New Adelphia Disclosure
In an 8-K document filed late Friday with the Securities and Exchange Commission, Adelphia disclosed that on May 14, when Deloitte & Touche suspended its audit of Adelphia Communications, one issue Deloitte raised was whether certain Adelphia employees had falsified accounting records or broken other laws. The next day Adelphia's board authorized a formal investigation into the nature of the dealings between the Rigas family and the company and the accuracy and completeness of the company's accounting and financial records. Friday's filing disclosed some new and some additional details on the many related party transactions between the Rigases and Adelphia, including approximately $1.9 million in outstanding loans to current and former employees. Adelphia has taken a reserve of approximately $500,000 against nonpayment of the loans, the filing indicated. Adelphia also guaranteed loans on behalf of four Adelphia employees and four Adelphia Business Solutions employees. Adelphia either fired or transferred to the Rigas family payroll seven employees whose primary functions were to provide services to the Rigases. Additionally, five other employees on the company's accounting, finance and investor relations staff who reported to former VP-finance Jim Brown are cooperating with the special committee but have been transferred to other duties pending completion of the investigation.
Yankees Suit Dismissed
U. S. District Judge Thomas C. Platt dismissed a class-action suit filed by New York Yankees fans miffed at their inability to see the Yankees Entertainment and Sports Network on Cablevision Systems Corp.'s systems. The suit alleged that Cablevision subscribers were being defrauded by Cablevision and that Cablevision and its Madison Square Garden Network conspired to exclude YES. ?Cablevision applauds the judge's decision to dismiss this lawsuit, which was entirely without merit?. We continue to believe that the best way to resolve this matter is through negotiation, not litigation,? the MSO said in a press release. In a conference call Alan Vickery, one of the attorneys representing YES in its lawsuit, said the opinion addressed only technical issues. ?It did not in any way address the merits of the dispute between YES Network and Cablevision,? he said. Cablevision still faces a federal antitrust lawsuit filed by YES.
Western Goes Broadband
There will be no more Western Show, but don't cancel your tickets to California. The California Cable & Telecommunications Association and CableLabs are crafting a new look, feel and name for the convention that the CCTA has sponsored for 36 years and that CableLabs has been intricately involved with for a decade. The show will have a new name, Broadband-Plus, and will focus on how broadband technology affects the marketing, programming and engineering areas of the cable TV industry, according to CableLabs' spokesman Mike Schwartz.
FCC Pole Oversight Upheld
Cable operators cheered a ruling by the U.S. Court of Appeals for the 11th District last week essentially reaffirming the FCC's jurisdiction over pole attachment matters. ?This decision bodes well for the efforts by cable operators to bring consumers new products and services,? NCTA SVP-law and regulatory policy Dan Brenner said in a prepared statement.
Moody's Warns Operators
Moody's Investors Service on Friday said it is imperative for managements of cable operators that depend on high-yield debt to operate in a completely transparent manner, in order to keep the market's confidence. ?Liquidity and capital adequacy continue to be of paramount importance to the high-yield cable industry, particularly given the large capital expenditure requirements and corresponding negative free cash flow implications that still remain, at least over the near-to-intermediate term, for most companies that we rate,? wrote senior analyst Russell Solomon. While Moody's still considers the cable industry a great investment, Solomon said the greatest single risk remains the threat of its strong market access being called into question.
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