SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED DECEMBER
31, 1996
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM
____________ TO _________.
Commission file number: 1-9046
Cablevision Systems Corporation
----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 11-2776686
- ----------------------------------------------------------- -------------------
(State of other jurisdiction incorporation or organization) (I.R.S. Employer
Identification No.)
One Media Crossways, Woodbury, New York 11797
- ---------------------------------------- -------------------
(Address of principal executive Offices) (Zip Code)
Registrant's telephone number, including area code (516) 634-8450
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Class A Common Stock
Name of each exchange on which registered: American Stock
Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 12 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. |_|.
Aggregate market value of voting stock held by nonaffiliates of the registrant
based on the closing price at which such stock was sold on the American Stock
Exchange on April 1, 1997: $369,446,664.
Number of shares of common stock outstanding as of April 1, 1997:
Class A common Stock - 13,587,151
Class B Common Stock - 11,251,234
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT TO APPLICATION OR REPORT
Filed pursuant to Section 12, 13, or 15(d) of the
Securities Exchange Act of 1934
CABLEVISION SYSTEMS CORPORATION
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 as set forth in the pages attached hereto:
Item 10. - Directors and Executive Officers of the Registrant.
Item 11. - Executive Compensation.
Item 12. - Security Ownership of Certain Beneficial Owners and Management.
Item 13. - Certain Relationships and Related Transactions.
<PAGE>
ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Board of Directors of the Company met, or acted by written consent in
lieu of meeting, eighteen times in 1996 and presently consists of 15 members, 8
of whom are officers of the Company or its subsidiaries.
Board Committees
The Board of Directors has an Executive Committee, an Audit Committee and
a Compensation Committee. The Board of Directors does not have a nominating
committee.
The Executive Committee consists of Messrs. Tatta, Bell, , Lemle
and James Dolan. The Executive Committee is authorized to exercise, between
meetings of the Board of Directors, all the powers thereof except as limited by
Delaware law and except for certain specified exceptions including authorization
of contracts with officers or directors, significant acquisitions, investments
or guarantees, entering new businesses, the approval of operating budgets or the
issuance of capital stock. The Executive Committee met, or acted by written
consent in lieu of meeting, three times in 1996.
The Audit Committee of the Board of Directors consists of Messrs. Hochman
and Oristano. The functions of the Audit Committee are to review and report to
the Board of Directors with respect to selection and the terms of engagement of
the Company's independent public accountants, and to maintain communications
among the Board of Directors, such independent public accountants and the
Company's internal accounting staff with respect to accounting and audit
procedures, the implementation of recommendations by such independent public
accountants, the adequacy of the Company's internal audit controls and related
matters. The Audit Committee met two times in 1996.
The Compensation Committee consists of Messrs. Oristano, Hochman and
Tatta. The functions of the Compensation Committee are (i) to represent the
Board in discharging its responsibilities with respect to the Company's employee
stock plan and, in doing so, to administer such plans with regard to, among
other things, the determination of eligibility of employees, the granting of
stock, SARs and/or options, and the termination of such plans and (ii) to
determine the appropriate levels of compensation, including salaries, bonuses,
stock and option rights and retirement benefits for members of the Company's
senior management, subject to the approval of the Board of Directors. A
subcommittee of the Compensation Committee consisting of Messrs. Oristano and
Hochman, has exclusive authority and responsibility for, and with respect to,
any grants or awards under the Company's employee stock plans to any executive
officer of the Company, and to the Company's other most senior employees. The
Compensation Committee met, or acted by written consent in lieu of meeting, five
times in 1996.
Each member of the Board of Directors participated in not less than 75% of
the aggregate number of meetings or consents in lieu of meeting of the Board of
Directors and of each Board committee of which he or she was a member, during
1996.
<PAGE>
Compensation of Directors
Directors who are not employees are paid a fee of $20,000 per year for
services rendered in that capacity, a fee of $1,000 for each meeting attended in
person and a fee of $500 for each meeting participated in by telephone. Members
of the Audit Committee and members of the Compensation Committee who are not
officers of the Company are paid a fee of $1,000 for each meeting attended in
person and a fee of $500 for each meeting participated in by telephone.
Non-employee members of the Board of Directors who serve on the Cablevision
Employee Benefit Plans Investment Committee receive a fee of $1,000 for each
meeting attended in person and a fee of $500 for each meeting participated in by
telephone.
John Tatta, a non-employee director, has a consulting agreement with the
Company expiring in 1998 which provides for an annual consulting fee of
$485,000, reimbursement of certain expenses and the continuation of certain life
insurance and supplemental pension benefits provided to him when he was an
employee. Pursuant to this consulting agreement, under which Mr. Tatta assists
senior management of the Company in strategic planning and performs special
projects relating to the Company's business, Mr. Tatta is to provide not more
than 50 percent of his professional time to the Company.
The following table sets forth the directors and executive officers of the
Company as of April 1, 1997.
NAME AGE POSITION
- ---- --- --------
Charles F. Dolan..........70 Chairman and Director
James L. Dolan............41 Chief Executive Officer and Director
William J. Bell...........57 Vice Chairman and Director
Marc A. Lustgarten........50 Vice Chairman and Director
Robert P. May.............47 Chief Operating Officer and Director
Robert S. Lemle...........44 Executive Vice President, General Counsel,
Secretary and Director
Margaret Albergo..........43 Senior Vice President, Planning and Performance
Joseph W. Cece............44 Senior Vice President, Strategic Planning
Thomas C. Dolan...........44 Senior Vice President and Chief Information
Officer
Sheila A. Mahony..........55 Senior Vice President and Director
Barry J. O'Leary..........53 Senior Vice President, Finance and Treasurer
Andrew B. Rosengard.......39 Senior Vice President and Controller
Patrick F. Dolan..........45 Vice President of News and Director
John Tatta................76 Chairman of the Executive Committee and Director
Charles D. Ferris.........63 Director
Richard H. Hochman........51 Director
Victor Oristano...........80 Director
Francis F. Randolph, Jr...69 Director
Daniel T. Sweeney.........67 Director
Vincent Tese..............54 Director
All directors hold office until the annual meeting of stockholders of the
Company next following their election and until their successors are elected and
qualified. All executive officers are elected to serve until the meeting of the
Board of Directors following the next annual meeting of stockholders and until
their successors have been elected and qualified.
Information with respect to the business experience and affiliations of
the directors and executive officers of the Company is set forth below.
2
<PAGE>
Charles F. Dolan -- Chairman and Director of the Company since 1985. Chief
Executive Officer of the Company from 1985 to October 1995. Founded and acted as
the General Partner of the Company's predecessor from 1973 until 1985.
