Busting Daniels' last dealAdelphia, estate collide on huge $6,700-per-sub deal 11/01/2008 08:00:00 PM Eastern
Bill Daniels prided himself on sealing multimillion-dollar cable deals with only a handshake. But the estate of the pioneering cable broker is having a hard time getting Adelphia Communications Corp. Chairman John Rigas to complete a transaction that was actually signed on paper.
The Daniels estate has gone to court accusing Adelphia Communications' Rigas family of backing out of a deal to buy Daniels Cablevision and the few subscribers that the founder of Daniels & Associates still had when he died. Adelphia agreed last September to buy the systems at a record-breaking price, before the financial markets started really tanking. A privately held Rigas-family company was supposed to complete the transaction.
The papers disclosed for the first time that the deal was even bigger than previously believed. The Rigases agreed to pay $456 million for Daniels' two California cable systems serving 67,400 subscribers. That puts the price at an enormous $6,700 per subscriber. The price on the larger of the two properties—the Carlsbad, Calif., system where Daniels lived—went for $6,900 per subscriber, or $410 million.
This is the second high-priced deal that has brought the Rigases to court. In January, Adelphia sued GS Communications over a similarly pricey deal, the $740 million purchase with 126,000 subscribers in Maryland, Virginia, West Virginia and Pennsylvania. That deal was priced at $5,873 per subscriber. Securities filings show that Adelphia completed the GS deal and a smaller package of systems in March, but at a sharply reduced price that Adelphia did not fully detail.
The Daniels suit doesn't explain why the Rigases were reluctant to close, saying only that, beginning in March, the Adelphia execs simply refused to discuss the deal or respond to Daniels' lawyers' requests for information. Daniels estate representative Buzz Mitchell sued Adelphia in federal court in Denver but filed to dismiss it four days later without explanation. Mitchell's attorney, Terrence Gill, wouldn't comment on the suit. Mitchell and Adelphia executives did not return calls seeking comment.
Bill Daniels died a year ago after a lengthy, storied career as a cable operator and system broker. As a confidant of the industry's top players, including Rigas, he and his investment banking firm, Daniels & Associates, stood on one side of virtually every major deal in cable for years. The proceeds of the sale of Daniels' systems are slated to fund a $1 billion charitable foundation he created before dying last year.