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Cablevision fires 14 over accounting issues
NEW YORK, June 18 (Reuters) - Cablevision Systems Corp. (CVC) has fired 14 employees over their accounting for millions of dollars in expenses, the cable television operator said on Wednesday, adding it alerted federal authorities this week.

An internal investigation showed $6.2 million in expenses were accounted for at Cablevision's American Movie Classics unit in 2002, rather than 2003, when the money should have been booked, the company said in a statement. It said more money was improperly accounted for at the division in 2000 and 2001.

It said the employees fired were all at American Movie Classics, including its president, Kate McEnroe.

The Bethpage, New York-based company, which also owns the New York Knicks pro basketball team and Madison Square Garden sports arena, said the errors will not have an impact on previously reported financial results.

But analysts said the announcement may put a wrench in several impending deals.

"It will slow down their participation with (Edgar) Bronfman for (Vivendi Universal) assets," said David Joyce, an analyst at Guzman & Company. "They will not be able to spin off (satellite assets) until the SEC is done with this issue."

A U.S. Securities and Exchange Commission spokesman was not immediately available for comment on Cablevision's announcement. Regulators have not announced any formal inquiries.

In May, the company said it was planning to back deposed media titan Edgar Bronfman, Jr.'s bid to purchase the U.S. entertainment assets for Franco American media conglomerate Vivendi Universal <EAUG.PA>.

Separately, Cablevision said earlier this month it planned to spin-off its yet-to-launch satellite pay television service. Investors sent shares of the company up more than 10 percent on the news on June 2.

Cablevision's announcement is the latest disclosure of accounting irregularities at a major U.S. company. On Tuesday, the U.S. Securities and Exchange Commission sought documents from Coca-Cola Co. (AU:CCL) as part of a probe into allegations of accounting fraud.

Last week Freddie Mac (FRE) fired its president for allegedly failing to comply with an internal accounting review, prompting U.S. lawmakers to plan hearings into government supervision of the country's largest mortgage finance firms.

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

Wall Street analysts expected the announcement, which came after the stock market closed, to hurt Cablevision's stock when it trades on Thursday. But they cautioned investors not to overplay the significance of the news.

"It's not a material dollar amount," said Guzman's Joyce. "This is nothing that requires reevaluation of the worth of Cablevision. It will result in headline risk and an overhang on stock and downward pressure on stock.

Ahead of the press release announcing the news, Cablevision shares closed the day down 31 cents at $22.54 on the New York Stock Exchange. Shares fell another 91 cents to $21.63 in after hours trading.

INTERNAL INVESTIGATION

Cablevision said its review covered 1998 to 2002 and was conducted by both internal and external auditor KPMG.

Separately, the board of directors audit committee has hired William McLucas of Wilmer Cutler & Pickering to conduct another probe into the matter.

A company spokesman declined comment further on the company's announcement.

A source familiar with the matter said Cablevision discovered the expense discrepancies as part of a five-month internal investigation, prompted by internal reports of expense accounting improprieties at the programming unit.