Established Manhattan Cable Television in 1961 and Home Box Office in 1971.
Charles F. Dolan is the father of James L. Dolan, Patrick F. Dolan and Thomas C.
Dolan.
James L. Dolan -- Chief Executive Officer of the Company since October
1995 and Director of the Company since 1991. Chief Executive Officer of Rainbow
Programming Holdings, Inc., a subsidiary of the Company, from September 1992 to
October 1995. Vice President of the Company from 1987 to September 1992.
Director of Advertising Sales from 1985 to September 1992. Manager of
Advertising Sales from 1983 to 1985. James L. Dolan is the son of Charles F.
Dolan and the brother of Patrick F. Dolan and Thomas C. Dolan.
William J. Bell -- Vice Chairman and Director of the Company since 1985.
Joined the Company's predecessor in 1979. Mr. Bell is a member of the Board of
Governors of the American Stock Exchange.
Marc A. Lustgarten -- Director of the Company since 1985. Vice Chairman of
the Company since 1989. Executive Vice President of the Company from 1985 to
1989.
Robert P. May -- Chief Operating Officer and Director of the Company since
October 1996. Senior Vice President and member of the Board of Directors of
Intelligent Electronics from 1993 to 1995. Senior Vice President of Federal
Express Corporation from 1987 through 1993.
Robert S. Lemle -- Director of the Company since 1988. Executive Vice
President, General Counsel and Secretary since February 1994. Senior Vice
President, General Counsel and Secretary of the Company from 1986 to February
1994 and Vice President, General Counsel and Secretary of the Company from 1985
to 1986.
Margaret Albergo -- Senior Vice President, Planning and Performance of the
Company since October 1996. Senior Vice President, Operations of Rainbow
Programming Holdings, Inc. from August 1995 to October 1996. Vice President,
Corporate Development of Rainbow Programming Holdings, Inc. from 1993 until
August 1995. Director of Operations and Administration of News 12 Long Island
from 1991 to 1993.
Joseph W. Cece -- Senior Vice President, Strategic Planning of the Company
since February 1996. President and Chief Operating Officer of Cablevision
Lightpath, Inc. from January 1994 to February 1996. Vice President, New Business
of the Company from September 1993 to January 1994. President and Publisher of
T.V. Guide from October 1988 to August 1993.
Thomas C. Dolan -- Senior Vice President and Chief Information Officer of
the Company since February 1996. Vice President and Chief Information Officer of
the Company from July 1994 to February 1996. General Manager of the Company's
East End Long Island cable system from November 1991 through July 1994. Thomas
C. Dolan is the son of Charles F. Dolan and the brother of Patrick F. Dolan and
James L. Dolan.
Sheila A. Mahony -- Director of the Company since 1988. Senior Vice
President of the Company since June 1995. Vice President of Government Relations
and Public Affairs of the Company and its predecessor from 1980 to June 1995.
3
<PAGE>
Barry J. O'Leary -- Senior Vice President, Finance of the Company since
1986. Vice President of the Company from 1985 to 1986 and Treasurer of the
Company since December 1985. Joined the Company's predecessor in 1984.
Andrew B. Rosengard -- Senior Vice President and Controller of the Company
since February 1996. Senior Vice President, Finance for Rainbow Programming
Holdings, Inc. from 1990 to February 1996. Vice President, Finance and
Administration of Rainbow Programming Holdings, Inc. from 1988 to 1990. Prior to
joining Rainbow Programming Holdings, Inc. in 1986, Mr. Rosengard was director
of planning, business development and research of CBS Broadcasting Group, CBS,
Inc.
Patrick F. Dolan -- Director of the Company since August 1991. Vice
President of News since September 1995. News Director of News 12 Long Island, a
subsidiary of the company, from December 1991 to September 1995. Producer of
Special Projects of News 12 Long Island from January 1990 to December 1991 and
Special Projects Director of News 12 Long Island from May 1989 to January 1990.
Patrick F. Dolan is the son of Charles F. Dolan and the brother of James L.
Dolan and Thomas C. Dolan.
John Tatta -- Director of the Company since 1985. Chairman of the
Executive Committee of the Company and consultant to the Company since January
1992. President of the Company from 1985 through December 1991. Chief Operating
Officer of the Company from 1985 to 1989.
Charles D. Ferris -- Director of the Company since 1985. Member of the law
firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. since 1981. Chairman
of the FCC from October 1977 until April 1981.
Richard H. Hochman -- Director of the Company since 1986. Managing Partner
of Regent Capital Partners, L.P. since April 1995. Managing Director of Paine
Webber Incorporated from 1990 to April 1995.
Victor Oristano -- Director of the Company since 1985. Chairman of Alda
Communications Corp., a holding company which has built and operated cable
television systems in Connecticut, Florida, New Jersey, Pennsylvania and England
since 1975. Mr. Oristano is also a member of the Board of Directors of People's
Choice TV, Corp.
Francis F. Randolph, Jr. -- Director of the Company since 1985. Vice
Chairman of the Company from 1985 to 1994.
Daniel T. Sweeney -- Director of the Company since 1985. Senior Vice
President of the Company from 1985 through June 1995.
Vincent Tese -- Director of the Company since July 1996. Director of The
Bear Stearns Companies, Inc. since December 1994. Chairman of Wireless Cable
International, Inc. since July 1995. Chairman of Cross Country Wireless from
December 1994 to July 1995. Mr. Tese served as Chairman and Chief Executive
Officer of the New York State Urban Development Corporation from 1985 to 1987,
and as Director of Economic Development for New York State from 1987 to December
1994. Mr. Tese also serves on the Board of Directors of Quintel Entertainment,
and Custodial Trust Company.
