Buffalo Seeks Adelphia Systems Audit


Upset over Adelphia Communications Corp.'s plans to increase cable rates while delaying work on a major building project, Buffalo, N.Y., officials would like state regulators to audit the MSO's local system.

Buffalo Common Council President James Pitts said past audits of the former Tele-Communications Inc. system have yielded consumer rebates. In fact, Adelphia had to pay a $650,000 rebate in order to close its acquisition of the system from TCI.

Adelphia's subscribers in Buffalo and elsewhere in the U.S. were recently told that their cable-subscription rates would rise. In Buffalo, that hike will be about 10 percent, an increase the company attributed to rising power costs and capital expenditures.

The system's last rate hike occurred 18 months ago. Adelphia executive vice president Tim Rigas said its Buffalo rates are relatively low compared with those charged elsewhere in the country.

But Adelphia faces a complicated situation in Buffalo, where it has 83,000 subscribers. The MSO is involved in negotiations over a multimillion-dollar redevelopment project for the city's waterfront area, called the "Inner Harbor" project.

Plans call for a 400,000 square-foot building, 75 percent of which would house a new network operations center for Adelphia. The building would also house a new practice facility for the Adelphia-owned Buffalo Sabres National Hockey League franchise and TV production studios for the MSO's Empire Sports Network.

A hotel and residential properties are also in the mix.

The city and state hope the project will cure a blighted area and add roughly 1,000 jobs. The governments have offered $123 million in public incentives, with most tax breaks coming from New York's Empire State Development Corp.

Erie County has pledged $1 million in operating subsidies. It will also forego some taxes and build a $9 million parking structure for the facility.

But ground won't be broken on the project until 2002, city officials recently disclosed. Published reports in the local press cited a dispute between the city and Adelphia over a $500,000 rent concession as the cause of the delay.

Rigas confirmed the delay, but attributed it to the complicated nature of the financing arrangement, which requires signed agreements from the state, county and city. The groundbreaking is "suspended indefinitely" until all those approvals are in place, he said.

He also said the $500,000 rent relief sought from Buffalo was under discussion.

At a recent hearing, Pitts grilled local Adelphia executives, questioning whether the rate hike was related to costs linked to the Inner Harbor project.

Pitts also blasted local officials for failing to publicize the company's 20-percent discount for senior citizens.

The council president later toned down his objections, noting that Adelphia's acquisition spree last year cost the MSO an estimated $12 to $14 billion. He cited articles in the financial press that lamented the amount of debt assumed by the Coudersport, Pa.-based company.

But Pitts said he'd still like to see an audit performed.

"We're opposed to the rate increase," he said. "It's bad timing."

Rigas said the rate hike was unrelated to the Inner Harbor development.

Pitts was also irked that local press reports tied the delay of the development to Buffalo officials.

"The delay was a surprise to me and other members of the council," he said, and added his belief that the holdup is tied to state negotiations.