AT&T Seeks End of Merger Conditions

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AT&T Corp. is asking federal regulators to consider it to be in
compliance with MediaOne Group Inc. merger conditions as a result of a March
court case that eliminated a host of cable-ownership rules.

In a filing Friday, AT&T told the Federal Communications Commission the
court ruling poked so many holes in FCC ownership rules on which the merger
conditions were largely based that 'it would be appropriate for the [FCC] to
eliminate the ownership condition and deem AT&T in compliance with the
merger order.'

Alternatively, AT&T said, the commission should continue to suspend
enforcement of the merger conditions while the agency considers whether to draft
new ownership polices consistent with the court's ruling.

When AT&T purchased MediaOne, the FCC found that AT&T had an
ownership interest in 41 percent of pay TV subscribers, well above the agency's
30 percent cap.

Last June, the FCC ordered AT&T to sell subscribers, to sell its 25
percent interest in Time Warner Entertainment or to divest its programming
interests to get below the 30 percent limit. Later, the commission determined
that AT&T opted to sell the TWE stake.

However, the U.S. Court of Appeals for the District of Columbia struck down
the 30 percent cap March 2 as a First Amendment violation, tossing the FCC's
ability to enforce the 30 percent cap into question.

AT&T is well down the road to spinning off its programming arm, Liberty
Media Group, and it is actively attempting to sell its TWE stake.

Pushing AT&T over the 30 percent cap was the FCC's decision to attribute
TWE's 11.2 million subscribers to AT&T. Attribution occurred because Liberty
sold programming to TWE.

AT&T noted in its filing that the D.C. Circuit vacated this
programming-sale rule, so TWE's subscribers can no longer be attributed to
AT&T.

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