ITEM 11 - EXECUTIVE COMPENSATION
4
<PAGE>
Summary Compensation Table
The following table shows, for the fiscal years ended December 31, 1996,
1995 and 1994, the cash compensation paid by the Company, and a summary of
certain other compensation paid or accrued for such years, to James L. Dolan and
to each of the Company's four other most highly compensated executive officers
who were serving as executive officers at the end of 1996 (the "named executive
officers") for service in all capacities with the Company.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
------------------- ---------------------------------------
Restricted All Other
Name and Principal Stock Options/ Compen-
Position Year Salary($) Bonus($) Awards($) SARs (#) sation($)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James L. Dolan 1996 555,206 225,000 0 0 43,188(1)
Chief Executive 1995 360,000 275,000 0 0 5,425
Officer and Director
Charles F. Dolan 1996 525,000 225,000 0 0 150,934(1)
Chairman and Director 1995 516,667 390,000 0 0 150,796
1994 600,000 375,000 0 0 150,861
William J. Bell 1996 500,000 330,000 0 0 100,239(1)
Vice Chairman and 1995 500,000 390,000 0 0 94,092
Director 1994 450,000 360,000 0 192,000 100,197
Marc A. Lustgarten 1996 525,000 330,000 0 0 58,635(1)
Vice Chairman and 1995 500,000 390,000 0 0 52,866
Director 1994 450,000 360,000 0 202,000 54,183
Robert S. Lemle 1996 475,000 315,000 0 0 49,999(1)
Executive Vice President, 1995 425,000 372,000 0 7,600 43,271
General Counsel, Secretary 1994 330,000 290,000 0 152,000 44,094
and Director
</TABLE>
(1) For 1996, represents the sum of (i) for each individual, $2,250
contributed by the Company on behalf of such individual under the
Company's Money Purchase Pension Plan (the "Pension Plan"), (ii) for
each individual, $25,500 credited to such individual (other than Mr.
James Dolan) on the books of the Company pursuant to the defined
contribution portion of the Company's Supplemental Benefit Plan (the
"Supplemental Plan"), (iii) for each individual, $2,250 contributed by
the Company on behalf of such individual as a basic company
contribution under the Company's 401(k) Plan, (iv) for each individual,
the following amounts contributed by the Company on behalf of such
individual as a matching contribution under the Company's 401(k) Plan:
Mr. James Dolan $983; Mr. Charles Dolan $1,073; Mr. Bell $854; Mr.
Lustgarten $1,073 and Mr. Lemle $875 and (v) for each individual, the
following amounts paid as a premium on individual life insurance
policies purchased by the Company for the executive officer to replace
coverage under the integrated policy previously provided by the
Company: Mr. James Dolan $37,705; Mr. Charles Dolan $119,861; Mr. Bell
$69,385; Mr. Lustgarten $27,563 and Mr. Lemle $19,125.
Fiscal Year End Option/SAR Value Table
5
<PAGE>
The following table shows certain information with respect to the named
executive officers concerning stock options and SARs held as of December 1996.
None of the named executive officers exercised stock options or SARs during
1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-The-Money Options/
Shares 12/31/96 (#) SARs at 12/31/96 ($)
Acquired On Value ---------------------------------------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charles F. Dolan 0 0 0 0 0 0
James L. Dolan 0 0 27,375 9,125 0 0
William J. Bell 75,000(1) 2,821,875 269,600(2) 10,500 291,488 0
Marc A. Lustgarten 82,500(1) 3,104,062 279,600(3) 10,500 291,488 0
Robert S. Lemle 56,250(1) 2,116,406 221,216(4) 10,532 269,263 0
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Exercise of SARs granted under the Company's Amended and Restated Employee
Stock Plan.
(2) Includes an aggregate of 150,000 options and SARs that may be exercised
only when the Fair Market Value (as defined) of a share of Class A Common
Stock exceeds the exercise price of $56.50 by at least 20 percent.
(3) Includes an aggregate of 160,000 options and SARs that may be exercised
only when the Fair Market Value (as defined) of a share of Class A Common
Stock exceeds the exercise price of $56.50 by at least 20 percent.
(4) Includes an aggregate of 120,000 options and SARs that may be exercised
only when the Fair Market Value (as defined) of a share of Class A Common
Stock exceeds the exercise price of $56.50 by at least 20 percent.
Defined Benefit Pension Plan
The Company's, nonqualified Supplemental Benefit Plan provides
actuarially-determined pension benefits, among other types of benefits, for 21
employees of the Company who were previously employed by Cablevision Systems
Services Corporation ("CSSC"). CSSC, which is wholly-owned by Charles Dolan,
provided management services to Cablevision Company (the Company's predecessor)
and to certain affiliates of the Company. The Supplemental Plan is designed to
provide these employees, in combination with certain qualified benefit plans
maintained by the Company and certain qualified retirement plans formerly
maintained by CSSC, with the same retirement benefit formulae they would have
enjoyed had they remained employees of CSSC and continued to participate in the
former CSSC qualified plans. The Supplemental Plan provides that the Company may
set aside assets for the purpose of paying benefits under the Supplemental Plan,
but that any such assets remain subject to the claims of general creditors of
the Company.
The defined benefit feature of the Supplemental Plan provides that, upon
attaining normal retirement age (the later of age 65 or the completion of five
years of service), a participant will receive an annual benefit equal to the
lesser of 75% of his or her average compensation (not including bonuses and
overtime) for his or her three most highly compensated years and the maximum
benefit permitted
6
<PAGE>
by the Code (the maximum in 1996 is $120,000 for employees who retire at age
65), reduced by the amount of any benefits paid to such individual pursuant to
the qualified defined benefit plan formerly maintained by CSSC. This benefit
will be reduced proportionately if the participant retires or otherwise
terminates employment before reaching normal retirement age.
The following sets forth the estimated annual benefits payable upon
normal retirement under the defined benefit portion of the Supplemental Plan
(reduced by any retirement benefits paid in connection with the termination
of the CSSC Defined Benefit Pension Plan) to the following persons: Mr.
Charles Dolan, $57,000; Mr. Bell, $97,098, Mr. Lustgarten, $104,663; and Mr.
Lemle, $109,817.
Employment Contracts and Severance and Change-In-Control Arrangements
Charles Dolan has an employment agreement with the Company expiring in
January 1998 with automatic renewals for successive one-year terms unless
terminated by either party at least three months prior to the end of the then
existing term. The agreement provides for annual compensation of not less than
$400,000 per year to Mr. Dolan. The agreement also provides for payment to Mr.
Dolan's estate in the event of his death during the term of such agreement, of
an amount equal to the greater of one year's base salary or one-half of the
compensation that would have been payable to Mr. Dolan during the remaining term
of such agreement.
Under the applicable award agreements, the vesting of the bonus award
shares, stock options and SARs granted to employees, including Messrs. James
Dolan, Bell and Lustgarten, Lemle, under the Company's Amended and Restated
Employee Stock Plan and its predecessor plans, may be accelerated, in certain
circumstances, upon a "change of control" of the Company. A "change of control"
is defined as the acquisition by any person or group, other than Charles Dolan
or members of his immediate family (or trusts for the benefit of Charles Dolan
or his immediate family) or any employee benefit plan sponsored or maintained by
the Company, of (1) the power to direct the management of substantially all of
the cable television systems then owned by the Company in the New York City
metropolitan area, or (2) after any fiscal year of the Company in which the
Company's cable television systems in the New York City metropolitan area
contributed in the aggregate less than a majority of the net revenues of the
Company and its consolidated subsidiaries, the power to direct the management of
the Company or substantially all of its assets. Upon such a change in control,
the bonus award shares, stock options and SARs may be converted into either a
right to receive an amount of cash based upon the highest price per share of
common stock paid in the transaction resulting in the change of control, or into
a corresponding award with equivalent profit potential in the surviving entity,
at the election of the Compensation Committee.
