Cablevision agrees to settlement in backdating suits

Newsday.com
Cablevision agrees to settlement in backdating suits
BY MARK HARRINGTON

mark.harrington@newsday.com

8:27 PM EDT, June 5, 2008

Cablevision Systems Corp., along with 16 past and current executives, directors and an outside compensation consultant, reached a $34.4 million agreement to settle a series of options-backdating lawsuits.

Settlement of the consolidated suit, reported by Cablevision in a federal filing yesterday, will result in most of the $34.4 million being returned to company coffers ($7.1 million will cover plaintiffs' legal fees) from the officials, including the company's chairman, chief executive, numerous board members and the estate of a deceased former vice chairman. None of the individuals named in the suit admitted wrongdoing.

Cablevision last month agreed to purchase Newsday from Tribune Co. in a deal valued at $650 million.

In August 2006, Cablevision said it had uncovered backdated options from 1997 to 2002, including grants to a dead former executive and a compensation consultant who received severance as though he were an employee. Cablevision has already restated financial results following an internal review, and is cooperating with a federal probe of the practices. A spokesman for the U.S. Attorney's Office in Brooklyn declined to comment yesterday.

The agreement calls for Cablevision to institute reform measures and more closely monitor its options granting procedures in the future. In a statement, Cablevision called the settlement "in the best interests" of the company and shareholders.

"None of the parties who entered into the settlement agreement has acknowledged any liability or wrongdoing, and each made their contribution solely to facilitate a settlement," company spokesman Charlie Schueler said in a statement. He noted that the matter "was discovered and disclosed after a voluntary review by the company and we look forward to moving ahead without the potential prospect of costly and protracted litigation."

According to the agreement, compensation consultant Harvey Benenson, of the firm Lyons, Benenson & Co., forfeited all claims to a $1.5 million severance he previously asserted the company owed him. He will also pay $2 million to Cablevision over three years at 6 percent annual interest, secured by a home he and his wife own in Bridgehampton valued at just over $2 million. At the end of a three-year term for repaying the $2 million, Cablevision will forgive $1 million of an unspecified loan previously given to Benenson.

Cablevision chairman Charles Dolan agreed to make a cash payment of $1 million to "facilitate resolution" of the case. His son, chief executive James Dolan, will pay $366,250 to Cablevision for previously exercised options and will make a separate $1 million payment as well.

Former Cablevision general counsel Robert Lemle agreed to return $2.55 million to Cablevision and relinquish options and related stock issues valued at $4.5 million.

The estate of former Cablevision vice chairman Marc Lustgarten, for its part of the settlement, relinquished all claims to $4.9 million in stock options and restricted shares it was granted, including improperly after he had died.

A lawyer for shareholder plaintiffs said the settlement was important because individuals are paying the lion's share of the amount.

"This was a long and hard-fought settlement with a lot of feelings on all sides," said lead plaintiffs' attorney Stuart Grant, a partner at Grant & Eisenhoffer, based in Wilmington, Del. "It gets money back for the company [while forcing] individuals to reach into their pockets to make good. I think that's an important message to send."

Henry L. Boerner, chairman of governance watchdog group Governance & Accountability Institute in Mineola, noted Cablevision was one of scores of companies caught up in the options backdating mess. But he said he wasn't surprised given "the closeness of the boardroom and the insiders that have dominated the company for a long time."

Copyright © 2008, Newsday Inc.

Cablevision agrees to settlement in backdating suits

Cablevisions 10 facts about Fios

This letter was mailed to employees and former employees of Cablevision:

Can Tru2way succeed where CableCard failed?

May 28, 2008 11:06 AM PDT
Can Tru2way succeed where CableCard failed?
Posted by John P. Falcone 5 comments

If the industry press is to be believed, Tuesday's announcement that Sony would be producing TVs with Tru2way compatibility was a watershed event--the electronics world equivalent of the Magna Carta or the Treaty of Versailles. But let's step back a bit and examine what this really means.

Tru2way is a digital cable technology developed by CableLabs that's designed to be built directly into TVs, eliminating the need for an outboard set-top box. In theory, you'd be able to buy a Tru2way-compatible TV, bring it home, connect it to your coaxial cable, and instantly be able to receive your entire lineup of digital cable and high-def channels--including all the interactive video-on-demand and pay-per-view channels that currently require a cable box.
Tru2way logo(Credit: CableLabs)

If this sounds familiar, it's because many of the same promises were made several years ago with a technology called CableCard. TVs that shipped with a CableCard slot were called "Digital Cable Ready" (DCR); they required a smart card, provided by your local cable operator, to receive digital and HD channels. The problem with CableCard was that it was an interim solution that satisfied nobody. Everyone--cable companies, hardware manufacturers, government regulators, and consumers--found CableCard technology lacking. Among the problems:

* CableCard was effectively a one-way technology, so it was incompatible with any interactive services, including video-on-demand and pay-per-view services that customers have grown to like, and cable companies depend on as a major revenue stream.

