Comcast Corp. and Time Warner, the two biggest U.S. cable-television operators, have reached a tentative agreement to buy Adelphia Communications Corp. for almost $18 billion in cash and stock, according to newspapers citing people familiar with the matter.
The deal, presented Thursday to the judge in Adelphia's bankruptcy case, would give Time Warner and Comcast 5.3 million subscribers in cities including Los Angeles, Miami and Buffalo. The agreement, reported in today's New York Times and some editions of the Wall Street Journal, may be completed within days.
The sale would give Adelphia money to pay part of the $20 billion owed to creditors and bring an end to almost three years of bankruptcy proceedings. Comcast Chief Executive Officer Brian Roberts, 45, and Time Warner CEO Richard Parsons, 57, would receive cable systems they can swap to meet regulators' demand that they unwind Comcast's stake in Time Warner's cable unit.
"All parties get what they wanted," said Paul Kim, an analyst at New York-based Tradition Asiel Securities.
It is not known which company will own the franchise serving the 300,000 customers in Western New York, although Time Warner already serves the Rochester, Syracuse and Binghamton markets. Also unclear is the impact on Adelphia's 1,000 customer service and technical support staffers in Buffalo and Cheektowaga, and the 700 workers who operate the local cable network.
Adelphia spokesman Paul Jacobson declined to comment. Time Warner spokeswoman Mia Carbonell and Comcast spokesman Tim Fitzpatrick didn't immediately return calls seeking comment.
An executive close to Adelphia told the Times the Time Warner/Comcast bid was "far and away the best deal actually on the table."
Time Warner, based in New York, and Philadelphia-based Comcast will pay Adelphia bondholders $13.5 billion in cash and $4.5 billion in stock in a new company that would be created out of Adelphia and Time Warner's cable unit, the New York Times said.
Comcast would contribute $2 billion in cash and swap its 21 percent stake in Time Warner's cable business in exchange for about 2 million of Adelphia's subscribers, the Times said. Time Warner would pay about $3 billion in cash and would borrow about $8 billion secured against the combined business, the newspaper said.
The Wall Street Journal reported that Comcast and Time Warner offered $12 billion in cash and more than $5.6 billion in stock in the new company.
The acquisition requires approval from Adelphia's board, representatives of unsecured creditors and the judge, the Journal said.
The agreement comes two days after Cablevision Systems Corp., the biggest cable company in the New York area, offered $16.5 billion in cash for Adelphia, the fifth-biggest U.S. cable company. Time Warner and Comcast also beat out an offer by New York-based Kohlberg Kravis Roberts & Co. and Providence Equity Partners Inc.
Adelphia, the nation's fifth-largest cable television provider, filed for bankruptcy after founder John W. Rigas and others were accused of looting the company and cheating investors out of billions of dollars. Rigas and his son Timothy were convicted in July of conspiracy, bank fraud and securities fraud. Sentencing is scheduled for April 18.
The company moved to the Denver suburb of Greenwood Village from Coudersport, Pa.