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Adelphia: Is a deal finally here?
Time Warner and Comcast reportedly set terms for an acquisition of the troubled cable outfit.
April 8, 2005: 8:56 AM EDT

NEW YORK (CNN/Money) - Time Warner and Comcast reached an agreement in principle to buy Adelphia Communications Corp., according to published reports.

The Wall Street Journal and New York Times are reporting that the nation's two largest cable operators agreed to pay about $18 billion in cash and stock for the bankrupt cable company.

The Journal reported the split would be $12 billion in cash and slightly more than $5.6 billion in stock, while the Times said the deal would be $13.5 billion in cash and about $4.5 billion worth of stock warrants.

The new company would be a combination of Adelphia and Time Warner's cable unit, the reports said.

If the deal were to come to fruition, Time Warner (Research) and Comcast (Research) would gain control of Adelphia's 5.3 million subscribers in 31 states. Adelphia is the nation's No. 5 cable operator.

Representatives of the two cable companies and Adelphia met with a bankruptcy court judge earlier in the week to discuss final procedures for completing a purchase, the Journal said.

The newspaper noted the deal would need to be approved by the Adelphia board of directors, the committee representing unsecured creditors and the judge in the case.

Cablevision out?

Cablevision (Research) reportedly prepared a $16.5 billion bid for Adelphia. The Bethpage, N.Y., cable operator had originally been expected to bid jointly with two private equity firms but decided to strike out on its own, according to various reports.

That bid has apparently been discounted by Adelphia, however. According to a report in the New York Times, an executive close to Adelphia said Cablevision's bid didn't have a realistic timetable.

One analyst said the failure of Cablevision's bid could cause problem for the company, which said in a filing with the Securities and Exchange Commission on Friday that it would shut down its satellite television service Voom as of April 30.

"Looks like you can pretty much sew this one up," said Greg Gorbatenko, analyst with Marquis Investment Research. "Now Time Warner and Comcast will get relatively bigger scale. While operating well, this leaves Cablevision as the odd man out.

"Considerably smaller in scale and now without VOOM, it will be hard for the company to compete with the larger gorillas and their economies of scale, which becomes more important as the cable industry matures," Gorbatenko added.

After Adelphia founder John J. Rigas and two of his sons were accused of looting the company of billions, Adelphia went into bankruptcy protection.

Time Warner is the parent company of CNN/Money.

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Adelphia Communications Corporation
Time Warner
Cablevision Systems Corporation
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