The Company adopted as of May 1, 1994, a severance pay plan pursuant to
which an employee whose employment is involuntary terminated (other than for
cause) or who resigns with the approval of the Company, may receive a benefit in
an amount determined by the Company.
In November 1994, the Company entered into employment agreements with each
of Messrs. Bell, Lustgarten and Lemle. The agreements are each for a three year
term ending December 31, 1997 and may each be extended for additional one-year
periods up until December 31, 2000, unless the Company or the executive notifies
the other of its election not to extend by the preceding October 31. Under their
respective agreements, these executives are to receive annual salaries of not
less then $450,000 in the case of Mr. Bell, $450,000 in the case of Mr.
Lustgarten, and $330,000 in the case of Mr. Lemle. Each agreement also provides
that in the event that the executive leaves the Company involuntarily (other
than for cause), following a change of control (as defined above), or because
such executive's compensation, title or responsibilities are reduced without his
consent, such executive shall
7
<PAGE>
be entitled to receive (1) a severance payment of not less than the salary due
for the remainder of the employment agreement or one year's annual salary (or
three times the sum of his annual salary plus his prior year's annual bonus in
the event of a change of control), whatever is greater, (2) a pro-rated portion
of his annual bonus, (3) acceleration of unvested stock options, conjunctive
rights and bonus award shares, (4) three years payment of life insurance
premiums and (5) the right to participate in the Company's health plan for
retired executives.
In February 1996, the Compensation Committee adopted the Cablevision
Systems Corporation Supplemental Life Insurance Premium Payment Plan (the
"Supplemental Life Insurance Premium Payment Plan"). Under the Supplemental Life
Insurance Premium Payment Plan, at all times following a change of control (as
detailed above) the Company would pay on behalf of certain executive officers of
the Company, including Messrs. Charles Dolan, James Dolan, Bell, Lustgarten and
Lemle all premiums on life insurance policies purchased by the Company for such
executive officers, up to the aggregate amount of additional premiums, if any,
necessary to fund fully the face amount of such executive officer's policy as in
effect immediately prior to the change of control.
Indemnification Agreement
Charles Dolan has entered into an agreement pursuant to which he has
agreed to guarantee the Company's obligation to indemnify its officers and
directors to the fullest extent permitted by Delaware law. In addition, subject
to certain limitations, Mr. Dolan has agreed to indemnify such officers and
directors against any loss or expense such person may incur in connection with
any transaction involving Mr. Dolan or entities affiliated with Mr. Dolan to the
extent indemnification is not provided by the Company. Any payment required to
be made by Mr. Dolan pursuant to such agreement will be reduced by any proceeds
of insurance or reimbursement under any other form of indemnification
reimbursement available to such officer or director.
Compensation Committee Interlocks and Insider Participation
As disclosed above, the Compensation Committee of the Board of Directors
is comprised of Messrs. Oristano, Tatta and Hochman. (See "Report of
Compensation Committee," above.) Mr. Tatta, the Chairman of the Company's
Executive Committee and the former President of the Company, is currently a
consultant to the Company. Mr. Oristano and Mr. Hochman are not employees of the
Company. Certain relationships and transactions between the Company and these
individuals of their affiliates is described under Item 13 - Certain
Relationships and Related Transactions.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth (i) the number and percent of shares of
Class A and Class B Common Stock owned of record and beneficially as of March
31, 1997 by each director and each executive officer of the Company named in the
summary compensation table below and (ii) the name, address and the number and
percent of shares of Class A and Class B Common Stock owned of record and
beneficially by persons beneficially owning more than five (5%) percent of any
class.
8
<PAGE>
<TABLE>
<CAPTION>
Combined Voting
Power of
Class A Class B Class A & Class B Class A & Class B
Common Stock Common Stock Common Stock Common Stock
Beneficially Beneficially Beneficially Beneficially
Name and Address Owned (1) Owned (1) (2) Owned (1) (2) Owned (1) (2)
---------------- --------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles F. Dolan(3)(4)
One Media Crossways
Woodbury, NY 11797 331,618 2.4% 6,234,281 55.4% 6,565,899 26.4% 49.7%
The Capital Group
Companies, Inc.(5)
Capital Research and
Management Company(5)
Capital Guardian Trust Company(5)
333 South Hope Street
Los Angeles, CA 90071 2,008,970 14.8% -- -- 2,008,970 8.1% 1.6%
The Equitable Companies,
Incorporated(6)
787 Seventh Avenue
New York, NY 10019 2,392,383 17.6% -- -- 2,392,383 9.6% 1.9%
Gabelli Funds, Inc.(7)
GAMCO Investors, Inc.(9)
One Corporate Center
Rye, NY 10580 3,799,329 28.7% -- -- 3,779,329 15.2% 3.0%
John Tatta(8) 20,000 * -- -- 20,000 * *
William J. Bell(9)(10) 116,349 * -- -- 116,349 * *
Francis F. Randolph, Jr.(10, 11) 58,500 * -- -- 58,500 * *
Robert S. Lemle(10) 93,957 * -- -- 93,957 * *
Marc Lustgarten(9)(10) 122,063 122,063 * *
Sheila A. Mahony(10) 21,337 * -- -- 21,337 * *
Robert P. May 200 * -- -- 200 * *
Daniel T. Sweeney(10) 31,351 * -- -- 31,351 * *
Charles D. Ferris(12) 9,000 * -- -- 9,000 * *
Richard H. Hochman(12) 10,094 * -- -- 10,094 * *
Victor Oristano(12)(13) 9,000 * -- -- 9,000 * *
James L. Dolan(10)(14)(15)(21)(22) 14,688 * 745,241 6.6% 759,927 3.0% 5.9%
Patrick F. Dolan(10)(15)(19)(23) 4,100 * 817,410 7.3% 821,510 3.3% 6.5%
Thomas C. Dolan(10)(16)(20)(24)(25) 4,017 * 663,686 5.9% 667,703 2.7% 5.3%
Vincent Tese(12) 2,500 * -- -- 2,500 * *
All executive officers
and directors as a group
(20 persons)(3)(4)(8)(9)(10)(11)(12)
(13)(14)(15)(16)(20)(21)(22)(23)(24)
(25)(26) 902,287 6.4% 8,460,618 75.2% 9,362,905 37.1% 67.6%
Paul J. Dolan(17)(22)(23)(24)(25)(26)
100 Corporate Place Suite 150
Chardon, OH 44024 1,700 * 1,894,063 16.8% 1,895,752 7.6% 15.0%
Kathleen M. Dolan(17)(23)
One Media Crossways
Woodbury, NY 11797 1,000 * 716,741 6.4% 717,741 2.9% 5.7%
