Verizon Conned Fairpoint, Creditors Claim Creditor Trust Sues Verizon for $2 Billion Tipped by FloridaBoy 
In 2008 Verizon offloaded their New Hampshire, Maine and Vermont DSL and landline networks to Fairpoint Communications for $2.7 billion. The deal was a crafty and complicated one for Verizon, company lawyers using a Reverse Morris Trust to not only offload networks they had no interest in upgrading -- but to saddle Fairpoint with $1.7 billion in Verizon debt while netting a nifty $600 million tax write off.  Verizon structured the transaction so that it could not only continue to compete with the combined entity in the relevant states after the transaction, but also so that it could crush the new competition created by the transaction.  -Fairpoint Creditor Trust Complaint |
Not too surprisingly, the added debt and obligations layered on a tiny telco (whose eyes were bigger than its stomach) resulted in Fairpoint's implosion and subsequent bankruptcy. Several years later, the creditors left holding the bag are trying to recoup their losses. A trust set up to benefit creditors in the FairPoint bankruptcy case is suing Verizon Communications for $2 billion, claiming Verizon was effectively running a giant con. According to the complaint (pdf), Verizon not only made out like a financial bandit up front, but took advantage of regulatory delays to strip mine the assets of anything of value, including core IP network components, business services, and localized billing and support assets required to support the three states. Verizon then billed out their support assistance for millions per month during the very rocky transition, during which time 911 and other services saw repeated outages, resulting in millions more in refund penalties. So why did Fairpoint executives sign off on such a disaster? The complaint insists a "blend of naivete and optimism" and existing rocky financial footing forced Fairpoint into the deal: By the time of the closing...Old FairPoint had become so strapped for cash that it could not even cover closing costs without help from Verizon. Old FairPoint executives, committed to taking on management responsibilities for a merger partner more than seven times its own size, while simultaneously shouldering a $2.5 billion debt, saw the writing on the wall, but believed Old FairPoint was trapped. The company had no chance given the hand it was dealt by Verizon. Old FairPoint was either insolvent or sliding over the edge into insolvency even before any money changed hands." Verizon sent Broadband Reports a statement saying the company would contest the suit "vigorously," and that Fairpoint's problems were entirely their fault: “FairPoint Communications’ 2008 acquisition of Verizon’s northern New England wire-line operations occurred after thorough due diligence on the part of FairPoint and its lenders and lawyers, as well as extensive review and approvals from telecommunications regulators in Maine, Vermont and New Hampshire. The claims now raised by the Litigation Trust two years after FairPoint’s bankruptcy wrongly blame Verizon for financial losses suffered by sophisticated lenders that resulted from operational, financial and other difficulties encountered by FairPoint after the closing of the acquisition, and not from actions by Verizon." As usual, the truth is somewhere in the middle. While it's possible Fairpoint knew they'd go bankrupt and playing dumb was part of a master plan by a tiny phone company, it's more likely that small town Fairpoint was simply manipulated from beginning to end by Verizon's more sophisticated New York legal department. Meanwhile state regulators, most of whom are comfortably in Verizon's pocket, ignored repeated warnings about the deal. Amusingly, the complaint doesn't even realize Verizon's master plan: to swoop into these markets and win back most of the customers (the only part of the deal really worth anything) with fixed LTE service. Verizon did effectively con Fairpoint, but Fairpoint executives were also clearly fools to agree to such a deal without understanding it. Meanwhile, this is the third deal of this kind for Verizon (Hawaii Telcom, Fairpoint, Frontier) with more likely to come. While Verizon has made out like a bandit every time -- two of the three acquiring companies (Hawaii Telcom, Fairpoint) have been forced into bankruptcy as a result of the deals. That is, again, the fault of both Verizon and the acquiring companies, but it's also the fault of our pay-to-play regulatory system, which was more than willing to look the other way for the right price.
|
 |  | | | Re: Con? If Verizon wants to sell something, it obviously isnt very profitable. The Fairpoint bigwigs are at fault 100% for being completely naive. | |
|
| | When did Karl first explain this? I mean anybody in any type of business should at least do a couple of google searches before signing a contract. Karl has been writing stories about this for a long time maybe even before 2008. | |
| | | | Re: When did Karl first explain this? Yes, he has. And I daresay that 90% of the people on this site also understand what a rotten deal this was. We knew it from the beginning, even before the contracts were signed.
But, IMHO, many of these deals aren't driven by people who know the industry; they're driven by accountants, financiers, and just plain greedy fools. These folks think they know how telecom works--with a little help from the sales pitch they doubtless viewed--but they often don't have a clue. They've probably never even heard of BBR, nor do they know about fixed LTE, the state of DSL, or the fact that Verizon is simply unloading less profitable markets that it never bothered to upgrade and can easily reenter through its wireless division. In short, they have money, and they THINK they know telecom. And, since these types of folks often have a very high opinion of themselves, they aren't going to take the advice of a bunch of posters on an Internet forum.
