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December 18, 2000
Shareholder Resolution Reaches Out to Touch AT&T
by Mark Thomsen
A group of investors recently announced the filing of a shareholder resolution with AT&T, asking
the company to reconsider its partnership with porn distributor The Hot Network.
SocialFunds.com --
A proxy resolution with AT&T was filed by a group of eight religious institutional investors last
week. The resolution calls for the telecommunications giant to study the potential financial,
legal and public relations liabilities related to company involvement in the pornographic industry.
AT&T revealed earlier this year that it had decided to partner with The Hot Network in
broadcasting pornographic material over its cable networks.
 The filing group controls over 1.6 million
shares of AT&T stock and is being led by Mennonite Mutual Aid, home of the MMA Praxis Mutual Funds.
All filers are members of the Interfaith Center on Corporate Responsibility (ICCR), an
organization of approximately 275 socially concerned institutional investors representing over $120
billion in invested assets.
"We are concerned about the type of world our investments help
build and the values they are encourage," said Mark Regier, Social Research and Advocacy
Coordinator at Mennonite Mutual Aid. "As institutional investors and AT&T shareholders, we are
concerned about AT&T's role in the corporate community and hold high expectations for the Company
in both business development and social leadership."
AT&T is the largest
telecommunications company overall in the U.S., and AT&T Broadband is the number one U.S. cable
operator. The Hot Network is part of the Vivid Entertainment Group, the world's top producer of
adult films. Vivid Entertainment is a privately held company.
The resolution specifically
asks for AT&T to issue a report by May 2001. The report should outline "the potential financial
liabilities posed by possible violations of local obscenity laws and lawsuits from individuals and
communities," and "potential legal issues related to the Company's connection to the pornography
industry, including obscenity law violations, distributing pornography to minors, and possible
collusion with organized crime in the sex industry."
In July, a coalition of institutional
investors sent a letter to AT&T CEO C. Michael Armstrong, asking senior management to rethink their
decision concerning a partnership with The Hot Network. Investors noted that other cable companies
such as Time Warner and Comcast chose not to add The Hot Network to their cable packages.
The coalition tried to continue a dialogue with AT&T company officials about the issue, but
claims the attempts were fruitless. They have taken the next step by filing a shareholder
resolution, saying that the principal purpose is to initiate a discussion with AT&T about its role
in "mainstreaming" pornography and the impact that such an action would have on the country.
"We find it troubling that AT&T's management has declined to dialogue with its concerned
shareholders," said Vidette Bullock Mixon, General Board of Pensions, United Methodist Church.
"However," she added, "we remain hopeful that constructive conversations between company management
and shareholders might preclude the need for shareholder resolution."
The coalition has
recognized that aside from this matter, AT&T has tended to be a frontrunner regarding corporate
social responsibility. But AT&T may be dialing for big trouble in providing an outlet for The Hot
Network. Any perceived support of the pornographic industry will surely upset not only socially
responsible investors, but a number of AT&T customers as well.
www.att.com
www.iccr.org
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SRI World Group, Inc. All Rights Reserved.
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