AT&T confirmed rumors that it will spin off Liberty Media Group as a separate company by 2Q 2001.
AT&T acquired Liberty when it purchased TCI from then chairman and CEO, John Malone, aka "The Doctor." Malone has since sat at the head of Liberty, its tracking stock struggling under the downward tug of AT&T.
Spinning off Liberty is one of three options AT&T has in order to comply with FCC mandates regulating cable ownership. The other two, and apparently less appealing options, are to sell off 9 million cable subs, or divest AT&T's 25 percent interest in Time Warner. The Liberty spin still requires a favorable ruling from the IRS to ensure the spin is tax-free to AT&T, Liberty and the shareholders.
After AT&T spins Liberty, it will have no interest in the programming company at all, and The Doctor will once again have the independence he gave up when he sold TCI to AT&T. Liberty will benefit as well, most likely receiving a cash payout of $800 million from AT&T as part of the spin.