My mom had a saying she told me more times than I can count, and it seems to fit this situation perfectly: A fool and his money are soon parted. | |
| | |  CheesePremium
join:2003-10-26
Naples, FL
kudos:1 | Re: When did Karl first explain this? said by ISurfTooMuch: And, since these types of folks often have a very high opinion of themselves, they aren't going to take the advice of a bunch of posters on an Internet forum.
And they need to listen to people on here why? | |
| | | | | | Re: When did Karl first explain this? said by Cheese:said by ISurfTooMuch: And, since these types of folks often have a very high opinion of themselves, they aren't going to take the advice of a bunch of posters on an Internet forum.
And they need to listen to people on here why? I would think a $2 billion lawsuit explains that. | |
| | | | | CheesePremium
join:2003-10-26
Naples, FL
kudos:1 | Re: When did Karl first explain this? said by viperlmw:said by Cheese:said by ISurfTooMuch: And, since these types of folks often have a very high opinion of themselves, they aren't going to take the advice of a bunch of posters on an Internet forum.
And they need to listen to people on here why? I would think a $2 billion lawsuit explains that. Um...no | |
| | | | | |  GooberPremium
join:2000-12-17
Naperville, IL
kudos:5
 ·Dish Network
| Re: When did Karl first explain this? Silly, isn't it? I work on probably a dozen M&A deals a year of all sizes and not once do I ever hit some stupid message board to see what the members are saying. I mean I do to see what people are thinking, but not to listen to their advice. That would be silly. The amount of clueless IP jabbering that I see on here is pretty indicative of the general cluelessness likely in all aspects of a deal. The knowledgeable voices are always drowned out by the agitators and the know-it-alls.
And I don't go for the fact that the sophisticated NY attorneys threw the wool over FP's attorneys. That about as stupid a comment as I've read regarding this as well. Inside counsel rarely does these deals. Mostly it's handled by outside firms that do M&A as their bread and butter.
It simply sounds like either bad due diligence (which I doubt) or someone higher up wanted the deal bad enough.
--
Support the Occupy Wall Street movement--poop on a police car! »tinyurl.com/64kv5h4 | |
| | | | | | | | | Re: When did Karl first explain this? said by Goober:It simply sounds like either bad due diligence (which I doubt) or someone higher up wanted the deal bad enough.
I don't disagree that the signal-to-noise ratio here can get pretty low, but the consensus was, from that beginning, that this was a bad deal for FairPoint.
And you make a good point about someone higher up wanting the deal badly enough. And that's precisely why everyone else should have been listening to what was being said about this deal as it unfolded. And yes, I've seen my share of mergers, and when one person is pushing it really hard, and when you find other, smaller voices, warning that it's a really bad idea, you'd better pay attention, because, more often than not, that powerful person trying to ram it through almost always has their own agenda, and it's hardly ever good for anyone else. | |
| | | | | | | | GooberPremium
join:2000-12-17
Naperville, IL
kudos:5 Reviews:
·Dish Network
| Re: When did Karl first explain this? The problem is that the people on message boards have no clue really. It's all conjecture on their part. I wouldn't come close to basing decisions on message board chatter by people who haven't seen the management presentations, don't have a white paper with preliminary diligence and don't get to see all the confidential documents in the data room.
Imagine if I'm outside or in-house counsel for a company and I go to the managing partner or the business guy and say, "Hey, the guys on this message board say it's not a good deal. They don't have any of the financial numbers, presentations or documents that we do, but HEY it's DSLR after all."
Not gonna fly. I sure the hell wouldn't bring it up to my boss or the involved BD guys.
--
Support the Occupy Wall Street movement--poop on a police car! »tinyurl.com/64kv5h4 | |
| | | | | | | | | | | Re: When did Karl first explain this? No, you wouldn't go into a meeting and say that, but if enough people are talking about the bad state of the infrastructure your client is buying, the fact that the number of landline subs is declining, and the fact that DSL is getting clobbered by cable, then you should do some research into these things and present your findings accordingly. For example, why didn't Verizon rehabilitate these aging copper networks? They've obviously done their own research and decided that the investment isn't worth it. Then why are they telling you about all the benefits of buying these areas from them? If they can't turn these areas around, then why should your client think they can?
As for this advice coming from end users, that lends its own valuable perspective. If Verizon is saying these copper areas are old but still performing satisfactorily, but you have lots of people in message boards talking about the problems they're having with their service and the fact that these problems aren't getting solved, then you should start to wonder whether Verizon is being entirely candid about the state of the network you're buying. And it should also make you wonder about customer defections to both existing and potential competitors. If the natives are getting restless and are looking to leave, your client might still want to buy, but you'd better warn them that their new customers' tolerance for mistakes is going to be very low. If Verizon is saying things are fine, yet you're getting different signals from other sources, you might want to see who's being more truthful with you. | |
| | | | | | | | | | GooberPremium
join:2000-12-17
Naperville, IL
kudos:5 Reviews:
·Dish Network
| Re: When did Karl first explain this? It just doesn't happen (and likely never will). To answer any of those questions, you'd have to talk to the BD guys. No one else can say.
