Issue One

Rigas "Let's Make A Deal" | by Christina Abt
See Also John Rigas [Cover Story] | by Christina Abt | photographs by dellas

Behind door number one sits the mastermind Adelphia Corporation headed by John Rigas and his business-savvy sons. Their grand-prize offer: a high-rise operations center touted as the anchor of Buffalo’s long-awaited waterfront revival. Accessories include two thousand job opportunities, the promise of spin-off employment, and "leverage-ability" to attract other high tech businesses to Western New York.

Deal drawbacks: high taxpayer cost and concern over Adelphia’s corporate stability.

In contemplating door number one, several issues need to be considered, all of which relate to the corporate health of Adelphia Cable. First: how fiscally sound is the nation’s fifth largest cable company? A 1999 coast-to-coast buying spree brought Adelphia’s corporate losses into the $300 million range, causing its stock price to drop dramatically–staggering figures which are not problematic, according to CEO John Rigas. "It doesn’t concern me about the current financial aspects of Adelphia. We have doubled in size in the last year and unfortunately some of the systems we took on had not done anything to upgrade, so now we have to catch up."

Rigas follows up by defining the action that must be taken to solidify his company’s portfolio. "Investors clear across this cable industry are saying that now that we’ve decided to stay the course and introduce new services throughout our systems, all we have to do is execute. So they’re waiting to see if we can execute. We recognize that and we think we can."

Which leads to concern number two: execution. While John Rigas ties his company’s future to an ability to execute, many of his customers complain that production is the area where Adelphia consistently falls short. Their most recent advance, the Adelphia Power Link system, is berated by consumers as a slow service hindered by long periods of down time.

Rigas defends his company’s maligned production record by employing the good-offense-is-the-best-defense strategy. He honestly wants to know what his customers think and has gone so far as to print his home phone number on Adelphia billings. "What I learned through the phone calls I received was that a lot of our customers were being mistreated and, in turn, what we needed to do to correct that. I also found out which systems were being well managed and which were not. But most important, what happened from my talking to customers was that I had friends by the end of the conversations, and so it was a wonderful experience."

Was providing his home phone number to irate clients a mistake? The senior Rigas responds, "No! In fact I should do it again. It was a great catharsis." Then he adds, "My sons, however, told me to never do that again!"

First Niagara Bank President, William Swan, categorizes Adelphia’s problems as expansion related. "They are a pretty successful company suffering from growing pains, and I think their growth might be getting ahead of them a little bit. It’s apparent to many of us that it’s a challenge for them right now." Rigas agrees with Swan’s assessment. "We are experiencing some growing pains. But I don’t have any doubt—not being over confident or arrogant—that we are on the right track."

Paul Ciminelli, President of Ciminelli Development Company, Inc. and a corporate advisor on the Adelphia deal to Buffalo Mayor Tony Masiello, has full confidence in the cable company’s administration. "The Rigas’ are smart people. They didn’t get where they are without being shrewd. They stuck to their core business in acquisitions and haven’t taken their eye off the ball." Ciminelli endorses Buffalo’s multi-million dollar development project. "This deal will jump start significant development in and around the waterfront by creating a momentum and installing a critical mass of workers in one specific area. It also will create a good work force, a good quality of life and a productive work environment in which companies can grow."

Fiscal and performance issues aside, a pivotal concern over Adelphia’s stability is its buyout potential. Currently, the cable company is an attractive buyout prospect. Obviously, a changing of its corporate guard could affect the stability of Buffalo’s waterfront development. Irrelevant, according to the CEO. "At this point we have a responsibility to so many people back in our hometown of Coudersport and in Western New York. People are dependent on us for their jobs and their futures. So a buyout of any type is not an option that we are interested in at all."

What will happen when the next generation assumes Adelphia’s corporate mantle is an unknown variable that could make this deal a long-term gamble.

Door number two’s grand prize comes courtesy of the efforts of the governments of New York State, Erie County and the City of Buffalo. Together they have amassed financial incentives for Adelphia worth an estimated $123 million, the majority of which is stacked in piles of freshly-minted green backs. The government’s promised payoff to taxpayers (who by the way are bankrolling this deal) is twofold: a downtown Buffalo waterfront renaissance and a re-energized national prominence for their grand dame city—true incentives for an area whose also-ran sports teams and long-past historical import have served as their only bragging rights.

Deal drawbacks: the same high taxpayer cost as in deal one, plus unknown urban-planning decisions foisted upon residents by politically-motivated leaders.

Behind door two exists the same basic deal as number one, only with a perspective beyond the grasp of many Western New Yorkers. The financial scope of the incentive package in this deal lies outside the realm of most Buffalonians and their average five-figure salaries. Add to that the past promises of a brighter Buffalo future that have flamed out in the muck and mire of political red tape and infighting—the result of which has created a citizenry with a once-burned, twice-shy attitude. All of this makes the deal behind door two hard for many to support.

Door number three proffers a lone-voice-in-the-wilderness grand prize of firm financial footing and block-grant assistance for inner city neighborhoods. It comes compliments of a small-but-insistent band of Western New York residents of which Buffalo Common Council President James Pitts is the most vocal. Pitts believes his hometown will most benefit by keeping those millions of greenbacks in the taxpayers’ pocketbooks rather than transferring them into Adelphia’s corporate coffers.

Deal drawbacks: loosing a chance to grab the Adelphia brass ring and thereby remaining forever mired in the wide-right, no-goal mindset eating away at the city’s vibrancy.

Door number three offers the most conservative of all choices and in some ways the most fiscally responsible. However, conventional wisdom seems to espouse that following James Pitts’ lead could permanently position Buffalo at the bottom of the urban-renewal heap. John Rigas believes that most Western New York citizens agree. "The state government and the local people looked at the facts, looked at the numbers and said this is a good business venture and a commitment to Buffalo’s future. My sense is that most people understand that and support that."

The bottom line is that with reports of an Adelphia ground-breaking ceremony set for the spring/summer of 2001, this version of "Let’s Make a Deal" has already played out. And while there are Western New Yorkers who still strongly support the fiscal safety behind door number three, dealmaker John Rigas, just as strongly, believes otherwise. "I think if you believe in your cause, ultimately you will prevail. It will be painful and costly, and in some cases downright disastrous, but ultimately the product that you believe in, will win out."

Monty Hall never said it any better.