Adelphia Swells Subs

7/04/2004 8:00 PM Eastern

Adelphia Communications Corp. continued to show digital and high-speed data subscriber growth in the month of May, but cash flow declined, brought on mainly by increased restructuring costs.

Adelphia finished May with 5.39 million basic subscribers — including about 423,000 in Rigas family-owned partnerships — down by about 6,200 customers from the previous month. Digital-cable customers totaled 1.99 million, up 27,000 from April and high-speed data customers came in at 1.22 million, an increase of 31,000 customers during the period.

Adelphia has posted strong new-services growth in the past 12 months, tallying increases in virtually every period.

These unusual, month-by-month snapshots of the Denver-based MSO are a result of its Chapter 11 bankruptcy filing in June 2002. Adelphia’s required to file monthly operating reports with the U.S. Bankruptcy Court for the Southern District of New York.


Adelphia repackaged its digital offerings last year, and looking at the numbers it has been a rousing success.

“It’s been easy to sell,” Adelphia spokesman Paul Jacobson said.

Since Dec. 31, 2003, Adelphia has increased its revenue generating units (basic, digital and high-speed data subscribers combined) from 8.4 million to 8.6 million, Jacobson said. “That trend has been encouraging,” he said.

Those increases had little effect on cash flow, which dipped 5.6% ($4.3 million) in May to $72.5 million, compared to $76.7 million in April.

Revenue rose slightly in May to $328.8 million, from $322.6 million in April, fueled mainly by increased advertising and high-speed data revenue.

Jacobson said the cash-flow decline was mainly due to restructuring costs, which rose to $5.9 million in the period.

According to the monthly operating report, when those restructuring costs are removed Adelphia shows an increase in cash flow for the month of about $900,000.

In a research report, UBS Securities cable debt and equity analyst Aryeh Bourkoff said Adelphia’s results could help assuage concerns about the impact of increased competition from phone companies and direct-broadcast satellite service providers on other cable companies.

“With Adelphia being an easy target for competitor marketing campaigns, given its limited financial flexibility and bankruptcy stigma, we note the overall solid top-line results for Adelphia driven by strong unit adds and advertising revenue can be reviewed as a positive indicator that cable’s second quarter, driven by tier-1 cable operators, could be poised to outperform versus expectations,” Bourkoff wrote.


Earlier last week, Adelphia agreed to amend its $8.8 billion exit financing, a key part of its plan to emerge from bankruptcy.

According to securities filings, Adelphia agreed to allow the lenders to reduce their commitments if certain assets involving joint cable partnerships with Comcast Corp. are not included.

Adelphia is pursuing a dual path in its bankruptcy, working towards emerging as a whole entity while simultaneously entertaining offers for a sale of its assets.

Jacobson said the amendments give Adelphia more favorable terms and flexibility as it pursues that dual-path strategy.

Last month, Comcast objected to the inclusion of two joint ventures it has with Adelphia — in the Buffalo, N.Y. region and parts of Los Angeles — as collateral for the exit financing. Comcast is a minority partner in those systems.

U.S. Bankruptcy Court Judge Robert Gerber denied the objection, allowing the assets to be used as collateral, but kept the door open for them to be removed in the future.

Gerber denied a claim that Comcast must give consent because the assets haven’t been pledged as collateral yet.

“The collateral is not now being pledged, and Comcast will have ample notice and opportunity to be heard, and indeed a full vetting of the relevant issues, before it is,” Gerber wrote.

Key Stats at No. 5 U.S. MSO
Source: Adelphia
May 2004April 2004
Basic Subscribers 5,396,9745,403,265
Digital Subscribers1,991,5201,964,473
High-Speed Data Subscribers1,216,1511,184,852
Cash Flow$72,459,000$76,749,000

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