When we do acquisitions, they're for a variety of one or more different reasons:
Branding
Distribution
IP
Competition elimination
New Product line
Expansion of existing product line
And we may or may not care about the rest of the items.
Also, only the company knows whether they actually identified the problems and negotiated a discount off the purchase price. We'd have to see the purchase agreement to know.
--
Support the Occupy Wall Street movement--poop on a police car! »tinyurl.com/64kv5h4 | |
| | | | | | | | | | | | Re: When did Karl first explain this? Well, it's pretty obvious that this deal was done for either expansion or competition elimination, or a little of both. But if I'm FairPoint, and I have access to $2.7 billion, then I'm going to also wonder what I can build myself for that money. Certainly not a network to cover all these states, but I'd rather have a small modern network than a large old one that needs lots of work. If I'm going to drop that kind of money on an acquisition, and if I know the network hasn't been upgraded, then I'm going to want to have additional resources available to do those upgrades. It's like buying any business. The more antiquated the infrastructure, the more extra money you need after the purchase to use to update. If FairPoint was as strapped for cash as they now claim, why did they do this deal in the first place? Sure, there can be delays, but you'd better plan a worst-case scenario out on the front end and then write that into your contract.
And I still don't think FairPoint did their homework. If nothing else, what made them think that they could turn around an area that Verizon wanted to be rid of? I'm not saying it can't be done, but it sure doesn't look like they had much of a plan to do it. | |
| | | | | | | | | | GooberPremium
join:2000-12-17
Naperville, IL
kudos:5 Reviews:
·Dish Network
| Re: When did Karl first explain this? said by ISurfTooMuch:Well, it's pretty obvious that this deal was done for either expansion or competition elimination, or a little of both. But if I'm FairPoint, and I have access to $2.7 billion, then I'm going to also wonder what I can build myself for that money. Certainly not a network to cover all these states, but I'd rather have a small modern network than a large old one that needs lots of work. If I'm going to drop that kind of money on an acquisition, and if I know the network hasn't been upgraded, then I'm going to want to have additional resources available to do those upgrades. It's like buying any business. The more antiquated the infrastructure, the more extra money you need after the purchase to use to update. If FairPoint was as strapped for cash as they now claim, why did they do this deal in the first place? Sure, there can be delays, but you'd better plan a worst-case scenario out on the front end and then write that into your contract.
And I still don't think FairPoint did their homework. If nothing else, what made them think that they could turn around an area that Verizon wanted to be rid of? I'm not saying it can't be done, but it sure doesn't look like they had much of a plan to do it.
We don't know the deal terms. Maybe the asking price was even higher and they took all that stuff into account and then mismanaged the business.
We are a bottom feeder when it comes to acquisitions and second to none when it comes to making those businesses profitable. It's done by others all the time as well. Companies see and eliminate waste that the prior owner couldn't or didn't want to do. There may have been synergies that they perceived at the time.
That being said, there are certain companies that are terrible at M&A and integration. My last employer was that way. They did a deal every few years and the last one they did was horrible. My present employer does a dozen deals a year--year after year--and I can't think of one that hasn't turned out well.
--
Support the Occupy Wall Street movement--vandalize private property! »tinyurl.com/4yaqboj
said by ISurfTooMuch:True, but, in this case, it takes cash--and lots of it--to upgrade the network. If FairPoint was as close to the edge as they now claim, why did they think they could do it? $2.7 billion is a lot to lose because you don't have the resources to run what you just bought.
If I overextend myself so much when I buy a business that I don't have the cash to fix the leaky roof or repair the cash register, then I'm a fool for doing it.
Maybe their line of credit disappeared in the downturn. That happened to a lot of companies. That's how my company benefits. We have a lot of cash and we wait for businesses to sell for relative peanuts. We acquire much more when the economy is down and businesses are hurting. | |
| | | | | | | | | | | | Re: When did Karl first explain this? Yeah, I saw an acquisition go bad. Two acquisitions, really. The company was called OneMain.com. I worked for them. Well, actually, the first acquisition--the purchase of small ISP's--went fine, but they couldn't integrate them into a cohesive unit to save their lives. And their new user-management system, called BOSS, was--well, words can't really describe how bad it was. Then the second acquisition occurred. The dot-com bubble burst, OneMain's stock price tanked, and EarthLink swooped in and bought them. But here's another example of a company not doing their homework. The regional ISP I worked for (we had never been integrated into OneMain proper) had a history of very personal service. We knew our customers, and they knew us, even though we had around 55,000 of them. When EarthLink came in, they decided to shut our local office down because they didn't see us getting the numbers their big call centers got. But, in the process, they lost tons and tons of customers. The local paper even did a story on how many of our customers were looking for other options, and I even got stopped by a lady in Wal-Mart who saw my t-shirt and asked if I worked for EarthLink. When I said no, that I'd been laid off like everyone else, she told me how great our company had been and how horrible EarthLink was. And I could tell how many of our business customers' Web sites never got converted properly or they'd left and headed elsewhere, since I remembered many of the domains I'd registered and watched to see what happened to them. And we were just starting to get into DSL. Well, when we were bought, EarthLink killed that off very quickly. Yeah, that was a really smart thing to do. | |
| | | | | | | | | | GooberPremium
join:2000-12-17
Naperville, IL
kudos:5 Reviews:
·Dish Network
| Re: When did Karl first explain this? Integration isn't easy. We've seen it in some of our larger (multi-billion dollar acquisitions), but over time if you know what you're doing it works.
