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Mergers

The Federal Commerce Commission conditionally approved AT&T’s acquisition of cable company MediaOne. The Department of Justice’s Anti-trust division conducted it’s own separate anti-trust merger review and proposed a consent decree with AT&T which requires the merged firm to divest it’s interest in the cable broadband ISP Road Runner and to obtain Department of Justice approval before entering certain types of broadband arrangements with Time Warner and America Online. This merger is in compliance with the Federal Commerce Commission 30% horizontal ownership rule. This rule prohibits a single cable company from serving more than thirty percent of the nations multi-channel video programming distribution. Subscribers who are served by primarily cable television and direct TV. Without this rule the merger would have served 41.8% of the nations subscribers.A separate statement was issued by the Federal Commerce Commission’s Chairman William Kennard. He stated, “ Within six months after closing its merger with MediaOne, AT&T must take an irrevocable election among three divestiture options in order to reduce their horizontal subscribers to 30%.” These are the three choices: 1. Divest their interest in Time Warner Entertainment. 2. Insulate their ownership interests in Time Warner Entertainment by ending involvement in Time Warner Entertainment video programming activities, which entails selling AT&T ‘s programming interests. 3. Divest their interests in other cable systems serving approximately 11.8% of cable and satellite subscribers nationwide, 9.7 million subscribers which is more than half of AT&T’s current subscribers. For the consumer the merger will mean a real choice and lower price in local phone service, faster Internet access and better cable TV. In contrast several consumer groups have opposed the merger as structured arguing that it will result in too much concentration on ...

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