Upstart cable company RCN, which made a name for itself trying to bust cable monopolies in local markets, filed for Chapter 11 Thursday in U.S. Bankruptcy Court for the Southern District of New York.
Princeton, N.J.-based RCN specializes in overbuilding — or laying down its own lines to compete with existing cable operators like Time Warner and Comcast — usually offering cable service at a lower price. Company also challenged telecom giants like Verizon.
Ironically, RCN was the cable company chosen to wire the new Time Warner Center complex at Columbus Circle.
But the effort has been costly. RCN spent nearly $1.9 billion building its network from 2000-02. Revenue in 2003 was $542 million. RCN estimated that its debt of $1.66 billion could be reduced to about $480 million if it emerges from bankruptcy as expected sometime in the fourth quarter.
Company said it has the support of creditors for a restructuring plan and that Deutsche Bank has agreed to lend it $460 million once the plan is approved by the bankruptcy court judge.
RCN has about 1 million customers in seven large markets, including New York and Philadelphia. It has shed employees and sold cable systems in recent years to keep afloat. In March, RCN sold its cable system in Carmel, N.Y., for $120 million. It sold its New Jersey cable operations for $245 million in February 2003.
RCN said the bankruptcy filing isn’t expected to disrupt service to customers.