Time Warner to Consolidate L.A.

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The shift in ownership from Adelphia Communications Inc. to Time Warner Cable and Comcast Corp. might be most obvious to consumers in the city of Los Angeles.

That’s where as many as 78% of consumers will see the Adelphia and Comcast trucks disappear in favor of Time Warner’s fleet, bringing the No. 2 U.S. operator’s city market share to about 98%.

The sprawling metropolis has about 700,000 cable subscribers spread across 14 municipal franchises. After the acquisition is complete and the new owners make their planned system swaps, there will still be three operators in the city of Los Angeles. The others are Charter Communications Inc., with fewer than 100 customers in tony Malibu, and Cox Communications Inc., the franchisee in the port area of San Pedro, home to about 10,000 subscribers.

“We are working very closely with the other companies to ensure a smooth transition,” said Roger Keating, president of Time Warner Cable Los Angeles. His division includes Los Angeles and Orange counties, serving 350,000 customers. Keating took over the operation in 2003 after a yearlong stint running the systems lumped into Time Warner’s National Division. He’s also a Comcast veteran who presided over the launch of that company’s high-speed data product.

Time Warner will vault from serving one franchise — boasting 125,000 customers in the San Fernando Valley — to holding 12, assuming the city approves the transition.

Los Angeles City Councilman Dennis Zine, who represents the San Fernando Valley served now by Time Warner, predicted his colleagues will embrace that operator’s expansion, given a good service reputation in his district and solid track record in community affairs.

“It’s a win-win situation. In the end, it’s all about the subscribers,” he said.

After the dust settles, Time Warner will pick up some of the city’s most penetrated systems, such as the Sylmar and Sunland/Tujunga areas, now operated by Comcast and serving more than 60% of the homes in each area. It also inherits three of the least penetrated areas.

Adelphia’s East Los Angeles area has about 22% penetration, as it was late to add Spanish-language cable exclusive fare in a heavily Hispanic area; Comcast’s South Central Los Angeles system, the last of the operator’s areas to be upgraded and only about 30% penetrated; and the heavily industrial Wilmington section, with less than 40% penetration.

Also, pockets of the Adelphia cluster have not been fully upgraded.

Time Warner will also pick up some heavy baggage from Adelphia, branded year after year by the city as the top complaint generator in the city.

By contrast, Time Warner’s statistics are among the lowest, even though it serves 20% of the market.

Adelphia has also been challenged by the city on rates and franchise fee underpayments. In 2003, the bankrupt operator had to come up with $7.8 million in payments, including $2.8 million in underpaid franchise fees and $5 million in rebates to satisfy claims it overcharged customers.

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