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Cable television broadcasting industry

Cablevision Raises Bid for Adelphia to $17.1 Billion

Strategic Insights

— 1 min read

Cablevision Systems Corp., despite widespread skepticism, has made a higher bid for Adelphia Communications, valuing the cable operator at $17.1 billion. This move comes after Adelphia agreed to a breakup fee of 2.5 percent of the sale price with Time Warner and Comcast if it switches to a different bidder. Cablevision's earlier offer was $16.5 billion, and it faces stiff competition from the joint bid of nearly $18 billion in cash and stock from Time Warner and Comcast.

Key Takeaways:

  • Cablevision has raised its bid for Adelphia Communications to $17.1 billion, surpassing its earlier offer of $16.5 billion.
  • Adelphia has agreed to pay a breakup fee of 2.5 percent of the sale price, totaling nearly $450 million at current bidding levels, if it switches to a different bidder.
  • Cablevision's bid faces competition from a joint bid of nearly $18 billion in cash and stock from Time Warner and Comcast.
  • Adelphia's 5.2 million customers, stretching from Los Angeles to Buffalo, may not align with Cablevision's 3 million subscribers in the metropolitan area.
  • Analysts believe Time Warner and Comcast could better mesh with Adelphia's operations due to their larger subscriber base.
  • Liberty Media chairman John Malone supports Cablevision's bid, citing the need for economies of scale and negotiating clout.
  • Malone also praised Cablevision's chief operating officer, Tom Rutledge, for his performance and potential in expanding cable operations nationwide.
  • Cablevision's founder and chairman, Charles F. Dolan, is reportedly not inclined to sell the company, despite analyst expectations of a possible sale.

Statistics:

  • Adelphia's value: $17.1 billion (Cablevision's current bid)
  • Adelphia's breakup fee: 2.5 percent of the sale price ($450 million at current bidding levels)
  • Time Warner and Comcast's joint bid: nearly $18 billion in cash and stock
  • Cablevision's subscribers: 3 million in the metropolitan area
  • Time Warner subscribers: 11 million
  • Comcast subscribers: 22 million
  • Adelphia's customer base: 5.2 million, stretching from Los Angeles to Buffalo

Sources:

  • "Wall Street Journal" (n.a.)
  • Newsday, Melville, N.Y. (Copyright 2005)

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