10-K 1 form10k.htm CABLEVISION SYSTEMS CORP 10-K 12-31-2012 form10k.htm


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
 
FORM 10-K
 
(Mark One)
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

OR

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to ________
 
Commission File
Number
 
Registrant; State of Incorporation;
Address and Telephone Number
 
IRS Employer-
Identification No.
         
1-14764
 
Cablevision Systems Corporation
Delaware
1111 Stewart Avenue
Bethpage, NY  11714
(516) 803-2300
 
11-3415180
         
1-9046
 
CSC Holdings, LLC
Delaware
1111 Stewart Avenue
Bethpage, NY  11714
(516) 803-2300
 
27-0726696
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:
Name of each Exchange on which Registered:
   
Cablevision Systems Corporation
 
Cablevision NY Group Class A Common Stock
New York Stock Exchange
   
CSC Holdings, LLC
None
   
Securities registered pursuant to Section 12(g) of the Act:
 
   
Cablevision Systems Corporation
None
CSC Holdings, LLC
None

Indicate by check mark if the Registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.

Cablevision Systems Corporation
Yes
x
 
No
o
CSC Holdings, LLC
Yes
o  
No
x

Indicate by check mark if the Registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Cablevision Systems Corporation
Yes
o  
No
x
CSC Holdings, LLC
Yes
o  
No
x
 


 
 

 
 
Indicate by check mark whether the Registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

Cablevision Systems Corporation
Yes
x
 
No
o
CSC Holdings, LLC
Yes
x
 
No
o

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of the Registrants' knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Cablevision Systems Corporation
o
CSC Holdings, LLC
o

Indicate by check mark whether the Registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrants were required to submit and post such files).

Cablevision Systems Corporation
Yes
x
 
No
o
CSC Holdings, LLC
Yes
x
 
No
o

Indicate by check mark whether each Registrant is a large accelerated filer, accelerated filer, non-accelerated filer or smaller reporting company.  See definition of large accelerated filer and accelerated filer in Exchange Act Rule 12b-2.
 

 
Large accelerated
filer
 
Accelerated
filer
 
Non-accelerated
filer
 
Smaller reporting
company
Cablevision Systems Corporation
Yes
x
 
No
o
 
Yes
o
 
No
o
 
Yes
o
 
No
o
 
Yes
o
 
No
o
CSC Holdings, LLC
Yes
o
 
No
o
 
Yes
o
 
No
o
 
Yes
x
 
No
o
 
Yes
o
 
No
o
 
Indicate by check mark whether the Registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).

Cablevision Systems Corporation
Yes
o  
No
x
CSC Holdings, LLC
Yes
o  
No
x

Aggregate market value of the voting and non-voting common equity held by non-affiliates of Cablevision Systems Corporation computed by reference to the price at which the common equity was last sold on the New York Stock Exchange as of June 30, 2012:  $2,697,914,833

Number of shares of common stock outstanding as of February 22, 2013:
 
 
Cablevision NY Group Class A Common Stock   -
210,659,548
 
Cablevision NY Group Class B Common Stock   -
54,137,673
 
CSC Holdings, LLC Interests of Member   -
17,631,479

CSC Holdings, LLC meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this Form with the reduced disclosure format applicable to CSC Holdings, LLC.

Documents incorporated by reference - Cablevision Systems Corporation intends to file with the Securities and Exchange Commission, not later than 120 days after the close of its fiscal year, a definitive proxy statement or an amendment to this report filed under cover of Form 10-K/A containing the information required to be disclosed under Part III of Form 10-K.
 
 
 

 
 
TABLE OF CONTENTS

     
Page
Part I
     
  1.
1
       
  1A.
20
       
  1B.
30
       
  2.
30
       
  3.
31
       
  4.
31
       
Part II
     
  5.
32
       
  6.
36
       
  7.
41
       
  7A.
92
       
  8.
94
       
  9.
94
       
  9A.
94
       
  9B.
95
       
Part III
     
  10.
Directors and Executive Officers and Corporate Governance
*
       
  11.
Executive Compensation
*
       
  12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters
*
       
  13.
Certain Relationships and Related Transactions, and Director Independence
*
       
  14.
Principal Accountant Fees and Services
*
       
Part IV
     
  15.
96

*
Some or all of these items are omitted because Cablevision intends to file with the Securities and Exchange Commission, not later than 120 days after the close of its fiscal year, a definitive proxy statement or an amendment to this report filed under cover of Form 10-K/A containing the information required to be disclosed under Part III of Form 10-K.
 
