Fast Track9/22/2006 08:00:00 PM Eastern
Cablevision Missteps Again
After acknowledging last week that it had granted stock options to one of its executives after he died, once again, Cablevision Systems will endure a humiliating spanking in front of investors. The disclosure makes the cable operator the most bizarre of the more than 100 companies caught “backdating” options, creating a windfall by artificially lowering their exercise prices below the market price on the day the options were actually issued.
Cablevision did not identify the executive, but Wall Street executives say the disclosure refers to late Vice Chairman Marc Lustgarten, who was an officer at the time of his 1999 death from pancreatic cancer.
The transaction is one of a series that were improperly reported, prompting Cablevision to admit that it had given executives $89 million more than it had accounted for to investors.
However, unless federal prosecutors find evidence of crimes and actually convict someone, the disclosure of this latest odd game inside Cablevision is unlikely to change the behavior of controlling shareholder and Chairman Chuck Dolan or his son, President James Dolan. Wall Street is shrugging off the latest disclosure, just as it has past corporate missteps.
Many times, Cablevision stock has taken a bad hit, but investors have always rallied back. Last year, the two Dolans fought bitterly over failed satellite-TV venture Voom, valued at $1.4 billion. Then the company stunned investors with a last-minute $16.5 billion bid to buy Adelphia Communications, renouncing years of preaching the benefits of focusing on its strong metro-New York clusters. Subsequently, Chuck Dolan made a serious attempt to take Cablevision private. That plan fizzled when the board demanded a better price. The list goes on.
Cablevision’s stock barely nudged down, off less than 3% after the company filed with the SEC. Citigroup analyst Jason Bazinet’s report to clients is typical, headlined “A positive development.” Gaffes aside, Cablevision’s operations remain the strongest in the cable business.
It’s easy to understand why the Dolans would want to do Lustgarten’s family a special favor. He had already earned tens of millions of dollars from the company, but he was a trusted confidant of Chuck Dolan and a mentor to James Dolan. He was seemingly the only person who could calm the often fractious relationship between father and son.
A strong, forceful man, it was sad to watch Lustgarten wither as the cancer and failed treatment progressed. And too bad for the Dolans. They could certainly use his counsel today.
—John M. Higgins
The CW Shines Bright
No one, not even The CW Entertainment President Dawn Ostroff, expected the new network to win among its target demos on night one Sept. 20. But it finished first in adults 18-34 (3.2 rating/10 share) and women 18-34 (4.9/14) with the premiere of America’s Next Top Model, according to Nielsen’s live-plus-same-day results.
Top Model scored its best premiere yet in adults 18-49 (2.6/7), while equaling previous adults 18-34, women 18-34 and women 18-49 (3.8/10) season debuts. It also delivered its second-most-watched premiere ever, with nearly 5.3 million viewers.
Significantly, the show bested the debut of its fifth cycle on UPN last fall by 7% in adults 18-34, 4% in women 18-34, 13% in adults 18-49 and 9% in women 18-49. And it notched increases in the high double digits over Wednesday debuts last fall on The WB.
Ostroff had expected much less since 71% of former UPN and WB viewers had to migrate to new affiliates, leaving CW without an effective on-air promotional platform over the summer.
So it had to rely on the passion of fans to seek out Top Model in markets where it switched from former UPN to WB affiliates. This week, The CW hopes fans of Gilmore Girls, which aired on The WB, will likewise find it on one-time UPN affiliates.
The CW relied on other marketing tactics, including an extensive online campaign to reach its younger viewers.
“It was a huge task,” Ostroff says. “I really thought that it would take months. There was so much confusion. A lot of affiliates didn’t even officially switch over until [last] week.”—Jim Benson
Fox and Cablevision Head for a Fight
Fox News and Cablevision are headed for a showdown over the network’s campaign to secure substantial increases in its license fees to cable and satellite-TV companies. The news network is taking a characteristic hardball approach to the negotiations, with News Corp. Chairman Rupert Murdoch personally calling out Cablevision Chairman Chuck Dolan for a fight.
Fox News says it is looking to boost its license fees from around 30¢ per subscriber monthly to $1, arguing that if its audience is double that of rival news network CNN, its license fees should be as well. That’s a massive hike, especially at a time when operators are trying to clamp down on programming-cost increases because they can’t readily raise basic-cable rates.
“Chuck Dolan has been a friend of mine for many, many years,” Murdoch said, “and I would hate that we had some big breach over this. But if we have to we will.”—John M. Higgins
Bell Denied CPB Spot
Hollywood conservative Warren Bell was disinvited from a Senate Commerce Committee nomination hearing to fill an empty seat on the board for the Corporation for Public Broadcasting.
The nominations of potential CPB board members Bell, former Sen. David Pryor and KQED San Francisco board member Chris Boskin had been slated for hearing. Pryor and Boskin remain on the schedule, but on the eve of the hearing, the committee said Bell had been removed from the schedule after “several members of the committee expressed concerns.”
His nomination has not been pulled by the White House.
The problems are with some of the writings of the conservative TV scribe and producer whose credits include According to Jim. The Association of Public Television Stations has expressed reservations to senators for what it considered his “flippantly critical” remarks on women and diversity issues.
Ray Soars in Debut
King World’s Rachael Ray debuted last week as the highest-rated syndicated talk show since Dr. Phil launched five years ago.
Ray’s average 2.6 rating/9 share over four days in metered markets was equal to the combined rating of the other three new talkers and 40% higher than the total for a pair of new court shows.
It finished up 18% over its lead-in of 2.2/8 and 24% above the September 2005 time-period average of 2.1/7. Only two of the 15 talk shows to debut over the past five years have beaten both averages in their first weeks: Martha and The Ellen DeGeneres Show.
Ray began the week with a 2.8/9, jumped to a 2.9/10 when Oprah Winfrey guested on Tuesday, fell to a 2.4/8 Wednesday and inched back to a 2.5/9 Thursday.
Meanwhile, NBC Universal’s Megan Mullally averaged a 1.0/3, starting at a 1.1/4 and then falling to a 0.9/3 in the final three days. It was 17% below its 1.2/4 lead-in and 29% off its 1.4/4 time period average.
KNBC Los Angeles’ moving Megan to 4 p.m. has hurt its profitable news starting at 5. Over four days, the first news hour was down 52% from a year ago, when it averaged a 3.1/7 with Ellen (now airing at 3 p.m.) as a lead-in; last week, it was at a 1.5/4. Megan dropped to a 0.7/2 from Ellen’s 1.5/4 last year.—Jim Benson
Advertising Week Starts
Roughly 60,000 people will descend on New York this week to figure out how to persuade people to consume more ads on more platforms. The third-annual Advertising Week runs Sept. 25-29, with a full lineup of seminars, panels and social events focusing on advertising on television and the Internet, as well as on radio and in print.
The gala is modeled after Fashion Week, which sees an array of fashionistas take over Manhattan for a week each September. “The goal was to create an event that would celebrate the good things going on in the advertising business,” says Advertising Week Chairman Ron Berger, CEO of ad agency Euro RSCG.
Highlights include panel discussions like “What’s New In Comparative Advertising,” “Claim Support and Self Regulation” and “ABC’s The Evolution of Essential Media Metrics,” as well as hot-ticket performances from soul duo Gnarls Barkley and a comedy showdown hosted by Susie Essman of Curb Your Enthusiasm. TV luminaries like Martha Stewart, NBC Universal Chairman Bob Wright and HDNet Chairman/President Mark Cuban all share their knowledge. —Joe Mandese