Reuters
Comcast, Time Warner may make joint Adelphia bid
Wednesday May 5, 7:53 pm ET
By Michael Learmonth and Kenneth Li
NEW ORLEANS/NEW YORK, May 5 (Reuters) - A scenario whereby Comcast Corp. and Time Warner Inc. join forces to purchase bankrupt cable operator Adelphia Communications Corp. would be good for the industry, analysts said on Wednesday.
A Comcast executive earlier on Wednesday confirmed Wall Street speculation that it could see a potential combined bid with Time Warner to purchase bankrupt cable operator Adelphia.
"If there would be some way we and Time Warner could do something jointly, that may result in a deal," John Alchin, Comcast co-Chief Financial Officer, told Reuters while attending the National Cable & Telecommunications Association annual conference in New Orleans.
But Alchin said the strategy remains in the planning stages at this point.
"There is no guarantee that that is going to happen," he added.
Under pressure from creditors, Adelphia last month said it would pursue a possible sale as an alternative to a stand-alone, post-bankruptcy plan as originally envisioned.
The company is in the process of interviewing bankers to pursue the sale option, although it may continue to use its restructuring bankers Lazard to pursue a sale, an Adelphia spokesman said.
Comcast CEO Brian Roberts last week said the company was interested in purchasing Adelphia among other expansion options, moments after dropping its hostile bid to buy Walt Disney Co.
However, company officials said that Comcast did not need to expand further.
"Whether we have 21 million subscribers or 26 million subscribers, we're really indifferent," Alchin said. "So we can be a very disciplined buyer."
In a scenario bandied about by industry analysts and investors, Time Warner and Comcast would jointly bid for Adelphia's cable systems. As part of the arrangement, Time Warner would swap cable systems with Comcast, in a move that would go toward eliminating Comcast's 21 percent stake in Time Warner Cable.
Analysts said the idea was plausible as the transaction is likely to be tax free.
"Comcast would like nothing better than to be able to exit its interest in Time Warner Cable in exchange for cable systems rather than receive cash in an IPO," said Craig Moffett, an analyst at Sanford C. Bernstein.
Mark May, an analyst at Kaufman Brothers agreed, "In fact it's one of the structures that makes the most sense."
Comcast received the stake in Time Warner's cable unit when it acquired AT&T Broadband in November 2002.
"We are engaged in discussions to explore options and approaches for Comcast to exit this investment," Time Warner Chief Executive Officer Richard Parsons told reporters on Monday. "We have 3-1/2 years left. Fortunately that gives us the time to be thoughtful and create value on both sides."
A Time Warner spokeswoman declined to comment further.
Comcast shares lost 41 cents, or 1.38 percent, to end at $29.26 in Wednesday trading on the Nasdaq. Time Warner shares fell 5 cents to $17.06 on the New York Stock Exchange. (Additional reporting by Dane Hamilton in New York)
quote:
Originally posted by Art:
Got ADELQ at .76