 
PART I

Item 1.
Business

This combined Annual Report on Form 10-K is separately filed by Cablevision Systems Corporation ("Cablevision") and CSC Holdings, LLC ("CSC Holdings" and collectively with Cablevision, the "Company" or the "Registrants").

Cablevision Systems Corporation

Cablevision is a Delaware corporation which was organized in 1997.  Cablevision owns all of the outstanding membership interests in CSC Holdings and its liabilities include approximately $2.9 billion of senior notes which amount does not include approximately $754 million of its senior notes held by Newsday Holdings LLC, its 97.2% owned subsidiary.  The $754 million of notes are eliminated in Cablevision's consolidated financial statements and are shown as notes due from Cablevision in total member's deficiency of CSC Holdings.  Cablevision has no operations independent of its CSC Holdings subsidiary.

CSC Holdings

CSC Holdings is one of the largest cable operators in the United States based on the number of video customers.  As of December 31, 2012, we served approximately 3.2 million video customers in and around the New York metropolitan area and in Montana, Wyoming, Colorado and Utah (the "Optimum West service area").  We believe that our cable television systems in the New York metropolitan area comprise the largest metropolitan cluster of cable television systems under common ownership in the United States (measured by number of video customers).  We also provide high-speed data (also referred to as high-speed Internet access) and Voice over Internet Protocol ("VoIP") services using our cable television broadband network.  Through Cablevision Lightpath, Inc. ("Lightpath"), our wholly-owned subsidiary, we provide telephone services and high-speed Internet access to the business market.  In addition, we own approximately 97.2% of Newsday LLC which operates a newspaper publishing business.  We also own regional news and high school sports programming services, a motion picture theatre business and a cable television advertising sales business.

We classify our operations into two reportable segments: Telecommunications Services and Other.  Our Telecommunications Services segment includes our cable television business, including our video, high-speed data, and VoIP operations and the operations of the commercial data and voice services provided by Lightpath.  It also includes the operations of our cable television systems in Montana, Wyoming, Colorado and Utah, which were acquired in December 2010.  Our Other segment includes the operations of (i) Newsday, which includes the Newsday daily newspaper, amNew York, Star Community Publishing Group, and online websites including newsday.com and exploreLI.com, (ii) our motion picture theatre business ("Clearview Cinemas"), (iii) the News 12 Networks, our regional news programming services, (iv) the MSG Varsity network, our network dedicated entirely to showcasing high school sports and activities and other local programming, (v) our cable television advertising company, Cablevision Media Sales Corporation ("Cablevision Media Sales"), and (vi) certain other businesses and unallocated corporate costs.  Refer to Note 18 to our consolidated financial statements included in this Annual Report on Form 10-K for financial information about our segments.
 
In February 2013, we entered into a purchase agreement pursuant to which Charter Communications Operating, LLC will acquire the Company's Bresnan Broadband Holdings, LLC subsidiary (Optimum West) for $1.625 billion in cash, subject to certain adjustments, including a reduction for certain funded indebtedness of Bresnan Cable. See further discussion below.
 
 
Telecommunications Services

General

Cable television is a service that delivers multiple channels of video programming to subscribers who pay a monthly fee for the services they receive.  Video signals are received over-the-air, by fiber optic transport or via satellite delivery by antennas, microwave relay stations and satellite earth stations and are modulated, amplified and distributed over a network of coaxial and fiber optic cable to the subscribers' television sets.  Cable television systems typically are constructed and operated pursuant to non-exclusive franchises awarded by local and state governmental authorities for specified periods of time.

Our cable television systems offer varying packages of video service.  Our video service is marketed under the Optimum brand name.  Our video services may include, among other programming, local broadcast network affiliates and independent television stations, certain other news, information, sports and entertainment channels such as CNN, AMC, CNBC, ESPN, MTV, The NFL Network and regional sports networks such as MSG Network, and certain premium services such as HBO, Showtime, The Movie Channel, Starz, Encore and Cinemax.  We also offer interactive video service, which enables customers to receive video on demand and subscription video on demand services, as well as interactive entertainment and advertising services.

