Cushing Wants Adelphia's Fla. Systems12/22/2002 7:00 PM Eastern
A former cable executive is making moves to be first in line if and when Adelphia Communications Corp. decides to sell its overbuilt cable systems in Central Florida.
Harry Cushing III — former CEO of Telesat Cablevision, an Orlando, Fla.-based overbuilder once owned by Florida Power & Light Co. — said he has contacted the Coudersport, Pa.-based MSO about buying the systems.
Although Adelphia informed him in a letter that the properties were not for sale, Cushing wants to press on.
The systems, located in Central Florida's Orange, Osceola, Citrus and Hillsborough counties, were sold to Adelphia in 1995 and have about 47,000 subscribers. They are primarily in areas already served by Time Warner Cable.
Went hungry, once
The Time Warner systems will fall under the ownership of Advance/Newhouse Communications in January, as part of A/N's agreement to bust up the Time Warner Entertainment-A/N partnership earlier this year.
Cushing has been out of the cable business for about seven years. He was laid off when Telesat sold its systems to Adelphia in 1995.
He briefly returned to the spotlight in 1996, when, according to press reports, Cushing staged a three-day hunger strike in front of FP&L headquarters in Orlando, claiming that he and two other executives did not receive a promised severance package and a percentage of the $110 million sale to Adelphia.
Cushing and the other former executives finally settled with the utility in May 1996.
Cushing believes he can run the systems more successfully than Adelphia has, and said he has backers who will help him work out a deal. He declined to name those backers.
He also plans to move from Seattle, where he currently resides, and will open up a Florida office on Jan. 8 under the name Florida Broadband Associates. That name could change as he pursues the Adelphia acquisition.
Cushing wrote to Adelphia chairman Erland Kailbourne on Nov. 7 about his interest in the systems. He received a reply Nov. 19 from Adelphia's chief restructuring officer, Ron Stengel, who stated that Adelphia was still evaluating whether it would dispose of some of its systems.
But Cushing is optimistic.
Since filing for bankruptcy protection in June — amid a financial scandal that saw its founding Rigas family ousted from the company and indicted by federal prosecutors — industry observers have speculated that Adelphia might sell some systems as it moves to shore up the company.
The company also is in the midst of a search for a new CEO. Former AT&T Broadband CEO Bill Schleyer is the front-runner, and analysts have speculated that new management may want to shed systems as well.
Bidding in advance?
"I concluded that the overbuilt systems in Florida would be the first to go," Cushing said. And he wants to be first in line to make a bid.
Advance/Newhouse might be interested in buying the properties as well, but Cushing said that current federal regulations prohibit an incumbent cable provider from purchasing an overbuilt system within its franchise area.
Adelphia had tried to skirt that issue last year when it agreed to buy Verizon Corp.'s overbuild properties in California and Florida. Those deals were terminated when Adelphia's financial situation turned sour.
"Adelphia in overbuilt areas is floundering miserably," Cushing said. When he left the company in 1996, he added, penetration rates stood at more than 54 percent. Currently, Adelphia's penetration rate in those Florida counties is about 40 percent, Cushing said.
"Running an overbuilt system is extremely complex," Cushing said. "I was at it long enough to find out what the mistakes are."
While there is still no guarantee that Cushing would be able to buy the Adelphia systems — or even that they are for sale — he said his first order of business should he win the properties is to shore up customer service and marketing.
In July, Adelphia announced it had laid off its entire 48-member direct sales force in Florida, but said the move would not affect customer service.
The Adelphia systems are in need of about $9 million in upgrades, Cushing estimated.
While he would not reveal what he would pay for the systems, he noted that the last big overbuilder to sell out — Ameritech Inc.'s Americast cable operator — was sold to WideOpenWest LLC for about $775 per subscriber. Given the state of the deal market since then, those same systems would be worth about $500 per subscriber, he said.
At that price, the Florida systems could fetch about $23.5 million.
Cushing said that Verizon is still trying to sell its Pinellas County, Fla., system — another overbuild of Time Warner Cable — which could present another opportunity for him and his investors.
"Pinellas County has about 59,000 subscribers," Cushing said. "We could put together a nice cluster."