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Charles Dolan, Founder and Former CEO, Cablevision, Dolan Family File Lawsuit, Seek Permanent Injunction Against Altice USA To Protect News 12 Network Employees and Enforce 2016 Merger Provisions

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Charles Dolan, Founder and Former CEO, Cablevision, Dolan Family File Lawsuit, Seek Permanent Injunction Against Altice USA To Protect News 12 Network Employees and Enforce 2016 Merger Provisions

PR Newswire

NEW YORK, Sept. 4, 2018 /PRNewswire/ -- A lawsuit and request to permanently enjoin Altice USA was filed today in the Court of Chancery of the State of Delaware by the Dolan Family against Altice USA (NYSE:ATUS) for failure to abide by promises the company made in a 2016 Merger Agreement and for equitable fraud, among other claims.

The lawsuit targets Altice USA and alleges that the company ignored commitments made as part of its merger with Cablevision Systems Corporation (Cablevision). The merger of Altice and Cablevision closed in June 2016 for a value of $17.7 billion.

Plaintiffs in the lawsuit include: Charles Dolan, founder and former CEO, Cablevision; Helen Dolan; James Dolan, former CEO of Cablevision; Patrick Dolan, president of News 12 at the time of the sale; and Colleen McVey, current employee of and news anchor with News 12 Networks.

This lawsuit was filed to protect current employee jobs and programming quality at News 12, which operates a group of local news television channels throughout New York, Connecticut, and New Jersey.

Agreement Conditions

In 2016 in order to induce the sale, Altice USA unambiguously agreed to operate News 12 substantially in accordance with the News 12 Business Plan through at least the end of 2020.

The business plan provided that News 12 would employ full-time equivalent headcount of 462 people throughout this period.

Altice expressly recognized, accepted and agreed, in adhering to the News 12 Business Plan, to incur cumulative losses of up to $60 million, which has not occurred, in the operation of News 12 over the period to maintain the network's existing employee base, as well as the quality and legacy of News 12.

Patrick Dolan Comments

Patrick Dolan was president of News 12 at the time of sale to Altice USA, a shareholder in News 12's parent company, Cablevision, and is currently a senior network advisor for News 12.

Mr. Dolan said, "As we negotiated with Altice on the sale of Cablevision in 2016, our family was committed to protecting the superb reputation and continued independence of News 12 and its employees. We considered News 12 to be one of Cablevision's most cherished assets and felt immense pride in the service that the news network provides the community."

"For those reasons, maintaining high quality hyper-local news content was critically important and a condition necessary for the sale."

"Unfortunately for the employees of News 12, Altice has disregarded its solemn promise to operate News 12 according to the News 12 Business Plan, as shown in the layoffs of approximately 70 employees in 2017 and its intent, expressed in writing, to conduct further layoffs starting this week. The purpose of today's lawsuit is to enforce Altice's contractual commitment to stand by the employees of News 12."

Mr. Dolan concluded, "We negotiated in good faith to add protective covenants in the merger agreement regarding News 12 for the benefit of the viewing public and network employees. The Dolan family intends to hold Altice accountable for commitments Altice made at the time of the sale and to protect the quality programming News 12 provides the community."

2016 Merger Agreement

A key provision of the 2016 Merger Agreement was the requirement for Altice to operate News 12 in accordance with News 12's Business Plan through at least the end of 2020 and support News 12 employees who were responsible for making the network unique among local television stations.  

Altice agreed to these nonstandard provisions in a transaction the scale of Cablevision, because Altice knew that continuing the legacy of News 12 was an important consideration for the Dolan Family and a necessary inducement to agree to the merger.

These covenants were of such importance to the merger, Cablevision intentionally disclosed these protections to public shareholders.

Altice Breached Merger Agreement

Turning its back on its prior representations and promises, in 2017 Altice eliminated approximately 70 News 12 positions — in direct violation of News 12's agreed-upon business plan incorporated into the Merger Agreement.

Altice recently informed the Dolans that it is on the verge of terminating dozens more News 12 employees, including Ms. McVey, threatening to irreparably harm the quality of the local news content that News 12 creates, the livelihoods of News 12's employees, and the legacy that the Dolan Family protected through explicit Merger Agreement provisions.  

Colleen McVey Background

Included in the next proposed round of terminations is Ms. Colleen McVey, 60, an Emmy award winning, prominent anchor at News 12, with more than 30 years of service to the network.
Ms. McVey tests well above average in News 12's target demographic, based on talent study research conducted by the marketing department of Altice USA.

According to the president of Altice USA News, Michael Schreiber, the reason for her impending dismissal, in violation of Altice USA's written representations, is that he is looking for a "fresh look."

Altice has given up any pretext of economic necessity, choosing to capriciously focus on Ms. McVey's "look" over her obvious talent and popularity with viewers.

Lawsuit Overview

Plaintiffs' lawsuit requests, in sum, that the Court enter judgment in favor of plaintiffs,  enjoining Altice USA from:

  • Terminating employment of any current employee of News 12, other than in the ordinary course of business to replace such individual for obvious cause with another person with equivalent qualifications;

  • Taking any action that would cause News 12 to cease to operate in substantial compliance with the News 12 Business Plan; and

  • Taking any action that would, in any way, violate or breach the Merger Agreement.

The lawsuit further requests ordering Altice USA to operate News 12 in substantial compliance with the News 12 Business Plan through at least the year 2020.

The plea for injunctive relief targets Altice USA due to the fact that the company ignored the commitments it made to attain its $17.7 billion merger with Cablevision.

The primary purpose of the lawsuit is to protect News 12 employees, consistent with the promises made by Altice in the Merger Agreement, and continue News 12's rich legacy as one of the topmost local television stations in the U.S.

The verified Complaint can be viewed at: https://www.scribd.com/document/387797405/Dolan-et-al-v-Altice-USA-Inc-et-al-Verified-Complaint "

The Brief in Support of Motion for TRO can be viewed at: https://www.scribd.com/document/387797443/Brief-ISO-Motion-to-Expedite-for-TRO-and-for-Preliminary-Injunction

The Dolan Family and Ms. McVey are represented by Rob Hoffman and John Reed, partners at DLA Piper LLP (US).

About News 12

News 12 is a group of cohesive, regional cable news television channels serving nearly 3 million households in New York State, Connecticut, and New Jersey including two boroughs of New York City and most of Long Island.

News 12 provides news coverage 24 hours a day, and focuses on providing award-winning, hyper-local, in-depth news coverage that is rare in the United States, particularly with respect to the region it serves.

The Dolan Family deliberately and methodically built News 12 as the foremost hyper-local news source for the edification of the Long Island, Bronx, Brooklyn, and other communities.

Due to the pre-merger journalistic freedom provided by Cablevision's ongoing financial support, the employees of News 12 were able to pursue important stories addressing significant local issues relevant to millions of individuals residing in the coverage area.

No news station would have otherwise had the resources to uncover and report these vital stories.

News 12 was and is of singular importance to the Dolan Family, News 12's employees, and the viewers within News 12's coverage community.

About Altice

Altice USA (NYSE:ATUS) is a Delaware corporation. Altice Europe is a Dutch company. Altice Europe is successor in interest to Altice N.V., and thereby bound to the terms of the 2016 Merger Agreement.

Altice USA is one of the largest broadband communications and video service providers in the United States, delivering broadband, pay television, telephony services, proprietary content and advertising services to approximately 4.9 million residential and business customers across 21 states through its Optimum and Suddenlink brands.

 

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SOURCE DLA Piper LLP

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