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TimeWarner and Comcast Complete $17 Bln Adelphia Deal

NEW YORK (Reuters) - Time Warner Inc. (NYSE:TWX - news) and Comcast Corp. (Nasdaq:CMCSA - news) said on Monday they completed a deal to buy the assets of bankrupt cable operator Adelphia Communications Corp. (Other OTC:ADELQ - news) valued at around $17 billion.
Time Warner's cable unit will take on 3.3 million Adelphia subscribers, bringing its total to 14.4 million, while Comcast will take on 1.7 million Adelphia subscribers, meaning it will have a total of 23.5 million subscribers.
Time Warner and Comcast will pay $12.5 billion in cash and Time Warner Cable common stock representing about 16 percent of the equity in Time Warner Cable, in a deal that Adelphia said in April was worth $16.9 billion.
Adelphia had valued the deal at $17.6 billion a year ago, but lowered that figure after a fall in cable stock valuations.
However, cable stock prices have risen since April due to strong subscriber growth. Comcast's shares have risen 11 percent in the last three months, while Cablevision Systems Corp. (NYSE:CVC - news) has climbed nearly 10 percent.
Time Warner declined to say how much a 16 percent stake in Time Warner Cable is worth.
Under the terms of the agreement, the media conglomerate will spin off the stake in Time Warner Cable through an initial public offering.
The proceeds from the IPO will either be held in an escrow account for Adelphia's creditors, or, if the creditors come to an agreement that is confirmed by the bankruptcy court before an IPO, then the shares will be distributed directly to creditors first and then start listing on a stock exchange.
Adelphia is required to sell at least one-third of the Time Warner Cable common stock it received through the transaction within three months of the offering.
Time Warner would not comment on the timing of the flotation but analysts estimate that it will take place late in the fourth quarter.
As well as taking on Adelphia's subscribers, Comcast and Time Warner agreed as part of the deal to exchange some of their own subscribers to consolidate their respective customer bases in key regions.
As a result, Time Warner Cable will dominate in Los Angeles and strengthen its hold on New York, while Comcast will increase its market share in Florida, New England, Minneapolis and its home base of Pennsylvania.