Judge Blocks Adelphia Overbuild Buy


Adelphia Communications Corp.'s attempt to buy Verizon Communications Inc.'s cable plant in Ventura County, Calif., has hit a pothole.

On March 29, a federal judge issued a temporary restraining order blocking the purchase — just as the axe was about to fall on the necks of Verizon's cable employees.

Court documents show Adelphia intended to take over the overbuild cable plant — built by GTE Corp. — on March 30. (GTE later merged with Bell Atlantic Corp. to form Verizon.)

Adelphia is the incumbent cable provider in Thousand Oaks and elsewhere in Ventura County. Adelphia has about 25,000 subscribers in the territory covered by the judge's ruling, as does Verizon.

Thousand Oaks and Ventura County officials scrambled to preserve cable competition during the week of March 25. They filed suit in state court on March 26, seeking an immediate order to halt Adelphia's purchase of its local overbuilder.

Local regulators said Adelphia was already informing Verizon's local cable customers that their accounts would be converted to the new owner unless they specifically opted out of Adelphia service.

Adelphia actually struck first, successfully shifting the complaint to federal court in Los Angeles, where the MSO had already filed suit. Adelphia sued on March 21, claiming action by local authorities to block the purchase violated the company's First Amendment rights.

Adelphia asserts it does not need transfer approval from local authorities because it is not buying a franchise. Rather, it is buying cable plant that it intends to use in place of its own antiquated plant.

But Thousand Oaks' cable ordinance anticipated changes in ownership other than a traditional sale, and specifies that management agreements, or other arrangements for the management of the system, that result in a significant change in control of a system's operation require the city's prior consent.

On March 29, U.S. District Court Judge Audrey B. Collins of U the Central District of Los Angeles sided with local regulators and temporarily stopped the acquisition.

The court challenge does not address Adelphia's purchase of the rest of Verizon's cable operations, including a system in Pinellas County, Fla.

The judge compelled Verizon to continue to provide service in its Ventura franchises or to transfer control of its system to Thousand Oaks, per the terms of the franchise.

The order stopped the two companies from further asset-transfer activities. Verizon also can't fire system employees until the restraining order is lifted.

The judge will hear arguments over a preliminary injunction on April 12.