(worth a read) Adelphia Auction Is Expected To Draw Cable Entrepreneurs
[NTOP is partnered with Bresnan Communications and with Cequel to deliver cable telephony to their cable mso properties.]
By DENNIS K. BERMAN
Staff Reporter of THE WALL STREET JOURNAL
August 27, 2004 2:02 p.m.
Three long-time players in the cable industry are about to plunge into the biggest cable war in years: the auction for Adelphia Communications Corp.
Cable-industry behemoths Comcast Corp. and Time Warner Inc. are already widely expected to pursue Adelphia, the nation's fifth-largest cable operator, in an auction that could fetch more than $17 billion and could hit more than $20 billion if sold in pieces. Talks with buyers are expected to begin in earnest after Labor Day.
But a trio of veterans -- backed by deal-hungry private-equity firms -- could play a crucial role in the dismantling of the Adelphia empire. For those in the small clique of aggressive cable entrepreneurs, this auction could represent the last high-stakes game of their careers.
Bill Bresnan, who got his start in the cable industry over 40 years ago and still operates systems in the West, is teamed with Providence Equity Partners, according to a person familiar with the matter,
Jerald L. Kent, who helped found Charter Communications Inc. and currently runs telecom-management firm Cequel III, is working with Goldman Sachs' private-equity arm, according to another person familiar with the arrangement.
These two operators already know each other well. While at Charter in 2000, Mr. Kent paid $3.1 billion for systems then operated by Mr. Bresnan.
Yet another veteran is getting into the mix. Steven J. Simmons, who started and sold his own cable operation, is hooking in with Spectrum Equity Investors, as the private-equity firm eyes the Adelphia properties. Simmons now operates Patriot Media & Communications, which recently purchased a system in central New Jersey.
None of these players will have the bankroll to go after all of Adelphia. The Denver-based cable company, still in Chapter 11 bankruptcy protection, has recently indicated it would consider selling its systems in pieces, essentially creating a series of mini-auctions for individual markets. It is here where the cable veterans and private-equity firms are expected to enter the fray -- competing against the likes of Time Warner and Comcast for small markets that catch their eye.
Of course, the private-equity teams would love to get their hands on Adelphia's system systems in California and Florida, where population growth and incomes are both high. But the private-equity bidders will probably have to first look at markets in such isolated places as Idaho, western Pennsylvania and Kentucky.
Having such firms involved is a crucial part of the auction process. Without them, Adelphia and advisers UBS and Allen & Co. could find just one bidder for certain markets. The private equity firms could join forces in some cases, making it possible to compete for somewhat larger and more expensive markets against Comcast and Time Warner.
Adelphia's operations suffered badly after an accounting scandal led to the bankruptcy-protection filing and a criminal prosecution of the founding Rigas family. But that has created potential for bidders, who are attracted to its size and turnaround potential. |