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Combined Voting
Power of
Class A Class B Class A & Class B Class A & Class B
Common Stock Common Stock Common Stock Common Stock
Beneficially Beneficially Beneficially Beneficially
Name and Address Owned (1) Owned (1) (2) Owned (1) (2) Owned (1) (2)
---------------- --------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mary S. Dolan(18)(20)
300 So. Riverside Plaza
Suite 1480
Chicago, IL 60606 2,500 * 597,401 5.3% 599,901 2.4% 4.7%
Deborah A. Dolan(18)(24)
One Media Crossways
Woodbury, NY 11797 1,000 * 816,741 7.3% 817,741 3.3% 6.5%
Matthew J. Dolan(19)(21)
231 Main Street
Court House Annex
Chardon, OH 44024 1,500 * 597,401 5.3% 598,901 2.4% 4.7%
Marianne E. Weber(19)(25)(26)
One Media Crossways
Woodbury, NY 11797 1,000 * 654,855 5.8% 655,855 2.6% 5.2%
John MacPherson(27)
21 Old Town Lane
Halesite, NY 10019 43,000 * 1,883,074 16.7% 1,936,074 7.8% 14.9%
</TABLE>
- ----------
(1) Beneficial ownership of a security consists of sole or shared voting power
(including the power to vote or direct the vote) and/or sole or shared
investment power (including the power to dispose or direct the
disposition) with respect to the security through any contract,
arrangement, understanding, relationship or otherwise. Unless indicated,
beneficial ownership disclosed consists of sole voting and investment
power. Beneficial ownership of Class A Common Stock is exclusive of the
shares of Class A Common Stock that are issuable upon conversion of shares
of Class B Common Stock.
(2) Class B Common Stock is convertible into Class A Common Stock at the
option of the holder on a share for share basis. The holder of one share
of Class A Common Stock is entitled to one vote at a meeting of
stockholders of the Company, and the holder of one share of Class B Common
Stock is entitled to ten votes at a meeting of stockholders of the Company
except in the election of directors.
(3) Includes 247,475 shares of Class A Common Stock owned by the Dolan Family
Foundation, a New York not-for-profit corporation, the sole members of
which are Charles Dolan and his wife, Helen A. Dolan. Neither Mr. Dolan
nor Mrs. Dolan has an economic interest in such shares, but Mr. Dolan and
his wife share the ultimate power to vote and dispose of such shares.
Under certain rules of the Securities and Exchange Commission, so long as
Mr. Dolan and his wife retain such powers, each of Mr. Dolan and his wife
is deemed to have beneficial ownership thereof. Also includes 5,000 shares
of Class A Common Stock owned directly by Mrs. Dolan. The number of shares
held as indicated includes 67,838 shares resulting from the assumed
conversion of 183,000 shares of 8.5% Series I Convertible Exchangeable
Preferred Stock ("Series I Preferred Stock") (0.37070 shares of common
stock for each share of Series I Preferred Stock).
(4) Does not include an aggregate 4,981,928 shares of Class B Common Stock
held by trusts for the benefit of Dolan family interests (the "Dolan
Family Trusts"). The Dolan Family Trusts
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<PAGE>
also own an aggregate of 94,026 shares of Series C Preferred Stock which,
commencing on December 30, 1997, may be converted by the Company into
shares of Class B Common Stock, in lieu of redeeming such shares for cash.
Mr. Dolan disclaims beneficial ownership of the shares owned by the Dolan
Family Trusts, in that he has neither voting nor investment power with
respect to such shares.
(5) The Company has been informed that certain operating subsidiaries of The
Capital Group Companies, Inc., exercised investment discretion over
various institutional accounts which held as of December 31, 1996,
2,008,970 shares of Class A common stock. Capital Guardian Trust Company,
a bank, and one of such operating companies, exercised investment
discretion over 751,210 of such shares. Capital Research and Management
Company, a registered investment adviser has investment discretion with
respect to 1,184,660 of shares. The number of shares held as indicated
includes 549,370 shares resulting from the assumed conversion of 1,482,000
shares of Series I Preferred Stock (0.37070 shares of common stock for
each share of Series I Preferred Stock).
(6) The Company has been informed that certain operating subsidiaries of The
Equitable Companies Incorporated exercise sole investment discretion over
various institutional accounts which own 2,392,393 shares of Class A
Common Stock, and that such operating subsidiaries exercise sole voting
power with respect to 1,980,433 of such shares and sole dispositive power
with respect to all of such shares. The number of shares held as indicated
includes 938,083 shares resulting from the assumed conversion of 2,530,572
shares of Series I Preferred Stock (0.37070 shares of common stock for
each share of Series I Preferred Stock).
(7) The Company has been informed that certain operating subsidiaries of
Gabelli Funds, Inc., ("GFI") beneficially held, or exercise investment
discretion over various institutional accounts which beneficially held as
of March 7, 1997, an aggregate of 3,779,329 shares of Class A Common
Stock, including approximately 24,745 shares of Class A Common Stock that
may be obtained upon conversion of shares of Series I Preferred Stock held
by such entities on such date. The Company has been informed that GAMCO
Investors, Inc., an investment advisor registered under the Investment
Advisors Act of 1940 and a wholly-owned subsidiary of GFI, held sole
dispositive power over 2,951,450 of such shares and sole voting power over
2,809,350 of such shares.
(8) Does not include 40,000 shares of Class A Common Stock held by the Tatta
Family Group. The Tatta Family Group is a New York limited partnership,
the general partners of which are six trusts for the benefit of Tatta
family interests (the co-trustees of each of which are Stephen A. Carb,
Esq. and either Deborah T. DeCabia or Lisa T. Crowley, each a daughter of
John Tatta who has been a director since 1985 and was the President of the
Company from 1985 until 1991), and the limited partners of which are
trusts for the benefit of Mr. Tatta and Tatta family interests (the
trustee of each of which is Stephen A. Carb, Esq.). Mr. Tatta, who, as of
April 1, 1995, was the holder of 20,000 shares of Class A Common Stock,
disclaims beneficial ownership of the stock beneficially owned by trusts
for the benefit of his family, in that he has neither voting nor
investment power with respect to such shares.
