Adelphia Breaches Contract with Island
Towns Charge Cable Television Giant with Failing to Deliver Payments for Community Access Channels
By JOSHUA SABATINI
Adelphia Communications, the nation's sixth largest cable operator, has breached the 10-year contract it signed with the six Island towns last year, says the Island's cable advisory committee.
Letters highlighting Adelphia's violations of its contractual obligations were drafted by Peter Epstein, a cable attorney in Boston, and sent this week to each town's board of selectmen for their signatures.
Mr. Epstein is the attorney who worked with the Vineyard cable advisory committee, a board made up of a representative from each Island town and put in charge of the contract negotiations with Adelphia. The negotiation process took a year.
The letters, destined for Randall D. Fisher, vice president and general counsel for Adelphia Cable Communications, state that Adelphia has not met three conditions of the contract, which took effect July 1, 2001.
Under the contract, Island towns are to receive five per cent of the gross annual revenues earned by Adelphia each year from the more than 9,000 cable subscribers on Martha's Vineyard.
The Island towns have designated Martha's Vineyard Television (MVTV) as the recipient of Adelphia's payment. The group aims to operate three public access channels provided by Adelphia, as well as provide the Island community with access to its film equipment and staff.
MVTV president Denys Wortman said the group received a first payment of $150,000 from Adelphia in February. The first $100,000 of that is a payment Adelphia must make annually at the beginning of the calendar year, and represents an advance on the annual five per cent payment due every year by August 1, he said.
Of the remaining $50,000, half represented start-up money and half a no-interest loan, to be paid back in annual $5,000 payments starting in the contract's sixth year.
Mr. Wortman said he has not received the rest of the five per cent payment for fiscal year 2002. All told, MVTV expects to receive about $200,000 each year.
John Alley, chairman of the cable advisory committee, said, "A lot of this played out over the last several months, with Adelphia going into bankruptcy."
The company filed for federal bankruptcy protection in June.
"They haven't completed a number of things that were in the contract," Mr. Alley continued. "We spent a year negotiating the contract. All has gone well except for these few areas."
The second condition that remains unmet requires the cable provider to present documentation certifying the exact amount of the five per cent payment within 30 days after the fiscal year's end, which would have been August 1.
No such documentation has been provided by Adelphia.
The letter noted that late payments accrue interest from the date due at the annual rate of three per cent above the prime rate. It gives Mr. Fisher 30 days to respond.
Mr. Wortman said MVTV plans to move into a building at the regional high school located between the football field and the main building.
He plans to sign a lease with the school next week for use of the building.
Work to prepare the building for MVTV has been ongoing, Mr. Wortman said, using money from Adelphia's initial payment. The facility should be completed in the next four weeks.
Mr. Wortman said if Adelphia does not pay the money MVTV is owed, he will not be able to hire the staff necessary to run the facility. Payments from the cable provider are needed to cover MVTV's operating expenses in coming years.
"Hopefully [the letters] will remind Adelphia that there are certain parts of the contract that it must honor," said Mr. Alley. "I imagine they will respond to the communities."
Mr. Alley added that Adelphia has also not installed all of the 29 live feeds in various municipal buildings around the Island, as required under the contract.
"It is out of our hands, in terms of the cable advisory committee writing a letter to Adelphia, to say pay up," said Mr. Alley. "The contract is signed, and Adelphia must honor their part of the deal. Once they signed, they are obligated to take care of it."
The money is there, said Mr. Alley, because it comes from the Island's Adelphia subscribers.
Lisa Carparelli, a spokeswoman for Adelphia Communications, said the company is "looking into the matter."