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TW in driver’s seat on bid for Adelphia

Comcast details deal

Comcast confirmed Wednesday that Time Warner Cable is the bigger fish putting up more of the money in a joint offer to buy up bankrupt Adelphia.

Comcast’s main aim would be to unwind its 21% stake in TW Cable, as required by federal regulators.

“There is no question but that the opportunity that we have … to tax effectively exit our stake in TW Cable is a linchpin that keeps us involved and keeps us interested in the Adelphia process,” Comcast exec VP and co-chief financial officer John Alchin said at the Bear Stearns annual media confab in Palm Beach, Fla.

“I think it’s been reported that TW Cable is by every and any measure the largest player in the proposed venture,” said Alchin, who also holds the title of treasurer.

The cash-and-stock bid submitted by the country’s two largest cablers is believed to be worth some $17.6 billion, with roughly $12 billion in cash and $5.6 billion in stock in a new company that would be formed by Comcast and TW Cable.

Comcast said the deal also would be a win-win in growing its footprint.

For TW Cable, pickup could be sweet indeed. Multisystem operator would acquire Adelphia’s systems in Los Angeles and become the largest cabler in the country’s second-largest television market. It’s likely Comcast would hand over its L.A. systems to TW Cable as well.

Some Wall Streeters have speculated that TW Cable could be putting up as much as 75% of the cash.

If successful, the Adelphia bid would mark the first major acquisition for giant conglom Time Warner since its fraught and costly merger with American Online.

On Tuesday, Time Warner topper Richard Parsons made it clear he wants to seal the Adelphia deal, assuring investors that the cable biz is a key growth driver. He said the conglom isn’t about to do something “stupid” and jeopardize its recovery.

Alchin’s remarks were the most candid to date regarding Adelphia’s confidential auction process, but even he wasn’t willing to reveal any financial terms of the joint bid.

Adelphia’s creditors reportedly want TW Cable and Comcast to put up more cash, but analysts don’t believe TW Cable or Comcast will budge all that much.

Private equity firms Kohlberg Kravis Roberts & Co. and Providence Equity Partners have put in a bid for Adelphia, but TW Cable and Comcast’s offer is seen as superior.

Alchin also informed investors at the Bear Stearns sesh that Comcast’s video-on-demand service continues to soar in popularity. He said VOD orders jumped 18% from 72 million in December to 85 million orders in January.

Fulcrum Global Media analyst Richard Greenfield was surprised and interested to learn during Alchin’s presentation that executive compensation and bonuses at the cable company are tied to free cash, i.e., earnings before costs.

Comcast shares were up 3¢ to close at $32.91 Wednesday. Shares of TW Cable parent company Time Warner were up 13¢ in trading to close at $17.72.

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