Depending on the reason Earthlink acquired your company and how much they paid, they may have gotten what they wanted. Undoubtedly the owner got a nice payout.
--
Support the Occupy Wall Street movement--vandalize private property! »tinyurl.com/4yaqboj | |
| | | | | | | | | | | | Re: When did Karl first explain this? I don't recall the details of the deal, since it was over 11 years ago, but I do remember that many folks who had stock options got screwed because they were now underwater, and I don't think they got offered anything to accommodate that, well, at least not for the folks I'm aware of.
However, most of us came out OK. Back before OneMain got bought, they had already started to do some consolidation and layoffs, so they'd put forward a pretty generous severance package: over three months pay when you factored in base and extended severance. It became more or less a standing offer, even if you weren't slated to get laid off in the foreseeable future, which was probably a mistake on someone's part, so, when EarthLink took over, they were stuck with that agreement. But boy did some folks in management try to keep people from taking the severance package and leaving. They tried to tell many folks that, no, they couldn't leave if they could be transferred to other departments when their departments were closed down, even though the written agreement said otherwise. And, since some of those transfers were downward moves, and since severance was based on your last rate of pay before you were laid off...well, you can see where this was going. They tried to tell us that our salaries wouldn't be reduced when we changed departments, but no one believed that, considering it wasn't in writing and also considering how they were trying to weasel their way out of what was in writing. Needless to say, it proved to be a pretty tense standoff before we were finally told they'd let us choose to leave and take the package.
As far as what EarthLink got, it wasn't much at our facility. The building was leased, and they had a fire sale of computers before shutting down. The main things they got were the POP's and the customers. And many of our POP's covered areas where EarthLink didn't have a local presence, so I guess that's something, although, considering that shared POP's were coming on the scene pretty quickly, I don't think those held their value for long. As for the customers, I already mentioned those, and, with SBC rolling out DSL pretty widely at the time and EarthLink abandoning it, they probably only kept a few rural customers in areas served by telcos that didn't offer DSL. So, all in all, I think it ultimately was a bad deal for EarthLink, but, given their stellar track record in the last 10-15 years, they probably couldn't see it. Although, I have some grudging admiration that they're still managing to hang on, if only by a thread. | |
| | | | | | | | | | GooberPremium
join:2000-12-17
Naperville, IL
kudos:5 Reviews:
·Dish Network
| Re: When did Karl first explain this? Interesting story. Thanks for sharing.
I've never been on the acquired side of the equation, but from what I've read in the various message boards, I'm glad.
Yeah, you can't trust most big business to look out for employees--everything needs to be in writing.
Sounds like it was just a bad transaction all around. I'd love to see the management presentations and white papers.
--
Support the Occupy Wall Street movement--vandalize private property! »tinyurl.com/4yaqboj | |
| | | | | | | | | | | | Re: When did Karl first explain this? To be honest, I'm not sure it was something that was in the works for long. The impression I got was that, as soon as the stock tanked, EarthLink went on a buying spree. We all came in one morning and found out we were owned by EarthLink. Even our regional VP was unaware. As far as I know, he found out in the same e-mail we got. Given that our stock fell so far in a very short time, I don't think EarthLink had to do much more than wave some cash. From what OneMain was doing (buying small to medium sized ISP's--many serving smaller cities and rural areas--and merging them), it certainly seemed like they were looking to be bought, but I don't think events transpired the way they'd hoped.
But, the thing was, it was obvious EarthLink didn't know much about what they'd bought. True, my ISP was relatively small by their standards, and our business sales division didn't get the raw numbers they did, but we were making some inroads into companies I'm sure they'd love to have now, such as a very large discount retailer everyone loves to hate. I know that one because I sold to them, and I was working directly with their national headquarters' IT department. We were also selling accounts to a decent sized insurance company and several trucking companies, and I'm not talking dialup accounts or DSL here--I mean T1's, ATM, Frame Relay, etc, and we had the people on the ground to configure, install, and support the equipment. But we never got visited once by someone from EarthLink. They just told us to stop selling, first, supposedly in preparation for a new product rollout, then we were told we were being closed down. Had they bothered to ask, I could have told them that the discount retailer sale I mentioned was part of a pilot project that had the potential to go national. I'll bet they still don't know that. Oh well, their loss.
