Adelphia announced Mon. it had fired accounting firm Deloitte & Touche and revised its 2001 subscriber count. In 8-K SEC filing, company said that based on preliminary results of investigation of special board committee, it was making downward revision of its 2000 and 2001 financial results and management’s guidance for 2002 earnings before interest, taxes, depreciation and amortization (EBITDA). Company reduced its 2001 revenue to $3.51 billion from $3.58 billion as reported in March and its 2001 EBITDA to $1.19 billion from $1.41 billion. For 2000, Adelphia lowered revenue to $ 2.54 billion from $2.6 billion and EBITDA to $1.04 billion from $1.2 billion. “Management’s revised preliminary estimate of EBITDA for 2000 and 2001 corrects the items in the previously announced operating results that current management believes were erroneous, and reflects more conservative accounting policies that the company intends to follow in the future,” Adelphia said filing. Citing inaccuracies in previously reported data, company also cut its 2001 basic subscriber total to 5.76 million from 5.81 million.” The company said it was in process of engaging new accounting firm and “information” about termination of old firm would appear in new filings. Meanwhile, Leonard Tow and Scott Schneider, who joined Adelphia board May 24, announced their resignations. In letter to CEO Erland Kailborne, they said “revelations of the unreliability of corporate data, as well as the ongoing serial disclosures of wrongdoing,” had made it impossible for them to contribute “meaningfully” to process of restoring credibility and financial integrity of company.
More bad news hit Microsoft Thurs. as Britain’s Independent TV Commission banned TV ad for Xbox videogame console after it received 136 complaints from viewers who found it offensive, shocking and in bad taste. Action came as Microsoft was mounting uphill battle to compete against Sony’s PlayStation 2 (PS2) in Europe, where it reduced Xbox price before SRP cut in U.S., and less than week after MIT student said he hacked Xbox security system and posted his findings at school’s Web site (CED June 5 p3).
Consumer intentions on buying TV sets fell in May from April, according to preliminary data in Conference Board monthly survey. Of 5,000 households polled, 6.5% said they planned to buy TV set in next 6 months, vs. 7.2% in April, 6.3% in March, 7.0% in May 2001. Consumer Confidence Index edged up 1.3 points from April, Conference Board saying: “Consumers’ upbeat mood about current business and labor conditions underscores the economy’s continuing recovery.” But it said slight decline in Expectations Index suggested “that the pace of economic growth will not accelerate in the months ahead.”
Federal judge denied preliminary injunction in Starband’s breach-of-contract suit against EchoStar. U.S. Dist. Judge Claude Hilton, Alexandria, Va., issued order denying request for injunction May 24, day after Starband filed suit (CD May 28 p11), court said. Starband, jolted by EchoStar’s decision in March to end distribution agreement, charged in suit that it was owed “millions of dollars” in monthly and wholesale service fees by DBS provider. Starband contended that as result of EchoStar’s failure to turn over collections and billings functions it was suffering damages of $385,000 per week. “As a growing business, we couldn’t financially wait any longer to receive payments for the services we provide,” Starband Chmn. Zur Feldman said in May 24 e-mail to customers. “It’s unfortunate we were forced to take this legal step. It was a last resort for us to resolve these issues. We always prefer to settle business matters in a business environment, not in a courtroom.”
Contributory and “vicarious” copyright infringement were among allegations in 76-page suit filed Fri. by RIAA and National Music Publishers’ Assn. (NMPA) against Napster-like file-sharing service, Audiogalaxy.
Federal judge has denied preliminary injunction in Starband’s breach-of-contract suit against EchoStar. U.S. Dist. Judge Claude Hilton, Alexandria, Va., issued order denying request for injunction May 24, day after Starband filed suit, court said. Starband, jolted by EchoStar’s decision in March to end distribution agreement, claimed in court papers it was owed “millions of dollars” in monthly and wholesale service fees by DBS provider. Starband charged that as result of EchoStar’s failure to turn over collections and billings functions it was suffering damages of $385,000 per week. It said EchoStar had accounted for 31,000 of its 41,000 subscribers, including 16,000 and 15,000 from retail and wholesale agreements, respectively. EchoStar spokesman declined comment.
Microsoft lost its appeal to block San Diego software company from calling itself Lindows.com and its Linux-based programs LindowsOS. In 7-page ruling, U.S. Dist. Court, Seattle, Judge John Coughenour said his March 15 ruling denying request by Microsoft to shut down Lindows was appropriate.
Mont. PSC concluded Qwest met requirements of Telecom Act Sec. 272 for interLATA long distance entry. AT&T had objected to PSC hearing examiner’s preliminary conclusion in Feb. that Qwest met requirement to demonstrate it would be providing in-region interLATA services through structurally separate affiliate and that it in no way would discriminate in favor of that affiliate. PSC dismissed all of AT&T’s objections, saying that if they were to stand, Qwest wouldn’t be able to make any advance preparations for its eventual in- region interLATA entry. PSC (Case D2000-5-70) said AT&T had produced no convincing evidence that Qwest might in future discriminate against competitors or that Qwest wasn’t in compliance with Sec. 272’s requirements. PSC said there had been some past issues on full separation of Qwest’s local exchange and interexchange units but company had taken action to address those issues and bring itself into compliance.
Proposal to grant Sirius Satellite Radio board authority to raise number of issuable common shares to 500 million from 200 million is up for shareholder vote at June 21 annual meeting in N.Y.C., company said in preliminary proxy statement filed with SEC Fri. Company had 161,580,493 shares outstanding April 30, filing said. It said board adopted resolution Fri. recommending that proposal be adopted on ground it would give company “flexibility” to issue common stock for variety of purposes without need for immediate shareholder action. However, it acknowledged that issuing additional shares could have “dilutive” effect on shareholder voting power. Increase in authorization of shares shouldn’t be construed as antitakeover move as no such action is expected, filing said.
Mass. regulators gave preliminary approval to new price capping system for Verizon that would limit increases in basic residential services to 5% annually and deregulate rates for most business services. In 108-page order adopted on 5-0 vote, Dept. of Telecom & Energy (DTE) concluded Verizon had demonstrated there was sufficient competition for most of its business services to permit rate deregulation. Verizon has been under caps since mid-1990s. Its last plan expired in Jan., and company technically reverted to rate-of- return regulation but proceeding on successor cap plan already was under way. DTE said residential rates could move between floor and ceiling levels to be defined later, except that increases couldn’t exceed 5% per year. It said Verizon should be allowed to set different residential rates for urban, suburban and rural areas to reflect cost differences despite opponents’ concern that would allow carrier to raise rates in rural markets where there was little or no competition to subsidize lower rates in markets such as suburban Boston where residential competition exists. Mass. Attorney Gen. opposed business rate deregulation, saying Verizon still controlled 80% of business market and little local business competition existed outside I-495 corridor. AG spokesman said agency might appeal to state courts if plan finally was adopted. DTE directed Verizon to file by June 5 detailed description of new rates it would charge, which must address issue of whether there would be significant differences between rural and urban rates.