Adelphia Case Study Essay

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Dale Cowburn was allergic to bee stings. He carried medication at all times in case he encountered an angry swarm. Last summer, however, while he was working in his barn, Cowburn was stung twice on the head. He had a heart attack and died on the spot.

The news traveled quickly through Coudersport, Pa., the town of 2,600 near the New York border where Cowburn had lived. One of the locals moved by his death was John Rigas, chairman and CEO of Adelphia Communications, the nation's sixth-largest cable television provider, a company with $3.6 billion in annual revenues and headquarters in--of all places--this rural town. Rigas knows about bees. He owns a farm outside town that sells Christmas trees, maple syrup, and honey. Soon after
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"How many would have the opportunity to hear a symphony orchestra, were it not for their generosity?"

John Rigas was also revered in the cable business. He was one of the pioneers who had started stringing wires and urging customers to throw away their rabbit ears in the early 1950s. He was inducted into the Cable Television Hall of Fame last year. Colleagues praised him not just for his business accomplishments but for his good works in Coudersport. In a celebratory video, Decker Anstrom, CEO of the Weather Channel, said, "If there's one person I'd like my son to grow up to be, it would be John Rigas."

Then, in the blink of an eye, John Rigas lost everything--his company, his reputation, even the affection of his beloved Coudersport. Last March, Adelphia disclosed it was on the hook for $2.3 billion in off-balance-sheet loans the Rigas family had used mostly to buy company stock. Rigas resigned, as did his three sons--Michael, Tim, and James--who held top executive positions and sat on the board with their father. The independent directors now running the company say they discovered that under the Rigases, nothing was as it seemed. They say Adelphia inflated subscriber numbers. Routine expenses like service calls had been booked as capital items, inflating Adelphia's reported cash flow. But what was perhaps most unsettling was the unabashed manner in which the Rigases had helped themselves to shareholder dollars.

Adelphia financed the

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