooperation from AOL. But it could use the stock as the foundation for some sort of derivative bond offering. Neither move would be devastating to AOL, but could be an annoyance limiting TWE's operating and financial flexibility. "We may certainly exercise those contractual rights," Noski said. - John Higgins