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The Buffalo News

By Fred O. Williams, The Buffalo News, N.Y.

Jul. 14--Time Warner plans to take over cable TV service in the Buffalo area by the end of the month, now that the Federal Communications Commission has approved the sale of Adelphia Communications.

The FCC vote Thursday removed the last major hurdle to the $17 billion sale of Adelphia, which was announced 15 months ago.

"They were the last piece in this whole transaction," Time Warner Cable spokesman Tim Wirth said.

Time Warner and Comcast will split up bankrupt Adelphia's system, with New York-based Time Warner getting the wires that pipe TV and Internet to about 300,000 Buffalo-area homes.

The sale will end Adelphia's long presence here. The nation's fifth-largest cable company with 4.8 million subscribers, Adelphia was based about 80 miles from Buffalo in Coudersport, Pa., until it slid into bankruptcy in 2002. Founder John J. Rigas and his son Timothy are appealing convictions for fraud and conspiracy.

Adelphia's sale will also give about 1,000 area workers a new employer, as Time Warner takes over local operations that include customer service call centers.

The Erie County Industrial Development Agency on Monday approved $6.65 million in sales tax breaks for Time Warner to protect jobs from being moved out of the area.

Viewers might see a few channels vanish temporarily as Time Warner negotiates for licenses that it doesn't already have, officials said. However, the company expects to duplicate Adelphia's channel lineup, and any substitutions will be minor, Wirth said.

"We don't want to make any immediate changes we don't have to make," he said.

Buffalo Sabres hockey games aren't threatened by the change, since Time Warner already carries the Madison Square Garden network that broadcasts the Sabres, Wirth said.

In the longer run, Time Warner expects to offer telephone-over-cable service that it already sells elsewhere. The company doesn't know when the rollout would begin, but said that phone service should be available within three years.

Comcast will swap the one-third share of Adelphia's Buffalo-area system that it already owns, giving Time Warner sole ownership, Wirth said.

Adelphia will continue to exist on paper as creditors continue to wrangle over its remains, company spokesman Paul Jacobson said. Money due to creditors and suppliers will remain frozen until the bankruptcy court approves a plan to divide up the assets, he said.

The FCC's 4-1 vote in favor of the sale Thursday came with strings attached. The agency said Philadelphia-based Comcast and Time Warner are prohibited from engaging in tactics that would effectively make regional sports programming unavailable to rivals, such satellite TV.

However, Comcast SportsNet in Philadelphia is exempt from the rule and will continue to be unavailable to DirecTV Group Inc. and EchoStar Communications Corp., owner of the DISH Network. SportsNet is home to several local professional sports teams, including the Philadelphia 76ers, the Phillies and the Philadelphia Flyers of the National Hockey League.

As the lone dissenter, Commissioner Michael Copps said: "This decision is about big media getting bigger with consumers holding the bag."

Copps also noted that Philadelphia was "inexplicably" exempted from an order to make regional sports programming available to competitors. "Residents of Philadelphia are still stuck without competitive choice," Copps said.

Comcast was told to enter into binding arbitration with the Mid-Atlantic Sports Network, or MASN.

MASN is owned by the Baltimore Orioles and Major League Baseball. Comcast has refused to carry the channel because of a dispute with Orioles owner Peter Angelos over TV rights to the team and control of the region's sports programming market.

In another condition, the FCC wants Comcast to make its exclusive PBS children's programming, currently seen through video on demand, available to rivals.

The FCC did not add any "Net neutrality" requirements as part of the approval. Some Internet firms are seeking legislation or administrative rulings that would prohibit cable providers from charging extra to move data faster for Web sites willing to pay higher fees.

Comcast and Time Warner, the nation's top two cable operators, plan to divide Adelphia's assets and swap systems in order to strengthen their positions in several markets. Adelphia, with 4.8 million subscribers, is the nation's fifth-largest cable TV provider.

The acquisition strengthens Time Warner's positions in New York, Texas, California, Ohio and the Carolinas. Comcast boosts its presence in Pennsylvania, Washington, D.C., Florida and Massachusetts.

Comcast is expected to end up with over 23 million subscribers while Time Warner would have more than 14 million.

Bloomberg News contributed to this report.

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