Our cable television revenues are derived principally from monthly fees paid by subscribers.  In addition to recurring subscriber revenues, we derive revenues from the sales of pay-per-view movies and events, video on demand and subscription video on demand program services, from the sale of advertising time on advertiser supported programming and from installation and equipment charges.  Certain services and equipment provided by substantially all of our cable television systems are subject to regulation.  See "Regulation - Cable Television."

We also provide high-speed data services using our cable television broadband network.  High-speed data services are provided to residential and small business customers through a cable modem device.  The high-speed data service is marketed as "Optimum Online".

We offer VoIP technology services exclusively to our residential and small business Optimum Online customers, marketed as "Optimum Voice".

Through Lightpath, a business broadband service provider, we provide telecommunications services, such as Ethernet-based data, Internet, voice and video transport solutions and managed services, to the business market in the New York metropolitan area.  As of December 31, 2012, Lightpath had over 5,800 buildings connected to its fiber network.  Lightpath has built an advanced fiber optic network extending more than 5,200 route miles, which includes approximately 274,000 miles of fiber, throughout the New York metropolitan area.  Optimum Business Services provides similar products in our Optimum West service area.

Superstorm Sandy

On October 29, 2012, Superstorm Sandy made landfall in the New York metropolitan area, resulting in widespread power outages and service disruptions for almost 60% of our customers in this service area, as well as damage to certain portions of our cable network.  Although the majority of our impacted customers experienced temporary power outages, in certain areas of our footprint, the damage to customers' homes was significant.  We issued service outage credits to customers who contacted us once their power was restored.  We have also recorded estimated credits for customers who we expect will contact us.  Additionally, we have incurred significantly higher salary and overtime costs, third-party labor costs, and repair costs associated with the efforts needed to restore services.  As of December 31, 2012, customer service credits and incremental costs incurred, net of programming and other cost savings, were approximately $114.7 million, including capital expenditures of $5.6 million, for our Telecommunications Services Segment, and approximately $2.5 million for our Other Segment.  In addition to these costs, we experienced other negative financial impacts including lower revenue related to customers for whom we decided to temporarily suspend billing during the restoration of their homes, displaced homes and advertising cancelations.  We expect insurance recoveries related to storm damage and business interruption to be minimal.
 
 
For several weeks after the storm, our workforce was dedicated to restoring services to our customers as quickly as possible.  During this period we reduced our marketing and sales activities which resulted in lower sales and lower new customer connections.  We also suspended our normal non-pay collection procedures and disconnect policy to focus our customer service representatives and field service technicians on service restoration.  As a result, our customer statistics include delinquent customer accounts that exceed our normal disconnect date.  Of these delinquent accounts, we estimated the number of accounts that we believe will be disconnected in 2013 as our normal collection and disconnect procedures resume and our customer counts as of December 31, 2012 have been reduced accordingly.

The following table sets forth certain statistical data regarding our video, high-speed data and VoIP operations, excluding Lightpath, as of the dates indicated:

   
New York Metropolitan Service Area
   
Optimum West Service Area
   
Total (f)
 
         
As of December 31,
       
   
2012(g)
   
2011
   
2010
   
2012
   
2011
   
2010(a)
   
2012(g)
   
2011
   
2010
 
   
(in thousands, except per customer amounts)
 
                                                       
Customer relationships(b)
    3,230       3,255       3,298       370       356       350       3,601       3,611       3,648  
Video customers(c)
    2,893       2,947       3,008       304       303       306       3,197       3,250       3,314  
High-speed data customers
    2,763       2,701       2,653       292       264       239       3,055       2,965       2,892  
Voice customers
    2,264       2,201       2,138       170       156       131       2,433       2,357       2,269  
                                                                         
Serviceable passings(d)
    4,979       4,922       4,882       667       662       650       5,646       5,584       5,532  
                                                                         
Penetration:
                                                                       