* CableCard was incompatible with Switched Digital Video (SDV) technology, which more cable providers are--or will soon be--utilizing to deliver more HD channels despite bandwidth limitations. As a result, CableCard devices such as the TiVo HD DVR need an outboard tuner (basically, a second cable box) to receive those channels, which often include the newest and most desirable HD stations.

* The CableCard installation and setup still required the cable companies to "roll a truck" to the customer's home--so it didn't save the company any time or money versus a cable box setup.

* Original CableCard setups were limited to just one tuner, so dual-tuner applications--such as picture in picture and the ability to record one show while watching another--were unavailable. (This issue was addressed with dual slots on the TiVo HD, as well as the multi-stream "M-card," which allowed for dual tuning--it was rarely deployed by cable operators.)

* CableCard setups are notoriously finicky, and often require one or more follow-up visits from the cable technician.

* The electronic programming guide (EPG) interface on most CableCard TVs was either bare bones or nonexistent. That was bad for users who've grown used to increasingly sophisticated EPGs (on TiVo and satellite DVRs). It also frustrated cable providers who were used to controlling that interface on their own boxes, where--for better or worse--they could add advertisements, customized graphics, and other "branding" that so excites multimillion dollar corporations.

* TVs with CableCard support often charged a slight premium over their non-CableCard counterparts--meaning that consumers were often paying more, but (as evidenced by the laundry list of issues above) getting less.

Not surprisingly, there was an immediate clamor for "CableCard 2.0" to address all of those issues. And that's effectively what Tru2way is: the next-gen CableCard, without the physical card. (You may have heard it mentioned during its years of development, when it was alternately referred to as "OpenCable" or "Open Cable Application Platform (OCAP)".) And--on paper, at least--it seems as if CableLabs and its partners finally got it right this time.

Tru2way is designed from the ground up to be interactive, customizable (for the cable provider), and plug-and-play. Switched digital video, video-on-demand, pay-per-view, HD channels, dual-tuner support--it should all work without a hitch, and deliver an identical experience on your local cable system, no matter which Tru2way TV you're buying.

There are plenty of other potential advantages. Tru2way TVs should be able to offer additional functionality, such as built-in DVRs. (A handful of CableCard DVR/TV combos were released, but they never took off, thanks largely to the problems outlined above.) And including the tuner inside the TV would offer the potential for better picture quality, since a TV signal native to the TV would no longer be reliant on the so-so video processing found on most set-top boxes.

Beyond the TV, Tru2way functionality could be built in to third-party DVRs (TiVo is already said to be working on a "Series4" DVR that utilizes the technology) and accessories. Among the other possibilities: a Tru2way Slingbox with a built-in tuner; an adapter that turns the Xbox 360 or PS3 into a cable-ready DVR; true home theater PCs; and portable TV viewers (such as the Comcast/Panasonic player shown in January).

So what's not to like? Nothing--except that none of this yet exists in the real world. Until you can actually buy one of these Tru2way products at Best Buy, Circuit City, or Amazon.com, it's all theoretical.

Sony joins Panasonic, Samsung, and RCA on the Tru2way roadmap, but whether any of these companies will actually deliver a real world Tru2way product before the end of the year remains to be seen. And even if they do, there are plenty of other questions. How much will cable companies charge you for the privilege of connecting a Tru2way product to their pipe? (Our guess: exactly the same fee they charge for renting the box you have now.)

And why will companies like TiVo bother developing Tru2way boxes if the consumer will be forced to use the drab cable company interface versus the far superior TiVo UI? Just imagine, for instance, if a future Apple TV offers Tru2way compatibility, but instead of its slick Apple home screen, you're stuck with a Comcast/Time Warner/Cox EPG the minute you toggle to live TV. For most users, that would eliminate the whole reason for upgrading in the first place.

Color us skeptical
The bottom line is this: Tru2way certainly looks to offer the potential for cable customers to return to the simple, halcyon days of "cable ready" TVs--just one wire, just one remote. But until we see the products hit stores in the real world, and see how--or if--they work as advertised on cable systems around the country, color us skeptical. In the meantime, we'll be waiting patiently in the downstairs rec room, sitting on hold with tech support, trying to get the CableCard PC up and running.

