Cablevision Enters Adelphia Communications Fray with $16.5bn Offer

The battle for Adelphia Communications, a bankrupt cable operator, has taken a dramatic turn with Cablevision Systems, a New York-based cable group, entering the fray with a $16.5 billion all-cash offer. This bid puts Cablevision in direct competition with Time Warner and Comcast, two rival cable groups that had jointly bid about $17 billion for Adelphia. While the Cablevision offer is slightly smaller in absolute terms, its all-cash nature makes it more attractive to investors. Furthermore, there is a possibility that the Cablevision bid could be raised further if it joins forces with two private equity firms, Kohlberg Kravis Roberts and Providence Equity Partners, which have also considered an offer for Adelphia.

Key Takeaways:

• Cablevision Systems has entered the bid for Adelphia Communications with a $16.5 billion all-cash offer, putting it in competition with Time Warner and Comcast.
• The Cablevision deal is more attractive because it is all-cash, as opposed to the mix of cash and stock offered by Time Warner and Comcast.
• There is a possibility that the Cablevision bid could be raised further if it joins forces with private equity firms Kohlberg Kravis Roberts and Providence Equity Partners.
• Adelphia's 3 million subscribers are concentrated in New York, which raises questions about the benefits of a deal for Cablevision.
• Members of the Dolan family, Cablevision's controlling shareholders, are at loggerheads over Voom, the company's satellite arm, which adds complexity to the deal.
• Cablevision has made plans to jettison Voom, but Charles Dolan is trying to raise money to acquire the assets.
• Cablevision has been engulfed in controversy over its efforts to block the construction of a stadium in Manhattan for the 2012 Olympics.

Sources:

• Financial Times Limited, 2005