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Adelphia to Buy Harron's Cable Systems

April 13, 1999| From Bloomberg News

COUDERSPORT, Pa. — Adelphia Communications Corp., moving to become the fourth-largest U.S. cable-TV company, said Monday that it agreed to buy the cable systems of closely held Harron Communications Corp. for $1.17 billion in cash.

Adelphia, which operates mostly in the mid-Atlantic region and in Florida, will add about 300,000 customers in New England and Philadelphia with the acquisition, which would be its third in less than two months. Adelphia last month reached an agreement to buy Century Communications Corp., and in February it agreed to buy FrontierVision Partners.

Adelphia and other large cable companies are buying smaller rivals to gain customers and reduce the unit costs of programming.

"We like it," said Charles Simonds, an analyst at Salomon Smith Barney who rates Adelphia a "buy." "It brings them closer to the 5-million [subscriber] mark, which historically has been where significant economies of scale kick in."

Coudersport, Pa.-based Adelphia expects to complete its purchase of Harron, which is based in Frazer, Pa., by April 2000. The company has not disclosed how it will raise the cash for the purchase.

At about $3,900 per subscriber, Adelphia is paying more per-subscriber than is true of some recent acquisitions, analysts said.

"It's at the high end of recent acquisitions, but it's below the premium Comcast paid for MediaOne," Simonds said, referring to Comcast Corp.'s $55.5-billion offer for MediaOne Group Inc. last month.

Harron is expected to have revenues of $139 million in 1999 and $153 million in 2000. The cable systems are expected to generate cash flow--or earnings before interest, taxes, depreciation and amortization--of $76 million in 1999 and $84 million in 2000.

Adelphia shares rose $3.94 to close at $64.94 on Nasdaq.

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