Subscriber losses continued to mount at Adelphia Communications Corp. in July, with the Denver-based MSO reporting losses of about 17,000 basic customers during the month.
Adelphia reported 5.099 million basic subscribers in July, according to financial documents filed with the U.S. Bankruptcy Court for the Southern District of New York on Aug. 25. That was down from the 5.116 million the company reported in June.
Since March 31, Adelphia has lost about 203,000 subscribers, as it winds through Chapter 11 bankruptcy.
Adelphia has said it expects to emerge from bankruptcy protection sometime in 2004.
The MSO has been under pressure, as direct-broadcast satellite service providers focus their marketing programs on what they perceive to be weaker Adelphia systems. Adelphia also is vulnerable because it has a high percentage of non-upgraded systems — about 25% — which makes it more difficult to compete. On the brighter side, Adelphia's subscriber losses in July were lower than the 22,000 customers lost in June. June was especially hard because of troop deployments related to the Iraq War, notably in Colorado Springs.
While basic subscribers took a hit, Adelphia managed to increase digital cable customers by almost 15,000 (to 1.790 million from 1.775 million in June) and boosted high-speed data customers by nearly 26,000 customers from 781,073 in June to 806,866 in July.
That resulted in an increase of nearly 24,000 revenue-generating units (an industry benchmark that includes basic, digital and high-speed data customers), a strategy that Adelphia has concentrated on since it hired former AT&T Broadband executives William Schleyer and Ron Cooper as chairman and CEO and president and COO, respectively, in March.
But the drop in basic customers also led to a corresponding decline in earnings before interest, taxes, depreciation and amortization (EBITDA, also known as cash flow) in the month of July to just $65.9 million from $99.9 million in June. Revenue also dipped 8.9% to $291.9 million from $320.3 million in June.
Separately Adelphia Business Solutions Inc., doing business as TelCove, proposed a reorganization plan that would turn over control of the competitive local exchange carrier to its bondholders.
Adelphia Business filed for bankruptcy protection in March 2002. According to the reorganization plan, bondholders could receive a portion of their holdings in cash, or opt for 60% of the new company's shares. Those shares would not be publicly traded.
Adelphia's secured and unsecured creditors have approved the plan. It has yet to be approved by the bankruptcy court.
Current shareholders of Adelphia Business would receive nothing, including its largest shareholder, former Adelphia Communications chairman John Rigas.
Rigas, sons Timothy and Michael Rigas and former Adelphia director of internal reporting Michael Mulcahey were indicted on federal charges of fraud and conspiracy last September. They pleaded innocent. A trial is set for January.
Since the bankruptcy filing, Adelphia Business has cut back considerably on its operations, focusing on 35 markets mainly in the eastern part of the country. Adelphia Business provides phone services to commercial customers.
Telcove lost $54.8 million on revenue of $163.8 million for the first six months this year, according to the bankruptcy court filing. Revenue is projected to grow from $252 million this year to $378.5 million in 2006.
Cash flow is projected to grow from $38 million in 2003 to $118.2 million in 2006, according to the reorganization filing. Adelphia Business also expects to report a net loss of about $81.6 million in 2003, reversing that to a profit of $9.2 million in 2004. The company expects to report net income of $38.1 million in 2006.