AT&T, under pressure to reduce its holdings in the cable industry, said Wednesday that it planned to spin off Liberty Media, the company that owns stakes in programming companies and is controlled by the entrepreneur John C. Malone.
Liberty Media now trades as an AT&T tracking stock but operates independently. AT&T plans to convert the Liberty shares into a new publicly traded stock in the second quarter of 2001, assuming a favorable tax ruling. AT&T will own no stake in Liberty after the spinoff.
AT&T acquired Liberty Media as part of its purchase of Tele-Communications Inc. in March 1999. With Liberty a tracking stock of AT&T, Malone has grown increasingly unhappy with AT&T's poor performance and the constraints placed on Liberty because of its affiliation with the struggling phone giant.
While Malone has been outspoken in his displeasure with AT&T, where he holds 0.86 percent of its shares and sits on the board, the impetus for the Liberty spinoff comes as much from the Federal Communications Commission as from Malone.
When AT&T bought MediaOne in June, after first acquiring Tele-Communications Inc., the FCC said AT&T had to reduce its power in the cable industry by one of several strategies: spinning off Liberty, selling cable subscribers or selling the 25.5 percent stake in Time Warner Entertainment that it acquired with the purchase of MediaOne.