Customer relationships to serviceable passings
    64.9 %     66.1 %     67.6 %     55.5 %     53.7 %     53.8 %     63.8 %     64.7 %     65.9 %
Video customers to serviceable passings
    58.1 %     59.9 %     61.6 %     45.6 %     45.7 %     47.1 %     56.6 %     58.2 %     59.9 %
High-speed data customers to serviceable passings
    55.5 %     54.9 %     54.3 %     43.8 %     39.9 %     36.8 %     54.1 %     53.1 %     52.3 %
Voice customers to serviceable passings
    45.5 %     44.7 %     43.8 %     25.4 %     23.5 %     20.2 %     43.1 %     42.2 %     41.0 %
                                                                         
Average Monthly Revenue per Customer Relationship ("RPC")(e)
  $ 137.51     $ 141.37     $ 137.73     $ 118.84     $ 114.85       N/A     $ 135.61     $ 138.77       N/A  
                                                                         
Average Monthly Revenue per Video Customer ("RPS")(e)
  $ 153.22     $ 156.09     $ 150.68     $ 143.99     $ 134.60       N/A     $ 152.35     $ 154.10       N/A  
 

N/A
Not meaningful.
(a)
Reflects data related to Bresnan Cable, which was acquired by the Company on December 14, 2010.
(b)
Represents number of households/businesses that receive at least one of the Company's services (see footnote (g) below).
 
 
(c)
Video customers represent each customer account (set up and segregated by customer name and address), weighted equally and counted as one customer, regardless of size, revenue generated, or number of boxes, units, or outlets.  In calculating the number of customers, we count all customers other than inactive/disconnected customers (see footnote (g) below).  Free accounts are included in the customer counts along with all active accounts, but they are limited to a prescribed group such as our current and retired employees.  Most of these accounts are also not entirely free, as they typically generate revenue through pay-per-view or other pay services.  Free status is not granted to regular customers as a promotion.  We count a bulk commercial customer, such as a hotel, as one customer, and do not count individual room units at that hotel.  In counting bulk residential customers, such as an apartment building, we count each subscribing family unit within the building as one customer, but do not count the master account for the entire building as a customer.
(d)
Represents the estimated number of single residence homes, apartment and condominium units and commercial establishments passed by the cable distribution network in areas serviceable without further extending the transmission lines.
(e)
RPC is calculated by dividing the average monthly U.S. generally accepted accounting principles ("GAAP") revenues for the Telecommunications Services segment, less the revenue attributable to Lightpath, for the fourth quarter of each year presented by the average number of customer relationships served by our cable television systems for the same period.  RPS is calculated using these same revenues divided by the average number of video customers for the respective periods.  For purposes of this calculation, both revenue and average number of video customers exclude our Lightpath operations because Lightpath's third-party revenues are unrelated to our cable television system customers.
(f) 
The sum of the customer data by service area may not equal the total amount presented due to rounding.
(g)
Amounts exclude customers that were located in the areas most severely impacted by Superstorm Sandy who we have been unable to contact and those whose billing we have decided to suspend temporarily during restoration of their homes.  These customers represent approximately 11 thousand customer relationships, 10 thousand video, 9 thousand high-speed data and 7 thousand voice.  Because of Superstorm Sandy, we suspended our normal collection efforts and non-pay disconnect policy.  As a result, the customer information in the table above includes delinquent customer accounts that exceed our normal disconnect timeline.  Of these delinquent accounts, we estimated the number of accounts that we believe will be disconnected in 2013 as our normal collection and disconnect procedures resume and our customer counts as of December 31, 2012 have been reduced accordingly (27 thousand customer relationships, 24 thousand video, 23 thousand high-speed data and 19 thousand voice).

Subscriber Rates and Services; Marketing and Sales

Video Services

Our cable television systems offer a government mandated broadcast basic level of service which generally includes local over-the-air broadcast stations, such as network affiliates (e.g., ABC, NBC, CBS, FOX), and public, educational or governmental channels.

Most of our cable television systems also offer an expanded basic package of services, generally marketed as "The Optimum Value Package", which includes, among other programming, news, information, entertainment, and sports channels such as CNN, CNBC, Discovery, ESPN, AMC, the Disney Channel, and regional sports networks such as MSG Network.  For additional charges, our cable television systems provide premium services such as HBO, Showtime, The Movie Channel, Starz, Encore and Cinemax, which may be purchased either individually or in tiers.

