Cable Operators

Schleyer: ‘Beachfront’ Systems Are Rare

9/23/2004 9:59 AM Eastern

New York -- Adelphia Communications Corp. chairman and CEO Bill Schleyer said the just-launched auction of the company’s 5.4 million-subscriber cable systems could be the last chance for MSOs to buy quality cable properties.

“Clearly, it’s a beachfront property,” Schleyer said in an interview Thursday afternoon at the Manhattan offices of Adelphia’s bankruptcy attorneys, Willkie, Farr & Gallagher LLP.

“It may be the only beachfront property left,” he added. “I would expect the financial players and the people in this industry that want to participate -- I would expect that they would understand that. There is an awful lot of interest, but this is a lot of assets. I would expect to have a large number of people looking at this thing and trying to figure out how they can participate.”

Schleyer said more than 20 parties have signed nondisclosure agreements to look at Adelphia’s books, although he would not identify any of them due to the confidential nature of negotiations.

Adelphia’s assets are expected to attract $17 billion-$20 billion. Earlier this week, the Denver-based MSO announced that it would offer seven geographical clusters for sale.

While Schleyer said the idea of selling the company in several different pieces was made to attract the highest number of potential bidders and the highest prices, he added that $17 billion was not a minimum price.

Although Adelphia valued itself at $17 billion in a reorganization plan filed with the U.S. Bankruptcy Court in March, Schleyer said the ultimate price could be higher or lower.

When asked if the final selling price could be as low as $13 billion, Schleyer said it depends on the market

“If the market for cable stocks recedes to a level of unimaginable proportions over the next six months, that $13 billion could look like a great bid,” he added. “Since we put the plan of reorganization out there, cable stocks have slid about 7%. If they were to slide another 20% or 30%, $13 billion might look good, particularly if it was cash.”

Adelphia expects final bids to come in December, and it expects to make its final decision sometime in early 2005. Schleyer said the entire process -- to the actual sale -- could take as long as five months, putting the closing date at around February.

He added that there are several scenarios that could play out: selling the entire company, selling each individual cluster to different parties, scuttling the sale and emerging as a whole entity, or selling part of the company and emerging as a smaller company.

When asked if he would be interested in running a downsized Adelphia if the latter scenario came to be, Schleyer declined to comment. “That’s a question for another day,” he said. “That has nothing to do with my fiduciary responsibility.”

September