$80K missing?: City says Adelphia owes big bucks

Trouble is no stranger to cable company Adelphia. After a very public bankruptcy claim in June 2002 (featuring perp walks for Adelphia's ruling Rigas family), problems now are striking closer to home. According to a City Council resolution passed Monday, April 21, Adelphia may owe the City of Charlottesville tens of thousands of dollars in back-franchise fees.

So how could this happen?

For the right to provide cable to city homes, the city charges Adelphia a franchise fee, which is reflected on local cable consumers' Adelphia bills. Included in the calculation of the fee is the number of cable consumers in the city as well as advertising revenue.

When Adelphia requested a renewal of its franchise agreement in 2002, the city performed a "needs assessment" to determine how well Adelphia was meeting the community's cable demand, says assistant city attorney Renee Knake. A financial audit is a routine part of the assessment, and the city retained T.A. Lewis & Associates, of Birmingham, Alabama, to perform the task.

In the course of its investigation, Lewis & Associates requested documentation relating to Adelphia's advertising revenue. Adelphia has not produced that information, according to the resolution, even after requesting an extension from the city in January.

Without specific numbers, Lewis & Associates was forced to rely on national data, and, basing its calculations on those numbers, found that Adelphia's underpayment from January 1, 1999, to December 31, 2001 had grown to a whopping $81,000.

Adelphia executives did not return The Hook's phone calls, but Knake says the city is still willing to listen to Adelphia's side of the story.

It's possible that Adelphia could provide the necessary information to support its advertising revenue allocations, Knake says. If that happens, according to the resolution, "the findings of the Lewis report would be adjusted accordingly."

The city won't consider legal action against Adelphia until May at the earliest, says Knake. The resolution simply sends a message that the city means business.

"We're basically putting Adelphia on official notice," she says. "They need to justify their numbers, or cut us a check."

 

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