Our digital video programming services currently offered to subscribers, branded Optimum TV, include:
 
 
·
Up to 555 standard definition and high definition ("HD") entertainment channels,
 
 
·
Up to 85 premium movie channels including multiplexes of HBO, Showtime, Cinemax, Starz, Encore and The Movie Channel,
 
 
·
Access to on-demand movies and other programming, including shows from the top broadcast and cable networks, and subscription on-demand,
 
 
·
46 channels of uninterrupted commercial-free digital music from Music Choice,
 
 
·
Seasonal sports packages from the National Basketball Association, National Hockey League, Major League Baseball, Major League Soccer, college football and basketball, plus sports and entertainment packages with up to 39 channels,
 
 
·
Up to 90 international channels from around the world,
 
 
·
Up to 140 channels available in HD, including local broadcast affiliates, local sports channels, premium networks such as HBO and various other cable networks,
 
 
·
A collection of enhanced television applications including News 12 Interactive, Newsday TV (Long Island only), Newsday Cars and Newsday Homes, MSG Interactive, Tag Games, and MSG Varsity, all in our New York metropolitan service areas,
 
 
·
TV to Go, access via the Internet for customers in our New York metropolitan service area to content from over 20 providers such as HBO, Showtime, The NFL Network and Disney Channel, and
 
 
·
DVR Plus, a remote-storage digital video recorder ("DVR") available in almost all of our New York metropolitan service area, giving subscribers the ability to record and play television programming from any digital set top box in the home.  We continue to offer a set top box DVR service giving subscribers the ability to record, pause and rewind live television.
 
 
(4)

 
Since 2011, in our New York metropolitan service area, we have offered a free Optimum App which was first made available for the iPad, iPod touch and iPhone, and more recently, for laptops, the Kindle Fire and select Android devices, with more Android devices being added regularly.  The Optimum App allows customers the ability to watch their channel lineup, stream on-demand titles and use the device as a remote to control their digital set top box, while in their home.  It also allows customers the ability to browse Optimum's program guide, search for programming, and schedule DVR recordings, inside and outside the home.

Packaging of our video product includes options with programming to suit the needs of our individual customers.  Offers include various levels of programming including premium channels, news, sports, children's, general entertainment, international channels and digital music at various price points.

Since our network serving our existing cable television systems has been upgraded to provide advanced digital video services, our sales and marketing efforts are primarily directed toward retaining our existing customers and increasing our penetration to homes passed for all of our existing services.  We market our video services through in-person selling, as well as telemarketing, direct mail advertising, promotional campaigns and local media and newspaper advertising.

Optimum Online

Optimum Online is our high-speed Internet access offering, which connects customers to the Internet using the same network that delivers our cable television service.

Our plant is designed for download speeds to a maximum of: (i) 15Mbps (megabits per second) downstream and 2Mbps upstream for our Optimum Online level of service, (ii) 30Mbps downstream and 5Mbps upstream for our Optimum Online Boost level of service, (iii) 50Mbps downstream and 8Mbps upstream for our Optimum Online Boost Plus level of service in our New York metropolitan service area, and (iv) 101Mbps downstream and 15Mbps upstream for our Optimum Online Ultra level of service in our New York metropolitan service area.

Optimum Online is available on an à la carte basis with Optimum Online Boost, Optimum Online Boost Plus or Optimum Online Ultra available for an additional charge per month.  Discount and promotional pricing are available when Optimum Online is combined with our other service offerings.
 
We have deployed a broadband wireless network ("WiFi") in commercial and high traffic locations across our New York metropolitan service area as a free value-added benefit to Optimum Online customers.  The WiFi feature, which is delivered via wireless access points mounted on our cable television broadband network, allows Optimum Online customers to access the service while they are away from their home or office.  WiFi has been activated across our Long Island, Bronx, Brooklyn, New Jersey, Westchester, and Connecticut service areas.  Our WiFi service also allows our customers to access the WiFi networks of Comcast Corporation ("Comcast"), Time Warner Cable Inc., and Bright House Networks, LLC.
 
 
Optimum Online service includes access to complimentary features such as web and mobile access to the customer's DVR in our New York metropolitan service area, giving users the ability to remotely schedule and manage recordings as well as internet security software, including anti-virus, anti-spyware, personal firewall, and anti-spam protection.  Our Optimum Online Boost Plus and Optimum Online Ultra levels also include web hosting, additional storage, and other features.
 
