SAN FRANCISCO (05/25/2000) - U.S. carrier AT&T Corp. today received the antitrust clearance necessary to close its merger with MediaOne Group Inc. by signing a consent decree with the U.S. Department of Justice (DOJ).
Under the terms of the decree, AT&T has agreed to offload Road Runner, a high-speed cable ISP (Internet service provider) part-owned by MediaOne. Other stakeholders in the Road Runner joint venture include affiliates of Time Warner Inc., Microsoft Corp. and Compaq Computer Corp.
"We're very pleased to have reached this major milestone in the MediaOne merger approval process and we look forward to closing the deal as soon as possible," AT&T General Counsel Jim Cicconi said in a statement issued by the company today. "The Road Runner divestiture is an obligation we always assumed we would face, and the decree proposes both a schedule and process that are fair and feasible."
The merger between AT&T and U.S. cable television and Internet access company MediaOne has been valued at US$58 billion, and was announced in May of last year. Comcast Corp. dropped out of the bidding war for MediaOne, leaving the field clear for AT&T. [See "Comcast to End MediaOne Bid, Agrees Deal with AT&T," May 5.]The AT&T, MediaOne merger was expected to close at the end of March, but has been held up by U.S. government authorities who had raised antitrust concerns about the move.
In the decree with the DOJ, AT&T agreed to divest MediaOne's minority interest in Road Runner before Dec. 31, 2001, the U.S. telecommunications company said in today's statement. Prior to the divestiture, AT&T must manage Road Runner separately from the rest of its operations, while AT&T customers are permitted to continue to receive service from Road Runner until June 2002.
Once AT&T has divested Road Runner, the company can keep or buy dedicated Road Runner assets or regional data centers. The decree also allows AT&T to migrate MediaOne's customers to Excite@Home Inc.'s rival service.
During a two-year period after the divestiture, AT&T must also gain DOJ approval before setting up agreements relating to cable modem or residential broadband services with AOL-Time Warner, the entity due to result from the merger of America Online Inc. (AOL) and Time Warner. For example, AT&T would require DOJ approval whenever it partnered with AOL-Time Warner to jointly offer residential broadband services anywhere in the U.S. The DOJ would give its blessing to such agreements unless they seemed likely to decrease the level of competition between AT&T and AOL-Time Warner.
AOL and Time Warner announced in January their plans for a US$350 billion merger deal. [See "UPDATE2: AOL to Merge with Time Warner for US$350B,"Jan 10.] AT&T expects to receive approval of its merger with MediaOne shortly from the U.S. Federal Communications Commission (FCC), clearing the way for the deal to close, according to AT&T's Cicconi.
In March, MediaOne announced it would sell off 14 million of its Time Warner Telecom Inc. shares -- the whole of its interest in the optical network facilities provider -- as a way to push forward the approval of its planned merger with AT&T.
MediaOne Group Inc., in Englewood, Colorado, can be reached at +1-303-858-3000 or via the Internet at http://www.mediaonegroup.com/. AT&T Corp., in Basking Ridge, New Jersey, can be reached at +1-908-221-2000 or via the Internet at http://www.att.com/.