Programmers are anxious to see how Adelphia Communications Corp. will use the
leverage it gains from bankruptcy proceedings, where the MSO has the right to
scrap existing contracts with creditors -- including carriage deals with
A few cable-network officials said they feared that Adelphia, the
sixth-largest U.S. MSO, will threaten to 'reject' existing affiliation
agreements -- and drop networks -- if it can't obtain renegotiated contracts
with better terms.
Other programmers questioned how much of an edge Chapter 11 bankruptcy
protection really gives the Coudersport, Pa.-based operator.
Adelphia has held preliminary talks with some programmers about reworking
contracts, sources said. An Adelphia spokesman confirmed that there have been
"general negotiations" with some networks.
Last week, officials at the MSO maintained that they have not yet determined,
as part of their Chapter 11 filing, how they will handle their existing carriage
"We haven't gone through any kind of rejection process with any programmer at
this point of time," vice president of programming Jeff Abbas said. "We really
need to develop an aggregate strategy with a timeline of getting us out of
reorg, but we haven't sat down and done it yet."
Despite Abbas' remarks, Adelphia has indicated that it has no intention of
"assuming" any of its carriage deals with programmers, at least one source
That's because if a company like Adelphia that has petitioned for bankruptcy
protection "assumes" an existing contract, it then must ante up all the
prepetition money (funds owed prior to the bankruptcy filing) that it owes that
particular supplier, according to several sources.
In Adelphia's case, that means the MSO would have to pay a lot of cable
networks a lot of money.
Last year, Adelphia's list of top 50 unsecured creditors included a batch of
cable networks, including most of the major programming giants. At that time,
Adelphia owed that group nearly $200 million, mostly in overdue license fees.
Home Box Office was owed the most, $34.4 million.