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FCC Approves Sale of Adelphia to Time Warner, Comcast (Update1)
 
July 13 (Bloomberg) -- Comcast Corp. and Time Warner Inc., the two biggest U.S. cable providers, won approval from the U.S. Federal Communications Commission to buy Adelphia Communications Corp. for $17.6 billion in the largest U.S. bankruptcy sale.

The 4-to-1 vote marks the sale's last major regulatory hurdle. The FCC will require the buyers to offer their regional sports programs to competitors as a condition of the sale.

FCC approval, after a year of review, paves the way for the sale's completion before a July 31 deadline that would allow the buyers to walk away. Comcast and Time Warner will divide Adelphia's 5.2 million customers, trading some assets to strengthen markets where each already has large clusters. The deal also positions Time Warner Chief Executive Officer Richard Parsons to spin off the cable unit.

``It could lead to further customer-swapping opportunities in the country,'' UBS AG analyst Aryeh Bourkoff said in a telephone interview. ``And it will likely result in a new public company in the cable industry in the form of Time Warner Cable, which could spark industry consolidation.''

Parsons said on May 3 that he still plans to make at least part of Time Warner Cable public. ``Both for strategic reasons and in terms of continuing the play in cable consolidation, having a cable currency is an appropriate way to go,'' Parsons, 58, said in the company's first-quarter earnings conference call.

Shares of New York-based Time Warner, the world's biggest media company, fell 32 cents to $16.09 at 3:42 p.m. in New York Stock Exchange composite trading. They declined 5.9 percent this year before today. Philadelphia-based Comcast declined 50 cents to $31.56 in Nasdaq Stock Market composite trading and has gained 24 percent this year.

Conditions

Comcast, the biggest U.S. cable provider, will gain 1.7 million subscribers, bringing its total to about 23.4 million and bolstering its position in Pennsylvania and Florida. Time Warner will have a net gain of about 3.5 million, giving it 14.4 million, while extending its reach in New York and Los Angeles.

As a condition of approval, the FCC required the buyers to offer some of their regional sports networks to rivals. Their inclusion is a victory for Verizon Communications Inc., which is beginning to compete against cable with its own video service. Satellite providers DirecTV Group Inc. and EchoStar Communications Corp. will also benefit.

The FCC relented to pressure from Washington-area members of Congress who sought to force Comcast into arbitration to resolve a dispute with Baltimore Orioles owner Peter Angelos over broadcasts of Washington Nationals games.

FCC Vote

Democratic Commissioner Michael Copps cast today's lone dissenting vote. The panel's other Democrat, Jonathan Adelstein, said he joined the three Republicans in supporting the merger because of the conditions.

The Adelphia sale has been before the FCC since June 2005. For most of that time, the commission had only four members, two Democrats and two Republicans. Chairman Kevin Martin gained a Republican majority on June 1, when Robert McDowell was sworn in as the fifth commissioner.

With the deal under FCC review, Comcast and Time Warner found themselves under pressure from members of Congress. Legislators pushed the companies to create new family friendly programming, saying cable subscribers were being required to pay for shows that were inappropriate for children.

In response, Time Warner, Comcast and some other cable companies agreed to offer a new tier of programming that doesn't include cable channels such as MTV, BET and USA.

US Bankruptcy Judge Robert E. Gerber approved the transaction on June 28. The Federal Trade Commission approved the deal in January without imposing any conditions.

Accounting Fraud

Completion of Adelphia's sale will put to rest the 11th- biggest bankruptcy by asset size in U.S. history. Adelphia, now based in Greenwood Park, Colorado, filed for bankruptcy in June 2002 after members of the founding Rigas family revealed that they had failed to disclose more than $2 billion in borrowing.

John Rigas, who founded the company in 1952, and son Timothy, who was chief financial officer, were convicted in July 2004 of conspiracy and securities fraud. Rigas, 81, was sentenced to 20 years in federal prison. Timothy Rigas, 50, was sentenced to 15 years in federal prison. Father and son are free pending appeal. Michael Rigas, 52, pleaded guilty last November of making false entries and agreed to serve 10 months under house arrest. The company was based in Coudersport, Pennsylvania until its headquarters were changed during the bankruptcy.

Geesh!!! I need to know how that's going to affect us here in Western N.Y.. Now that Adelphia is based in Greenwood Park, Colorado and no longer in Coudersport, Pennsylvania and will be no more, I get worried that the Extreme tier of powerlink will not roll-out north to N.Y. but rather more roll-outs to California...do'h.

TheHalf™