Sept. 13 (Bloomberg) -- RCN Corp., a U.S. cable-television provider that emerged from bankruptcy two years ago, may put itself up for sale, two people with knowledge of the plans said. Its shares rose 8.3 percent, the most in almost two years.

The Herndon, Virginia-based company, led by NTL Inc. Chairman James Mooney, hasn't made an annual profit since exiting Chapter 11 protection at the end of 2004. With a market value of $1 billion, RCN may draw bids from private-equity firms and communications companies, said the people, who declined to be identified before an announcement from RCN.

RCN, founded in 1997, went bankrupt in May 2004 after failing to sign up enough customers to pay debts amassed while it built up its network, wiping out investments of shareholders including Microsoft Corp. co-founder Paul Allen. RCN is still struggling to compete with larger rivals Comcast Corp. and Time Warner Inc., said analyst Chris Roberts.

``You have lower programming costs the bigger you are, so they do have a competitive disadvantage,'' said Roberts, of Austin, Texas-based Tejas Securities, who has a ``buy'' rating on RCN and doesn't own its shares.

RCN may fetch more than $29.50 a share because it operates in some of the most attractive U.S. markets, Roberts said. RCN has about 400,000 customers in cities including Washington, Chicago and Los Angeles.

Hiring Blackstone

The company's stock rose $2.16 to $28.16 at 4 p.m. in Nasdaq Stock Market composite trading, the highest since RCN exited bankruptcy in December 2004. It was the biggest one-day gain since Dec. 28, 2004, when the shares jumped 13 percent after Mooney was named chairman.

The shares had risen 11 percent this year before today, compared with the 7.6 percent advance of the Russell 2000 Index.

RCN hired New York-based Blackstone Group LP to help it evaluate options, the people said. Blackstone was involved in the 2004 agreement with RCN's creditors to restructure the company.

Michael Houghton, a spokesman at RCN, and Blackstone spokesman John Ford declined to comment. Blackstone provides advice on mergers and acquisitions and corporate restructurings, and also manages the world's biggest buyout fund, a $15.6 billion pool raised in July.

RCN, which also sells telephone and high-speed Internet service, reported a loss of $136 million last year on sales of $561 million. The second-quarter loss was $25.3 million, with sales increasing 11 percent to $157.3 million. RCN had $202 million of long-term debt and $98 million of cash and short-term investments at the end of June.

RCN Chairman Mooney also is facing a possible sale of NTL. A group of buyout firms including Providence Equity Partners Inc. were last month considering a bid for NTL, Britain's biggest cable company, people familiar with the matter said then.

The LBO firms are weighing a takeover as NTL faces growing competition from British Sky Broadcasting Group Plc and BT Group Plc in the market for combined television, Internet and phone services. NTL exited from its own bankruptcy in 2003.

To contact the reporters on this story: Dana Cimilluca in New York at dcimilluca@bloomberg.net; Brett Cole in New York at coleb@bloomberg.net.

Last Updated: September 13, 2006 16:56 EDT