Comcast and Time Warner purchase Adelphia
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Comcast and Time Warner purchase Adelphia
Posted by
davepeck
on 21 Apr, 2005 09:57
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Adelphia deal to shuffle cable
One in 10 subscribers to get new operator as a result of $17.6B purchase by Comcast, Time Warner.
April 21, 2005: 9:11 AM EDT
NEW YORK (CNN/Money) - About one in every ten U.S. cable subscribers will get a new provider as the result of the deal unveiled Thursday in which Comcast Corp. and Time Warner Corp. agreed to jointly buy Adelphia Communications as well as swap some of their own cable customers.
A source familiar with the complex cash and stock deal values it at $17.6 billion overall.
Comcast (Research), the nation\'s largest cable operator, and media conglomerate Time Warner (Research) will pay $12.7 billion in cash as part of the deal. Time Warner will also pay 16 percent of the stock in its Time Warner Cable unit, the nation\'s No. 2 cable operator.
Bethpage, N.Y.-based cable operator Cablevision (Research) reportedly had expressed interest in bidding for Adelphia late in the process, but this deal apparently trumps those efforts.
Besides the normal regulatory approvals, the deal needs the consent of the bankruptcy court overseeing Adelphia\'s operations since the high profile collapse of what was then the nation\'s No. 6 cable operator three years ago.
Adelphia filed for bankruptcy in June 2002, about a month before its founder, chairman and CEO John Rigas was arrested and charged with looting the company\'s assets for their personal use. Two of his sons, who were also executives at the company, were also charged.
The elder Rigas and one of his sons were convicted of conspiracy, securities fraud and bank fraud in July 2004. They still await sentencing, while the other son charged in the matter faces a new trial after the jury couldn\'t reach a verdict on many of the counts against him.
Swapping customers
Time Warner is getting an estimated 3.5 million basic cable subscribers as part of the deal. It is paying $9.2 billion in cash for the Adelphia assets in addition to issuing the stake in its cable unit.
The additional customers push Time Warner Cable ahead of the nation\'s two satellite television operators: DirecTV (Research) and EchoStar Communications\' (Research) Dish Network.
Cable and satellite television operators are competing to provide not only television but also high speed Internet and phone service to U.S. households.
Comcast has used acquisitions to grow, most recently with its 2002 purchase of AT&T Broadband, which brought it 13 million customers. It also made an unsuccessful bid for media conglomerate Walt Disney Co. (Research) in 2004.
Time Warner had until recently been a seller of assets, such as its Warner Music unit and its stake in cable channel Comedy Central as it tried to cut debt levels. But last year, company officials announced the asset sales to be over and signaled their interest in buying more cable operations.
Comcast is acquiring 1.8 million additional basic subscribers, as well as having its current 21 percent stake in Time Warner Cable redeemed.
Comcast and Time Warner will also swap certain cable operations as part of the deal, with Comcast giving Time Warner more than 1 million subscribers while Time Warner gives Comcast about 750,000 subscribers.
The companies said the deal and swaps allow them to serve more compact geographic areas. Time Warner will have 85 percent of its customers in five large clusters, with more than a third of its overall customer base in either the New York or Los Angeles metropolitan areas.
After the deal Comcast will have about 23.3 million basic cable customers of its own and an additional 3.5 million additional subscribers held in various partnerships. Time Warner will have 14.4 million basic subscribers of its own, and another 1.5 million in a continued partnership with Comcast.
Time Warner also owns CNN/Money.
http://money.cnn.com/2005/04/21/technology/adelphia/index.htm?section=cnn_topstories
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