NEW YORK — Cable giant Tele-Communications called off plans Wednesday to spin off its programming arm, Liberty Media Inc., TCI Intl. and Southern Satellite Systems Inc., the company which will hold Liberty’s stake in Time Warner Inc., after opposition from the Internal Revenue Service.

The decision’s main impact will be to force TCI to look elsewhere for funds to pay for a stock buyback that was largely aimed at reclaiming some of the stock held by the estate of TCI’s former chairman Bob Magness. TCI chairman John Malone wants to buy back some of the Magness estate’s holdings to cement his own control of the cable giant.

Ironically, however, it was the Magness estate’s intentions to sell its stock that created the roadblock. The IRS wanted the estate, like other shareholders owning more than 5% of Liberty, to promise it wouldn’t sell any of its stock after the spin-off, but the estate “was unable to make such a representation,” TCI said in a statement.

Without such a promise, the IRS refused to provide rulings that the spin-offs would be tax-free to TCI shareholders, and without such a ruling, TCI will not go ahead with the spin-offs, it said.

“Each of these assets is extremely valuable, and TCI’s stockholders will now continue to share in those values through their TCI Group and Liberty Media Group holdings,” TCI president Leo Hindery said Wednesday.

Cancellation of the Liberty and TCI Intl. spin-offs is a blow to TCI’s beleaguered shareholders. While both companies already have separate stocks trading, TCI was proposing to sever all ownership links, which would have increased their value, analysts say. The buyback also would have increased the value of Liberty stock.

Cancellation of the Southern Satellite spin-off — which means the 9% of Time Warner owned by Liberty stays within the TCI group — won’t upset as many investors. One big money manager said he preferred the shareholding to be kept within Liberty because of its value, noting that TCI agreed to spin it off only as a concession to the Federal Trade Commission’s review of the Time Warner-Turner Broadcasting merger. Liberty’s stake in Time Warner is non-voting.

But TCI and Liberty management may be upset. Liberty planned to borrow several hundred million dollars and transfer the debt to Southern Satellite’s balance sheet before the spin-off, keeping the money for a stock buyback. Liberty will have to either forget the buyback or find funds elsewhere.

News of the cancellation came after the market closed Wednesday, but it’s unlikely it will be much of a shock to investors. Liberty CEO Robert Bennett warned Wall Street analysts last week that the spin-offs were uncertain because of the IRS’ position.

TCI fell 25¢ to $11.37, and Liberty stock dropped 50¢ to $21 Wednesday.

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