Charles Dolan, Cablevision CEO

Cablevision Systems Corp.’s board of directors have been sued by an investor for wrongfully approving “grossly excessive” compensation for Chairman Charles Dolan and members of his family who serve as executives at the fifth-largest U.S. cable company.

The board of Bethpage, N.Y.-based Cablevision, which includes Dolan’s three daughters, approved more than $80 million in pay and benefits for the firm’s founder and his son over the last three years while the company piled up financial losses, according to the plaintiff’s suit.

Charles Dolan founded the cable company in 1973. Although others at the company have taken a larger role managing its day-to-day operations, Charles still won approval of $41 million in compensation for himself over a three-year period beginning in 2010. His son James was awarded $40 million, despite the fact he seems to be losing interest in Cablevision, preferring to devote more time to his rock band – JD & The Straight Shot – where he serves as lead singer, according to the lawsuit.

The plaintiff alleges the compensation packages were excessive and a waste of corporate assets at a time when Wall Street analysts criticized the cable company for underperforming financially.

“The Dolans treat Cablevision as a family coffer, routinely entering transactions with the company that have improperly favored the Dolan family’s interests over the interests of the company and its public stockholders,” said shareholder Gary Livingston, who filed the suit.

What the Dolan family wants, they usually get. The family collectively hold shares that control about 73 percent of the company’s voting rights.

It isn’t the first time the Dolan family — now billionaires — have found themselves in court over compensation issues. In 2008, the company’s top executives agreed to pay more than $24 million to settle shareholder lawsuits accusing them of benefiting from stock option grants that were backdated.

Livingston’s case is an example of “baseless shareholder lawsuits designed simply to enrich the plaintiff and his lawyers,” Charles Schueler, a Cablevision spokesman, told Bloomberg News today in an e-mailed statement.

What is the best way to win a big promotion at Cablevision? Be related to the Dolan family that founded the cable system.

Cablevision Systems CEO James Dolan suddenly announced a shuffling of executives at the helm of the cable operation that serves suburban New York, Connecticut, and parts of New Jersey.

Dolan’s wife got the biggest promotion: president of Optimum Services. That represents a big jump for Kristin Dolan, who was last seen helping revive the long dead career of Michael Bolton in a marketing and rebranding exercise that turned the faded pop musician into a de facto Cablevision mascot. Under her leadership, Cablevision managed to put its most important product — broadband, dead last in its triple play marketing campaigns.

Brian Sweeney, Dolan’s brother-in-law, also scored a new title – senior executive vice president of strategy.

Dolan called the management shifts a pro-customer effort that would refocus and streamline the company’s decision-making processes. Since both executives will report directly to Dolan, some industry insiders believe James Dolan intends to tightly consolidate his control over management decisions at the company.

Kristin will keep her role as chief of brand positioning and expand her oversight into the company’s sales and promotional activities. Sweeney will serve as the “long-term strategy” guy, overseeing planning, customer retention, and winning customers away from Cablevision’s biggest competitor — Verizon FiOS.

A large number of former Cablevision executives defected from the cable company in 2011, most heading with former chief operating officer Tom Rutledge to Charter Communications.

Compare Optimum/Cablevision’s Marketing Campaigns: Before <- Kristin Dolan -> With

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Cablevision Ad 2008.flv[/flv]

Cablevision’s ‘Before Kristin’ Advertising (1 minute)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Cablevision Bolton 2-15-13.flv[/flv]

Cablevision’s ‘With Kristin’ Advertising (1 minute)

Tribune-owned WCCT was seen on certain Cablevision systems in Connecticut.

Tribune Broadcasting Corporation’s WPIX-New York, KWGN-Denver, WPHL-Philadelphia, and WCCT-Waterbury/Hartford, Conn. were all dropped from Cablevision’s lineup late last week in the latest fee dispute between TV station owners and cable systems.

Tribune says the stations were taken off Cablevision as the two sides were in a negotiating session, even after offering the cable company an extension of their current agreement to avoid upsetting viewers.

“Cablevison took this action despite our offer of an unconditional extension of the current carriage agreement with no change in terms while negotiations continued,” Tribune said in a statement. “To be clear, Tribune was willing to provide Cablevision subscribers access to the valuable programming on these stations while working toward a new agreement. Tribune never made any threat to withdraw these stations or any demand that Cablevision remove them.”

Cablevision’s decision to discontinue the New York/Philadelphia stations affects subscribers in suburban Connecticut and New Jersey, Brooklyn, the Bronx, and Long Island. KWGN is a common superstation seen on Cablevision/Optimum West systems in Colorado, Montana, Wyoming and Utah.

Cablevision accused Tribune’s owners of anti-consumer behavior over their demands for higher retransmission fees.

“The bankrupt Tribune Co. and the hedge funds and banks that own it, including Oaktree Capital Management, Angelo Gordon & Co. and others, are trying to solve Tribune’s financial problems on the backs of Cablevision customers,” Cablevision said. “Tribune and their hedge fund owners are demanding tens of millions in new fees for WPIX and other stations they own. They should stop their anti-consumer demands and work productively to reach an agreement.”

WPIX management counters the station is asking for less than a penny extra per day per subscriber.

Both sides are appealing to the public, but city comptroller John C. Liu is fed up.

