The Bids Are In for Adelphia

The deadline for bids for Adelphia Communications Corp. passed Monday night, with at least two bidders making offers for the entire Denver-based MSO and four others opting for separate pieces.

According to sources familiar with the situation, Time Warner Inc. and Comcast Corp. made a joint offer of about $17 billion at 8:30 p.m. Jan. 31.

Sources said at least one other bidder -- private-equity giants Providence Equity Partners Inc. and Kohlberg Kravis Roberts & Co. -- has made a proposal for all of Adelphia. And while published reports have put the Providence/KKR bid at $15 billion-$16 billion, sources could not confirm that figure.

Officials at Time Warner, Comcast and KKR all declined to comment. Providence Equity officials did not return phone calls seeking comment.

But even if the Providence/KKR bid was that far below Time Warner’s and Comcast’s offer, it doesn’t mean the lower bid won’t be considered. According to sources familiar with the situation, key to the success of each bidder is the mix of cash and stock that is included in the offer. It is expected that Adelphia’s creditors -- especially its bankers -- will favor a bid that leans heavy on the cash side.

One source familiar with the bidding process said several smaller cable companies have lobbed in bids for pieces of Adelphia, including Patriot Media & Communications (backed by Spectrum Equity Investors, Bain Capital LLC and Silver Lake Partners), Atlantic Broadband Finance LLC (backed by ABRY Partners LLC), Jerry Kent’s Cequel III LLC (backed by GS Capital Partners, the private equity arm of The Goldman Sachs Group Inc.), Bresnan Communications (backed by Providence Equity) and Advance/Newhouse Communications’ Bright House Networks.

The size of those bids could not be determined.

Officials at Atlantic, Cequel III, Patriot and Advance/Newhouse declined comment. Officials at Bresnan did not return phone calls seeking comment.

Adelphia first put itself on the block in April, succumbing to pressure from creditors that it consider a sale in conjunction with its plan to emerge from Chapter 11 bankruptcy protection as a new entity.

In September, Adelphia split the company into seven separate clusters -- Los Angeles and West (1.5 million subscribers); Florida and Southeast (891,700); Buffalo, N.Y., and Connecticut (408,800); New England and eastern New York (554,900); Cleveland and Ohio (638,200); Pennsylvania (518,000); and Virginia/Maryland/Colorado Springs/Kentucky (869,700) -- to attract a wider range of bidders.

Atlantic closed on the purchase of about 230,000 cable subscribers from Charter Communications Inc. in Miami Beach, western Pennsylvania, the Maryland/Delaware peninsula and West Virginia for $735 million last March. Atlantic was backed by ABRY on that deal.

Bright House has about 2 million subscribers in Tampa and central Florida; Indianapolis; Birmingham, Ala.; Bakersfield, Calif.; and Detroit, along with several smaller systems in Alabama and the Florida panhandle, which it received from Time Warner Cable in 2002 as part of the unwinding of the Time Warner Entertainment L.P. partnership.

Sources said Cequel has bid on three of Adelphia’s seven clusters, including the Florida properties. Atlantic is concentrating on Pennsylvania, and Newhouse is bidding on Florida, those same sources said.

One source familiar with the bidding process said Adelphia has asked that bids remain open for 30 days.

This likely means that bids submitted Monday were effectively a starting point for further negotiations, the source added.

Adelphia, which declined to comment on the auction process, has said in the past that once bids are in, it could take weeks before they are all evaluated.

The MSO has also stated that if a buyer or buyers are chosen, a deal wouldn’t be closed until the fourth quarter of this year.