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AT&T seeks trust for TWE - Broadcasting & Cable

AT&T seeks trust for TWE

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AT&T Corp. is seeking government permission to put the company's 25 percent interest in Time Warner Entertainment L.P. into a trust if plans to divest the venture are not completed before close of the long distance telephone
and cable giant's merger with Comcast Corp.

Under the plan, a government-approved trustee would manage the investment for up five
years before a mandatory divestiture would begin.

The divestiture then would have two years more for completion.

As a public interest concession to win approval of the Comcast deal, AT&T promised
to divest its stake in TWE, which controls AOL Time Warner Inc.'s cable
systems, Home Box Office and Warner Bros. Studios.

Public advocates have long criticized the partnership as an
anti-competitive venture between the country's two largest cable operators.

They aren't likely going to favor putting TWE into a trust either.

'We've never believed insulation works,' said Media Access Project President
Andrew Schwartzman. 'We will approach this with deep skepticism.'

Comments on AT&T's plan are due to the Federal Communications Commission
Aug. 30.

The request comes as Wall Street valuations for cable stocks are steadily
declining.

Almost two weeks ago AOL Time Warner and AT&T suspended a
registration-rights process for a TWE spinoff in order to pursue an alternate
transaction.

AT&T had been asking for $1 billion in cash in addition to selling its
partnership stake in a public offering, according to published reports.

AOL Time Warner reportedly wants AT&T to swap its
TWE interest for a stake in a newly created Time Warner Cable that controls only
cable systems.

AT&T could then sell that Time Warner Cable stake to the
public.

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