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Adelphia Communications Corp. and an investment partnership linked to Merrill Lynch & Co. have struck a deal to sell their cable television joint venture in Puerto Rico to two private equity firms for $520 million in cash.
The buyers, New York- and London-based MidOcean Partners and Crestview Capital Partners LLC, a fledgling New York firm which counts cable industry entrepreneur Jeffrey Marcus as a partner, will pay about $3,800 for each of the joint venture's 137,000 subscribers.
The deal comes as Adelphia prepares to emerge after three years from Chapter 11 bankruptcy protection and complete its $17.6 billion sale to Time Warner Inc. and Comcast Corp.
In late May, Greenwood Village, Colo.-based Adelphia dispensed with one major hurdle when the bankruptcy court approved a $715 million settlement of accounting fraud charges that had been lodged against the company by the U.S. government.
Adelphia acquired its 50% interest in the Puerto Rican cable operations through its 1999 acquisition of Century Communications Corp. Century and the Merrill partnership, ML Media Partners LP, teamed up in 1986 to buy the assets.
Each owned 50% of the business, Century/ML Venture.
Neither Adelphia nor ML Media Partners has disclosed Century/ML's revenue or earnings. But the investment plainly has been profitable: At the end of 2003, Adelphia valued its 50% interest at $240.5 million, $175.5 million more than it had invested.
But the JV was contentious. In 2000 ML Media Partners sued Adelphia to dissolve the venture and to appoint a receiver to sell it.
In late 2001 Adelphia agreed to buy out ML Media Partners for between $275 million and $279.8 million. That pact fell apart when Century/ML sought bankruptcy protection in September 2002. The battle resumed.
Early last year ML Media Partners said it had rounded up a prospective buyer, an investor group led by James C. Vaughn. But that group got cold feet.
The adversaries, meanwhile, have continued to press their cases in court. Spokesmen for Adelphia, ML Media and MidOcean did not say if the deal to sell Century/ML meant that hostilities will cease.
Officials at MidOcean and Crestview were unavailable for comment.
Citigroup and J.P. Morgan Chase & Co. are arranging debt financing for the buyout, which is subject to approval by regulators and by the U.S. Bankruptcy Court for the Southern District of New York.
Lazard advised Adelphia and Daniels & Associates advised ML Media. Willkie Farr & Gallagher LLP's Maurice Lefkort was counsel to Adelphia. Proskauer Rose LLP's Jeffrey Levitan, Bertram Abrams, Lawrence Budish, Bradley Ruskin and Scott Eggers were counsel to ML Media Partners.
MidOcean and Crestview tapped DH Capital LLC for financial advice.
The buyers' legal team consisted of Kirkland & Ellis LLP's George P. Stamas, Mark D. Director, Thomas L. Evans, Matthew N. Kleiman and Christopher Butler.
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Adelphia Introduces Adelphia Music for Its High-Speed Internet Customers Thursday June 9, 11:15 am ET New Premium Service Offers Access to Largest Online Subscription Music Library Available With More Than 1.5 Million Licensed Music Tracks and Music Videos Company Also Introduces Additional New Service: Adelphia NetPak
GREENWOOD VILLAGE, Colo., June 9 /PRNewswire-FirstCall/ -- Adelphia Communications Corporation a leading operator of cable systems in the United States, announced today the launch of Adelphia Music, a new online music service for its high-speed Internet customers. Offering access to more than 1.5 million music tracks, it is the first premium subscription service to be launched by Adelphia on the company's new high-speed Internet customer home page, www.adelphia.net. (Photo: http://www.newscom.com/cgi-bin/prnh/20050609/LATH030-a)
Adelphia Music is powered by MusicNet, the world's leading business-to-business digital music service provider. MusicNet offers the single largest available online subscription music library, including licensed tracks from all major record labels as well as thousands of independent labels. Adelphia Music is delivered to customers via MusicNet's state-of-the-art Performer(TM) music client, which delivers a robust music discovery experience that allows users to find music in a variety of ways.
The new service, priced at $7.95 per month, provides Adelphia's high-speed Internet customers with access to exclusive song titles, music videos, editorial play lists and other features, all of which are available in CD quality audio. Subscribers may stream or download as many songs as they want to play on their PCs. In addition, they have the option to purchase songs that they want to own permanently, to burn to CD or transfer to supported portable music players. The service is suitable for all ages, and provides parents with the ability to restrict access to titles containing explicit lyrics. Adelphia Music subscribers also receive Zinio digital magazine subscriptions to "PC Magazine" and "Sync."
