AT & T May Sell StakesIn Speedvision and OLN


Washington-At a time when John Malone is urging AT & T Corp. to bulk up on content, the country's largest cable operator appears to be moving in the other direction.

According to a recent government filing, AT & T said it is exploring the sale of its stake in Speedvision and Outdoor Life Network to the networks' other owners. AT & T inherited ownership in the networks when it purchased MediaOne Group Inc. last month.

Cox Communications Inc. and Comcast Corp. are the other primary investors in Outdoor Life and Speedvision. A new partner, Fox/Liberty Networks, took a 17 percent stake in each of the networks in March 1998. As part of the deal, Fox obtained the ability to buy Outdoor Life and Speedvision outright in 2004.

Fox Cable Networks president Jeff Shell said last week that the company would be interested in purchasing a part or all of AT & T's stake, but "only if the price is right." He would not reveal specific figures.

Under MediaOne merger conditions imposed by the Federal Communications Commission, AT & T said it needs the agency's approval to talk with the other cable operators about the possible sale of Speedvision and Outdoor Life.

"AT & T requests permission to engage in such discussions with these partners in order to sell these programming assets," AT & T said in a July 11 letter to FCC Cable Services Bureau chief Deborah Lathen.

Two weeks ago, Malone, chairman of Liberty Media Group, told The Wall Street Journal AT & T could help its sagging stock price by loading up on programming networks.

In a related development, AT & T said it also needed FCC approval to send a representative to attend the next management-committee meeting of New England Cable News, the 24-hour regional news service that is a joint venture between AT & T and Hearst Corp.

AT & T said if it failed to attend the next meeting, which was held last Thursday, it might have to allow Hearst to buy out AT & T's stake in the network at 20 percent below fair-market value. "Clearly, such a result would be grossly unfair and was never contemplated by the [FCC] when it adopted the [merger conditions]," AT & T said.

As of last Tuesday, the FCC had not responded to AT & T's requests related to Outdoor Life and Speedvision, an FCC spokeswoman said. But last Wednesday, the agency agreed to let AT & T attend the Hearst meeting.

Although AT & T needs FCC permission to talk about the sale of certain programming assets, Malone is apparently not covered by the same restriction when he wants to talk to AT & T chairman C. Michael Armstrong about how AT & T should comply with the FCC's MediaOne merger conditions.

The FCC gave AT & T three choices: sell Liberty and other programming interests, sell 9.7 million cable subscribers, or sell its 25.5 percent stake in Time Warner Entertainment.

The FCC's safeguards specifically prohibit Malone from attempting to influence, directly or indirectly, AT & T's video-programming activities.

The Wall Street Journal reported that Malone has spoken regularly to Armstrong about various programming issues.

An AT & T spokesman said the FCC's safeguards were designed to block Malone from influencing AT & T's programming-acquisition decisions, but not from stating his views on AT & T's future corporate structure, including the three options the FCC gave AT & T to come into compliance with the MediaOne conditions.

FCC officials did not respond at deadline about whether Malone's communications with Armstrong and his comments to The Wall Street Journal were consistent with the FCC's merger safeguards.