Clearing for cable

Judge opens path for sale of Adelphia

Adelphia could soon be wired to new corporate owners.

In a major legal victory for both the seller and buyers, a bankruptcy court judge ruled Tuesday that the sale of the Adelphia assets to Time Warner Cable and Comcast can proceed without a bankruptcy reorganization plan in place.

Ruling effectively means the companies can conduct the sale without the blessing of creditors, whose infighting threatened to derail the transaction.

Adelphia, TW and Comcast had argued that they should be allowed to reverse their earlier position, in which they said they would wait for a reorg plan. Late last month, to the chagrin of the creditors, they filed a motion with the court seeking an end run.

In his ruling Tuesday, Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York said he did not believe a knotty creditor dispute should stand in the way of the sale.

With the ruling, Adelphia goes from an operating cable company to, essentially, a pile of money that creditors now will squabble over.

But insiders cautioned that FCC approval scheduled for mid-July could still gum up the deal. The commission has yet to take up the case, and the companies are running out of time. The court has ordered a July 31 drop-dead deadline for the sale.

Adelphia still faces the relatively minor hurdle of securing court approval on the sale of two joint ventures it had with Comcast, including one involving 600,000 subscribers in the L.A. area. A hearing on the matter is scheduled for today.

The Adelphia sale, in which Comcast and Time Warner would buy Adelphia’s 5.3 million customers, also would result in a complicated three-way trade among the companies that will switch the cable provider for an estimated 10% of American cable subs.

Time Warner and Comcast want the sale because it will bolster their respective footprints. TW especially could benefit since it could be the first step on the road to an IPO — a course some on Wall Street want the company to take.

“The ruling is good for the sale, but what we’re concerned about is when a public Time Warner Cable will happen,” said Pali Research’s Rich Greenfield.

TW remains mum on the subject, and a rep declined comment.

Sale is also critical to Adelphia, which would net an estimated $17 billion in cash and stock from the two cable giants. Adelphia has about 5 million customers in markets that include L.A. but has been operating under bankruptcy protection since 2002.

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