Optimum Voice

Optimum Voice is a VoIP service available exclusively to Optimum Online subscribers and offers unlimited local, regional and long-distance calling any time of the day or night within the United States, Puerto Rico, U.S. Virgin Islands and Canada with over 20 calling features at a flat monthly rate.  Discount and promotional pricing is available when Optimum Voice is combined with other service offerings.

Optimum Voice includes over 20 premium calling features, including enhanced voicemail, call waiting, caller ID, caller ID blocking, call return, three-way calling, call forwarding, and anonymous call blocker, among others.  Several notable advanced Optimum Voice features also include Click-to-Call and a directory listing self-care tool. Click-to-Call provides users with the convenience of dialing a call from any Internet connected computer simply by clicking on a phone number displayed in a web page.  The directory listing self-care tool enables subscribers to make changes to their 411 directory listings and the Optimum Voice Homepage allows customers to manage their calling features and directory listings, view their call history, and receive voicemails via the Internet.

Optimum Voice for Business provides for up to 24 voice lines for small and medium businesses.  The service provides over 20 important business calling features at no additional charge.  Optimum Voice for Business also offers business trunking services with support for legacy telecom interfaces and newer internet protocol interfaces.  As an optional add-on service in our New York metropolitan service area, Optimum Voice for Business provides customers with toll free capability.

International service for Optimum Voice includes Optimum Voice World Call, per minute plans and other promotional plans.  Optimum Voice World Call is for residential customers and provides 250 minutes per month of calling from their Optimum Voice phone to anywhere in the world, including up to 30 minutes of calling to Cuba, with certain restrictions, for a flat monthly fee.  Per minute plans are available to both residential and business customers.

Bundled Offers

We offer several promotional packages with discounted pricing to existing and new customers who subscribe to two or more of our products as compared to the à la carte prices for each individual product.  We also offer other pricing discounts for certain products that are added to existing services.  For example, we offer an "Optimum Triple Play" package that is a special promotion for new customers or eligible current customers where our three products, video, high-speed data and voice, are each available at a reduced rate for a specified period, when purchased together. For a total additional fee of $9.95 per month, the Ultimate Triple Play, available in our New York metropolitan service area, includes Optimum Online's Boost Plus and a free router for new customers.  We also offer promotional and other pricing discounts as part of our competitive and retention strategies.

Subscribers to all three of our service offerings who are not on a promotional pricing plan are eligible for "Optimum Rewards", which provides subscribers with a monthly discount on their bill, exclusive discounts and offers for shopping, dining, movie tickets and other benefits.

System Capacity

Our cable plant network in the New York metropolitan service area uses state of the art technology including fiber optic cable.  The network is a two-way interactive system with a minimum of 750 MHz offering digital channels, high-speed data and voice services.  Our cable plant network in the Optimum West service area is also a state of the art platform of which 90% of the plant is two-way with a minimum of 750 MHz capacity.
 
 
Programming

Programming is available to the cable television systems from a variety of sources.  Program suppliers' compensation is typically a fixed, per subscriber monthly fee (subject to contractual escalations) based, in most cases, either on the total number of video subscribers of the cable television systems, or on the number of subscribers subscribing to the particular service.  The programming contracts are generally for a fixed period of time and are subject to negotiated renewal.  Cable programming costs have increased in recent years and are expected to continue to increase due to additional programming being provided to most subscribers, increased costs to produce or purchase cable programming and other factors.

Franchises

Our cable television systems are operated in New York, New Jersey, Connecticut, Montana, Wyoming, Colorado and Utah under non-exclusive franchise agreements, where required by the franchising authority, with state and/or municipal or county franchising authorities.  Although the terms of franchise agreements differ from jurisdiction to jurisdiction, they typically require payment of franchise fees and contain regulatory provisions addressing, among other things, service quality, cable service to schools and other public institutions, insurance and indemnity.  The terms and conditions of cable franchises vary from jurisdiction to jurisdiction.  Franchise authorities generally charge a franchise fee of not more than 5% of certain of our cable service revenues that are derived from the operation of the system within such locality.  We generally pass the franchise fee on to our subscribers.