Wow, this all sure brings back some memories. It was quite a ride. | |
| | | | | | | | | | GooberPremium
join:2000-12-17
Naperville, IL
kudos:5 Reviews:
·Dish Network
| Re: When did Karl first explain this? Do you recall the purchase price of your company? I'm just kind of curious how much Earthlink paid, relative to their revenues back then.
We do small deals pretty quickly, but take a long time with the bigger ones. We're pretty conservative and are very thorough with our due diligence. I know that many other companies aren't. And in the go-go days, a lot of those companies closed deals quickly to just get them done without much diligence at all.
--
Support the Occupy Wall Street movement--vandalize private property! »tinyurl.com/4yaqboj | |
| | | | | | | | | | | | Re: When did Karl first explain this? I don't recall, but I'll do some checking when I'm at my computer. I remember that CNET covered it, so I'm sure the info is out there.
But here's a fun fact. The guy who originally started the ISP that he sold to OneMain started a new ISP/telecom company right after we were shut down. Since he was the owner of the building, he just started it in an area not leased to Earthlink. He then hired back about a quarter of the employees (I even worked there for a while until I moved), grabbed a bunch of EarthLink's former local customers, and, as far as I know, the company is still there.
Now THAT'S the guy who made out like a bandit. | |
| | | | | | | | | | GooberPremium
join:2000-12-17
Naperville, IL
kudos:5 Reviews:
·Dish Network
| Re: When did Karl first explain this? lol. Earthlink were idiots then. All our purchase agreements have non-compete and non-solicitation clauses.
--
Support the Occupy Wall Street movement--vandalize private property! »tinyurl.com/4yaqboj | |
|
| | | | | | | | |  cdruGo ColtsPremium,MVM
join:2003-05-14
Fort Wayne, IN
kudos:7 | said by ISurfTooMuch:For example, why didn't Verizon rehabilitate these aging copper networks? They've obviously done their own research and decided that the investment isn't worth it. Then why are they telling you about all the benefits of buying these areas from them? If they can't turn these areas around, then why should your client think they can? If a job pays $50k per year, someone who makes $100k annually isn't going to look at that job as an attractive employment opportunity. However someone who has been flipping hamburgers may look at it as a great opportunity. It's all in the matter of perspective. | |
| | | | | | | | | | | | Re: When did Karl first explain this? True, but, in this case, it takes cash--and lots of it--to upgrade the network. If FairPoint was as close to the edge as they now claim, why did they think they could do it? $2.7 billion is a lot to lose because you don't have the resources to run what you just bought.
If I overextend myself so much when I buy a business that I don't have the cash to fix the leaky roof or repair the cash register, then I'm a fool for doing it. | |
|
| | | | | | |  braynesPremium
join:2005-03-14
Waterville, ME | "I don't disagree that the signal-to-noise ratio here can get pretty low, but the consensus was, from that beginning, that this was a bad deal for FairPoint."
Fairpoint what about the poor bastards in new England in the this crap phone service. so who cares about fairpoint they wanted to play big man own a phone company. Sort of like melleon wanted a RR bought mcpp now look. fairpoint will be something we will all be paying for all are lives.
Bruce | |
|
| | | | | | cdruGo ColtsPremium,MVM
join:2003-05-14
Fort Wayne, IN
kudos:7 | said by Goober:And I don't go for the fact that the sophisticated NY attorneys threw the wool over FP's attorneys. That about as stupid a comment as I've read regarding this as well. Inside counsel rarely does these deals. Mostly it's handled by outside firms that do M&A as their bread and butter.
It simply sounds like either bad due diligence (which I doubt) or someone higher up wanted the deal bad enough. I don't buy it either. This wasn't Ma and Pa Kettle going into town and getting swindled by a slick car salesman. Not saying that all attorneys are brilliant, but I think FP would have had to hire a ambulance chaser in order for FP to be able to claim they got suckered. | |
|
| | | | | said by Cheese:said by ISurfTooMuch: And, since these types of folks often have a very high opinion of themselves, they aren't going to take the advice of a bunch of posters on an Internet forum.
And they need to listen to people on here why? Well, for one thing, if they'd bothered to listen, maybe they wouldn't have gotten themselves into such a horrible deal. It's been no secret here that Verizon was dumping these more rural areas, and it's been known for years that the copper plant in these areas has essentially been allowed to rot. And not to mention the fact that wireline phone service has been in decline for the last decade or so, and cable has been eating DSL's lunch for about the same time period. None of this is to say that you can't turn things around, but you'd better be ready to hit the ground running with some major upgrades to the network the moment you sign the deal.
If the FairPoint folks had been paying attention, they'd know this. | |
| | | | | CheesePremium
join:2003-10-26
Naples, FL
kudos:1 | Re: When did Karl first explain this? said by ISurfTooMuch:said by Cheese:said by ISurfTooMuch: And, since these types of folks often have a very high opinion of themselves, they aren't going to take the advice of a bunch of posters on an Internet forum.
