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AT&T Unlikely to Sell Stake in Time Warner

October 11, 2000|From Times Staff and Wire Reports

WASHINGTON — AT&T Corp. said it was not likely to reach a negotiated settlement to sell its stake in Time Warner Inc.'s entertainment unit, a holding that concerns regulators weighing America Online Inc.'s purchase of Time Warner.

Regulators are concerned that if AOL acquires No. 2 U.S. cable company Time Warner, the new company will have a tie to AT&T, the largest U.S. cable group, by a joint venture in cable systems that could raise anti-competition questions.

AT&T discussed its 25.5% stake in Time Warner Entertainment and negotiations about divesting it in a letter to the Federal Communications Commission, dated Oct. 4 and made available Tuesday.

AT&T said it could only sell the stake in the unit by taking steps with securities regulators to register its holdings for possible sale.

A Time Warner spokesman said Tuesday the talks with AT&T about the stake in the entertainment unit were "ongoing."

An AT&T official said the company recognizes that the addition of AOL to the cable partnership raises regulatory concerns and has been the subject of discussions with the FCC, but declined further comment.

However, lawyers for AOL and Time Warner recently told the FCC that the AT&T stake would not affect competition, and separation should not be a condition of the deal.

AT&T bought cable company MediaOne Group Inc. earlier this year. As part of the deal, it acquired a 25% stake in Time Warner Entertainment, which owns all of the cable systems, Warner Bros. and Home Box Office.

AT&T shares ended up 19 cents to close at $26.75 on the New York Stock Exchange. Time Warner rose 60 cents to close at $85.10 and AOL added 14 cents to close at $57.24, both on the NYSE.

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