Time for dish?
It hadn’t been a good week for Adelphia Communications.
First, Adelphia Business Solutions, which was just spun off from Adelphia Communications in January, filed for Chapter 11 bankruptcy protection on March 27. That same day, parent company Adelphia posted a $1.71 billion loss for 2001— despite a 23 percent increase in revenue.
The news got worse. On April 3, Adelphia announced it was under investigation by the Securities and Exchange Commission for $2.3 billion in off-the-books loans to partnerships controlled by its founders, the Rigas family. Since that disclosure, Adelphia’s share value has fallen by half.
Adelphia, the sixth largest U.S. cable TV company, holds the cable franchise for Charlottesville. While the franchise technically isn’t a monopoly, in truth, Adelphia’s 33,800 subscribers here have no cable television alternatives.
This latest news has some local cable viewers wondering if their days of watching Six Feet Under are numbered. It doesn’t help that the Washington Post compared Adelphia’s maneuverings to Enron’s.
“That’s a knee-jerk reaction from the uninformed,” says Adelphia spokesman Paul Heimel. “That’s like comparing a third-rate burglary that takes place in Washington with Watergate.”
Heimel doesn’t believe the SEC investigation will affect cable operations. “We’ve adopted a ‘business as usual’ stance,” he says. “This is an accounting issue that could be a legal issue.”
Heimel sent The Hook to Adelphia’s investor relations department for more information. When asked if Charlottesville cable subscribers should be pricing satellite dishes, director of investor relations Karen Chrosniak answered, “We would not be able to comment on that at this time.”
Well, that’s not very reassuring. Furthermore, neither Heimel nor Chrosniak owns Adelphia stock. “I’m not trying to alarm you,” says Chrosniak. “I wish I could offer more assurances, but this is very sensitive, and we have to be very careful about what we say now.”
On the Adelphia Business Systems front, local sales manager Tom Thompson says the telecom industry is under siege and points to the even harder hit Nortel and Lucent. “We had to restructure our debt,” says Thompson, adding that the company is ahead of schedule in doing so.
Thompson estimates that ABS has 500 to 600 local corporate customers. It provides high-speed Internet access and voice mail services; its main competitor is Sprint.
The future may not be exactly rosy for either ABS or Adelphia Cable, but it’s unlikely local cablephiles will be left staring vacantly into a static-y screen. Former city councilor Tom Vandever, who used to field complaints about Adelphia when he was in office, thinks that even in the worst scenario, if the company goes into bankruptcy or ceases operations, some other entity will snatch it up.
He compares it to the Omni. “People used to worry what would happen if it went bankrupt and the City were stuck with it. What would happen is that someone would get a really nice hotel at a cheap price.”
The city is about to begin negotiations with Adelphia, whose five-year franchise contract is up for renewal in June 2003. “Obviously we’re very aware of the SEC investigation, especially at the time of the franchise negotiation,” says Renee Knake, assistant city attorney. But Knake says the city isn’t worried— at least so far.
“At this point, we’re going to proceed as planned,” says Knake.