What do you think: Will Tru2way make for a better cable TV experience? Or will it be theCan Tru2way succeed where CableCard failed?

Senior, kid movie ticket now $12 at one NYC theater

NEW YORK - The price of a senior or child movie ticket is now $12 at one Manhattan theater.

The Clearview Cinemas theater on the Upper East Side now charges the same for everyone _ even for matinees.

The company said Tuesday in a statement: "An evening at the movies is still the most affordable entertainment option outside of the home. Clearview Cinemas remains committed to providing moviegoers with unique choices at premiere venues that offer a great value for your entertainment dollar."

California professor Ricard Gil, who studies the industry, predicts movie prices could rise even more.




Gil, who's an assistant professor of economics at the University of California, Santa Cruz, told the New York Post that theaters are just trying to cover their own cost increases.


http://www.newsday.com/news/local/wire/newyork/ny-bc-ny--movieprices0520may20,0,1122443.story

Cablevision plans to expand its empire further

BY JAMES BERNSTEIN

james.bernstein@newsday.com

May 13, 2008

Back in 1973, when most people had only a dim idea of what cable television was all about, Charles Dolan saw an industry and gained an empire.

More than three decades later, Bethpage-based Cablevision Systems Corp. is the nation's fifth-largest cable operator, with 3 million-plus subscribers in the metropolitan area, and it plans to expand further.

Cablevision's agreement, announced yesterday, to acquire Newsday for $650 million comes less than a week after it disclosed plans to buy the Sundance Channel, specializing in independent programs, for $496 million. Sundance, the brainchild of actor Robert Redford, will join the company's AMC, IFC and WE television channels.

Cablevision, Long Island's second-largest company in terms of sales, has struck out in different directions in the past, buying Madison Square Garden in 1994 with ITT Corp., in a 50-50 deal. In 1997, Cablevision took full ownership of the Garden.

But the cable operator has mostly held to its core broadcast entertainment business for its 35 years of operation, gaining a reputation for innovation in the cable industry. In 2004, Cablevision became the first cable operator in the country to offer what it calls Triple Play, which provides consumers with phone, cable and Internet service at a discounted rate. Other cable and phone companies quickly followed suit. Cablevision said 60 percent of its new customers now take all three services, compared with 11 percent when it was first introduced.

Cablevision is made up of three parts: The cable operation, which is about 70 percent of sales, makes up most of the company's profits, from home subscriptions. Rainbow Media Holdings, the programming arm, represents about 14 percent of revenues. And Madison Square Garden generates about 15 percent of sales.

The company, which went public in 1984, has been controlled since the beginning by founder Dolan and members of his family.

Dolan, Cablevision's chairman, and his family hold approximately 20 percent of the company's stock but represent about 70 percent of the voting power. Many of the Dolan family members live in the Town of Oyster Bay.

Dolan, widely considered a pioneer in the cable TV industry, started HBO in 1972 and sold it to Time Inc. before starting Cablevision. Dolan also created the first regional sports channel, called SportsChannel, in 1976. His son James is now chief executive of Cablevision and chairman of Madison Square Garden, and a number of Charles Dolan's other children and relatives are prominent in the company.

The Dolans have tried in the past few years to take the company private, but the efforts were voted down by shareholders.

Joseph Bonner, who follows the cable television industry for Argus Research in Manhattan, said of Cablevision, "They do better in most instances than a lot of other cable companies for a lot of reasons. ... They're centralized in New York, where there's high income, high population density. Other cable companies have far-flung operations, and lower density."

Not all of Cablevision's ventures have been successful. In 1998 Cablevision bought The Wiz, a struggling chain of consumer electronics stores, out of bankruptcy for $80 million. Analysts said they saw no synergies in the deal; the venture failed as the stores closed.

Sometimes, the giant cable operator made moves that had analysts scratching their heads, such as a last-minute bid in 2005 to wrest Adelphia Communications from the arms of the much larger duo of Time Warner and Comcast Corp. Cablevision's bid failed.

Evan Jake on the Phone

Cablevison customer ...

