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Adelphia Sale Under FCC Microscope

The FCC Friday formally launched its review of the $12.7 billion purchase of bankrupt cable operator Adelphia Communications by Comcast and Time Warner.

Comments on the deal from the public, industry, and other interested parties are due July 5, 2005; replies July 20, 2005.

After the transaction is completed, Comcast says it will serve approximately 26.8 million subscribers, or 28.9% of U.S. pay-TV subscribers.

Time Warner Cable says it will add 3.5 million subscribers, increasing its share of national pay-TV subscribership to 17.9%.

Time Warner Cable expects to emerge as the second largest pay-TV provider, climbing up one notch to surpass DirecTV.

The two companies said the deal would benefit consumers by allowing more Adelphia subscribers to receive advanced services such as cable telephone, high-speed Internet and high-definition television. Adelphia systems lag in delivering new cable products because of the company’s financial woes. The Coudersport, Pa., company declared bankruptcy in 2002.

The companies also said the deal will set them up to better compete with regional Bell phone companies by boosting the size of their regional clusters.

A key issue in the review will be whether the FCC accepts the companies' subscribership share numbers or whether the agency will decide that splitting Adelphia's 5.2 million subscribers between them will push the companies over the commission's 30% cap on one company's pay-TV subscriber share.

A federal appeals court ordered the FCC to set a new ownership cap in 2001, but the commissioners have not settled on another number.

In the meantime, agency lawyers continue to use the 30% as their working limit.

Media Access Project and other public interest groups have warned the FCC that they will sue the agency if it approves the deal before setting a new national cable ownership cap.