FCC to Scrutinize AT&T-MediaOne; Deal

WASHINGTON — Federal Communications Commission Chairman William Kennard warned on Friday that AT&T; Corp.’s plan to acquire MediaOne Group Inc. would require extensive review by his agency.

“This is a complex transaction,” Kennard said in a statement. “Because of its size and reach and the many novel legal and policy issues involved, this proposed merger warrants very careful scrutiny.”

Kennard’s comments were in stark contrast to his reaction last year when AT&T; made its first foray into the cable business, buying Tele-Communications Inc. for $48 billion.

The short statement also contrasted with remarks by AT&T; Chairman C. Michael Armstrong, who has predicted few regulatory difficulties for the mega-deal.

AT&T; officials said they were not surprised by Kennard’s statement and had always expected a serious FCC review.

“We would of course expect a close and careful review,” AT&T; general counsel Jim Cicconi told reporters in a telephone conference, adding he was “cautiously optimistic” about the FCC’s assessment.

AT&T; agreed earlier this week to buy Englewood, Colo.-based MediaOne, the third-largest U.S. cable company, in a $58-billion deal that would make the long-distance phone giant the largest U.S. cable operator.

The FCC is also taking a hard look at Bell Atlantic Corp.’s proposed acquisition of GTE Corp., which received federal antitrust clearance Friday.

The Justice Department approved the $82.4-billion merger plan of Bell Atlantic and GTE, which would form the nation’s largest phone company, after the companies agreed to sell wireless operations in 65 markets.

The FCC has raised some concerns about GTE’s Internet and long-distance holdings. Irving, Texas-based GTE is a major Internet service provider.

Shares in New York-based Bell Atlantic rose $2.31 to close at $58.19 on the New York Stock Exchange, and GTE was up $2.75 to close at $67 on Nasdaq.

AT&T; closed down $1.50 at $60.44, while MediaOne gained 13 cents to close at $79.13, also on the NYSE.