Adelphia CEO says it was a 'complete mess'
NEW YORK — A brutally candid William Schleyer emerged Thursday from the exec suites of the bankrupt Adelphia to update investors on the cabler’s uncertain fate and potential sale, disclosing he couldn’t believe the “complete mess” he found upon arriving at the company last year.
“It was unbelievable. I’ve never seen anything like it,” said Schleyer, who was tapped CEO in March 2003 after members of the Rigas family were arrested on charges of fraud and conspiracy in a corporate scandal that brought their family-owned business to the edge of collapse.
“It was an obvious meltdown, but that has changed,” Schleyer said at the UBS Annual Media Week Conference in Gotham.
Schleyer announced that Adelphia has set a late January deadline for final bids, but that the process could spill over to February. He also said the company could opt to emerge intact from Chapter 11 bankruptcy proceedings. Either way, Schleyer said a decision would be made in the first quarter of 2005.
The sale of Adelphia — the country’s fifth-largest cable operator, and the largest in Los Angeles — could well mark the first major media deal of 2005. Pricetag could be anywhere from $17 million-$20 million, according to analysts.
Believed to top the list of suitors are Time Warner Cable and Comcast, which have submitted a joint bid.
Time Warner could grab up Adelphia’s coveted cable system in Los Angeles, the country’s No. 2 media market, possibly along with systems in western New York state and Cleveland. Comcast, meanwhile, would likely pick up systems in Florida, New England and the Washington-Baltimore area.
Wall Street analysts are keeping close track of Adelphia, saying the company’s sale could be a catalyst for the cable biz.
Most notable, according to Oppenheimer analysts Thomas Egan and Shub Mukherjee, was Schleyer’s comment that Adelphia could emerge as an operating entity from bankruptcy, either selling some of its assets or none.
While Adelphia has declined to comment on reports that a team of private-equity investors are eyeing the company, Schleyer said, “we were surprised by the level of interest” from various parties.
Cluster of sales
Schleyer said there is no change in terms of the company’s plan to sell its cable systems off in seven major clusters.
Any sale probably wouldn’t close until the final quarter next year, since it would need Washington’s approval, Schleyer said.
He also disclosed that the new management team at Adelphia has cooperated with the Justice Dept. in its case against the Rigases. Adelphia founder and former CEO John Rigas and his son, former chief financial officer Timothy Rigas, have both been convicted and are awaiting sentencing.
“We have built up goodwill and clearly have a relationship,” Schleyer said.
He said he hopes that goodwill will be a mitigating factor when the Securities and Exchange Commission decides what amount of restitution the company should pay to some Adelphia shareholders.
Audit almost done
Schleyer said a comprehensive audit of the company’s books is nearly complete. Once Adelphia decides whether to sell or remain as is, a reorganization plan will be filed with the bankruptcy court.
In terms of the company’s present health, Schleyer said he and his team have improved Adelphia’s management structure, hiring more than 25 execs in order to build a regional leadership layer.
“Now, no one person can make all the decisions,” he said.
Also, Adelphia has completed updating 95% of its plant, and is now offering more advanced services, such as high-speed data.
Company, which has 5.3 million subscribers, now has 2 million digital cable customers and 1.3 million high-speed subs.
Schleyer candidly declared that he’s generally avoided speaking at investor conferences, considering Adelphia’s bankruptcy woes. “But I thought it would be good to talk about the sale process,” he told the crowded ballroom at the UBS confab.
Schleyer served as chief exec of AT&T Broadband before its sale to Comcast for $51 billion, including stock and assumed debt. Before that, he served as president of Continental Cable, which was sold to US West in 1996.