FCC Ownership Rules Detailed
Washington -- The Federal Communications Commission
released new details last week explaining the steps that AT&T Corp. needs to take to
demonstrate that its future stake in Time Warner Entertainment should not count against
national ownership limits.
Under rules adopted Oct. 8, the FCC indicated that
AT&T's pending stake in TWE's 9.7 million subscribers would not count if
AT&T can show that it is not materially involved in the video-programming activities
of TWE. AT&T would get 25 percent of TWE from MediaOne Group Inc., which it is buying.
That could be a tough hurdle to clear because
AT&T's semiautonomous Liberty Media Group, run by AT&T director John Malone,
sells programming to TWE. Furthermore, AT&T has an ownership stake in Rainbow Media
Holdings Inc., another TWE supplier.
In the new rules, the FCC said AT&T would have to file
a certification containing "facts, e.g. in the form of documents, affidavits or
declarations, that demonstrate" no material involvement in TWE programming decisions.
Although FCC sources have said that ownership of a supplier
would not allow AT&T to insulate TWE, AT&T leaders who pushed for the change said
they believe they can meet the FCC's new standard.
With the MediaOne deal, AT&T would have complete or
partial ownership of at least 29 million subscribers -- 5 million more than allowed under
If AT&T insulates TWE, its cable-subscriber-ownership
level would drop to 19 million, allowing the MSO to buy more cable systems
Scott Cleland, a telecommunications analyst with Legg Mason
Wood Walker's Precursor Group, said the FCC produced complex rules that will take
lawyers and accountants to sort out.
"These rule look like IRS [Internal Revenue Service]
tax rules, which no mere mortal can understand," Cleland added.
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