L.A. to Adelphia: Roll Back Rates

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Adelphia Communications Corp. must roll back its basic rates to 2001 levels
under the terms of an order approved by the Los Angeles City Council Friday.

The order could cost the cable operator -- which has five franchises in the
city -- up to $4.3 million, according to city computations. It would impact
236,000 subscribers.

The vote came despite a plea earlier in the week by Adelphia to delay it
until August. That would have allowed the bankrupt company's corporate auditors
time to verify subscriber totals and related operating costs so that it could
certify that the rates it is charging are justified.

Los Angeles has questioned the basis for the rate increases, as
investigations related to the corporate bankruptcy have revealed accounting and
other irregularities.

The city's auditor, therefore, asked representatives of current Adelphia
management to certify that the Los Angeles accounting figures used to justify
rate increases dating back to 2001 are true and correct. Local management
officials argued that they could not do this until the corporate accounting is
completed.

At a council committee meeting May 28, Adelphia's newly appointed regional
vice president of law and public policy, Tom Carlock, told council members,
"This is a new Adelphia." The company wants to verify its numbers, but it can't,
he said, adding, "It's just bad timing."

In committee, councilman Jack Weiss indicated that he'd push for the
roll-back vote as a message to the "$40 million men" -- his term for new
Adelphia chairman Bill Schleyer and chief operating officer Ron Cooper.

At the meeting of the full council, Weiss added, "Show us you're new by
rolling back these price increases."

The council approved the rollback order by a 13-0 vote.

In an interview in advance of the vote, Carlock said the city rate analysis
is flawed. For instance, the report stated that Adelphia has 35 channels on
basic, when in fact there are 38 channels in the package.

Adelphia will have no choice but to appeal the city action to the Federal
Communications Commission, Carlock added.

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