Time Warner and Comcast received bankruptcy court approval to purchase troubled Adelphia Communications Corp. for $17.6 billion.
The cable television companies will share the bankrupted cable operator's 5 million subscribers. Adelphia's creditors had slowed down the sale, fighting over the course of the past year over how best to distribute the proceeds to cover more than $18 billion in debts. The ruling from Federal Bankruptcy Court Judge Robert E. Gerber allowed the sale to move forward without a creditor vote.
The purchase increases Time Warner's subscribers by 32 percent, to 14.5 million, and Comcast's by 8 percent, to 23 million. The deal strengthens Comcast's position in Pennsylvania and Florida, and makes Time Warner Cable the largest cable provider in New York and Los Angeles.
Adelphia, which owns cable systems across the country, will receive nearly $13 billion in cash and 16 percent of a cable company Time Warner plans to spin off.
In 2004, John Rigas, founder of Adelphia Communications Corp. and his son Timothy were sentenced to 15 years and 20 years, respectively, for their part in orchestrating a massive fraud at the company. Last summer, the pair was convicted of fraud and conspiracy for keeping $2 billion in debts off the books and taking another $100 million from the company coffers. Adelphia entered bankruptcy protection in June 2002.
Previously on WebCPA:
Adelphia Founder Faces Tax Evasion Charges (Oct. 11, 2005)
Adelphia Founder Sentenced to 15-Year Prison Term (June 21, 2005)
Insider Details Crooked 'Accounting Magic' at Adelphia (May 6, 2004)
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