Adelphia Scandal

Adelphia Cable

Bruce Dawson

Principles of Management

Mgmt.230

"Adelphia is one of the nation's leading cable companies with more than 5.3 million residential customers nationwide. In addition to cable entertainment Adelphia offers digital cable, high-speed internet access, long distance telephone service, and home security" (Adelphia).

The leadership of this company currently consists of 18 officers. One officer for each of the five regions Adelphia covers. One officer in each of the following: Human Resource, Finance, Customer Care, Marketing, Programming, Media Services, Chief Accounting Officer, and Information Technology. Currently the top four officers for Adelphia Communications are as follows, Brad Sonnenberg, Executive VP of General Counsel and Secretary, Vanessa Wittman, Executive VP and Chief Financial Officer, Ron Cooper, President and Chief Operating Officer and William T. Schleyer who is the Chairman and CEO of Adelphia Cable. Prior to Schlleyer's employment for Adelphia he was engaged as a Principal in Pilot House Ventures, President and COO of Media One, President and COO of Continental Cablevision, Inc.

The company was founded in 1952 in the small town of Coudersport, Pennsylvania and incorporated in 1972. By 1998 Adelphia had passed the two million-customer milestone for its cable television service while, at the same time, rapidly expanding a new line of telecommunications products and services. By 1999 Adelphia more than doubled its reach with three major acquisitions, extending their services into 30 states and serving more than 5 million customers. Presently Adelphia Cable is the fifth-largest cable television company in the United States. "Adelphia Communications Corporation has traveled a path from relative obscurity through notoriety and into the national spotlight. It is working now under the new leadership to address the issues of it's past and emerge from Chapter 11 bankruptcy to become a broadband industry leader with a reputation for strong and effective corporate governance" (Adelphia).

Adelphia Communications offers a variety of different products such as Cable for more than 5.3 million residential customers nationwide, digital cable, high-speed Internet access, long distance telephone service, and home security along with 24-hour customer service.

In July 2002 John Rigas (Former CEO) and two of his sons were arrested and charged with looting the cable TV company of hundreds of millions of dollars to pay for luxury condos, a golf course, and to cover personal investment loses. "The complaint alleges that members of the Rigas family that controlled Adelphia systematically looted the corporation. In less than four years, the complaint alleges, they stole hundreds of millions of dollars and through their fraud caused losses for investors of more than $60 billion" (CNN). Subsequent to the arrest of Rigas Adelphia's stock closed at 15 cents a share on July 24, 2002, down from a peak of $66 in May 1999.

"Rigas, founder, former chairman and CEO, his sons Timothy and Michael, faced federal conspiracy charges as well as securities, bank and wire fraud charges. They each face up to 100 years in prison and millions of dollars in fines if convicted on all counts" (CNN). Timothy and Michael Rigas were executive vice presidents of Adelphia Communications. Timothy was chief financial officer and head of the board's audit committee, and Michael was in charge of operations.

April 17, 2002 Adelphia announced that the SEC issued formal order of investigation in connection with the matters, which are the subject of Adelphia's previously, disclosed SEC inquiry. May 14, 2002 Deloitte & Touche LLP, Adelphia's former auditor, suspended its auditing work on Adelphia's financial statements for the year ending December 31, 2001. May 15, 2002 John Rigas resigned as Chairman and CEO then on the same day Adelphia failed to make interest payments totaling approximately $38.3 million under certain notes and an approximately $6.5 million dividend payment on its Series E Mandatory Convertible Preferred Stock. One day after John Rigas CEO resigned his son Timothy Rigas resigned as Executive Vice President, CFO, CAO and Treasurer. On June 25, 2002 Adelphia Communications filed "voluntary petitions" for reorganization under Chapter 11 of the United States Bankruptcy Code (Case number 02-41729), File in the Southern District of New York. After Adelphia filed for Chapter 11 Bankruptcy they investigated the suspicious trail that Rigas had left behind and filed a complaint against him on July 24, 2002 along with former executives and some Board members. On Wednesday July 24, 2002 John Rigas and his two sons were arrested and charged with looting the cable TV company of hundreds of millions of dollars.

During the past two years Adelphia Communications has tried effortlessly to salvage their somewhat distorted reputation that they have obtained through this bankruptcy claim. They have gone through many different officers to obtain the leadership they are looking for in their company. On September 16, 2003 Adelphia proposed to launch new video and Internet packages nationwide and on September 23, 2003, Adelphia proposed to increase operations management and direction for Tele-Media Cable properties in 5 States. October 2, 2003 Adelphia customers receive more power from their online connection at no extra cost. November 2003, Adelphia introduced Video-On-Demand. February 25, 2004 Adelphia obtained $8.8 Billion exit financing commitment from four financial institutions those institutions are as follows: JPMorgan Chase & Co., Credit Suisse First Boston, Citigroup Inc. and Deutsche Bank AG all lead the financing package. Each of the four financial institutions provided an equal share of the commitment. Directly proceeding receiving the financing commitment, Adelphia Communications put together a plan of Reorganization to get out of the Chapter 11 bankruptcy they had filed two years past.

Adelphia Communications has tried desperately to escape from the litigations, charges, and the bad name that Rigas has brought against them. April 22, 2004 Adelphia Communications explores the option of possibly selling the company