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Time Warner and Comcast To Acquire Adelphia U.S. Assets

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Time Warner and Comcast is acquiring the U.S. assets of Adelphia for $12.7 billion in cash and 16% of the common stock of Time Warner’s cable subsidiary, Time Warner Cable.

Under the terms of the transaction, approved by the boards of directors of Adelphia, Time Warner and Comcast, Adelphia’s stakeholders will receive $9.2 billion in cash and 16 percent of Time Warner Cable’s common equity from Time Warner. In addition, Comcast will pay Adelphia $3.5 billion in cash. Under proposed transactions between Time Warner and Comcast, the two companies will swap cable systems to enhance their respective geographic clusters and unwind Comcast’s investments in Time Warner Cable and Time Warner Entertainment Company, L.P. in an efficient and mutually beneficial way.

The transaction is subject to approval by the U.S. Bankruptcy Court for the Southern District of New York and customary closing conditions. Going forward, Adelphia will file a revised Plan of Reorganization and Draft Disclosure Statement with the Bankruptcy Court that reflects the terms of the transaction. A Disclosure Statement hearing must be held, followed by creditor balloting on the plan and ultimately a confirmation hearing before the Bankruptcy Court leading to a confirmed Plan of Reorganization. Parallel to the bankruptcy process, for the deal to close it will require approvals of the FCC, the Justice Department (Hart-Scott-Rodino) and, where required, local franchising authorities. Subject to all necessary approvals, the deal is expected to close in approximately nine to 12 months.

The Official Committee of the Unsecured Creditors supported Adelphia in moving forward with this transaction.

Bill Schleyer, chairman and CEO of Adelphia, said, “After extensive review of all options for the company, Adelphia’s Board of Directors has determined that this transaction delivers the maximum value to its bankruptcy constituents. We believe that this option is superior to Adelphia emerging as a standalone company. It is also a positive outcome for our cable customers, who will benefit from continuing considerable investment in our cable assets. The significant interest in Adelphia is a testament to the dramatic improvements our employees have made to the company and its assets during the past two years.”

Schleyer added, “Over the past two years, the Adelphia team has worked tirelessly to transform our business, enhance our operations and improve our competitive position. Today, Adelphia has a first class network, dramatically improved financial performance with complete transparency, and improved service offerings — and this transaction clearly recognizes the tremendous value of the Adelphia enterprise.”

Since early 2003, Adelphia has made significant investments in the most advanced equipment and systems to upgrade its cable network. As a result, Adelphia serves 97 percent of its homes passed with an advanced network capable of delivering services like digital video, high-speed Internet, high-definition television, video-on-demand, digital video recorders, and eventually telephony. The company has also completely overhauled its customer care organization, consolidating more than 70 outmoded call centers into 12 state of the art centers and repackaged its service offerings for greater customer choice and value.

After a massive 20-month effort involving hundreds of accountants, Adelphia restored credibility to its financial reporting last December with the filing of its 2003 Annual Report on Form 10-K and audited financial statements for the fiscal years 2003, 2002 and 2001. New financial reporting systems were put in place along with a corporate-wide ethics policy signed by every employee.

Throughout this process, Adelphia has remained committed to its customers and communities. That commitment will continue in the months ahead, and the company will work to ensure a seamless service transition.

Said Vanessa Wittman, Adelphia’s executive vice president and chief financial officer, “We have been working closely with Adelphia’s constituents and the Bankruptcy Court throughout this process and will continue to do so in the coming months as we move toward closing. I want to take this time to thank Adelphia’s employees for their unwavering commitment and diligence during the past several years.”

The agreement does not include Adelphia’s cable system partnership in Puerto Rico.

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Time Warner and Comcast To Acquire Adelphia U.S. Assets
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