Cable suitors to trade systems

Comcast would gain Md., Va. subscribers

Adelphia being jointly acquired

Co-buyer Time Warner to get other big markets

April 22, 2005|By KNIGHT RIDDER/TRIBUNE

PHILADELPHIA - Comcast Corp. and Time Warner Corp. will divide cable systems in Los Angeles, Dallas, Minneapolis and several other big markets if their bid to buy bankrupt Adelphia Communications Corp. is approved.

The proposed swaps are part of the transactions announced yesterday in which Comcast and Time Warner would buy Adelphia Communications for $17.6 billion and divide its 5.3 million subscribers.

Systems in Carroll and Frederick counties in Maryland, and in Washington's Virginia suburbs are among those Comcast would get.

Adelphia has almost 30,000 cable subscribers in Carroll County, said Carol Shawver, coordinator for the Carroll County Cable Regulatory Commission.

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

The deal is subject to approval by regulators and the court overseeing Adelphia's bankruptcy case. That could take six to nine months.

Comcast and Time Warner are the nation's two largest cable television companies. Comcast, based in Philadelphia, has 21.5 million customers; Time Warner, of New York, has 10.9 million.

Adelphia, the fifth-largest cable operator with 5.3 million subscribers, is operating under bankruptcy protection.

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

Fast-growing markets

The systems Comcast would acquire are in "very fast-growing and exciting markets," Comcast Chairman and CEO Brian L. Roberts said yesterday during a conference call with Wall Street analysts.

"Almost every system we're getting is nearby an existing Comcast market," Roberts said.

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

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

From Adelphia, Comcast also would acquire systems and subscribers in Florida, principally in Palm Beach and Miami; in New England, mainly in the Boston and Hartford, Conn., areas and in Vermont; in the Pittsburgh, Johnstown and Scranton areas of Pennsylvania; and in Colorado Springs, Colo.

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

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

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

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

`Welcomed'

"For consumers and everybody else this is going to be welcomed," he said, 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, had no comment yesterday. The judge overseeing the case in U.S. Bankruptcy Court approved on Tuesday a provision in the Time Warner-Comcast bid that would require any other company buying Adelphia to pay Time Warner and Comcast a breakup fee of about $440 million.

Sun staff Writer William Patalon III contributed to this article.

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