Adelphia Sales May Miss Forecast, Analysts Say

Adelphia Communications Corp.’s 2002 sales may rise less than the cable television operator forecast because a possible slowdown in system upgrades would curb customer growth, analysts said.

The company is under scrutiny by regulators after disclosing $2.3billion in loans guaranteed to Chairman John Rigas’ family. Analysts, including Sean Egan of Egan-Jones Ratings Co., have predicted the company may cut in half its 2002 capital spending budget of as much as $2.2 billion to free up cash.

Adelphia is upgrading cable lines to sell digital TV and Internet access services, products the cable industry is counting on to spur sales as overall subscriber growth slows.

A delay in those improvements might crimp customer growth and cause the sixth-largest U.S. cable provider to fall short of its sales forecast this year, analysts said.

Shares of Coudersport, Pa.-based Adelphia have fallen 51% since the additional debt was disclosed March 27.

Adelphia has forecast a 44% increase in digital TV subscribers this year to 2.7 million. Digital TV offers hundreds of channels and better sound and picture quality than standard cable TV.

By comparison, Adelphia expects a 0.5% rise in basic cable subscribers in 2002, the same as last year and down from 1.3% in 2000. Adelphia finished last year with 5.81 million cable customers.

The company may lose customers to satellite-TV providers because Adelphia systems serving 46% of subscribers haven’t been upgraded for digital TV, said Jefferies & Co. analyst Kavir Dhar. EchoStar Communications Corp. and Hughes Electronics Corp., which are combining, sell digital TV on satellite throughout the United States.

“If they don’t upgrade, then satellite could steal away more customers,” Dhar said. “That’s the longer-term problem.”

Adelphia shares fell 61 cents to $9.90 on Nasdaq.