Cablevision Systems said it has settled a nearly five-year old suit with founder Charles Dolan’s son Thomas, agreeing to pay him $21 million to cancel wrongful termination litigation he brought against the company after the demise of its former Voom HD service.

According to documents filed with the SEC, Cablevision paid Thomas Dolan on Feb. 8. As part of that settlement, Cablevision founder and chairman Charles Dolan and CEO James Dolan have agreed to pay an aggregate of $6 million to the company as partial reimbursement in the event Cablevision’s planned merger with Altice is not consummated.

In the SEC filing, Cablevision said the payment to Thomas Dolan is permitted by its merger agreement with Altice N.V. and “does not reduce or otherwise affect the consideration payable to the company’s stockholders under the merger agreement.”

Thomas Dolan brought the suit in New York State Supreme Court in 2011 and in April 2015 the court granted a summary judgment to the plaintiff on liability, with damages to be determined. In June 2015, Cablevision filed a notice of appeal. Thomas Dolan is currently executive vice president, strategy and development at Cablevision. In 2004 he was named president and CEO of Voom, the former HD unit of  programming arm of Rainbow Media.

Cablevision had high hopes for Voom and its original HD content, but soon discovered the unit was moot after practically every other content provider offered its own programming in HD. The unit -- which was shuttered in 2008 -- was the source of another high-profile litigation – against Dish Network, which had signed on as its first big distribution customer. Dish settled that suit in 2012  for about $700 million, of which Cablevision received about $525 million.

“This matter from a decade ago has been settled," Cablevision said in a statement. "It has been handled by an Independent Committee of the Board of Directors and the company will have no comment.”

Cablevision Systems is in talks to license its total audience application (TAPP) software to other operators, company chief operating officer Kristin Dolan said at a recent industry conference.

TAPP utilizes data from set-top boxes and helps advertising buyers plan advanced ad campaigns. Cablevision began using the TAPP technology in April, using data from the 7 million set-tops in its New York metro area footprint.

With TAPP and other analytics, Cablevision is able to target specific demographics – like soccer mom’s that make more than $50,000 per year – and recommend which networks an advertiser should buy ads on to reach that audience.

“We have a lot of networks that are too small to be measured, but actually have really committed interested audiences that are great targets for very specific advertising,” Dolan said at the recent Bank of America Merrill Lynch Media, Entertainment & Communications conference in Beverly Hills. She added that Cablevision is talking to other operators about licensing the technology.

“We're talking to a lot of people about it because it's not that huge of a lift for people to aggregate the data,’” Dolan said at the conference. “…They get the benefit of being able to charge a higher cost for the advertising and to recommend, like we do, schedules that might include nontraditional networks that they hadn't been monetizing before.”

Dolan said that Cablevision also has high hopes for its Freewheel WiFi phone product, launched in February.

“We will be talking a lot more about Freewheel in the coming months,” Dolan said. “We are continuing to explore the opportunities for it. And it was a learning experience at first, but now we are getting very enthusiastic about the future for that product.”  

Cable stocks began the long crawl back on Friday after two straight days of heavy losses, with Viacom and other major media stocks gaining back some lost ground.

The programing sector was hit hard in the past few days, with stocks in the sector down a collective 10% between Aug. 5 and Aug. 6 as investors, skittish over over-the-top competition, declining ratings and slumping ad revenue, headed for the exits. Viacom dipped more than 14% on Aug. 6 after reporting a 9% decline in domestic ad revenue in its fiscal third quarter. Discovery dipped 12% on Aug.5 after it reported sluggish results for its U.S. networks and others like Walt Disney Co., 21st Century Fox and AMC Networks weathered similar declines.

Viacom began the long road back, rising as much as 6% during the day before closing at $45.47, up 3.1%. Other stocks were up slightly – 21st Century Fox rose 2.8%; AMC Networks rose 1.4%; Time Warner Inc. increased 1.2%; and Disney increased 0.7%. Discovery, which gained back some ground Thursday, fell 1.5% on Friday.

Distribution stocks also felt some pain early on – Comcast dipped about 5% on Aug. 5 and Charter, Time Warner Cable and Cablevision declined in the 1% to 2% range. Cablevision, which reported second quarter results on Friday, saw its stock dip as much as 4% on Aug. 7 before closing at $25.82 each, down 2.7%, despite reporting its first positive customer relationship growth (5,000 customers) in two years.

Cablevision CEO James Dolan also lashed out at Verizon Communications’ FiOS  service – the company is often singled out by analysts as having the greatest exposure to FiOS service in the cable industry – claiming that the telco has lost the competitive fight.

On a conference call with analysts, Dolan said that since Cablevision began competing with FiOS, Cablevision has taken about 2 million phone customers from the telco to become the largest telephone company in the tri-State area.

“The impact of FiOS on Cablevision has been minimal,” Dolan said, adding that the telco fiber unit is “an unprofitable business today, and I doubt that they will ever be profitable.”

