Copyright 2005, Inc.

April 8, 2005 Friday 9:34 AM Eastern Time

Time Warner (TWX:NYSE) and Comcast (CMCSK:Nasdaq) reportedly have a preliminary agreement to buy bankrupt cable operator Adelphia for cash and stock.

Adelphia's creditors will receive $12 billion in cash and a stake in the combined Time Warner-Adelphia cable operation valued at around $6 billion, several newspapers reported.

The transaction allows Comcast a tax-advantaged way to unwind its stake in Time Warner. The Philadelphia-based company will put up $2 billion of the Adelphia purchase price and swap a 21% stake in Time Warner for 2 million Adelphia subscribers.

Adelphia, which has about 5.3 million total subscribers, filed for chapter 11 protection two years ago after collapsing in an accounting and corporate governance scandal.

Long Island-based Cablevision (CVC:NYSE) previously offered $16.5 billion in cash for Adelphia. That offer lacked the detail of the Time Warner-Comcast bid but could still upset Thursday night's preliminary agreement, the Wall Street Journal reported.