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Time Warner, Comcast to buy Adelphia
By Grant Gross

Time Warner Inc. and Comcast Corp. have reached an agreement to acquire cable television provider Adelphia Communications Corp., which filed bankruptcy in July 2002.

Adelphia has accepted the bid, worth approximately $17.6 billion, instead of a $17.1 billion bid from rival cable operator Cablevision Systems Corp. The deal must be approved by the U.S. Bankruptcy Court for the Southern District of New York.

Adelphia expects no immediate effect on consumers and employees, the company said in a statement. The deal should take nine to 12 months to complete, Adelphia said.

If the deal goes through, cable operators Time Warner and Comcast would pay US$12.7 billion and 16 percent of Time Warner Cable Inc.'s common stock, the companies said in a press release Thursday. Time Warner would pay $9.2 billion in cash, with Comcast paying $3.5 billion. As part of the deal, Time Warner Cable and Comcast would swap some cable systems, and Time Warner Cable will buy back a 21 percent interest that Comcast has in it.

Adelphia provides cable TV and cable broadband services to customers on the U.S. East Coast, parts of the Midwest and the West Coast. Adelphia customers would see faster deployment of video, high-speed data, voice and other services, according to the press release.

In the deal, Time Warner Cable would gain cable systems passing about 7.5 million homes, with approximately 3.5 million basic subscribers. Comcast would gain about 1.8 million new basic cable customers for a net cash investment of about $1.5 billion. Following the deal, Comcast would serve about 23.3 million customers, clustered around Washington, D.C., and in Florida, Pennsylvania and Massachusetts.

Both Comcast and Time Warner hailed the deal as good for their long-term growth. The deal provided Adelphia the "best value for its bankruptcy constituents," Bill Schleyer, Adelphia's chairman and chief executive officer, said in a statement. The deal is a better option than Adelphia trying to emerge from bankruptcy as a stand-alone company, he added.

The agreement may not mean the end to bidding on Adelphia, said Jeff Kagan, an independent telecom analyst. "Typically we'd expect to see Comcast and Time Warner upping their bid and hear nothing else from Cablevision," he said in an e-mail. "But Cablevision sees as many reasons to buy as Comcast and Time Warner. The deal will probably go to Comcast and Time Warner, but this is a very interesting deal to watch."

Posted April 22, 2005 01:10 PM |