AT&T Asks FCC to Suspend Deadlines

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Armed with a recent court victory, AT&T Corp. is asking the Federal
Communications Commission to consider lifting approaching deadlines for the
company to sell cable-system or programming assets as required under the
MediaOne Group Inc. merger order adopted last June.

In a March 9 letter the company released Monday, AT&T said it had
'suggested' to senior FCC officials in a March 8 meeting that various deadlines
should be suspended after a federal court struck down a batch of FCC
cable-ownership rules that tied into the MediaOne merger approval.

Under the merger order, AT&T is required to sell its 25 percent stake in
Time Warner Entertainment by May 19. The company has until March 20 to inform
the FCC whether it can meet the May 19 deadline. AT&T has already moved to
sell the asset by informing AOL Time Warner Inc. of its plan to convert TWE from
a limited partnership to a publicly held company.

TWE, majority owned by AOL Time Warner, includes at least 9.7 million cable
subscribers, as well as Home Box Office and the Warner Bros. studio. AT&T
and AOL Time Warner have been negotiating for months on the sale of AT&T's
stake, but the sides have remained billions of dollars apart on price.

Originally, AT&T had the option to sell the TWE stake, to sell 9.7
million cable subscribers, or to divest Liberty Media Group and other
programming assets. But the FCC ordered the TWE sale after the agency was
dissatisfied with AT&T's original asset-sale election, which called for
selling TWE only if Liberty could not be spun off tax-free with Internal Revenue
Service approval.

The FCC ordered AT&T to shed assets after finding that the company had at
least 40 percent of subscribers to cable, direct-broadcast satellite and other
providers of multichannel-video programming when agency rules limited companies
to just 30 percent.

In a Feb. 28 filing, AT&T said it had an ownership interest in 34.6
million cable subscribers, or 40 percent of the nation's 86.4 million pay TV
subscribers.

On March 2, the MediaOne merger conditions were placed in doubt when a panel
of the U.S. Court of Appeals for the District of Columbia Circuit tossed out the
30 percent cap and other ownership rules as either First Amendment violations or
instances of arbitrary rulemaking.

Jane Mago, the FCC's acting general counsel, said Monday that the agency was
talking to AT&T about the merger order in the context of the court's
decision, but she referred questions to AT&T about the company's
proposals.

'We have talked to them,' Mago said. 'No decisions have been made about what
we are going to do.'

Last week, FCC chairman Michael Powell said the agency was obligated to
conduct a review because the merger conditions were predicated on the
enforcement of ownership rules that a court had just tossed out. But Powell did
not indicate what steps he wanted to take.

Republican commissioner Harold Furchtgott-Roth said last week that the FCC
should suspend any deadlines facing AT&T. The agency's two Democrats --
Susan Ness and Gloria Tristani -- have not commented publicly on the issue.

Some observers have said AT&T could tell the FCC the court decision
voiding key ownership caps meant that the company had already met the MediaOne
merger conditions.

'We have to look at all of those arguments,' Mago said.

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