Adelphia buy may spur more cable consolidation

NEW YORK -- After months of haggling and fending off a bid from a rival suitor, Time Warner Inc. and Comcast Corp. have sealed a deal to purchase the assets of Adelphia Communications Corp., the bankrupt cable TV company based in Colorado.

The $17.6 billion cash-and-stock deal unveiled yesterday will also allow Time Warner to float shares in its cable subsidiary, opening the possibility of even more consolidation in the cable industry.

The deal must still be approved by regulators and a Bankruptcy Court, but company officials and analysts did not anticipate significant hurdles to the deal closing. The companies said the multipart deal could take up to another year to close.

For Time Warner, the transaction marks the first major acquisition since the disastrous merger with AOL in 2000. Since then, the company has disposed of several businesses including its music company, bolstering its balance sheet in the process.

The joint bid from Time Warner and Comcast had long been favored to win out over a last-minute bid by Cablevision Systems Corp., a New York-area cable provider that has been wracked by internal turmoil and a public showdown with New York Mayor Michael Bloomberg over plans to build a football stadium in Manhattan.

The deal divvies up Adelphia's approximately 5.3 million cable subscribers between Comcast and Time Warner, which are already the number one and number two players in the national cable TV industry, respectively.

Adelphia has 36 Bay State franchises -- 26 in Eastern Massachusetts and 10 at the northern and southern ends of Berkshire County.

While the deal is not expected to face major regulatory hurdles, it further consolidates the power of the top two companies, enabling them to move more quickly to expand into lucrative new businesses.

Time Warner and Comcast will pay $12.7 billion in cash and 16 percent of the stock in Time Warner's cable subsidiary, to get Adelphia subscribers.