Franchise agreements are usually for a term of 5 to 15 years from the date of grant; most are 10 years.  Franchises usually are terminable only if the cable operator fails to comply with material provisions, and then only after complying with substantive and procedural protections afforded by the franchise and federal and state law.  We have never lost a franchise for an area in which we operate.  When a franchise agreement reaches expiration, a franchising authority may seek to impose new requirements, including requirements to upgrade facilities, to increase channel capacity and to provide additional support for local public, education and government access programming.  Negotiations can be protracted, and franchise agreements sometimes expire before a renewal is negotiated and finalized.  New York and New Jersey state laws provide that pre-existing franchise terms continue in force during the renewal negotiations until agreement is reached or one or both parties seek to pursue "formal" franchise remedies under federal law.  As of December 31, 2012, our ten largest franchise areas comprised approximately 48% of our total video customers and of those, one franchise, Newark, New Jersey, comprising approximately 57,000 video customers, is expired.  We are currently lawfully operating in this franchise area under temporary authority recognized by the State of New Jersey.  In our Optimum West service area, our right to operate following the expiration of a franchise for franchises still in renewal negotiations is protected by federal law and/or the consent of the municipality.  In approximately 40 municipalities in Montana, Wyoming, and Colorado, we operate our cable television systems without a franchise, pursuant to Section 621(b)(2) of the Federal Cable Act, which provides that no franchise is required in communities where the cable operator or its predecessor lawfully provided service as of July 1, 1984 and the municipality has not requested a franchise.  Federal law provides significant substantive and procedural protections for cable operators seeking renewal of their franchises.  See "Regulation - Cable Television."  Despite our efforts and the protections of federal law, it is possible that one or more of our franchises may be subject to termination or non-renewal or we may be required to make significant additional investments in response to requirements imposed in the course of the franchise renewal process.

Lightpath holds a franchise from New York City which grants rights of way authority to provide telecommunications services throughout the five boroughs.  The franchise expired on December 20, 2008 and renewal discussions with New York City are ongoing.  We believe we will be able to obtain renewal of the franchise and have received assurance from New York City that the expiration date of the franchise is being treated as extended until a formal determination on renewal is made.  Failure to ultimately obtain renewal of the franchise could negatively affect Lightpath's revenues.
 
 
Other

Newsday

Newsday consists of the Newsday daily newspaper, amNew York, Star Community Publishing Group and online websites, including newsday.com and exploreLI.com.  Newsday has also developed and deployed applications for iPhone, iPad, Kindle and Android devices.

Our publications are distributed through both paid and free distribution in various ways across Long Island and the New York metropolitan service area.  Our products include:
 
 
·
the Newsday daily newspaper, which is primarily distributed on Long Island and in the New York metropolitan area;
 
·
amNew York, a free daily newspaper distributed in New York City; and
 
·
Star Community Publishing, a group of weekly shopper publications, which is primarily distributed on Long Island.
 
News 12 Networks

Our regional news services include News 12 Long Island, News 12 New Jersey, News 12 Westchester, News 12 Connecticut, News 12 The Bronx, News 12 Brooklyn, News 12 Hudson Valley, and News 12 Interactive, as well as News 12 Traffic and Weather (collectively, the "News 12 Networks").  The News 12 Networks include seven 24-hour local news channels and five traffic and weather services dedicated to covering areas within the New York metropolitan area.  News 12 Networks is available to all subscribers throughout our footprint in the New York metropolitan area.

MSG Varsity

MSG Varsity is a network dedicated entirely to showcasing high school sports and activities and other local programming.  One of the components of this programming service is the involvement of high schools throughout our footprint as co-producers of MSG Varsity's content, in addition to content created by our professional productions.  We have a licensing arrangement with Madison Square Garden permitting us to use "MSG Varsity" as the name of this programming service.  MSG Varsity is available to all subscribers throughout our footprint in the New York metropolitan service area.

Clearview Cinemas

Our chain of tri-state area movie theatres, Clearview Cinemas, features family, art and independent films.  Its exhibition facilities include Manhattan's famed Ziegfeld Theatre, a frequent and historic host to film premieres and events.

Clearview operates 47 movie theatres containing 243 screens in New York City, Westchester County, Rockland County, Long Island, Pennsylvania and New Jersey.

