Dirección General para Asuntos Culturales

Adelphia Communications was run and operated by one family. It had been started as a family-owned private company and was managed as such for many years. According to the data, the transition to public company made little difference in the actual operations. Participants commented as follows regarding this theme:

They ran it like a family company when it was public. . . . Mr. Rigas was like everyone’s father. He had great concern for the people of the community so he wanted to invest in the community as much as in the company, improve the schools, etc. Probably 80% of Coudersport worked at Adelphia. From a bird’s eye view the whole place was like one big dysfunctional family. (Exec C)

The Rigases kind of controlled everything, so although they were good to you, you really weren’t going to go far unless your name was Rigas. . . Even

though the company was publicly traded, it was still pretty much family-owned and-operated. (Exec I)

The results showed that Adelphia was a family-run business. Its success and ultimate downfall had a great deal to do with the leaders’ ability to take risks and make decisions that might not otherwise be approved. Participants commented as follows regarding the mechanism of operations as a family business.

Ultimately the [Rigas] family prospered and I think John [Rigas] thought the employees and the town people were extended family and he was the father, or grandfather, making the decisions that in his mind benefitted them the best. (Exec E)

If Tim [chief financial officer] were not John’s [chief executive officer] son, John might have questioned what Tim was doing more. But there was a family trust among the Rigases, there’s (sic) a family bond, there’s belief in your son and you want him to do well and succeed, so maybe you give him more leeway than you would give to a [chief financial officer] that was not related, not in your family. (Exec B)

As a family, they just trusted each other. I don’t think they sat around the table and said, “Hey guys, I’m scamming the company today and I did some off-

balance-sheet deals so we get more money.” I don’t believe there was scheming at the whole family level as there was at one primary level of the family. And the family just trusted each other. (Exec B)

After the initial public offering of stock, the Rigas family still held the top operating positions in the company and therefore maintained decision-making authority. Seats of the voting majority of the board of directors (six out of eight positions) were also occupied by the Rigas family. The fact that a family ran Adelphia had a cultural influence, as demonstrated in comments by the former executives interviewed:

It was a quirky culture. I guess the best way to describe it was like a family. You had to be very accepting of everyone even if they did not deliver, because that is what you do in a family—you accept people’s flaws. And no one got fired. It was very rare. (Exec I)

I never got an office and had to work in the conference room because Doris [John’s wife] wanted it to stay a conference room, and the family was not going to go against her wishes as a family member. There was an office available, but I was told that was the “family wing” and not available. (Exec D)

The family bond was something that was not to be questioned, both within the family and by the executives. The Rigas family trusted each other above all else. The former executives I interviewed commented about this family bond as follows:

I was originally hired as chief [X] officer. On the day I started, they changed my title to senior vice president. As Michael Rigas told me, there was only going to be one chief in the company and it was John Rigas. So he did not want anyone else in the company outside the family to have “chief” in their title. . . . The leadership and decision making promised to me never happened. It had become clear that they were very unwilling to let someone outside of the family make any decisions. The family bond was the company. (Exec D)

It is possible that John, James, and Michael never knew the full extent of what was going on. Keep in mind they had their own silos to run. Michael ran operations and James ran the phone company, and when their brother would walk in and say, “Hey, sign this, we are refinancing,” they were not going to their own lawyers to sit down and comb through the documents. They trusted their brother. (Exec B)

The following story told by one former executive of Adelphia reveals the extent to which the family bond formed the firm, and the negative impact that was a result:

I was hired by Jim Rigas directly, and as part of my responsibility, I oversaw a data center. The manager of the data center called me and said, “Hey, they’re asking me to do something and I am totally uncomfortable doing it. So if they want me to do it, I need it in writing.” So I told the manager to fax me the info.

Well, apparently Tim [Rigas] had learned that the billing system would allow a disconnect flag on an account to go away after 180 days and show up again as current owed dollars. That was staggering, that they wanted to manipulate the books that way. I’ve never told this story to anyone except a few industry friends. So the manager took the document and wrote, “I will do this with the

understanding that Tim Rigas agrees and is directing me to do this.”

And I took this to one of our top accounting guys who said, “This is creepy,” and he took it to Jim Rigas. Jim got angry, livid, and went back to the accounting guy and said, “You NEVER question what my brother wants to do.” And that was the

end of it. The manager instituted the rule that the disconnect flags would drop off at 180 days. That family stuck by each other. (Exec A)

The theme of family loyalty and trust was strongly prevalent in every interview. The fact that the company was run by a family, and treated as a family, permitted the Rigases to enforce extreme control over the decisions of the organization. That high level of control and the resulting low empowerment of the staff is the second major theme in the data.