AT&T must shed Time Warner stake

WASHINGTON (AP) -- AT&T failed to comply with conditions attached to its summer cable merger and now must shed its stake in Time Warner Entertainment, federal regulators concluded Thursday.

The decision by the Federal Communications Commission comes after days of back-and-forth between the government and the nation's largest cable company over how AT&T can comply with federal limits on the reach a cable company can have.

Unsatisfied with AT&T's proposal for coming under this cap, the FCC determined that the company would have to get rid of its 25 percent interest in Time Warner Entertainment, a subsidiary that owns most of Time Warner's cable systems.

That's unless AT&T can convince regulators it's in the public interest for the company to exercise another option before Jan. 15.

AT&T had hoped to spin off Liberty Media Group, a programming interest, to come into compliance with the federal rules, which limit to 30 percent of the national total the number of satellite and cable subscribers a single company can control.

The FCC calculated that the summer acquisition of MediaOne made AT&T serve about 42 percent of the market.