Rigas’s Zito Media Buys Galaxy5/31/2010 12:01 AM Eastern
Zito Media, the Coudersport,
Pa.-based cable company headed by James
Rigas, said last week that it has agreed to
purchase cable systems in five states from
Galaxy Cable for an undisclosed sum.
Zito has about 23,000 customers in Pennsylvania,
Kentucky, North Carolina, Tennessee,
Ohio, and West Virginia. The Galaxy
Cable systems pass about 55,000 homes and
have 19,000 revenue generating units in Kentucky,
Illinois, Nebraska, Kansas and Texas.
New York-based cable investment banker
Waller Capital served as Galaxy Cable’s exclusive
financial adviser in the transaction.
The deal is expected to close within the next
90 to 120 days.
Galaxy was formerly owned by the Gleason
family, which founded the cable operator
in 1979. The family — which now runs
NewWave Communications, a Sikeston,
Mo.-based operator with about 117,000 subscribers
— managed the operations for a
brief period after Galaxy filed for Chapter 11
bankruptcy protection in 2001, but severed
ties after the company emerged a from bankruptcy
about one year later with new owners,
distressed debt investor Cerberus Partners.
In 2003, Cerberus began an initiative to
sell off its then 80,000 subscribers; it sold a
chunk of the system over the past several
years. The Zito transaction was the last Galaxy
property to be sold.
According to people familiar with the
company, the Galaxy operations were in
need of upgrade and were not generating
positive cash flow. That also could present
a substantial upside to an owner willing to
invest in the systems.
Rigas formed Zito Media in 2006, after his
father and brother — former Adelphia Communications
chairman John Rigas and former
Adelphia chief financial officer Tim
Rigas — were convicted on fraud and conspiracy
charges. John and Tim Rigas are
currently serving 15-year and 20-year sentences,
respectively, at the Federal Correctional
Complex in Butner, N.C.
James Rigas, who was not charged or indicted,
was awarded about 5,000 former
Adelphia customers in the Coudersport
area — Adelphia’s former headquarters —
and formed Zito. Adelphia went bankrupt
in 2002 and was sold to Comcast and Time
Warner Cable for $17.6 billion in 2005.
Since forming Zito, James Rigas has grown
the company’s reach to seven states and has
pushed hard to offer a package of high-speed
Internet, digital cable and phone service. In
March, the company was awarded a $6.1
million federal broadband stimulus grant to
construct a 382-mile fiber ring with 10 Gigabits-
per-second capacity in Northeastern
Ohio and Northwestern Pennsylvania.