fired 14 employees over what it called improper accounting, but said the money at issue appears "insignificant."
The New York-based cable operator says certain employees at its Rainbow programming arm improperly accelerated the accrual of marketing expenses "and, in some cases, fabricated invoices."
The terminated employees come from Cablevision's AMC national programming unit and include the president of the division, whom it didn't name in Wednesday evening's announcement. Cablevision's Web site identifies the president of AMC Networks as Kate McEnroe, an executive at Cablevision for more than two decades.
Cablevision says its audit committee has hired an outside attorney to conduct an investigation into the matter. The expense accruals at issue, says Cablevision, had the effect of "inappropriately accelerating into one year expenses that should properly have been accrued in the following year."
To date, the company says, it appears that $6.2 million of expenses for 2003 were improperly recognized in 2002. All but $1.7 million of that amount was identified and reversed before the company released its 2002 results. Based on its review, which Cablevision says has taken five months, the company says improper accruals in 2000 and 2001 were similar in size to those in 2002.
In accordance with its auditors, Cablevision says the numbers are "insignificant" relative to its prior financials, and doesn't plan to restate them.
Cablevision reported revenue of $4 billion in 2002, and operating income of $68 million.
Shares in Cablevision, which traded as low as $4.67 last summer on worries that the company was facing a cash shortfall, fell 31 cents in normal trading Wednesday to close at $22.54. Shares dropped 91 cents further in after-hours trading.
Since the beginning of 2002, the credibility of the cable industry's accounting practices has taken several blows, chief among them the revelation that
-- at the time a longtime family-controlled cable operator, just like Cablevision -- had grossly understated its potential liabilities, among other problems. Adelphia has since filed for bankruptcy protection.
Another setback for the industry was when St. Louis-based
said it was the subject of a federal grand jury investigation over certain accounting issues. Last December, Charter fired its chief operating officer and chief financial officer because of matters related to that investigation.
In its announcement, Cablevision didn't explain why employees might have accelerated these accruals or fabricated invoices. A company spokesman didn't respond to a message requesting further comment.