John Rigas, the founder and former chairman and CEO of Adelphia Communications who was sentenced to 15 years in federal prison after a massive fraud scheme that afflicted the company over decades, died in Coudersport, Pennsylvania, on Sept. 30. He was 96 years old.
Rigas was the epitome of the bootstrapping cable executive, founding Adelphia in 1952 with his brother, Gus, with a $300 loan and eventually growing the company to the sixth-largest cable operator in the country with 5.5 million subscribers.
Rigas reveled in his rags-to-riches story and he often spoke of growing up in an apartment over his Greek immigrant parents’ diner (Texas Hot) in Wells, N.Y., and how he often slept in the Coudersport movie theater that was his first business venture. While he grew Adelphia mainly by acquisition — he famously paid the highest multiple ever (at the time) for a cable company, Daniels & Associates‘ Carlsbad, California, system in the early days — his empire came crashing down in 2004, when federal prosecutors claimed he and his family took from publicly traded Adelphia billions of dollars for their own personal use.
John Rigas was convicted of 18 counts of fraud and conspiracy in July 2004 and sentenced to 15 years in prison. His son, Adelphia chief financial officer Timothy Rigas, was convicted on 18 counts of fraud and conspiracy and sentenced to 20 years. John Rigas was released from federal prison in 2016 after serving nearly 10 years, when a judge ordered his compassionate early release after it was thought he had about six months to live. Rigas had earlier been diagnosed with Stage IV bladder cancer.
Timothy Rigas was released in 2019 after serving about 12 years of a 17-year sentence (reduced from 20 years in 2008), part of the federal First Step Act which allows for the early release of inmates convicted of nonviolent crimes who have served two-thirds of their sentence and are over the age of 60. Tim Rigas was scheduled to serve the remaining two years of his sentence in home confinement.
A third son, former Adelphia chief operating officer Michael Rigas, was granted a mistrial after jurors could not reach a verdict regarding 15 counts of securities fraud and two counts of bank fraud. He pleaded to a lesser charge of signing false documents and served a two-year sentence under house arrest.
A fourth executive, assistant treasurer Michael Mulcahy, was found not guilty.
The scandal erased more than 50 years of good will the Rigas family built up as it assembled its cable empire and rocked the industry as a whole. Coming at a time when the business world was swept up in off-balance sheet debt issues after the Enron and WorldCom scandals, some major figures, including cable legend John Malone, have said the Rigas family was unfairly treated. Others believed the family reaped what it sowed.
John Rigas continued to maintain his innocence until the day he died. In an interview with USA Today (opens in new tab) in 2007, he claimed that he could have cut a deal with the federal government by pleading to lesser charges and avoiding jail time, but he refused to plead guilty to something he believed he didn’t do.
“My legacy is to my grandchildren, and you have to stand up — as difficult as it is — for something. And that is not something to be compromised or amended," Rigas told USA Today in 2007.
The Rigases were accused of pillaging the company over a span of decades, siphoning money from operations and putting the company on the hook for about $2.3 billion in off-balance sheet loans. In court documents, prosecutors accused the family of using Adelphia as its “personal piggy bank” and “personal ATM” financing a golf course, luxury condominiums and items as mundane as a $6,000 to fly two Christmas trees from Coudersport to daughter Ellen’s home in New York, and John Rigas’ Columbia House record club subscription.
Adelphia’s fall began in March 2002 after company executives, during a conference call discussing Q1 results, couldn’t answer questions regarding $2.3 billion in off-balance sheet debt. It was later determined that the Rigases used those loans to buy Adelphia stock, which was used aggressively to buy other cable systems.
Adelphia was sold in 2006 to Comcast and Time Warner Cable for $17.6 billion in cash and stock.
Rigas is survived by his sons Timothy, Michael and James (CEO of Zito Media), his daughter Ellen and several grandchildren. His wife Doris predeceased him in 2014.
Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.
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