Desperate times call for desperate measures – according to AT&T’s rulebook.
Down-and-out AT&T Chairman Michael Armstrong seems to be doing everything in his power to get away from the negotiating table at which he’s now stuck with Time Warner chief Gerry Levin. The two media titans have locked horns over what to do with AT&T’s 25 percent stake in Time Warner Entertainment.
Armstrong headed to Washington, D.C., yesterday in search of support for an amendment that would eliminate cable TV ownership restrictions.
Armstrong, who has been furiously fighting to raise AT&T’s sagging stock price with a number of possible merger ideas, met yesterday with Sen. Ted Stevens (R-Alaska), chairman of the Senate Appropriations Committee and Sen. Ernest Hollings (D-S.C.), the ranking minority member of the Appropriations subcommittee, to discuss specific issues.
“We are talking to people on the Hill about the cable ownership rule,” said AT&T spokesman Jim McGann. “We have grave concerns about the overall ownership rules and the FCC’s interpretation of them.”
Hollings’ camp said the senator had meetings with Armstrong but would not discuss details of their talks. Hollings has been busy drumming up support for a bill that would ban companies majority-owned by foreign governments from buying major U.S. telecom companies. Beltway insiders insist Armstrong has been trying to get Hollings to include his measure on the bill – “but Hollings refused,” said one D.C. source.
A spokesman for Stevens did not return calls, but it is widely known that the Republican from Alaska is preparing an amendment to an appropriations bill that would lift federal rules limiting how many cable systems a single company may own.
Federal Communications Commission rules bar one company from controlling more than 30 percent of pay-TV subscribers.
After AT&T’s merger with MediaOne in June, AT&T is now in control of about 40 percent.
As a result, the FCC demanded that Armstrong divest some assets in exchange for approval: AT&T was given the option of selling off millions of cable customers, cutting ties with John Malone’s Liberty Media or bailing out of its partnership with Time Warner.
Sources say Armstrong has been trying to sell the stake back to Levin – but the Time Warner honcho refuses to budge on price.
Armstrong has three more months to come to a decision, but insiders say he’d do anything – including trying to sway influential senators – to get out of paring down AT&T’s assets
Insiders say part of Armstrong’s plan is to pressure lawmakers with the threat of pulling his cable service from rural and inner-city households – part of the hot-button “digital divide” issue about which President Clinton has been speaking – as a way to scare politicos into giving Armstrong what he wants.
“Michael Armstrong feels desperate. Wall Street has given him a Bronx cheer,” said Jeffrey Chester of the Center for Media Education, a consumer advocacy group that opposes the proposal to change cable ownership rules.
“But no one should own more than 30 percent of the nation’s households.”