Cablevision, on the other hand, has transformed its business, focusing on connectivity rather than promotions, and has led the charge for flexible packaging with its cord-cutter package (high-speed Internet and a digital antenna) and other products.

“Cablevision has changed its culture. We no longer think like a monopoly. The Verizon FiOS Effect, if there ever was one, is over,” Dolan said.

Verizon said its products would provide the best response to Dolan's claims.

“We’ll let our FiOS services speak for themselves – better Internet speeds, better connectivity, better TV quality, tops in customer service rankings, and better overall value for our customers,” Verizon spokesman John Bonomo said in a statement. “That speaks volumes.” 

Cablevision Systems CEO James Dolan said he doesn’t think that consumers are dropping traditional cable packages for over-the-top and skinny bundles, but added that a shift away from more expensive offerings could take hold in the next five to 10 years.

“I don’t think the sky is falling quite yet,” Dolan said on a conference call discussing second quarter results. "There is not enough programming weight yet on the Internet and OTT services to really entice a mainstream video customer. …Eventually there will enough programming for OTT to be competitive with the traditional video bundle. I’m not saying I think that is going to happen over a very short period of time. Consumers have become very comfortable with the bundle cable is offering.”

Later, Dolan predicted that it would take at least five years for 10% of the market to move to OTT and 10 years for 30% of the market to move.

Cablevision has been at the forefront of offering smaller video and data packages – it was the first MSO to offer HBO Now to its customers and earlier this year launched a cord cutter package of high-speed data and a digital antenna to capture over-the-air programming. On the call, chief operating officer Kristin Dolan said the cord cutter package has been more attractive to new customers, but is not necessarily luring customers of the larger bundles to drop service.

“The cord-cutter packages are definitely making the phone ring,” Kristin Dolan said on the call, adding that the bulk of customers are going toward the three-product bundle. “We’re not seeing a migration.”

Connectivity has become cable’s No. 1 product, Cablevision Systems CEO James Dolan said at an industry conference Tuesday, adding that as video margins dwindle, providing a speedy and reliable pipe to access content and other services will become essential to cable company survival.

Doan said that data service outperforms video at his company by a 7-to-1 margin, and as high-speed Internet customers surpass video subscribers, operators have to shift the way they approach the business.

“Connectivity has really become our No.1 product. It’s no longer video. …That actually is a significant change to the model,” Dolan said. “We recognize that the connectivity experience we offer is going to be crucial to being able to keep the customer and be able to maintain margins and monetize.”

Dolan pointed to Cablevision’s WiFi service, currently available through more than 100,000 public hotspots in its service territory and more than 1.2 million when residential routers are included. He added that customers regularly use the WiFi service to cut down on data usage on their cell phone plans, a benefit that Dolan said the industry needs to better communicate to customers.

“The trick is to get the customer to recognize that,” Dolan said.

At Cablevision, which was a pioneer in rolling out WiFi service, the usage numbers are growing. Dolan said monthly data usage is up 123% from last year, average monthly customer usage is up by 121% and WiFi usage is up 60%. Cablevision already has rolled out one specific product to take advantage of its WiFi superiority – the WiFi only mobile phone and data service Freewheel and others will likely follow.

That focus on data and connectivity also led Cablevision to introduce its cord-cutter packages earlier this year, essentially a digital antenna and high-speed data service ranging in speed form 5 Mbps to 50 Mbps.

Dolan said that initially he and the Cablevision team didn’t think there was enough over-the-top content to encourage a sizeable number of people to cut the cord, but that changed after offerings began to surface from CBS, ESPN and others. Now he believes that the traditional programming bundle will begin to unravel as more and more content companies go over the top.

 “The one thing that we see as being inevitable, is a reduction in the number of customers that take the big bundle,” Dolan said. “That is going to have an impact on the programmers. How much of an impact? My own personal guess is somewhere around 20% to 25% over the next five years.”

Dolan said as more networks go over the top, it will likely impact smaller content companies that have relied on being part of the larger programming bundle for survival.

“You have a new generation coming in that likes watching on their computer,” Dolan said. “The remote isn’t quite as cool to them. As that all evolves, you’re going to see some degradation of the bundle for the programmers.”
Dolan said that some will thrive, especially those that have highly viewed original and scripted content, like Game of Thrones and Mad Men.

“If you’re a channel that is not highly viewed, that is extremely niche, you are going to have a hard time because you’ve been living off the ecosystem where everybody takes the bundle,” Dolan added. “If you don’t have a corresponding audience that goes along with that, then you’re not essential anymore.”    

Cablevision System reported mixed results in the first quarter, shedding 28,000 basic video customers and adding about 7,000 high-speed data subscribers, as it continues to move forward with its strategy to focus on connectivity via WiFi and its wireline broadband service.

Cablevision lost about 28,000 basic video customers in the period and high speed data subscribers rose by 7,000, compared to a loss of 14,000 video customers and a gain of 8,000 HSD subscribers in the same period last year. Voice customers declined by 14,000, compared to a gain of 8,000 subscribers in the first quarter of 2014.