Cablevision Blatantly Lies To Subscribers As The FCC Twiddles Its Thumbs

Cablevision is lying to customers by claiming that the FCC will require all subscribers to upgrade to digital cable boxes in 2009. Digital cable boxes cost $6.50 per month, plus an extra $10.95 for digital service. Cablevision recently sent a letter to all boxless subscribers threatening to cut several channels unless they forked out a bundle of extra cash for digital service. When one of our family member called for an explanation, Cablevision shirked responsibility and placed the blame squarely on some crazy new FCC mandate. We called shenanigans and decided to call back and record our chats with several customer service representatives. Inside, the recordings of Cablevision lies and the FCC's flaccid response.
Before we get to the recordings, let's look at Cablevision's fairly innocuous letter:
Here's the deal: Cablevision—not the FCC—has decided to move several channels to their digital tier. To keep receiving the channels, customer will need to upgrade to digital service with a digital box. Customers who don't pony up for the service lose the channels.
40 million American families don't use a digital cable box. Assuming all cable companies use Cablevision's rates, operators stand to pick up an extra $698,000,000 per month by convincing all 40 million families to shell out an extra $17.45 for digital service. That small pice of change is worth more than the yearly GDP of several small nations.
Cablevision is well within its bounds to charge whatever it wants for service. They can tell us we need a cable box, and that service will now cost $300 per month. That's a freedom afforded by the market. What they can't do is cowardly hide behind the FCC and blame their money-grubbing on the government. Let's listen as they try to do just that:
We spoke with four representatives, each of whom blamed the FCC for forcing us to upgrade to digital cable. We asked one representative how this information was conveyed to the CSRs, and she explained that Cablevision had specifically trained them to point to the FCC.
Let's be perfectly clear: the FCC decision has absolutely nothing to do with the channels Cablevision is taking away, nor does it require anyone to upgrade to a digital cable box.
Don't believe us? Let's see if we can find someone to refute Cablevision.... Maybe Cablevision is up to the task?
Looks like they know the truth after all. The transition to digital television will have no affect on Cablevision's service.
We spoke with two representative at the FCC who claim that several cable companies have engaged in similar deceitful and fraudulent actions. According to the representatives, the Commission is powerless to take action. One even defended the cable companies, saying:
"Most of [the cable companies] are blaming it on the FCC. It's easier for us to take it. We have broad shoulders, you know? We're the ones who have to explain it to all the consumers anyway when they find the 800 number and then they start calling and asking us: "why is my cable company doing this to me? I want to file a complaint."
Unfortunately, there are no mandates for good customer service. I wish there was! I would really like there for to be a mandate that says: "I'm sorry, but people on the phone at my cable company have to be nice to me and they have to tell me the truth." I wish there was, but there's not.A mandate for good customer service couldn't be enforced by the 82nd-airborne, but lying? Regulated companies should not be allowed to lie to their customers.
Thankfully, the bespectacled bossman helming the FCC takes a different view. Chairman Kevin Martin recently slammed retailers for lying about the digital transition, dishing out several million dollars worth of fines to Sears, Best Buy and Walmart. Why can cable companies lie, but not retailers?
We know that Chairman Martin is a good guy who likes consumers. Let's go back and listen to the sweet consumer-protecting swan song he sung so graciously in our defense last year:
If the cable companies had their way, you, your mother and father, or your next door neighbor could go to sleep one night after watching their favorite channel and wake up the next morning to a dark fuzzy screen. This is because the cable operators believe that it is appropriate for them to choose which stations analog cable customers should be able watch. It is not acceptable as a policy matter or as a legal matter.Kevvy was announcing that cable companies would be required to carry broadcast channels (CBS, NBC, ABC, etc...) until 2012, and not Travel Planet or RAI, which Cablevision is preparing to yank. The Chairman did, however, explicitly endorse our right to enjoy cable service without a box, and Cablevision's right to require us to rent one:
...the Commission is not forcing consumers to purchase or lease a set top box to continue watching their favorite channels. This decision lies in the hands of the cable company. They can avoid the need for new boxes bychoosing to downconvert the digital signal into analog at their headend. This downconversion would permit analog cable subscribers to continue watching broadcast television just as they do today without disruption.This isn't the first time Cablevision has used the DTV transition to beat customers like cash-spewing pinatas. The cable giant was previously caught sending letters to prospective customers telling them that TV would disappear in 2009 unless they started paying $240 per year, despite the availability of $20 converter boxes that will keep the Price Is Right up and running.
Cablevision is clearly engaged in a pattern of deception and fraud. The FCC has a responsibility to investigate and admonish Cablevision for their abusive conduct. Predatory upseling simply cannot be tolerated in a responsibly regulated marketplace.
http://consumerist.com/379852/cablevision-blatantly-lies-to-subscribers-as-the-fcc-twiddles-its-thumbs