And they need to listen to people on here why? Well, for one thing, if they'd bothered to listen, maybe they wouldn't have gotten themselves into such a horrible deal. It's been no secret here that Verizon was dumping these more rural areas, and it's been known for years that the copper plant in these areas has essentially been allowed to rot. And not to mention the fact that wireline phone service has been in decline for the last decade or so, and cable has been eating DSL's lunch for about the same time period. None of this is to say that you can't turn things around, but you'd better be ready to hit the ground running with some major upgrades to the network the moment you sign the deal. If the FairPoint folks had been paying attention, they'd know this. For one thing, a business, for the most part, is not going to listen to end users on a message board, especially regarding a acquisition/merger. | |
| | | | | | | | Re: When did Karl first explain this? I'll bet Netflix had wished they'd listened. They finally did, but they've been through an extremely rocky period in the meantime.
I'm sorry, but I just have to take the opposite view on this. Paying attention to what people are saying about your company can be very valuable because you get a different perspective that you don't get when you only listen to other insiders. I'll bet Clear Channel thought it was a nifty idea to buy a ton of radio stations, gut their operations, and centralize programming decisions. I'm sure they thought they'd save tons of money and generate enormous economies of scale. Which they did. However, people were not only moaning about the loss of localism, but they were also warning that this was ultimately a recipe for disaster because listeners would leave. And they were right. Listeners have abandoned terrestrial radio in droves, and Clear Channel is a shell of what it was at the beginning of this adventure. And Citadel Broadcasting, another big chain broadcaster, is gone, having gone into bankruptcy and being gobbled up by Cumulus. Companies like Clear Channel and Citadel have wrecked terrestrial radio, all despite many warnings from stupid message boards. | |
| | | | | | |  TransmasterDon't Blame Me I Voted For Bill and Opus
join:2001-06-20
Cheyenne, WY
 ·CenturyLink
| Re: When did Karl first explain this? What an excellent example Clear Channel though they could in effect corner the broadcast market. They automated the small market stations and homogenized most of the big market stations so you couldn't even tell what station you where listening to. If you will recall Clear Channel was in cahoots with the RIAA in their attempt to kill streaming radio with ruinous licensing fees. This ultimately failed. Now the only place that has diversity in listening choices is on line. Belatedly Clear Channel came up with iHeart radio to stream a number of it's stations but even then there are unforeseen consequences. iHeart Radio in effect turned the entire Nation into one radio market Which is now dominated by the few Clear Channel stations that are different from the rest. Presently the number one station on iHeart is KFI, Los Angles. So instead of people tuning into their local station on the iHeart app on their smartphones they are going to just a few stations such as KFI. Now Clear Channel is trying to make more money from iHeart Radio by trying to emulate Pandora.A day late and a dollar short move.
--
I am quite sure now that often, very often, in matters concerning religion and politics a man's reasoning powers are not above the monkey's.
- Mark Twain in Eruption | |
|
| | | | | | | "For one thing, a business, for the most part, is not going to listen to end users on a message board, especially regarding a acquisition/merger."
That is one of the issues at hand with today's global economy . Many if not most Corporations do not care what the end user thinks or feels because they have very little on their minds except turning as much profit as they can without regard to any long term and as fast as they can. This is especially true when their customer base has no options but to use their goods or services or go without. With no legal recourse to protect the consumer from the less than honest actions of corporations, its open season on the consumer by the corporate establishment. This mindset will come back to haunt us all in months and years to come. | |
|
| | | | | | said by ISurfTooMuch:If the FairPoint folks had been paying attention, they'd know this.
It was so obviously going to go down this way, I don't believe they were just not paying attention. Figure out who, in a decisionmaking capacity at Fairpoint, benefited from the deal, and you'll know why it happened. | |
|
| | |  bear73Metnav... Fly The Unfriendly SkiesPremium
join:2001-06-09
Grand Forks Afb, ND
1 edit | while they don't need to listen to posters from some random tech site, they should/do need to listen to the techs/engineers/system experts that all warned them that they(Fairpoint) were placing their head into the noose while standing on the edge of a plank. These folks still were too full of themselves to listen to the people knowledgeable in the systems that knew that it was a deal engineered to fail and that Verizon built the deal so they could come in at a later date and re-acquire their old customer base without all the restrictive regulations of a wire-plant/copper-plant
-- | |
|
| | axus
join:2001-06-18
Washington, DC | Agreed, how can it be a con when the terms are plainly stated? The worst part was the regulators failing to block it. Verizon was forced to support these places by taking USF funds, they were meant to provide service to unprofitable places.