Overall revenue was up 2.5% to $1.6 billion and adjusted operating cash flow increased 1% to $446.6 million.

Recently, Cablevision has made several moves to build ont the connectivity strategy that CEO James Dolan first talked about in 2014, capitalizing on its robust WiFi network – it has more than 1 million hotspots throughout its footprint. In February, Cablevision rolled out its WiFi-only phone service Freewheel and was the first cable operator to launch Home Box Office’s standalone broadband product, HBO  NOW.  Late last month it introduced “Cord-Cutter” packages of high-speed data and a digital over-the-air antenna, and was the first cable operator to ink a distribution deal with Hulu.

"Cablevision had a solid start to 2015 with growth in net revenue, AOCF and revenue per customer," Dolan said in a statement. “As we move through the year, we will continue to address evolving consumer demand by expanding our product offerings to provide greater value and flexibility. Connectivity is the wave of the future, and we plan to leverage our industry-leading position to be the preferred choice for consumers in our market."

The Internet was abuzz on Monday after Cablevision CEO and Madison Square Garden executive chairman James Dolan lashed out at a frustrated New York Knicks fan, suggesting that he was an alcoholic and telling him to root for the rival NBA Brooklyn Nets “because the Knicks don’t want you.”

According to Deadspin.com, the New York Post and several other media outlets, long-time Knicks fan Irving Bierman – the father of filmmaker Aaron Bierman, sent a heated e-mail to Dolan on Friday, lambasting the Knicks owner for the team’s dismal start and begging him to sell the team. While Bierman, who claimed to be a Knicks fan for 60 years had some harsh words for the team owner, it wasn’t any worse than what Dolan probably hears from the stands while watching games at the Garden.

The screed had little effect on Madison Square Garden stock -- shares were down less than 1% (61 cents each) to $77.50 per share in early trading Monday.

Madison Square Garden, the owner of the Knicks, declined comment.

What was unusual was Dolan’s response. In a heated, typo-filled e-mail -- which sources confirmed was genuine -- that was published by several media outlets, Dolan called the fan “sad,” suggested he may be alcoholic and told him the team doesn’t need fans like him anymore.

“What have you done that anyone would consider positive or nice,” Dolan wrote in the e-mail. “I am betting nothing. In fact ill bet you are negative force in everyone who comes in contact with you. You most likely have made your family miserable. Alcoholic maybe. I just celebrated my 21 year anniversary of sobriety. You should try it. Maybe it will help you become a person that folks would like to have around. In the mean while start rooting.for the Nets because the Knicks dont want you.”

Dolan and the Knicks have been under fire as the team has faltered even after bringing in high-profile former Los Angeles Laker and Chicago Bulls head coach Phil Jackson as Knicks president in March in a five-year deal worth $12 million per year.

While the hiring of Jackson was a high point, according to the NY Post, the new president low-balled his choice of a coach – Steve Kerr, the former Turner Sports analyst, Phoenix Suns executive and Chicago Bulls player under Jackson – offering him a three-year deal worth about $13.2 million to coach the team. Kerr signed as head coach of the Golden State Warriors in May in a reported five-year $22 million deal.

The Knicks are in last place in the NBA Eastern Conference’s Atlantic Division with a 10-41 record, 24.5 games behind first place.

Dolan, according to reports, has kept a low profile with the Knicks since hiring Jackson, attending most home games but limiting his comments about the team’s predicament. The e-mails come just as the Garden gets ready to host the 64th Annual NBA All-Star game on Feb. 15.

Here is Bierman’s email:

Subject: I have been a knicks fan since 1952

At one stage I thought that you did a wonderful thing when you acquired EVERYTHING from your dad. However, since then it has been ALL DOWN HILL. Your working with Isaiah Thomas & everything else regarding the Knicks. Bringing on Phil Jackson was a positive beginning, but lowballing Steve Kerr was a DISGRACE to the knicks. The bottom line is that you merely continued to interfere with the franchise.

As a knicks fan for in excess of 60 years, I am utterly embarrassed by your dealings with the Knicks. Sell them so their fans can at least look forward to growing them in a positive direction Obviously, money IS NOT THE ONLY THING. You have done a lot of utterly STUPID business things with the franchise. Please NO MORE.

Respectfully,

[Aaron Bierman's dad]

And Dolan’s response:

Mr Bierman

You are a sad person. Why would anybody write such a hateful letter. I am.just guessing but ill bet your life is a mess and you are a hateful mess. What have you done that anyone would consider positive or nice. I am betting nothing. In fact ill bet you are negative force in everyone who comes in contact with you. You most likely have made your family miserable. Alcoholic maybe. I just celebrated my 21 year anniversary of sobriety. You should try it. Maybe it will help you become a person that folks would like to have around. In the mean while start rooting.for the Nets because the Knicks dont want you.

Respectfully

James Dolan