JUDGMENT DAY COMES FOR CABLE SECTOR

July 10 could turn into a watershed day for the cable market as scandal-ridden Adelphia Communications, which has until October to file its reorganization plan under Chapter 11 bankruptcy, must deliver its statement of financial affairs by that date and AT&T shareholders vote on Comcast's proposed acquisition of its broadband cable operations.

Once considered a no-brainer, the Comcast/AT&T deal now is under the microscope, in part because of the almost daily revelations of wrongdoing at Adelphia.

As part of the acquisition vote, AT&T shareholders will be asked to give Comcast's founding Roberts family (led by Ralph Roberts as chairman and his son, Brian Roberts, as president) one-third of the voting power despite having only a 1.5% ownership stake in the company. In addition, Brian Roberts, who would take over as chief executive, can only be ousted by a 75% vote of the board.

While appearances scream for comparison to the family-centric Adelphia scandal, cable industry watchers insisted it was just a coincidence.

“Adelphia was sealed off by itself,” said one vendor executive who didn't want to be identified. “If you look at who the cable operators have become, they really are big publicly traded companies under a lot of scrutiny and with very significant organizations. Adelphia is definitely different than the rest of the industry right now.”

Chapter 11 lets Adelphia fully evaluate its enterprise without the immediate pressure to sell valuable assets that may well benefit the company in the future, Erland Kailbourne, chairman and interim CEO, said in a prepared statement.

Late last month, Judge Robert Gerber of the U.S. Bankruptcy Court in New York's Southern District approved $500 million in financing for Adelphia to continue operations. A hearing on an additional $1 billion, arranged by J.P. Morgan Chase Bank and Citigroup USA, is scheduled for Aug. 9.

Even with the money and the ongoing reorganization, Adelphia has a lot of financial issues to resolve, said David Mercer, vice president of Strategy Analytics' consumer practices. “The whole Adelphia thing is pulling everybody [in cable] back again.”

Among those being pulled back are Adelphia's creditors, including big-name cable vendors such as Scientific-Atlanta and Motorola, which are owed $83.3 million and $80 million, respectively.