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Last Updated: Thursday, 21 April 2005, 13:37 GMT 14:37 UK
US TV giants split bankrupt rival
Time Warner headquarters
Time Warner will gain 3.5 million subscribers from the deal
US media giants Time Warner and Comcast have agreed to buy bankrupt cable firm Adelphia for $17.6bn (9.2bn) in cash and shares.

The bid beat a last-ditch, all-cash offer from New York's Cablevision.

If the bankruptcy court approves the deal, Time Warner will become the US's second biggest pay-TV operator.

Adelphia went bust in 2002 amid a wide ranging investigation into allegations of fraud against its owners and executives.

Adelphia founder John Rigas and his son Timothy have both been convicted of conspiracy, bank fraud and securities fraud.

Leverage

The bid from Time Warner and Comcast has been tipped as the most likely to succeed since it was first mooted in September 2004.

Cablevision was also keen to acquire Adelphia's assets in order to expand its footprint out of New York, as Adelphia has a presence across the US, and gain a foothold in the lucrative Los Angeles market.

Adelphia founder and former CEO John Rigas
John Rigas: 'used Adelphia as his personal ATM'

But its all-cash bid would have increased its already heavy debts.

Unwinding investments

A successful bid will deliver extra customers to both Time Warner and Comcast - and allow the two to sunder a variety of joint ventures.

Most of the $12.7bn cash for the deal will come from Time Warner, which will integrate 3.5 million of Adelphia's subscribers and its own Time Warner Cable into a new company, 16% of which will go to Adelphia shareholders.

Comcast, in turn, will pay a net $1.5bn - but ends up extricating itself from its stake in Time Warner's cable and entertainment arms, and adding 1.8 million new subscribers in areas which neatly expand to its existing operations.

It will remain the number one cable operator in the US with 23.3 million subscribers, leaving Time Warner second with 14.4 million. Satellite operator DirecTV will slip into third place.

"We think Comcast is the biggest beneficiary here," said Thomas Eagan, analyst at Oppenheimer & Co.


SEE ALSO:
Adelphia founder guilty of fraud
09 Jul 04 |  Business
Cable flop sues former auditor
07 Nov 02 |  Business
US cable giant goes bust
26 Jun 02 |  Business


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