AT&T is mulling a plan to sell its stake in rival cable TV operator Cablevision in a deal valued at about $2 billion.
The telecommunications giant said in a filing with the Securities and Exchange Commission that it was evaluating the sale of all – or a portion – of its 48.9 million shares in Cablevision, the New York City area’s largest cable-TV provider.
AT&T’s shares represent an approximate 45 percent stake in Cablevision – home to the New York Knicks and Rangers, and Radio City Music Hall.
Cablevision shares fell $1.60 to $64.50. AT&T rose 30 cents to $20.80.
While AT&T said it has no immediate plan to sell its stake, the filing served to notify Cablevision of its plans and asked it to register 30 million of its shares for sale. Once the shares are registered, AT&T can then pursue the sale either through the stock market or a private transaction.
Both AT&T and Cablevision declined to comment.
However, in the filing AT&T said, “Any disposition would be dependent on market conditions, AT&T’s own business opportunities and liquidity goals and other factors.”
Ma Bell’s move to sell its stake – which could bring the telco giant nearly $2 billion if AT&T were to sell the 30 million Cablevision shares at its current price of $64.50 – is all part of its plan to reduce its massive mountain of debt.
AT&T has been selling its stakes in other non-core assets in an effort to raise cash. Its debt soared 81 percent last year to $65 billion as a result of its rush to bulk up on cable companies. AT&T pared the debt to $46 billion in January and agreed in February to sell another $5 billion in assets.
The sale could also be seen as a way to meet federal regulations barring one cable company from owning more than 30 percent of the U.S. market. However, that rule is now up in the air because of an appeals court decision this year that ordered the Federal Communications Commission to reconsider its rules on cable ownership.
That could leave AT&T free to retain its stake in Cablevision and Time Warner Entertainment.
However, most Wall Street watchers agree, AT&T’s need to reduce its debt will push the company to sell its stake in Cablevision.