Jump to content

Comcast, Time Warner buy Adelphia


Recommended Posts

Comcast to get piece of Urban Cable Works as part of Adelphia deal


By Tony Gnoffo




Comcast Corp. would take over 40 percent of of West Philadelphia's Urban Cable Works system if federal and local regulators approve its deal to swap multiple systems with Time Warner Corp.


The swap is proposed as part of a complicated series of transactions under which Comcast and Time Warner would buy Adelphia Communications Inc. and divvy up its systems and 5.3 million subscribers.


Other swaps in the proposed transaction would give Comcast systems in Washington's Virginia suburbs and Minneapolis. Comcast would give to Time Warner systems it owns in Los Angeles and Dallas.


Sixty percent of Urban Cable works is owned by Inner City Broadcasting of New York. Earlier this year, Philadelphia City Council, which must approve ownership changes in the city's four cable franchises, blocked Inner City's effort to sell its stake to Time Warner.


Urban Cable Works General Manager Regina Martin said this morning that it is too early to tell what impact Comcast's partial ownership of the system would have. The system serves about 41,000 customers in West, Southwest and parts of Northwest Philadelphia.


It is expected to take nine months to a year to complete all the complicated transactions involved in the Adelphia deal, the companies have said.


Comcast owns the three other cable franchises in the city.


In all, Comcast will pick up 1.8 million new subscribers in the Adelphia deal. Time Warner will gain 3.5 million subscribers.


Comcast and Time Warner were already the nation's two largest cable-television providers. Comcast, based in Philadelphia, provides cable to 21.5 million customers; Time Warner, of New York, has 10.9 million subscribers.


Adelphia, the fifth-largest cable operator with 5.3 million subscribers, is operating under bankruptcy protection after its founder, John J. Rigas, and two of his sons were accused of looting the company of billions of dollars. Rigas and his son Timothy are awaiting sentencing; the trial of Michael Rigas ended in a hung jury.


The federal court overseeing the bankruptcy must approve the transaction.


The system swaps with Time Warner will also allow Comcast to "unwind" two investments representing a 21 percent ownership stake in Time Warner Cable. By swapping systems rather than selling the ownership stake outright, Comcast estimates it will save about $900 million in taxes.


The systems Comcast will acquire are in "very fast-growing and exciting markets," Comcast chairman Brian Roberts said this morning in a conference call with Wall Street analysts. "Almost every system we're getting is nearby an existing Comcast market."


He called the overall deal "an orderly win-win transaction that reaffirms our bullishness for cable."


Still, he said, Comcast would no longer be looking to acquire new cable systems for growth's sake, but rather would make "opportunistic" purchases.


From Adelphia, Comcast will acquire systems and subscribers in Florida, principally in Palm Beach and Miami; Virginia, mainly in the suburbs of Washington; New England, mainly in the Boston and Hartford areas, and Vermont; Pennsylvania, in the Pittsburgh, Johnstown and Scranton areas; and Colorado Springs.


From Time Warner, Comcast will pick up systems in Minneapolis; Memphis; Jackson, Miss.; Louisiana, principally in Shreveport and Monroe; and in the Cape Coral and St. Augustine areas of Florida.


Comcast will give to Time Warner systems in Los Angeles, Dallas and Cleveland.


Several public interest groups said yesterday that they'd oppose the deal because it furthers what they consider to be anti-competitive media consolidation.


Roberts said this morning that he expects regulators at the federal and local level to embrace the proposed purchase.


"For consumers and everybody else this is going to be welcomed" because of "the additional financial and operational advantages we will bring."


Cablevision Systems Inc. of Bethpage, N.Y., which has offered a competing bid for Adelphia, did not comment this morning. Yesterday, the judge overseeing the bankruptcy case approved a provision in the Time Warner-Comcast bid that would require another company buying Adelphia to pay them a breakup fee of about $440 million.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Reply to this topic...

×   Pasted as rich text.   Restore formatting

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Create New...