New Yorkers are witnessing a clash of bold-faced names from politics and business ahead of Cablevision Systems Corp.'s (NYSE:CVC) May 23 annual shareholder meeting.
New York City Comptroller and mayoral candidate John Liu has urged investors to vote against the company's five directors representing Class A shareholders.
Among other matters, Liu stated in a Wednesday news release, the directors have allowed the company to be "run for the benefit of the Dolans," referring to the family of CEO James Dolan and chairman Charles Dolan.
Cablevision counters that Liu's letter is meant to provide cover for legal problems facing his campaign for mayor.
Liu said in his statement that he is acting on behalf of New York City Pension Funds holding more than 530,000 shares of the Bethpage, N.Y., cable operator.
Three Cablevision board members retained their seats, he asserts, even though shareholders withheld a majority of votes for them. The Comptroller largely argues that there is a "fundamental lack of board accountability" at the pay-TV company.
"This is one of many letters that Mr. Liu sends to companies," responded a Cablevision spokeswoman.
"We are baffled because Cablevision's board members have helped to create great value for Cablevision shareholders over the past decade," the spokeswoman added. "This strikes us as an attempt to distract attention from the indictment and ongoing trial of Mr. Liu's campaign."
Two former officials of Liu's campaign are on trial for alleged campaign finance fraud in the U.S. District Court in Manhattan. Liu has not been charged.
Liu's office replied that it is "baffling that three directors who repeatedly failed to receive majority support remain on the board." Cablevision has helped the Dolans, rather than shareholders, extract superior value, the spokesman charged.
Citigroup Inc. analyst Jason Bazinet's forecast that Cablevision could be sold within a year to 18 months gives "new urgency" to the governance matters, Liu's statement asserts. In a mid-March report, Bazinet outlined a scenario in which Time Warner Cable Inc. could buy Cablevision for $20 per share, drawing on comparisons to Time Warner Cable's purchase of Insight Communications Co. in early 2012.
In his bear case, Bazinet wrote that Cablevision's "muted" outlook for free cash flow and dividend payments would make it difficult for the Dolans to consolidate their position through buybacks. "If true, then it suggests there may be a stronger incentive for the Dolans to sell the firm," he wrote. "After all, bearish scenarios still suggest the equity value could fall to zero."
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