Cable pioneer John Rigas, who built Adelphia Communications Corp. (ADLAE) from a small-town family business 50 years ago into a cable powerhouse, lived the classic American success story, until it ended in disgrace.
On Wednesday, Rigas and his sons Timothy and Michael were arrested on federal securities and bank fraud charges. The complaint said Rigas and members of his family "looted Adelphia on a massive scale."
The fall of the business empire built by the 77-year-old Rigas in the small western Pennsylvania town of Coudersport began in March with the disclosure of $2.3 billion in loans by the company to partnerships controlled by the Rigas family.
That was followed by federal investigations, missed interest payments and, last month, bankruptcy.
Rigas resigned in May from his role as chairman and chief executive officer of Adelphia as the company said it would investigate the loans.
The long climb to the top ranks of American business by Rigas began with a movie theatre in Coudersport, where he started his first cable system in 1952 with a $300 check.
Rigas, who served with the armored infantry in the U.S. Army during World War II, was born to a Greek immigrant father. With his brother Gus, Rigas called the company they founded together Adelphia, the Greek word for brotherhood.
The brothers gradually expanded by acquiring cable systems in Pennsylvania and New York State. Gus sold his share of the business in 1983.
Adelphia remained a family business, and John's three sons, Michael, Timothy and James, became senior executives of what is now the No. 6 U.S. cable operator.
Rigas kept to his roots, eating breakfast and taking phone calls in a local cafe in the small town of just 2,650. He was known as a man whose word was good enough to seal a deal.
"He was good to his word and he would frequently conduct business on a handshake," one cable industry source said.
Robert Sachs, CEO of the National Cable and Telecommunications Association, in May described Rigas as "one of the true pioneers in this business."
Rigas was so concerned about family values that he resisted airing the Playboy channel for Los Angeles subscribers even though it meant forsaking revenues, Sachs said.
Last week, however, Sachs told trade publication Multichannel News that his reaction to the Adelphia story changed to anger and betrayal from an intial feeling of sadness and personal tragedy when the events first emerged.
But the success story took a darker turn in March after Adelphia disclosed it guaranteed $2.3 billion in loans to partnerships controlled by the Rigas family.
In May, Adelphia said grand juries in New York and Pennsylvania were investigating the company, including its defaulting on billions of dollars of bank loans.
In his hometown, Rigas had long been admired.
"People still held (Rigas) in high regard because of what he has accomplished but you can't argue with the arrest. It's tragic the arrogance of accomplishment led to criminal behavior," said Jack Myers, a television industry analyst and editor of the Myers Report.