The company said the spinoff is subject to a favorable tax ruling. AT&T expects to convert the Liberty Media tracking stock into an asset-based security and launch Liberty MediaGroup as an independent, publicly traded company in the second quarter of 2001.
The new asset based security will be issued to holders of Liberty Media
tracking stock in exchange for their shares of Liberty Media tracking stock.
AT&T said the spin off is consistent with the rationale behind the
company’s recent decision to restructure into four companies.
The spin off would better enable Liberty Media to raise capital on its own, use its stock as currency in acquiring, merging or partnering with other companies and help
the public markets to better value Liberty Media. This action would alleviate
the competitive and conflict of interest concerns that arise from the
differing business directions of AT&T and Liberty Media. It would also reduce
regulatory concerns arising from the FCC’s interpretation of its new cable
ownership and attribution rules.
This step also gives AT&T the option of deciding to use the spin off of
Liberty Media to comply in large part with one of the three conditions set
forth by the Federal Communications Commission in its June order approving
AT&T’s merger with MediaOne.
AT&T intends to seek rulings from the Internal Revenue Service that the
Liberty Media spin off is tax-free to AT&T, Liberty Media and their
shareowners. AT&T does not anticipate the need for other regulatory,
Department of Justice or court approval, but said that certain existing
agreements would require modification. While the company said it is confident
that it will receive all necessary approvals, there can be no guarantee that
the spin-off plan will be implemented or that changes in the plan will not be
made.
Financial details on the transaction will be released as they become available in accordance with securities regulations.
In March of 1999, TCI combined Liberty Media Group, its programming arm,
and TCI Ventures Group, its technology investment unit, to form the new
Liberty Media Group. In connection with the closing of the AT&T and TCI
merger, the shareowners of the new Liberty Media Group were issued separate
tracking stock by AT&T in exchange for the shares held in Liberty Media Group
and TCI Ventures Group. Although Liberty Media is a 100-percent-owned-
subsidiary of AT&T, it has been accounted for as an equity investment. Under
the tracking stock arrangement, all of Liberty Media’s earnings and losses
have been excluded from the earnings available to the AT&T Group common
shareowner.