Verizon made a smart business move, but it was Fairpoint that begged and pleaded to be taken. Nobody could understand why. | |
|
| Mr Matt
join:2008-01-29
Eustis, FL
kudos:1 | It is all about salesmanship. I am sure that Verizon had a team of their lawyers make a pitch with charts and spreadsheets and a slick Power Point presentation to Fairpoint, showing how the purchase of Verizon's assets was the deal of the century. | |
| | | | | Re: When did Karl first explain this? And that's precisely when the FairPoint execs should have stepped back, done their research, and asked the question, "If this network is such a potential moneymaker, why are you wanting to get rid of it?" | |
| | | |  LinklistPremium
join:2002-03-03
Longport, NJ
kudos:5 | Re: When did Karl first explain this? said by ISurfTooMuch:And that's precisely when the FairPoint execs should have stepped back, done their research, and asked the question, "If this network is such a potential moneymaker, why are you wanting to get rid of it?"
And even if Fairpoint still wanted to expand knowing what you just said, they paid WAY TOO MUCH for the assets. They should have told Verizon to cut the price or go pound sand.
--
»www.politico.com/rss/2012-election.xml
»www.politico.com/rss/2012-election-blog.xml
| |
| | | |  woody7Premium
join:2000-10-13
Torrance, CA | Bingo!!!!!!
--
BlooMe | |
|
| |
See 6 replies to this post | |
LinklistPremium
join:2002-03-03
Longport, NJ
kudos:5 |  Did Fairpoint execs not care?
I just don't think Fairpoint execs got fooled. The shareholders of Fairpoint prior to the Verizon deal are probably the ones taken to the cleaners along with the banks lending money.
And let's not forget this all took place while the US banking system was collapsing and being bailed out. A lot of the creditor disgust now should not be with either Fairpoint or Verizon, but with the banks not doing their jobs. If anyone should be sued, it is the banks. Verizon is a target for the same reason all lawsuits follow when suing - sue the deep pockets. Relative culpability bears no relation to who is being sued.
--
»www.politico.com/rss/2012-election.xml
»www.politico.com/rss/2012-election-blog.xml
| |
|  PathfinderDazed ConfusedPremium
join:2000-03-26
Mount Vernon, NY
 ·Verizon FiOS
 ·RoadRunner Cable
| Give it a rest quote:
Fairpoint was simply manipulated from beginning to end by Verizon's more sophisticated New York legal department
And a major corp like Fairpoint has a bunch of rube lawyers? C'mon give it a rest. The deal was a crock from the start but I find Fairpoint at fault here not Verizon. Due Diligence!! | |
|  n2jtx
join:2001-01-13
Glen Head, NY | Surprised? Anybody who has been on this site for at least six years had been following all this nonsense from the beginning. It was spelled out in detail that the sale would fail and it was no surprise, the play-by-plays, to see the regulators cave. It was not as if there was no information available to show what a truly bad deal this was. Any creditors who feel burned have no one to blame but themselves. There was plenty of information available about how risky this deal was and if they chose to ignore it, they did so at their own peril.
I myself would never put one dime in any asset Verizon or AT&T decided to spin off.
--
I support the right to keep and arm bears. | |
| |  alchav
join:2002-05-17
Palm Desert, CA | Re: Surprised? said by n2jtx:Anybody who has been on this site for at least six years had been following all this nonsense from the beginning. It was spelled out in detail that the sale would fail and it was no surprise, the play-by-plays, to see the regulators cave. It was not as if there was no information available to show what a truly bad deal this was. Any creditors who feel burned have no one to blame but themselves. There was plenty of information available about how risky this deal was and if they chose to ignore it, they did so at their own peril.
I agree with you 100%, but all the fault lies in the Fairpoint Execs, they just didn't have a clue on the failing Technology. There is mixed feeling on what makes good Top Managers, but mine was always they have to know their Product, and the best Managers were the ones that worked their way up. I think this is especially true in Technology Companies like Telcos. Here is a prime example of Top Management not knowing their Product, and relying on advice from their Experts. | |
| | | Zen6
join:2011-06-04
Saratoga Springs, NY | Re: Surprised? Ask yourself, who had the most to gain from this deal. Who benefited from this deal. | |
|
guppy_fishPremium
join:2003-12-09
Lakeland, FL
kudos:1 | The new american way - its not my fault I &^%$ up! Bought a home and its not worth what you pay, don't!
Bought a company and its worth less than you pay SUE!
"It's not my fault I f&*^ed up!!!"
Here is a long lost term
"personal responsibility" | |
| | | .... Rule of thumb; never make deals with Verizon. | |
| | woody7Premium
join:2000-10-13
Torrance, CA | Re: .... I am sure many will think this in the future.................... 
--
BlooMe | |
| | | | | Re: .... They will once they get a bill per day vs per month.  | |
|
| | Verizon Conned Fairpoint, Creditors Claim Even my dog could see that. Why did they let the deal close in the first place?  | |
| | |
| | Not just a giant con... a giant, government-approved con.
