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The Image that Shocked Cable

7/28/2002 8:00 PM Eastern

For veterans of the tight-knit cable industry, it was a disturbing, almost surreal, image. On flickering TV screens across the country throughout the day, they watched as one of cable's founding fathers — former Adelphia Communications Corp. chairman John Rigas — was taken into federal custody in Manhattan, handcuffed like the most common of criminals.

Assembled TV crews shot the haggard-looking septuagenarian as he was escorted to a police car, where arresting officers tucked him down so he wouldn't hit his head as he got in.

It was the "perp walk," the familiar arrest scene that is the staple of TV police dramas. Sons Timothy and Michael, also manacled, followed.

The "Greek tragedy" metaphor continues to be summoned, as clichéd as it is, to describe the self-destruction of the Rigas dynasty, the immigrant success story gone bad. Last week, the cable industry's reaction to the tape of the Rigas's arrest, and the startling fraud charges levied against them, ranged from shock to sympathy and beyond.

"Very, very sad," said Cox Communications Inc. CEO Jim Robbins, one of John Rigas's peers.

Some cable executives who didn't want to be quoted said they thought the Rigases deserve to end up as jailbirds, because of what's happened to the now-Chapter 11 MSO in terms of its employees, shareholders and creditors — and the subsequent dramatic downturn in cable stocks.

Other cable officials criticized the government for the way it handled the dawn arrest, by calling in the media to witness and record the Rigas family's humiliation.

One industry official, who didn't want to be named, said the Rigases were treated unfairly, compared with the handling of executives from Enron Corp. and WorldCom Inc. — or even "the guy who killed that little girl out in California!"

John Rigas's counterparts in MSO corporate suites seemed to have mixed reactions.

"I do feel sorry for a man who has spent his entire career building a business and he's seen it crumble completely around him," said Jerry Kent, a principal of Cequel III and former CEO of Charter Communications Inc. "His reputation in his last days has just completely deteriorated. He's going to potentially go to his grave being in jail.

"If the allegations are true, given the current environment, they are going to be the poster family for white-collar crime," Kent said. "They will be vigorously prosecuted and sentenced as an example for others."

While Kent didn't see the tape of the Rigases' arrest, he saw the photo of the handcuffed Rigas on the front page of his newspaper, which he described as "one of the more bizarre circumstances" in his career.

"It's not real nice to see a 78-year-old guy thrown in the back seat of a car in handcuffs, but on the other hand, there's a lot of mistrust out there and I think the government needs to show that there are terrible consequences for your actions," Kent said. "You can't treat them lightly."

'SAD, UNNECESSARY'

Comcast Corp. vice chairman Julian Brodsky didn't like the way the arrest was handled.

"It was sad and I thought it was unnecessary," Brodsky said. "According to the reports in the newspaper, they were trying to arrange a surrender through their attorney.

"Why armed agents had to show up at six o'clock in the morning to put on a show is beyond me."

Brodsky described the downfall of the Rigas family as "a terrible personal tragedy," given the elder Rigas's history in the business.

"John Rigas was a hard worker in our industry," he said. "I would hope he will be treated fairly and justice will be done. It was an outrageous piece of show business the way the arrest was orchestrated. It had nothing to do with the issue."

Even some people who have been directly hurt by the Rigases still feel sorry for them. For example, through six operating companies, Adelphia and the MSO Tele-Media Corp. jointly own cable systems with 174,000 subscribers in Connecticut, Florida, Virginia, West Virginia and Maryland.

Pleasant Gap, Pa.-based Tele-Media manages those systems. When Adelphia filed for Chapter 11 protection in June, those six partnerships were among the 200 Adelphia-affiliated companies listed in the filing.

While those jointly owned systems are financially stable on a standalone basis — and are operating smoothly — they had to be part of the bankruptcy filing, since "they may be exposed to obligations of other Adelphia entities," according to Tele-Media chairman Robert Tudek.

"Tele-Media has been injured critically, but we will survive and go on," Tudek said.

"For that matter, the entire CATV industry has been hurt badly by Adelphia. But the industry will also survive and go on to even greater success. I and my partner, Everett Mundy, and our entire management team realize that John Rigas and his sons have done some things that they should not have done.

"But hell, we're still sorry for them. I don't feel good about John being handcuffed and taken to jail. He's done a lot of good things, too."

Tudek said he sympathizes with the Rigases, and doesn't think they should have been "led around in handcuffs," while others were able to surrender on their own.

"We believe their errors have been overblown," Tudek said. "We're not looking for revenge, but rather that somehow the Rigas family survives this horrible tragedy."

CABLE CENTER

John Rigas contributed to charities, and his donations included a $2 million pledge to The Cable Center in Denver. He's paid $1.5 million of that so far, and the 200-seat theater at the museum bears his name.

Rigas has so far been on schedule with cash payments for his donation, according to Cable Center chief development officer Beverly O'Brien. Both she and Jim O'Brien, The Cable Center's president, claimed that it's far too early to speculate on whether John Rigas's name will be taken off the theater, as he is still innocent until proven guilty.

John Rigas was inducted into the Cable Center's Hall of Fame last year.

Jim O'Brien, the ex-chief of former MSO Jones Intercable, said he videostreamed the image of the Rigases in cuffs.

"It's tragic, and it certainly made me sad," he said. "First of all, it's a human tragedy. And not only relative to the Rigases, but for all their employees and the people in the community."

Adelphia continues to be a member "in good standing" of the National Cable Television Cooperative, according to its president, Mike Pandzik.

"We've had other members over the years declare bankruptcy," he said. "It's always an unpleasant circumstance, but we work with them. We work through the bankruptcy court, and some of those guys have proceeded through that process and are now up and operating again."

Pandzik said the Adelphia situation is a tragedy for anyone involved, and that the courts will decide if any wrongs were done and remedy those wrongs. But he was "shocked" by the way the arrests were handled.

"Anybody that's been in the cable business very long knows of the Rigas family, even if they haven't met them personally," Pandzik said. "I was a little disturbed that the district attorney chose the venues the way he did.

"Obviously, he chose them for maximum impact. He called the networks to make sure the cameras were there. That's a little disconcerting."

Matt Polka, president of the American Cable Association — a lobbying group for independent cable operators — had a take on the Rigas situation that was probably shared by many.

"It's not too often that any of us see people we know being taken off to jail, and that is a pretty shocking picture, regardless of the merit of the case," Polka said. "And I just viewed it from my position, which is way, way off in the distance, as someone who didn't know Mr. Rigas.

"Regardless of the merits of the whole issue, it is a shame. Six months or so ago, Mr. Rigas was honored as a hall of fame recipient in the cable industry. In that short of period of time, to see that all crumble …"

'HOPE THEY CAN EXPLAIN'

Programmers and vendors in general were mum about the Rigases last week, with some exceptions. They included Court TV CEO Henry Schleiff, who saw the family in custody on TV.

"Personally, I found it as depressing as it is infuriating," Schleiff said. "It's more than a 'Greek tragedy' given the damage done to all the long-term loyal employees of Adelphia, let alone others who have lost so much of their faith and money.

"Everyone deserves a fair trial and their day in court. I just hope that they have some explanation for these charges."

Mike Farrell, Simon Applebaum and Jim Forkan contributed to this story.

 

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