News

As Rigas Trial Nears, Adelphia Makes Its Case

1/04/2004 7:00 PM Eastern

It's been more than 17 months since John Rigas was handcuffed and placed in the back of a police car in New York — an image employees of Adelphia Communications Corp., the company he founded in 1952, will not soon forget.

The arrests of Rigas, his sons Michael and Timothy and two other Adelphia executives who were charged with conspiracy, wire fraud and bank fraud rocked Adelphia and the rest of the cable industry. The MSO continued to operate through the turmoil, overhauling its board of directors and hiring cable veterans William Schleyer as chairman and CEO and Ron Cooper as chief operating officer last March.

While Adelphia has attempted to distance itself from the Rigas family — which it accused of looting billions of dollars — that job is far from over. Adelphia is gearing up for the spotlight again, as the criminal trial of Rigas and his sons is scheduled to begin on Feb. 9 in New York.

The trial is expected to draw a media blitz, as the story behind Adelphia and other corporate scandals at companies such as Enron Corp. and WorldCom Corp. has jumped from the business section to the front page of major newspapers.

Paul Jacobson, brought on board as Adelphia's vice president of communications this past July, said the new management is getting ready to tell the story of change at the Denver-based MSO, since the Coudersport, Pa.-based Rigas regime was toppled.

"I think we want to be proactive and offensive in the sense that when the limelight does turn to focus on Adelphia, we use that as an opportunity to let the industry and our own employees and our customers know that a lot has been happening in the eight or nine months since Ron Cooper and Bill Schleyer came on board, and that the board has been put in place and a new mission and new values have been communicated throughout the company," Jacobson said.

The former Starz Encore Group LLC public-relations man joined Adelphia after a short stint as deputy communications director for U.S. Senate Majority Leader Bill Frist (R-Tenn.).

Before Schleyer and Cooper brought Jacobson on, Adelphia relied on crisis-communications firm Robinson Lerer & Montgomery to handle all of its media relations. Adelphia hired that New York-based firm soon after the accounting scandal broke in spring 2002, but that relationship ended in September.

Jacobson said Adelphia currently doesn't have plans to seek an assist from a public-relations firm during the trial. Communications will be handled internally, "in consultation with our legal counsel," he added.

One advantage Adelphia executives will have during the trial is that they can blame most of the company's troubles on the Rigas family, said Lou Colasuonno, a partner at New York-based corporate communications firm Westhill Partners.

"They've got the bogeyman, if you will, to blame everything on, and that will help them, and that will probably be part of their strategy," Colasuonno said. "But they're going to take some nicks and cuts for the way that corporation was run."

Adelphia needs to make sure it gets out in front of the story, Colasuonno also said, and must make sure it has done enough research to determine who was responsible for the alleged financial shenanigans — and that those responsible for the accounting woes are no longer working for the company.

In media interviews during the trial, Adelphia will emphasize that the former management team was responsible for the accounting issues, said Jacobson. "All of those folks are gone, and of course we've been focused on building a new management team and a new board of directors," he said.

Adelphia plans to emphasize the accomplishments of the new management team during interviews, such as how the MSO has upgraded 84% of its plant. Only 70% of Adelphia's plant had been upgraded when Schleyer and Cooper took over last year, Jacobson said.

The MSO has also replaced board members who were appointed by John Rigas, including Peter Metros, Leslie Gelber, Erland Kailbourne and Dennis Coyle.

The new board includes Yale Law School Dean Anthony Kronman, former Securities and Exchange Commission member Philip Lochner and former FCC commissioner Susan Ness.

Adelphia has also hired about 110 managers to staff its Denver headquarters, including many veterans of AT&T Broadband and other cable companies. And all 14,000 Adelphia employees have signed a new ethics policy.

Schleyer and Cooper have said they've also considered changing the Adelphia name — derived from the Greek word for "brothers," for John and Gus Rigas, who founded the company 52 years ago — but not until after the trial's over.

September