AT&T, AOL Time Warner Near TWE Deal

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AT&T Corp. could be winding up its negotiations with AOL Time Warner Inc.
regarding dissolving its Time Warner Entertainment partnership, possibly
resulting in AOL Time Warner paying the phone giant as much as $1 billion in
cash, according to a published report.

According to sources familiar with the matter, Bank of America Corp. has
until the end of the month -- Wednesday -- to assign a value to AT&T's 26
percent stake in the partnership.

Both AT&T and AOL Time Warner have been trying to sever the partnership
for months, but they could not agree on a price. AT&T is said to value its
stake at nearly $10 billion, while AOL Time Warner assigned it a much smaller
value.

Last year, AT&T registered its interest in the partnership for public
sale, which triggered the Bank of America valuation. TWE assets are most of the
Time Warner Cable systems, Home Box Office and the Warner Bros. Studios.

AOL Time Warner is not likely to want the TWE partnership to be publicly
traded -- it would rather have ownership of all of its HBO and Warner Bros.
assets and offer a minority interest in the cable systems.

According to a report in TheNew York Times, AOL Time Warner is
pushing for AT&T to swap its TWE interest for a stake in a newly created
Time Warner Cable. AT&T -- which is expected to close its pending merger
with Comcast Corp. by the end of the year -- could then sell that Time Warner
Cable stake to the public.

But, the Times said, AT&T is asking for a $1 billion cash payment
in addition to the Time Warner Cable stake due to the sluggish market for cable
stocks.

Officials at both companies declined to comment.

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