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Cablevision Fires 14 for 'Improper' Accounting

The dollar sum is called insignificant. But the firm's role in a Universal bid could be affected.

June 19, 2003|Sallie Hofmeister | Times Staff Writer

Cablevision Systems Corp. said it fired 14 employees Wednesday after discovering fabricated invoices and inappropriate accounting of millions of dollars in expenses.

Analysts said the disclosure could cast a cloud over Seagram heir Edgar Bronfman Jr.'s bid for Vivendi Universal's U.S. entertainment assets. Cablevision is backing Bronfman's move to try to reclaim the assets his family once owned. Cablevision would contribute its three national cable networks -- American Movie Classics, International Film Channel and WE: Women's Entertainment -- to the venture.

Although Cablevision executives said the company contacted federal authorities about the accounting matter, they said the problem wasn't material and wouldn't require the company to restate its financial statements.

Sources close to Bronfman said Wednesday that the development would have no effect on his bid for Vivendi's assets, including its movie studio, cable unit, theme parks and music company.

But analysts had another view. "It will slow down their participation," said David Joyce, an analyst at Guzman & Co. The Vivendi bids are due Monday.

Cablevision, based in Bethpage, N.Y., said an internal investigation found that $6.2 million in expenses that should have been accounted for in 2003 were improperly booked in 2002 by its AMC Networks division. The company added that an equal amount of money was improperly accounted for at the division in 2000 and 2001.

"The company launched an extensive review and has taken measures to help ensure that a problem of this type does not occur again," Cablevision Chairman and Chief Executive James Dolan said in a statement.

Cablevision said that among those fired was the president of AMC Networks, Kate McEnroe, who couldn't be reached for comment.

If the Cablevision disclosure should lead to an investigation by the Securities and Exchange Commission, that could impair the company's ability to contribute its TV channels to the Bronfman venture because any SEC probe would have to be concluded first, Joyce said. Metro-Goldwyn-Mayer owns a 20% stake in Cablevision's three national channels.

Cablevision's disclosure extended a string of recent announcements about accounting irregularities.

On Tuesday, the SEC sought documents from Coca-Cola Co. as part of a probe into allegations of accounting fraud. Last week, Freddie Mac fired its president for allegedly failing to comply with an internal accounting review.

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Reuters was used in compiling this report.

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