“These blackouts are happening all too often,” Liu said.  “Cablevision, as a city franchisee and service provider, should do all it can to ensure that this blackout is resolved swiftly because New Yorkers deserve to get what they pay for, not be unfairly punished because of battling corporate interests.  If a swift resolution cannot be achieved, the Department of Information Technology and Telecommunications must step up to hold the provider accountable to the subscribers, who feel the brunt of this irresponsible disagreement.”

Liu adds that New Yorkers are effectively paying Cablevision for channels they no longer receive, and the cable operator is not offering any refunds.

Eventually, both sides will come to an agreement for higher payments, which will be passed along to subscribers with the next rate increase.

[flv width=”640″ height=”380”]http://www.phillipdampier.com/video/Bloomberg Cablevision Blacks Out Tribune Channels in Dispute 8-17-12.flv[/flv]

Bloomberg News talks with Matthew Harrigan from Wunderlich Securities about the impact of the Tribune-Cablevision dispute. Does WPIX and Tribune have enough clout to get Cablevision to cave?  (2 minutes)

Cablevision Systems may be engaged in a long term effort to position itself for a sale, some New York investment firms have come to believe.  The most likely buyer?  Time Warner Cable.

The bulk of Cablevision’s assets are located in several boroughs of New York, Long Island, New Jersey and Connecticut.  Virtually all of their service areas, outside of the acquisition of Bresnan Cable in the mountain west, are adjacent to Time Warner, making an acquisition by the nation’s second largest cable operator a natural fit.

This isn’t the first time rumors of a Cablevision sale have been floated.  The Dolan family has run the cable operator for decades, with family patriarch Charles Dolan still controlling a sizable interest in the company.  Barron’s notes the senior Dolan is currently in his 80s.  Son James, current president and CEO of Cablevision, seems more interested in his leadership role at Madison Square Garden, spun-off from Cablevision last year.

“I think the Dolans have positioned the company for a sale,” Mark Boyar, who heads Boyar Asset Management, told Barron’s.

Boyar points to Cablevision’s ongoing efforts to minimize their involvement in side businesses, such as MSG and cable networks like AMC, spun away from Cablevision on June 30.

Buyers like transactions to be simple and straightforward, and Cablevision’s operations increasingly meet both standards.

On its own, Cablevision’s growth opportunities come mostly from rate increases, which subscribers routinely complain about.  The company already enjoys the highest penetration rate among major cable operators and the highest average monthly revenue per subscriber — $150 a month vs. $113 for Time Warner Cable.  With a depressed economy and fierce competition from Verizon FiOS, growing the business (and the stock price) has become increasingly difficult in a maturing industry unlikely to attract new subscribers.

Among the only prospects for subscriber growth on the horizon comes from satellite TV subscribers.  But that alone may not be enough to keep investors satisfied, much less excited.  A sale could bring shareholders a massive return on their investment, particularly if a bidding war breaks out between likely buyers Time Warner Cable and Comcast.  Shareholders ultimately own the company, and should the Dolan family lose their love affair with cable, Cablevision and their subscribers will likely find themselves on the auction block.

Cable, satellite and telco-TV subscribers around the country can now watch most of the hit shows on Turner’s TBS and TNT Networks for free, assuming two things are true:

1. You pay for a package of television channels from Comcast, DirecTV, Dish Network, Cox Communications, Cablevision Systems, Suddenlink Communications, Verizon FiOS, or AT&T U-verse.
2. You are not a Time Warner Cable subscriber.

The new TV Everywhere app, available for phones and tablets, comes free of charge.  Once authenticated as a legitimate pay television subscriber, users can watch hit series and some older shows from both networks.

Once again, Time Warner customers are on the outside, looking in.  The nation’s second biggest cable operator has not been a TV Everywhere team player, preferring to launch its own live streaming iPad application and steering clear, so far, from on-demand, online viewing from most of its partner networks, including HBO.  Time Warner Cable executives have, in the past, alluded to licensing fees and user authentication complications for not launching TV Everywhere on-demand viewing for its customers, but the company has not explained why it has not signed on for Turner’s app.

TV Everywhere, a concept on the drawing board for almost two years, is an attempt by the pay television industry to lock down online video programming for paying customers, in an effort to slow down “cord cutting” by consumers trying to save money on their cable TV bill.  The concept delivers unlimited access to popular cable programming, but only to those who already pay to subscribe.

Many TV Everywhere projects have been soft-launched without much publicity, but that is not true for Turner’s app.  The network has commissioned several clever advertisements featuring various network stars promoting the app, and now Turner wants to educate consumers about how to use it to watch shows online.

The most complicated part of the process is getting “authenticated” by the application for authorized viewing.  Some cable companies like Time Warner want customers to launch access to TV Everywhere programming from the cable company’s website, where customers have already been authenticated when they sign up for an online account.  Other companies are using customer account numbers, PIN codes, or passwords printed on monthly bills to let customers register directly for access.  When the application matches a customer account number or PIN code, the content becomes accessible.  It is typically a one-time-only hassle, but there have been cases where customers have had to grab a recent bill more than once to re-authenticate themselves.

Not every show will be made available for online viewing.  Many rerun off-network shows shown on TNT and TBS don’t currently include streaming rights.  So while users can watch past episodes of Conan O’Brien, they’re out of luck if they want to watch Friends.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Turner App.flv[/flv]

Watch a selection of spots from the new advertising campaign for Turner’s ‘TV Everywhere’ app.  (4 minutes)