FCC staff report: AT&T should divest
A staff report circulating at the FCC could throw a wrench into AT&T's local service plans - or not.
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The report recommends that AT&T's $62.5 billion takeover of MediaOne be approved only if AT&T divests itself of programming assets in Liberty Media and Rainbow Media Sports Holdings that would give it significant "vertical leverage" in content and distribution, said Scott Cleland, managing director of the Legg Mason Precursor Group.
In addition, an FCC rule currently under appeals court review prohibits one company from serving more than 30% of U.S. cable and satellite TV households; combined, AT&T and MediaOne would serve about 41% of the market.
"This should not be a deal breaker, unless [AT&T] totally misjudged its ability to make the rules go away," Cleland said. "They will have to sell Liberty and Rainbow or the Time Warner Entertainment [interest], but it's probably going to be their choice."
The FCC commissioners will vote on the recommendation by May 15. The merger also faces scrutiny by the Justice Department.
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© 2012 Penton Media Inc.
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