(9) Includes shares owned by children of the individuals listed, which shares
represent less than 1% of the outstanding Class A Common Stock.
(10) Includes shares of Common Stock issuable upon the exercise of options
granted pursuant to the Company's First Amended and Restated 1996 Employee
Stock Plan or its predecessor
11
<PAGE>
plans which on April 1, 1997 were unexercised but were exercisable within
a period of 60 days from that date. These amounts include the following
number of shares for the following individuals: Mr. James Dolan 13,688;
Mr. Bell 116,050; Mr. Lemle 93,733; Mr. Lustgarten 121,050; Ms. Mahony
21,191; Mr. Sweeney 14,800; Mr. Patrick Dolan 2,200 and Mr. Thomas Dolan
3,017; all executive officers and directors as a group 422,264. Certain of
these options held by Messrs. Bell, Lustgarten and Lemle may be exercised
only when the Fair Market Value (as defined) of a share of Class A Common
Stock exceeds $67.80. These Options (which are included in the aggregate
option amounts set forth above in this footnote (10)) are as follows: Mr.
Bell 75,000, Mr. Lustgarten 80,000 and Mr. Lemle 60,000. Certain of these
options held by Ms. Mahony, Mr. Patrick Dolan, Mr. Thomas Dolan, and other
executive officers, may be exercised only when the Fair Market Value (as
defined) of a share of Class A Common Stock exceeds $59.375. These options
(which are included in the aggregate option amounts set forth above in
this footnote (10) are as follows: Ms. Mahony 2,500; Mr. Patrick Dolan
1,562; Mr. Thomas Dolan 1,375; all executive officers and directors as a
group 16,373.
(11) Includes 500 shares of Class A Common Stock held by The Utopia Fund and
500 shares of Class A Common Stock held by The Sarah Tod Fund. The Utopia
Fund and The Sarah Tod Fund are both private charitable trusts of which
Mr. Randolph is the sole trustee. Mr. Randolph disclaims beneficial
ownership of the shares of Class A Common Stock held by The Utopia Fund
and The Sarah Tod Fund in that neither Mr. Randolph nor any member of his
immediate family has a vested interest in the income or corpus of such
trusts.
(12) Includes shares of Common Stock issuable upon the exercise of options
granted pursuant to the Company's 1996 Stock Option Plan for
Non-Employee Directors, which on April 1, were unexercised but were
exercisable within a period of 60 days from that date. These amounts
include the following number of shares for the following individuals:
Mr. Ferris 8,000; Mr. Hochman 8,000; Mr. Oristano 8,000; Mr. Tese 2,500.
(13) The shares listed are owned by Alda Investment Company, a Florida
partnership consisting of members of the Oristano family.
(14) Includes 28,500 shares of Class B Common Stock owned by trusts for minor
children as to which James L. Dolan disclaims beneficial ownership. Also
includes 716,741 shares of Class B Common Stock held by two family trusts
of which James L. Dolan is a contingent beneficiary and a co-trustee, as
to which James L. Dolan disclaims beneficial ownership, which shares are
also described in footnotes (22) and (23).
(15) Includes 9,500 shares of Class B Common Stock owned by trust for a minor
child as to which Patrick F. Dolan disclaims beneficial ownership. Also
includes 807,910 shares of Class B Common Stock held by two family trusts
of which Patrick Dolan is a contingent beneficiary and a co-trustee, as to
which Patrick F. Dolan disclaims beneficial ownership, which shares are
also described in footnotes (20) and (24).
(16) Includes 663,686 shares of Class B Common Stock held by three family
trusts of which Thomas C. Dolan is a contingent beneficiary and a
co-trustee, as to which Thomas C. Dolan disclaims beneficial ownership,
which shares are also described in footnotes (21) (25) and (26).
(17) Includes 303,116 shares of Class B Common Stock held by the DC Kathleen
Trust, the co-trustees of which are Kathleen Dolan and Paul Dolan.
12
<PAGE>
(18) Includes 303,116 shares of Class B Common Stock held by the DC Deborah
Trust, the co-trustees of which are Deborah Dolan and Mary Dolan.
(19) Includes 294,285 shares of Class B Common Stock held by the DC Marianne
Trust, the co-trustees of which are Marianne E. Weber and Matthew Dolan.
(20) Includes 294,285 shares of Class B Common Stock held by the DC Patrick
Trust, the co-trustees of which are Patrick Dolan and Mary Dolan.
(21) Includes 303,116 shares of Class B Common Stock held by the DC Thomas
Trust, the co-trustees of which are Thomas Dolan and Matthew Dolan.
(22) Includes 303,116 shares of Class B Common Stock held by the DC James
Trust, the co-trustees of which are James Dolan and Paul Dolan.
(23) Includes 413,625 shares of Class B Common Stock held by the Dolan
Descendants Trust, the co-trustees of which are James Dolan, Kathleen
Dolan and Paul Dolan.
(24) Includes 513,625 shares of Class B Common Stock held by the Dolan Progeny
Trust, the co-trustees of which are Patrick Dolan, Deborah Dolan and Paul
Dolan.
(25) Includes 307,625 shares of Class B Common Stock held by the Dolan
Grandchildren Trust, the co-trustees of which are Thomas Dolan,
Marianne E. Weber and Paul Dolan.
(26) Includes 52,945 shares of Class B Common Stock held by the Dolan Spouse
Trust, the co-trustees of which are Thomas Dolan, Marianne E. Weber and
Paul Dolan.
(27) Includes an aggregate of 1,883,074 shares of Class B Common Stock held by
various trusts for the benefit of family members of Charles F. Dolan's
family for which Mr. MacPherson serves as Trustee and, in such capacity,
exercises sole voting power and dispositive power with respect to such
shares. Such trusts also own an aggregate of 38,724 shares of Series C
Preferred Stock.
The Dolan family interests (other than Charles Dolan) have agreed with the
Company that in the case of any sale or disposition by Dolan family interests
(other than Charles Dolan) of shares of Class B Common Stock to a holder other
than Charles Dolan or Dolan family interests, the Class B Common Stock will be
converted on the basis of one share of Class A Common Stock for each share of
Class B Common Stock.
Charles Dolan and trusts for the benefit of members of his family, by
virtue of their ownership of Class B common stock, are able collectively to
control stockholder decisions on matters in which holders of Class A and Class B
common stock vote together as a class, and to elect 75% of the Company's Board
of Directors.
