COMCAST AND TIME WARNER WIN BIDDING FOR ADELPHIA

$17.6 Billion Joint Offer Beats Out Cablevision

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NEW YORK (AdAge.com) -- Comcast and Time Warner Cable, the nation's largest and second-largest cable operators, yesterday won the bidding to acquire bankruptcy-troubled Adelphia, the fifth-largest cable operator.

In a deal estimated to be worth $17.6 billion, the two cable giants trumped competitor Cablevision System Corp., which

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made an 11th-hour $17.1 billion bid for Adelphia.

Additional subscribers
Through the deal's acquisitions and swaps Comcast stands to gain 1.8 million subscribers and Time Warner will likely add 3.5 million. Comcast will end up with a total of 23.3 million subscribers and Time Warner with 14.4 million.

Analysts point out that the locations of the new subscribers are as important as the increased numbers for both companies and their marketer clients.

Clustering impact
"They not only get larger but they get more clustered," said Jim Goss, an analyst with Barrington Research. "Time Warner mentioned that over  85% of their customers will be located in five regions and 95% of customers will be in eight major clusters the smallest of which will be 400,000 subscriptions -- a lot of cable companies don't even have 400,000 subs. So they benefit from scale and concentration."

Merrill Lynch analyst Jessica Reif Cohen wrote in a recent note that the deal will create potent Comcast clusters in such fast growing areas as Florida and Washington D.C.

Surpass DirecTV
Additionally, Time Warner's 14.4 million customer base will surpass DirecTV's 12.2 million subscribers, which Mr. Goss says, improves their bargaining power when it comes to dealing with program providers.

"The best positioned ones with the best chances of calling the shots during deals are the largest [operators]," he says.

In a statement, Brian L. Roberts, chairman-CEO of Comcast, said: "Adding these subscribers, many of whom are in high-growth, geographically desirable areas, will allow us to roll out our new products and services rapidly. Our vision remains to provide customers with more choice and control of their entertainment and communication services."

In the same joint statement Time Warner's chairman-CEO, Dick Parsons, said the acquisition "will better position us to compete. ... We'll gain important scale, enhance our subscriber clusters and accelerate growth."

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