A 12-month countdown for AT & T's government-ordered divestitures of cable industry investments begins ticking early this week, if the FCC approves the company's $70 billion merger with MediaOne Group as expected.
AT & T would be given a choice of divestiture options aimed at bringing the company in compliance with the government's cap on cable-audience reach. But the company must pick its route within six months, according to a source familiar with the negotiations.
The options: selling AT & T's 25% stake in Time Warner Inc.'s cable systems operation, spinning off investments in programmers that sell shows to Time Warner cable systems, or divesting investments in non-Time Warner-related cable systems.
Staffers in the FCC's cable services bureau had recommended a six-month grace period, while AT & T originally asked for 18 months to complete FCC-ordered selloffs. Public advocacy groups had urged the shorter grace period, but their effort was weakened by the agency's decision last month to give Viacom 12 months for broadcast- station divestitures imposed on its merger with CBS.
An FCC green light to AT & T would follow a Justice Department order two weeks ago approving the MediaOne deal, with one condition: that AT & T, which owns leading cable Internet provider Excite@Home, sell MediaOne's stake in No. 2 provider Road Runner by the end of 2001.
Whereas Justice focused on antitrust, the FCC aims to prevent too much concentration in the cable market. The divestitures would bring AT & T back into compliance with the 30% cap on share of U.S. multichannel subscribers. Without asset sales, the MediaOne deal would bring AT & T's reach to 41%.