Registration Rights. The Company has granted to each of Charles Dolan,
certain Dolan family interests and the Dolan Family Foundation the right to
require the Company to register, at any time prior to the death of both Mr.
Dolan and his wife, the shares of Class A Common Stock held by them provided
that the shares requested to be registered shall have an aggregate market value
of at least $3,000,000. There is no limitation on the number or frequency of the
registrations that such parties can
13
<PAGE>
demand pursuant to the preceding sentence. After the death of both Mr. Dolan and
his wife, such parties will be permitted one additional registration. In
addition, the Company has granted such parties "piggyback" rights pursuant to
which they may require the Company to register their holdings of Class A Common
Stock on any registration statement under the Act with respect to an offering by
the Company or any security holder thereof (other than a registration statement
on Form S-8, S-4, S-15 or any successor form thereto).
The Company has granted Mr. Tatta and certain Tatta family interests the
right to require the Company, on any date, with the consent of Charles Dolan,
his widow or the representative of the estate of Mr. Dolan or his wife, to
register the shares of Class A Common Stock held by them provided that the
shares requested to be registered have an aggregate market value of at least
$3,000,000. After the death of both Charles Dolan and his wife, such parties
will be permitted to demand only one registration. Such parties have also been
granted piggyback registration rights identical to those described above,
provided that in certain instances they receive written consent of Mr. Dolan,
his widow or the representative of the estate of Mr.
Dolan or his wife.
Pursuant to an Agreement of Sale and Assignment, dated as of February 14,
1989 among the A. Jerrold Perenchio Living Trust (the "Perenchio Trust"), the
Company, Mr. Tatta and certain Tatta family interests, the Perenchio Trust was
assigned registration rights with respect to the 270,000 shares of Class A
Common Stock purchased under such agreement. In connection with an option
granted to Mr. Randolph to acquire 840,000 shares of Class A Common Stock
pursuant to the Company's 1986 Nonqualified Stock Option Plan, the Company
granted to Mr. Randolph a limited right to require the Company to register such
shares. Pursuant to these agreements, in 1990 the Company filed a registration
statement on Form S-3 with respect to these shares and has agreed to use its
best efforts to keep such registration statement continuously effective until
such time as all the shares covered thereby have been publicly sold.
The demand and piggyback registration rights described above are subject
to certain limitations which are intended to prevent undue interference with the
Company's ability to distribute securities.
14
<PAGE>
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Cablevision of Boston Limited Partnership, a Massachusetts limited
partnership ("Cablevision Boston"), is engaged in the construction, ownership
and operation of cable television systems in Boston and Brookline,
Massachusetts. On December 15, 1995, the Company acquired the interests in
Cablevision Boston that it did not previously own pursuant to an agreement
entered into by the Company and Cablevision Boston. In connection with the
acquisition, the limited partners (other than the Company) of Cablevision Boston
received 682,454 shares (of which 680,266 shares were issued by December 31,
1995) of the Company's Class A Common Stock and the Company paid approximately
$83 million, (including fees and expenses) primarily with funds borrowed under
the Company's credit agreement, to repay existing Cablevision Boston
indebtedness and to make certain payments to Charles F. Dolan, referred to
below. Upon consummation of the acquisition of Cablevision Boston, all
outstanding subordinated advances made by the Company to Cablevision Boston
became intercompany indebtedness. Mr. Dolan, a former general partner of
Cablevision Boston and the Chairman of the Board of the Company, received 7,357
shares of the Company's Class A Common Stock and approximately $20.8 million in
cash to repay a portion of Cablevision Boston's indebtedness to him in
connection with the acquisition. The Company and its affiliates (other than
Cablevision Boston's former general partners and their affiliates) received
1,041,553 shares of the Company's Class A Common Stock (such shares are
reflected as treasury shares at December 31, 1995) and assumed approximately
$42.9 million of intercompany indebtedness referred to above. As part of the
acquisition of Cablevision Boston, the Company entered into an agreement with
Mr. Dolan with respect to his 0.5% general partnership interest in Cablevision
of Brookline Limited Partnership ("Cablevision Brookline"), a partnership
affiliated with Cablevision Boston. The Company acquired the remaining 99.5% of
the partnership interests in Cablevision Brookline in the acquisition of
Cablevision Boston. Under the Agreement, the Company has a right of first
refusal to acquire Mr. Dolan's general partnership interest and a right to
acquire such interest on the earlier to occur of Mr. Dolan's death or January 1,
2002 at the greater of $10,000 or the book value of such interest,. Mr. Dolan's
estate has the right to put the interest to the Company at the same price.
Additionally, in the event of a change of control of the Company or Cablevision
Brookline, Mr. Dolan will have the right to put his general partnership interest
in Cablevision Brookline to the Company at the greater of (i) prices declining
from $3.9 million for the year ended December 15, 1996 to $10,000 for the year
ended December 15, 2002 and (ii) the book value of such interest.
Atlantic Publishing holds a minority equity interest in a company that
publishes a cable television guide which is offered to the Company's subscribers
and to unaffiliated cable television operators. As of December 31, 1996, the
Company had advanced an aggregate of approximately $16.7 million to Atlantic
Publishing, reflecting approximately $0.1 million, $1.0 million and $0.6
million, net, paid back during 1996, 1995 and 1994, respectively. The Company
has written off all of its advances to Atlantic Publishing other than $2.4
million. Atlantic Publishing is owned by a trust for certain Dolan family
members; however, the Company has the option to purchase Atlantic Publishing for
an amount equal to the owner's net investment therein plus interest. The current
owner has made only a nominal investment in Atlantic Publishing to date.
In July 1992, the Company acquired (the "CNYC Acquisition") substantially
all of the remaining interests in Cablevision of New York City - Phase I through
Phase V (collectively, "CNYC"), the operator of a cable television system in The
Bronx and parts of Brooklyn, New York City. Prior to the CNYC Acquisition, the
Company had a 15% interest in CNYC and Charles Dolan owned the remaining
interests. Mr. Dolan remains a partner in CNYC with a 1% interest and the right
to certain preferential payments.
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<PAGE>
Under the agreement between the Company and Mr. Dolan, a new limited
partnership ("CNYC LP") was formed and holds 99% of the partnership interests in
CNYC. The remaining 1% interest in CNYC is owned by the existing corporate
general partner which is a wholly-owned subsidiary of the Company. The Company
owns 99% of the partnership interests in CNYC LP and Mr. Dolan retains a 1%
partnership interest in CNYC LP plus certain preferential rights. Mr. Dolan's
preferential rights entitle him to an annual cash payment (the "Annual Payment")
of 14% multiplied by the outstanding balance of his "Minimum Payment". The
Minimum Payment is $40.0 million and is to be paid to Mr. Dolan prior to any
distributions from CNYC LP to partners other than Mr. Dolan. In addition, Mr.
