Investors' Action Against Cablevision Is Dismissed
Eastern District Judge Kiyo Matsumoto (See Profile) has dismissed an investor class action that accused Cablevision Systems Corp. of telling investors that a decline in cable TV subscriptions was caused by a contract dispute with News Corp., when in reality it was caused by competition with Verizon Communications Inc. The plaintiffs are investors who bought Cablevision stock between Feb. 16, 2011, when Cablevision released its annual report for 2010, and Oct. 28, 2011, when it released its report for the third quarter of 2011.
In a news conference following the February annual report, the plaintiffs alleged that a Cablevision executive blamed declining subscriptions on a dispute with News Corp., which pulled its programming for about two weeks during the World Series in 2010. By October 2011, the investors claim, it became clear Cablevision was actually losing customers due to competition with Verizon, which had started offering its own cable services in the New York area in 2006.
In dismissing the case, Matsumoto found that Cablevision's past corporate disclosures "repeatedly made it abundantly and unequivocally clear…that the company faced considerable competition from the rise of Verizon's video service." She also found that, even if the plaintiffs had stated a claim, they had failed to plead scienter.
Robert Rothman and Samuel Rudman of Robbins Geller Rudman & Dowd represent the plaintiffs. Robert Giuffra and Matthew Schwartz of Sullivan & Cromwell represent Cablevision. The case is Livingston v. Cablevision, 1:12-cv-00377.