An independent cable operator sued Time Warner Inc. and Comcast Corp. on Tuesday, claiming their purchase of Greenwood Village-based Adelphia Communications Corp. would violate antitrust law.
The suit, filed in a Minnesota federal court, claims the proposed $17.6 billion sale of Adelphia, the bankrupt cable-television operator, to New York-based Time Warner and Philadelphia-based Comcast resulted from bid-rigging and price-fixing and would create a U.S. cable-TV monopoly. Comcast is the largest U.S. cable operator, and Time Warner is second. Comcast has 700,000 subscribers in Colorado.
Adelphia has 4.9 basic cable-TV customers nationwide and offers cable-TV service in Colorado Springs. There are 120 employees at the company’s local headquarters.
“Adelphia should be sold to independent cable operators around the country, not to Time Warner Comcast monopolies,” Joseph Alioto, a lawyer for the America Channel, the Heathrow, Fla.-based cable operator filing the suit, said by e-mail.
The America Channel claims Time Warner and Comcast favor their own networks and those in which they have a stake when choosing what to carry on their systems, keeping independents from reaching enough potential subscribers to get necessary financing.
The America Channel is an independent cable network that will distribute programming via satellite to 50 million households overseas by the end of the year, a company statement says.
The Florida company asked for a court order stopping the Adelphia sale and assessing damages against the defendants, trip ling the damages to the extent permitted by antitrust law.
“The allegations in this complaint are entirely frivolous, and we are confident that this matter will not impede closing of the Adelphia transaction,” Time Warner spokeswoman Susan Duffy said.
Tim Fitzpatrick, a Comcast spokesman, declined to comment.
Paul Jacobson, a spokesman for Greenwood Village-based Adelphia, said the company wouldn’t comment on pending litigation.
Adelphia filed the 11th-biggest bankruptcy by asset size in U.S. history in June 2002 after an accounting fraud orchestrated by founder John Rigas and his son Timothy Rigas. Both men were convicted in July 2004 of conspiracy and securities fraud. The company owed creditors more than $18 billion when it filed for bankruptcy protection.
Comcast and Time Warner won U.S. antitrust approval to buy Adelphia’s cable assets this year.
A Federal Trade Commission investigation uncovered no evidence “that the proposed transactions are likely to substantially lessen competition in any geographic region in the United States,” according to a Jan. 31 statement by FTC Chairwoman Deborah Platt.
A dispute among creditors over how to distribute the proceeds from the Adelphia sale has delayed the company’s exit from bankruptcy, threatening the company’s ability to complete the sale by the original July 31 deadline. Time Warner and Comcast agreed to push back the date by a month, Adelphia said in court papers.
Adelphia has asked a bankruptcy judge to approve the sale to Time Warner and Comcast without a creditors’ vote to meet the Aug. 31 sale deadline.
Hearings in the Adelphia bankruptcy are scheduled for today and Thursday before U.S. Bankruptcy Judge Robert Gerber in Manhattan.
