IRS paves way for Liberty spinoff


The Internal Revenue Service has given AT&T Corp. the green light for a
tax-free spinoff of Liberty Media Group, the cable-programming unit led by John

AT&T plans to turn the company into a separately traded security by

The IRS go-ahead and AT&T's plan to shed its investment in Cablevision
Systems Corp. are the major components of AT&T's plan to comply with a
Federal Communications Commission order to either eliminate 9.7 million cable
subscribers or sell investments in programming operations that sell to Time
Warner Entertainment. Cablevision operates Rainbow Media Holdings, which also
sells cable shows to TWE.

Whether AT&T actually must comply with the FCC's dictate -- imposed as a
condition for government approval of the company's purchase of MediaOne Group
Inc. -- is increasingly doubtful, but company officials say they are moving
ahead with sales of the major programming investments anyway.

Last month, the FCC suspended the company's May 19 deadline for selling
enough cable investments to get below the 30 percent cap on one company's share
of pay TV subscribers. The action was prompted by a March 2 court decision
striking down the cable cap. The commission is currently amending its
cable-ownership limits to account for the decision.