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Cable giant’s recovery keys payments, porn

Adelphia to add 2 directors, change content

NEW YORK — Adelphia Communications chairman and interim CEO Erland Kailbourne said Monday the troubled cabler plans to add two outside directors to its board within 10 days as it seeks to renew credibility with subscribers, local officials and investors.

In an interview with Daily Variety, the head of Southern California’s largest cable provider said the company is talking with programmers about adding adult content after years of boycotting such entertainment.

Kailbourne said Adelphia is settling its debts with local franchise authorities and has resumed upgrades of its systems that were delayed by a string of financial scandals and a subsequent Chapter 11 filing. And he said no asset sales are likely for at least five months as the company hashes out a restructuring plan with creditors.

Nonpayment of fees had put in jeopardy Adelphia’s franchise agreements in certain markets, including Los Angeles, where the contract expires Aug. 2. The city is seeking about $1.7 million in fees that were due June 30 — plus $3 million more that it claims Adelphia underpaid between 1996-99.

Kailbourne said the bankruptcy court has authorized a request by Adelphia management that arrears to franchise authorities be paid immediately. “The court approved it, and we have the funding to do it. Our accounting systems will segregate franchise fees so this will never happen again,” he said.

“I’m sure the city of Los Angeles would appreciate that,” said Ana Garcia, communications director for the City Attorney’s Office. As of late Monday, she said no payment had arrived.

As for new services, namely high-speed Internet access still unavailable to subscribers in Los Angeles, Kailbourne said things are moving.

“We are commencing our rebuild out here. The trucks are out, the contractors are back to work in Anaheim, Ventura and Simi Valley” and they will soon be rolling through Los Angeles city limits, where Adelphia has nearly 250,000 subs. It’s got about 1.2 million across Southern California.

Kailbourne said it’s not likely the company will offer subscriber rebates — a move requested by Los Angeles City Attorney Rocky Delgadillo. Kailbourne and Delgadillo are meeting today in Beverly Hills.

The city has some hard feelings because Adelphia subscribers in neighboring Santa Monica do have high-speed access, and pay the same as L.A. residents. “You just have to walk across the street,” Garcia said.

Six-member board

Kailbourne said the new directors, who will boost Adelphia’s board to six, will be execs with expertise in cable who’ll also shore up concerns about corporate governance following disclosures of financial and accounting improprieties by Adelphia’s founding Rigas family.

The SEC, the Justice Dept. and a committee of Adelphia’s board are investigating the family, including former chairman John Rigas and sons Tim, Michael and James Rigas.

Adelphia will also need a top exec to take the reins of the cable business, with speculation focusing on Continental Cablevision founder Amos Hostetter, former Charter CEO Jerald Kent and other industry stalwarts.

Influential investors had apparently also promoted Leo Hindery, head of the YES Network, for the post at one point.

It seems increasingly likely Adelphia won’t sell assets piecemeal but will stay intact. Divesting the immensely valuable Los Angeles systems in particular would make the company much less attractive to potential acquirers later on.

Kailbourne, a former top exec at Fleet Bank, was named chairman and interim CEO of Adelphia in May. He lined up $1.5 billion in financing and steered the company into Chapter 11, where companies find relief from creditors and time to restructure.

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