"Adelphia Music enhances the value of our high-speed Internet service by making it affordable, safe and fun for our customers to find their favorite music or discover new music online," said Jeff Turner, Adelphia Director of HSI Product Marketing. "For about half the price of one CD per month, our customers will have access to tremendous music choice, with the flexibility to purchase only those songs that they want to own permanently."
Adelphia is also launching a second premium subscription option for its high-speed Internet customers, Adelphia NetPak. For an additional $9.95 a month, the service features some of the most popular subscription-only online content available. Adelphia NetPak includes access to:
* Gameday audio, condensed games, video highlights, and more from MLB.com * Online and printable greetings cards from American Greetings.com * A variety of award-winning educational games for children from Clever Island * Research tools from Encyclopedia Britannica * A vast collection of online games from Shockwave.com GameBlast * Videos clips from CNN.com featuring top CNN stories of the day * Local video weather forecasts and more from weather.com® -- the website of The Weather Channel
Synacor, a leading provider of private-label portal technology, is handling the integration of all premium content services for Adelphia.net. Synacor's software platform supports the integration of a variety of premium services accessible via a single user-ID, password and interface, along with the ability for Adelphia to add these services directly to the cable bill.
"Adelphia's leadership recognizes the role of great services in the delivery of a compelling broadband experience," said Ron Frankel, Synacor President and Chief Executive Officer. "Our alliance with Adelphia, like our relationship with 15 other major cable operators in the United States, speaks to our key objective to extend and deepen the relationship with consumers by delivering highly valued services and significant personalization."
Adelphia High-Speed Internet customers also enjoy many other benefits, including:
Adelphia.net * A newly designed customizable customer home page featuring worldwide news, weather, and sports, with streaming video clips from Associated Press * Access to a free online photo sharing service, online automobile resources, travel information, and career planning resources * Integrated access to the Google search engine * Quick links to a variety of customer service resources, including a real-time online chat feature that provides access to instantaneous online support
Web-based Email Accessible from any Internet-connected PC * Includes 70 MB of storage (100 MB with Premier level of service) * Includes 7 email accounts per household (10 with Premier level of service)
About Adelphia Communications Headquartered in Greenwood Village, Colo., Adelphia Communications Corporation (OTC: ADELQ - News) is the fifth-largest cable television company in the country. It serves customers in 31 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks.
About MusicNet
MusicNet is the world's leading business-to-business digital music service provider. The top U.S. and global consumer brands private label MusicNet's comprehensive suite of digital music services. MusicNet enables its partners to offer their customers a fully customized experience, including the ability to buy music downloads and subscriptions, choose from more than 1.5 million tracks (the industry's largest catalog of licensed music), explore engaging editorial programming and enjoy an easy-to-use interface. Headquartered in New York, MusicNet is wholly-owned by Baker Capital, a New York-based private equity firm with $1.5 billion under management. For more information, please visit www.musicnet.com.
Cautionary Statement Regarding Forward-Looking Information
This document includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements regarding the Company's and its subsidiaries' and affiliates' expected future financial position, results of operations, cash flows, process for sale of the Company, restructuring and financing plans, expected emergence from bankruptcy, business strategy, budgets, projected costs, capital expenditures, network upgrades, products and services, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include words such as "anticipate," "if," "believe," "plan," "estimate," "expect," "intend," "may," "could," "should," "will," and other similar expressions are forward-looking statements. Such forward-looking statements are inherently uncertain, and readers must recognize that actual results may differ materially from the Company's expectations. The Company does not undertake a duty to update such forward-looking statements. Factors that may cause actual results to differ materially from those in the forward-looking statements include those discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and the Company's pending bankruptcy proceeding and its ongoing sale process, results of litigation against the Company and government investigations of the Company, the effects of government regulation including the actions of local cable franchising authorities, the availability of financing, actions of the Company's competitors, results and impacts of the process to sell the Company or its assets, pricing and availability of programming, equipment, supplies, and other inputs, the Company's ability to upgrade its network, technological developments, and changes in general economic conditions. Many of these factors are outside of the Company's control.
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