Adelphia Communications agreed yesterday to pay about $715 million to settle a federal fraud case in what the bankrupt cable television company called “a major milestone” toward being acquired by two competitors.

The money will be used to create a government-run fund to compensate those who claim they were defrauded by Adelphia under its founder, John Rigas, and his son Timothy, who were convicted last July of conspiracy and fraud. The agreement spares the Greenwood Village, Colo.-based company from criminal prosecution.

The settlement should help clear the way for Adelphia’s acquisition by Comcast and Time Warner, the two largest American cable-television companies, said Sanford C. Bernstein & Company analyst Craig Moffett. Comcast and Time Warner announced last week they would buy Adelphia for $17.6 billion in cash and stock, the biggest transaction in the industry in two years.

The agreement “helps pave the way for a smoother transaction,” Mr. Moffett said. “It removes some of the uncertainties around the liabilities” associated with Adelphia. Mr. Moffett rates Comcast shares “outperform.”

Attorney General Gonzales said the $715 million represents the largest forfeiture of funds by individuals in any corporate fraud case. “Today is a day of restitution for the victims of corporate corruption,” Mr. Gonzales said at a news conference in Washington.

The agreement “is the price we must pay to protect against the much larger potential harm” of leaving the case unresolved, William Schleyer, Adelphia’s chairman and chief executive, said in a statement.

The two Rigases, along with some members of their family who weren’t charged criminally, will forfeit ownership of more than 95% of the family’s assets, including most of its cable television systems, real estate worth about $10 million, and about $567 million in Adelphia securities.

Their bankruptcy lawyer, Lawrence McMichael, said the family “continues to believe it did nothing wrong. Nevertheless, the family felt the settlement was the right thing to do.”

Adelphia, which already operates the Rigases’ cable systems, will take ownership of about a dozen of them under yesterday’s agreement, leaving the family in control of just two small ones in Pennsylvania, the company said. Adelphia will be allowed to cancel the debt represented by the securities that have been held by the Rigas family, the Justice Department said.

The government will sell the real estate, with proceeds going into the compensation fund along with Adelphia’s payment of $715 million in cash and stock.

The settlement is subject to approval by U.S. Judge Robert Gerber in New York, who is overseeing Adelphia’s 2002 bankruptcy filing, and U.S. Judge Leonard Sand, who presided over the criminal trial of John and Timothy Rigas and will sentence them.

The SEC alleged in 2002 that the company, under the leadership of John Rigas, fraudulently concealed $2.3 billion in bank debts. John Rigas, 80, and Timothy, 48, were convicted in July of conspiracy and fraud for looting Adelphia and lying about its finances prior to the bankruptcy filing.

The decision not to prosecute Adelphia as a company “recognizes that the corporation was also a victim of its executives’ crimes, that it cooperated fully in the investigation, and that it took significant remedial measures,” Mr. Gonzales said.

In addition to John and Timothy, five other members of the Rigas family joined in the forfeiture agreement, which also covered more than 50 companies, partnerships, and other entities owned by the family.

Among the signers of the forfeiture agreement is Michael Rigas, another son of the founder, who faces a new trial later this year. His first trial for securities fraud ended with a deadlocked jury. Other family members covered by the agreement were never charged.

David Kelley, U.S. attorney for the Southern District of New York, said it’s “a little bit unusual” for people not charged criminally to have to forfeit assets. In this case, the five relatives had been given property “that had essentially been stolen from the company, fraudulently,” and the government could have gone after the property in court, Mr. Kelley said.

Adelphia disclosed in a regulatory filing last month that it had offered to pay $725 million to settle the investigations by the Security and Exchange Commission and Justice Department.

The company, which has 5 million customers in 31 states, including Florida and California, in December said lawyers for the SEC had told the company they might seek “billions of dollars” in penalties.

The victim-compensation fund will be run by the Justice Department and the SEC. Adelphia will have to make its payment when it emerges from bankruptcy.