• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Proposed Swaps Could Put Comcast in Charge of Philadelphia Cable System

Posted on: Thursday, 21 April 2005, 18:00 CDT

Apr. 22--Comcast Corp. would own 40 percent of Philadelphia's Urban Cable Works and would take over management of that system if Comcast's deal to swap dozens of cable systems with Time Warner Corp. is approved.

The proposed swaps are part of a series of transactions under which Comcast and Time Warner would buy Adelphia Communications Inc. for $17.6 billion and divvy up its 5.3 million subscribers.

The deal still must be approved by regulators and the court overseeing Adelphia's bankruptcy case.

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

It was not immediately clear how Comcast's involvement might alter the operation of the Urban Cable Works system, which serves about 41,000 customers in West, Southwest and parts of Northwest Philadelphia. But Comcast may have to help settle a dispute among the owners of the other 60 percent.

Most of that majority stake is held by Inner City Broadcasting of New York, a private company whose owners include the family of former New York City Council President Percy Sutton. But 20 percent of that stake is owned by a partnership of Philadelphians with strong political and business connections.

They include Bruce A. Crawley, head of the African American Chamber of Commerce and the Crawley Haskins Sloan advertising agency; Willie Johnson, who heads PRWT Services Inc., a personnel management firm; attorney Carl Singley, a partner in Blank Rome; and Joann Bell, an economic development coordinator in the office of the City Representative.

Bell said yesterday that the partnership, Philacomm, has had concerns about Time Warner's management of the system. She said the partners were dismayed as the system lost customers to satellite-TV providers.

"We believe essentially that Time Warner wasn't all that interested in this particular franchise," Bell said.

Philacomm also had disagreements with Inner City Broadcasting over the size of their relative ownership stakes in the system, she said.

Those issues, she said, led Philacomm to oppose a deal that Inner City struck to sell its stake to Time Warner earlier this year. Philadelphia City Council voted in March to deny the franchise transfer required to complete that deal.

Bell said the partners expect those issues to be resolved before Comcast can assume ownership of Time Warner's stake.

Even if Comcast could arrange to buy a larger share of Inner City's stake in the system, Bell said the local partners would like to remain invested.

Though the city cannot require it, over the years minority ownership of that franchise has been encouraged by the city. The Philacomm partnership would fit that bill.

David Cohen, Comcast's executive vice president and chief of staff for Gov. Rendell when he was mayor, said it was too early to say whether Comcast would seek a larger stake in Urban Cable Works, but he asserted it is certain to take a strong interest in the system's operation.

"I think a number of people for many years have hoped that Comcast would own that system, in part because we pay special attention to our hometown systems," he said. "It was not a strategic asset for Time Warner. I don't think it has received the attention that their Manhattan system or their Los Angeles system ... has received."

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

Comcast owns the three other cable franchises in the city, and also provides cable service to Philadelphia's suburbs.

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

Comcast and Time Warner were already the nation's two largest cable-television firms. 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 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 them, 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 yesterday 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.

Cablevision Systems Inc. of Bethpage, N.Y., which has offered a competing bid for Adelphia, had no comment yesterday. On Tuesday, the judge overseeing the bankruptcy case approved a provision in the Time Warner-Comcast bid that would require any other company buying Adelphia to pay them a breakup fee of about $440 million.

-----

To see more of The Philadelphia Inquirer, or to subscribe to the newspaper, go to http://www.philly.com.

Copyright (c) 2005, The Philadelphia Inquirer

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

CMCSK, TWX, CVC, ADELQ,

Source: The Philadelphia Inquirer

More News in this Category