NEW YORK, July 1, 2019 /PRNewswire/ -- A Delaware judge has cleared the way for New York's Dolan Family to pursue a lawsuit against Altice USA (ATUS) in a bid to save jobs and journalistic quality at News 12 Networks.
In an opinion issued on June 27, the Honorable Joseph R. Slights III, Vice Chancellor, Court of Chancery, State of Delaware, ruled the lawsuit may proceed to trial.
Altice had filed a motion on April 22, 2019 to dismiss the case.
Vice Chancellor Slights denied Altice's motion to dismiss the Dolan Family's breach of contract and promissory estoppel claims. Altice sought to prevent the lawsuit from going to trial, scheduled for September 4, by filing the motion to dismiss.
Altice had argued in court that its promises to the Dolans were essentially a meaningless "gesture" and are not enforceable. But the Dolans say the sale of their family-controlled cable empire to Altice would not have taken place without Altice's pledges regarding News 12.
The court gave the Dolans the green light to pursue their breach of contract and promissory estoppel claims against Altice after Altice painted a scenario under which its promises to the Dolan's concerning News 12 could be nothing short of a bait and switch tactic aimed at persuading the Dolans to proceed with the sale.
The Dolan lawsuit was filed to protect employee jobs and programming quality at News 12, which operates a unified group of local news television channels throughout New York, Connecticut, and New Jersey.
The Dolans agreed to include News 12 in the June 2016 sale of Cablevision to Altice only after Altice gave its solemn promise to maintain 462 full-time equivalent employees and operate the popular, award-winning News 12 stations for a five-year period in substantially the same way as the Dolans had. Despite its promise, Altice laid off approximately 70 employees by the Spring of 2017 and last year was making plans to terminate more.
News 12 Networks consists of seven cable-delivered local news television channels serving Long Island, Westchester, the Hudson Valley, southwest Connecticut, the Bronx, Brooklyn and New Jersey. It was founded by the Dolan Family to give back to local communities through high-quality, "hyper-local" tv news coverage.
Notes from the Court's Memorandum Opinion
In rejecting the Altice motion to dismiss, the Chancery Court states that Defendant Altice's construction of the relevant Merger Agreement provisions could create "an arguably absurd result by rendering meaningless the protections the Dolan family allege they bargained for with respect to News 12." (P.23)
As to the claim of promissory estoppel, Vice Chancellor Slights' opinion states: "Here, if the Merger Agreement does not bind Altice to the Dolan family, then the Dolan family have adequately pled ... that injustice will result ... if the promise is not enforced." (P.28)
Comments by Patrick Dolan
Patrick Dolan, who was president of News 12 at the time of its sale to Altice commented, "We are extremely pleased with the Vice Chancellor's decision. We will now have our day in court to show how Altice cynically disregarded its promise to protect the jobs of News 12 employees and maintain the long-standing quality of News 12 programming."
A website ─ www.dolanalticelawsuit.com ─ includes a link to the Judge's July 27 Opinion, prior legal filings and court orders, news releases as well as major media coverage on the lawsuit, Facebook message from Patrick Dolan to News 12 employees, and letter of support from Long Island's Fair Media Council.
Background on Lawsuit Filed September 4
Altice is no stranger to lawsuits. Records show Altice is a party to 235 lawsuits worldwide for the three years 2016 to 2018.
A lawsuit and request to permanently enjoin Altice USA was filed September 4 in the Court of Chancery, State of Delaware by the Dolan Family against Altice USA (ATUS) for failure to abide by promises Altice made in connection with the 2016 Merger Agreement.
The lawsuit targets Altice USA and alleges that the company disregarded News 12 related 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 and non-cash consideration pertaining to supporting News 12 and its employees.
Plaintiffs in the lawsuit include: Charles Dolan, founder and former CEO, Cablevision; Helen Dolan; James Dolan, former CEO of Cablevision; and Patrick Dolan, president of News 12 at the time of the sale.
2016 Agreement Conditions
In order to induce the sale in 2016, Altice agreed to operate News 12 substantially in accordance with the 2015 News 12 five-year Business Plan through at least the end of 2020.
The Business Plan provided News 12 would employ full-time equivalent headcount of 462 people throughout this period and spend agreed upon amounts to support news gathering, news production, and the high-quality of journalism that News 12 had been famous for before the merger.
Altice expressly agreed, in adhering to the News 12 Business Plan, to incur cumulative losses of up to $60 million, which has not occurred; and further agreed in the operation of News 12 over the five-year period to maintain the network's existing employee base. To the contrary, Altice has realized millions of dollars in profits from News 12 by laying off numerous employees and essentially closing certain studios.
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 of this type, because Altice knew that continuing the legacy of News 12 was an important consideration for Cablevision's stockholders and a necessary inducement to agree to the merger.
This five-year commitment by Altice was of such importance to the merger that Cablevision intentionally disclosed these protections to public shareholders and to the Securities and Exchange Commission.
Altice Breached the 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.
Again in 2018 Altice informed Patrick Dolan that Altice was on the verge of terminating more News 12 employees, including long-term anchors Colleen McVey and Danielle Campbell, threatening to irreparably harm the quality of the local news content that News 12 creates, the livelihoods of targeted News 12's employees, and the legacy that the Cablevision stockholders protected through explicit Merger Agreement provisions.
Altice is alleged to have remarked that its singular rationale for wanting to terminate the two women anchors – both highly respected 30-year veterans of News 12 — was to have a "fresh look."
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 but requiring replacement with another person having equivalent qualifications; and
Taking any action that would cause News 12 to cease to operate in substantial compliance with the News 12 Business Plan for a five-year period.
The lawsuit further requests ordering Altice to operate News 12 in substantial compliance with the News 12 Business Plan for a cumulative five-year period, and to appoint a third-party monitor to assist the court in evaluating Altice's compliance.
The plea for injunctive relief targets Altice USA because Altice ignored the commitments it made to attain its $17.7 billion acquisition of Cablevision.
The primary purposes of the lawsuit are to protect News 12 employees, consistent with the promises made by Altice in the Merger Agreement, and to continue News 12's rich legacy as one of the topmost local television stations in the U.S.
About News 12
News 12 Networks consists of seven cable-delivered local news television channels serving Long Island, Westchester, the Hudson Valley, southwest Connecticut, the Bronx, Brooklyn and New Jersey. It was founded by the Dolan Family to give back to local communities through high-quality,"hyper-local" tv news coverage.
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 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 could robustly 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, former Cablevision stockholders in general, News 12's employees, and the viewers within News 12's coverage community.
Altice USA (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.
Patrick Drahi is Altice USA's controlling stockholder and Board Chair. Mr. Drahi has been in the news lately in connection with his bid to purchase Sotheby's.