Caveat emptor. | |
| Reviews:
 ·ooma
·Optimum Online
·Verizon FiOS
| SOL, maybe.. they don't have the statue of limitations called SOL for nothing...
why did Fairpoint wait this long to bring a lawsuit about getting the short end of the stick?
many of these deals closed 7-10 years ago...
consumers have as little as 30 days (with rare exceptions) to report fraud on their bank & credit card statments to be 100% covered by zero liability provisions of the account.
perhaps it was CONVENIENT to play nice with Verizon because they still were helping them figure out how to run a local bell company and how to screw over customers & employees and have them think they're a best friend doing them a favor...
that is, until Verizon can distance themselves from the titanic like a devilish red iceberg... | |
| |  RARPSL
join:1999-12-08
Suffern, NY | Re: SOL, maybe.. said by tmc8080:they don't have the statue of limitations called SOL for nothing...
why did Fairpoint wait this long to bring a lawsuit about getting the short end of the stick?
The suit is NOT being brought by Fairpoint (pre or post Bankruptcy) but by the creditors of Pre-Bankrupt Fairpoint who were left holding the bag when Fairpoint went bankrupt and reorganized. | |
| | |  tshirtPremium,MVM
join:2004-07-11
Snohomish, WA
kudos:3
·Comcast
| Re: SOL, maybe.. And why were they stupid enough to lend money to this venture?
If they are creditors of Frontier, then it wasn't verizon that mislead them, but frontier's staff and their own due diligence team.
there was no fraud, any one with half a brain saw this is a VERY high risk gamble at best.
a reasonable deal would have been to take the debt and the territory with full responsiblity...NO CASH! | |
| | | Reviews:
·ooma
·Optimum Online
·Verizon FiOS
| said by RARPSL:said by tmc8080:they don't have the statue of limitations called SOL for nothing...
why did Fairpoint wait this long to bring a lawsuit about getting the short end of the stick?
The suit is NOT being brought by Fairpoint (pre or post Bankruptcy) but by the creditors of Pre-Bankrupt Fairpoint who were left holding the bag when Fairpoint went bankrupt and reorganized. I'm no legal judge, but IMO, I'd now say SOL, definitely. These creditors knew what they were getting into when they signed off on it (or SHOULD have known). When Verizon transferred this debt, they KNEW they were left with PISS POOR infrastructure that had less than ZERO chance of being upgraded and therefore by proxy increased revenue, profit and a chance of getting paid back by offering more value to the consumer. Therefore, barring any malfeasance & HIDDEN fraud on the part of Verizon or the lawyers this case is dead before it begins. There are stunning similarities to the mortgage fraud, except that was REAL fraud.. this was just a super duper slick lube job on the part of Verizon to get rid of the COPPER NETWORK they never had any intention of upgrading due to the souring economy along with a whole lot of debt offloaded. While I'd have some pity if these creditors cried foul years ago, but now when they have a very good chance of getting diddly? Hah! I'm no fool, but if you have the slighest chance of losing BILLIONS of dollars in the greatest telco fleecing job since MCI worldcom... you scream it from the rafters immediately! | |
|
| rody_44Premium
join:2004-02-20
Quakertown, PA Reviews:
·Comcast
| lol the creditors lost not fairpoint Fairpoint will come out of bankrupcy. Fairpoint and verizon both made out in the deal. Fairpoint creditors are who lose in the deal. The company will come out of bankrupcy minus the debt they took on. The company wasnt stupid. The people who were their creditors were the morons. | |
|
1 edit | Bust them up!! Personally,
Verizon, AT&T, Comcast, etc. and ALL the big conglomerates need to be busted up. I will usually do my very best NOT to use some major monopoly company that is to big and greedy for their own good, if at all possible. This includes our own government also. It's about as useless as tits on a boar hog!
Frontier will be next to do something like this and there's already a story right under this one of the front page here.
Edit:
I guess that Frontier story isn't quite about the same thing.
One of these days I hope one of these major companies gets sued right out of existence!!
--
The Firefox alternative.
»www.mozilla.org/projects/seamonkey/ | |
| | Reviews:
·Comcast
| Re: Bust them up!! And when the large telcos (and other large companies that you loathe) get broken up, what will happen to the services that you have now? Largely, they will get much worse, and cost much more. Consider what has happened to telephone service since the breakup of AT&T (the original one, not that RBOC-and-wireless-particulate that calls itself AT&T today) - and you want to do an instant-replay of that? | |
|
| | verizon Everyone knew it was a bad deal, except the investors, lol. | |
| | | | Re: verizon said by again :Everyone knew it was a bad deal, except the investors, lol.
That is so true - truly a fine example of "be careful what you wish for" - there were so many people warning and putting up roadblocks for FP and the state commissions. Everyone who has dealt with verizon knows they're the kind who will gladly park illegally and pay the paltry fines. | |
|
| |
|
|
Con?
Smells like a mortgage backed security deal!
It appears Verizon used the same technique to con Fairpoint that the unethical mortgage companies used to defraud home buyers. Con home buyers into buying a property that the mortgage company knows the home buyer cannot afford and trick the home buyers into taking responsibility for a debt the mortgage originator knows that the home buyer can never pay off. 
Re: Verizon Conned Fairpoint, Creditors Claim