Dolan has the right, exercisable on December 31, 1997, and as of the earlier of
(1) December 31, 2000 and (2) December 31 of the first year after 1997 during
which CNYC achieves an aggregate of 400,000 subscribers, to require the Company
to purchase (Mr. Dolan's "put") his interest in CNYC LP. The Company has the
right to require Mr. Dolan to sell his interest in CNYC LP to the Company (the
Company's "call") during the three-year period commencing one year after the
expiration of Mr. Dolan's second put. In the event of a put, Mr. Dolan will be
entitled to receive from the Company the Minimum Payment, any accrued but unpaid
Annual Payments, a guaranteed return on certain of his investments in CNYC LP
and a Preferred Payment defined as a payment (not exceeding $150.0 million)
equal to 40% of the Appraised Equity Value (as defined in the agreement) of CNYC
LP after making certain deductions including a deduction of a 25% compound
annual return on approximately 85% of the Company's investments with respect to
the construction of Phases III, IV and V of the CNYC cable television system and
100% of certain of the Company's other investments in CNYC, including Mr.
Dolan's Annual Payment. In the event the Company exercises its call, the
purchase price will be computed on the same basis as for a put except that there
will be no payment in respect of the Appraised Equity Value amount.
The Company has the right to make payment of the put or call exercise
price in shares of the Company's Class B Common Stock or, if Mr. Dolan so
elects, Class A Common Stock, except that all Annual Payments must be paid in
cash to the extent permitted under the Company's senior credit agreement. Under
the Company's senior credit agreement, the Company is currently prohibited from
paying the Preferred Payment in cash and, accordingly, without the consent of
the bank lenders, would be required to pay it in shares of the Company's Common
Stock. The Company has agreed to invest in CNYC LP sufficient funds to permit
CNYC LP to make the required Annual Payments to Mr. Dolan and to make certain
equity contributions to CNYC.
On August 23, 1996, the Company entered into an agreement with Northcoast
Operating Co., Inc. ("Northcoast") and certain of its affiliates, to form a
limited liability company (the "LLC") to participate in the auctions conducted
by the Federal Communications Commission ("FCC") for certain licenses to conduct
a personal communications service ("PCS") business. The Company has contributed
an aggregate of approximately $31 million to the LLC (either directly or through
a loan to Northcoast) and holds a 49.9% interest in the LLC and certain
preferential distribution rights. Northcoast is a Delaware corporation
controlled by John Dolan. John Dolan is a nephew of Charles F. Dolan and cousin
of James Dolan.
The Company's By-Laws prohibit the making of further investments in or
advances to entities owned or controlled by Charles Dolan without the approval
of a majority of the members of the Board of Directors who are not employees of
the Company or any of its affiliates.
Richard H. Hochman, a director and a nominee for director, was, until
recently, a Managing Director of Paine Webber Incorporated. PaineWebber
Incorporated has performed investment banking services for entities affiliated
with Charles Dolan.
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<PAGE>
Charles D. Ferris, a director and a nominee for director, is a partner
in the law firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. provides legal services
to the Company and certain of its subsidiaries.
Vincent Tese, a director and a nominee for director, is a director of The
Bear Stearns Companies, Inc. Bear Stearns has performed investment banking
services for the Company.
Conflict of Interest
Charles Dolan and certain other principal officers of the Company and
various affiliates of the Company are subject to certain conflicts of interest.
These conflicts include, but are not limited to, the following:
Business Opportunities. Charles Dolan may from time to time be presented
with business opportunities which would be suitable for the Company and
affiliates of the Company in which Mr. Dolan and his family have varying
interests. Mr. Dolan has agreed that he will own and operate cable television
systems only through the Company, except for cable television systems owned and
operated under franchises held by Mr. Dolan or affiliates of Mr. Dolan as of
January 27, 1986, any expansions of such systems within the same county or an
adjacent county, and systems which the Company elects not to acquire under its
right of first refusal. Except for any such expansions, Mr. Dolan will offer to
the Company the opportunity to acquire or invest in any cable television system
or franchise therefor or interest therein that is offered or available to him or
his family interests. If a majority of the members of the Board of Directors,
who are not employees of the Company or any of its affiliates (the "Independent
Directors") rejects such offer, Mr. Dolan or such family interests may acquire
or invest in such cable television system or franchise therefor or interest
therein individually or with others on terms no more favorable to Mr. Dolan than
those offered to the Company. Mr. Dolan's interests in companies other than the
Company, may conflict with his interest in the Company.
Except for the limitations on the ownership and operation of cable
television systems as described above, Mr. Dolan is not subject to any
contractual limitations with respect to his other business activities and may
engage in programming and other businesses related to cable television. A
significant portion of Mr. Dolan's time may be spent, from time to time, in the
management of such affiliates. Mr. Dolan will devote as much of his time to the
business of the Company as is reasonably required to fulfill the duties of his
office. During 1996, substantially all of Mr. Dolan's professional time was
devoted to the business of the Company.
In the event that Charles Dolan or any Dolan family interest decides to
offer (other than to any Dolan family interest or an entity affiliated with Mr.
Dolan) for sale for his, her or its account any of his, her or its ownership
interest in any cable television system or franchise therefor, he, she or it
will (subject to the rights of third parties existing at such time) offer such
interest to the Company. Mr. Dolan or such Dolan family interest may elect to
require that, if the Company accepts such offer, up to one-half of the
consideration for such interest would consist of shares of Class B Common Stock,
which shares will be valued at the prevailing market price of the Class A Common
Stock and the remainder would consist of shares of Class A Common Stock and/or
cash. If a majority of the Independent Directors rejects such offer, Mr. Dolan
or such Dolan family interest may sell such interest to third parties on terms
no more favorable to such third parties than those offered to the Company.
As noted, Atlantic Publishing holds an interest in a company that
publishes a weekly cable television guide that is sold to the Company's
subscribers.
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CABLEVISION SYSTEMS CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CABLEVISION SYSTEMS CORPORATION
Registrant
Date: May 6, 1997 /s/ Robert S. Lemle
--------------------------------------
By: Robert S. Lemle
Executive Vice President, General Counsel and
Secretary
Date: May 6, 1997 /s/ Andrew Rosengard
--------------------------------------
By: Andrew Rosengard
Sr. Vice President and Controller
