The discovery of new accounting errors at US cable operator Cablevision has overshadowed the company’s swing into profit.
The group – America’s sixth-largest cable firm – posted net income of $162.1 million (€142.3m; £100.3m) for the second quarter, compared with a net loss of $98.2m in Q2 last year, as revenues climbed 8.1% to $973.3m.
But auditor KPMG failed to sign off the results due to an ongoing investigation into the company’s accounting by law firm Wilmer, Cutler & Pickering.
This probe was ordered by Cablevision’s audit committee in June after $6.2m of marketing payments at its Rainbow Media cable-TV unit were found to have been improperly booked [WAMN: 20-Jun-03]. The admission also prompted an investigation by the Securities & Exchange Commission.
Now Wilmer, Cutler & Pickering has unearthed more “improperly recognized expenses”.
These new errors are connected with production costs at the group’s American Movie Classics and WE: Women’s Entertainment networks. According to preliminary estimates, payments of $3.4m that should have been booked in the 2003 accounts were instead brought forward to earlier years. There are similar irregularities in the accounts for 2000 to 2002, though the net effect of these is estimated at less than $1m a year.
Cablevision insists the scale of the errors is so “insignificant” that it need not restate previous financial results. It is also adamant that KPMG’s delay in reviewing the Q2 results will not hit the company’s plans to spin off a new satellite television business [WAMN: 18-Jul-03].
Data sourced from: The Wall Street Journal Online; additional content by WARC staff