More AMC Mess Noted By Cablevision

8/24/2003 8:00 PM Eastern

Accounting woes at Cablevision Systems Corp.'s AMC Networks unit continue to mount.

The Bethpage, N.Y-based MSO has disclosed yet another possible expense accrual irregularity at the cable channel.

According to Cablevision's 10-Q quarterly financial report filed with the Securities and Exchange Commission Aug. 14, the MSO's independent investigator, Wilmer, Cutler & Pickering, has identified "certain vendor relationships where additional improper expense recognition may have occurred."

Cablevision said Wilmer, Cutler had not yet determined the amount of the possible improper accruals.

"The Wilmer, Cutler investigation is ongoing," Cablevision said in a statement last week. "The company continues to believe that based on the investigation to date, the aggregate amount of improper expense recognition identified is insignificant with respect to the previously issued annual audited financial statements."

This is the second time Cablevision has said its independent investigators have uncovered additional improper accruals since June 18. On that date, the MSO said it had discovered in its own investigation about $18 million in improper expense accruals at AMC over three years. Fourteen AMC executives were fired, including president Kate McEnroe.

Earlier this month, Cablevision said Wilmer, Cutler identified $3.4 million in original production expenses in 2003 at AMC and WE: Women's Entertainment.

In the 10-Q, Cablevision said it had not determined the quarter in which the improper accruals occurred.

But, Cablevision said in the 10-Q that if the entire $5.1 million of 2003 expenses ($3.4 million in original production expenses and $1.7 million in previously reported uncorrected marketing expenses) that were expensed in earlier years were recognized in the first half of 2003, operating income would have declined from $75.73 million to $70.63 million.

In a July 3 Securities and Exchange Commission filing, Cablevision revealed it had received a formal order of investigation from the SEC, as well as a subpoena in connection with the probe.

According to reports, the U.S. Department of Justice had launched an investigation into Rainbow.

The new findings had a minor effect on Cablevision's stock, which declined 50 cents on Aug. 14, to $19.

Despite another slight downturn on Aug. 19, to $18.66, the stock rebounded nicely on Aug. 20, to $19.47, up 81 cents.

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