Cablevision Media Sales Corporation

Cablevision Media Sales Corporation is a cable television advertising company that sells local and regional commercial advertising time on cable television networks and offers advertisers the opportunity to target specific geographic and demographic audiences.
 
 
Investment in Comcast Corporation Common Stock

We own 21,477,618 shares of Comcast common stock acquired in connection with the sale of certain cable television systems in prior years.  All of these shares have been monetized pursuant to collateralized prepaid forward contracts.  See "Item 7A.  Quantitative and Qualitative Disclosures About Market Risk" for a discussion of our monetization contracts.

AMC Networks Inc. Distribution

On June 30, 2011, Cablevision distributed to its stockholders all of the outstanding common stock of AMC Networks Inc. ("AMC Networks"), a company which consists principally of national programming networks, including AMC, WE tv, IFC and Sundance Channel, previously owned and operated by the Company's Rainbow segment (the "AMC Networks Distribution").  The AMC Networks Distribution took the form of a distribution by Cablevision of one share of AMC Networks Class A Common Stock for every four shares of Cablevision NY Group ("CNYG") Class A Common Stock and one share of AMC Networks Class B Common Stock for every four shares of CNYG Class B Common Stock.  As a result of the AMC Networks Distribution, the Company no longer consolidates the financial results of AMC Networks for the purpose of its own financial reporting and the historical financial results of AMC Networks have been reflected in the Company's consolidated financial statements as discontinued operations for all periods presented through the AMC Networks Distribution date.

MSG Distribution

On February 9, 2010, Cablevision distributed to its stockholders all of the outstanding common stock of The Madison Square Garden Company ("Madison Square Garden"), a company which owns the sports, entertainment and media businesses previously owned and operated by the Company's Madison Square Garden segment (the "MSG Distribution").  The MSG Distribution took the form of a distribution by Cablevision of one share of Madison Square Garden Class A Common Stock for every four shares of CNYG Class A Common Stock and one share of Madison Square Garden Class B Common Stock for every four shares of CNYG Class B Common Stock.  As a result of the MSG Distribution, the Company no longer consolidates the financial results of Madison Square Garden for the purpose of its own financial reporting and the historical financial results of Madison Square Garden have been reflected in its consolidated financial statements as discontinued operations for all periods presented through the MSG Distribution date.

Bresnan Cable

On December 14, 2010, the Company, through two wholly-owned subsidiaries, consummated the acquisition of Bresnan Broadband Holdings, LLC ("Bresnan Cable").  The purchase price was approximately $1.36 billion.  The acquisition was financed using an equity contribution to the acquisition subsidiaries by CSC Holdings of $395 million, which CSC Holdings borrowed under its revolving loan facility, and debt incurred by the acquisition subsidiaries consisting of an undrawn $75 million revolving loan facility, a $765 million term loan facility and $250 million 8.0% senior notes due 2018.

In February 2013, the Company entered into a purchase agreement pursuant to which Charter Communications Operating, LLC will acquire the Company's Bresnan Broadband Holdings, LLC subsidiary (Optimum West) for $1.625 billion in cash, subject to certain adjustments, including a reduction for certain funded indebtedness of Bresnan Cable.  The closing of the transactions contemplated by the purchase agreement is subject to customary closing conditions, including the expiration or early termination of the waiting period applicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and receipt of FCC approvals, franchise approvals covering not less than 80% of Bresnan's video customers as of the date of the Purchase Agreement and certain state telecommunication authorizations.  The closing of the transactions contemplated by the purchase agreement is expected to occur during the third quarter of 2013.  However, there can be no assurances that the conditions to closing set forth in the purchase agreement will be satisfied or waived or that the closing will occur at all.  The purchase agreement does not provide any post-closing recourse against the Company.
 
 
Competition

Cable Television

Our cable television systems operate in an intensely competitive environment, competing with a variety of other video programming providers and delivery systems, including incumbent telephone companies, satellite-delivered signals, internet-based programming and broadcast television signals available to homes within our market by over-the-air reception.
 
Incumbent Telephone Companies.  We face intense competition in the New York metropolitan service area from two incumbent telephone companies.  Verizon Communications, Inc. ("Verizon") and AT&T Inc. ("AT&T"), which offer video programming in addition to their voice and high-speed Internet access services to residential customers in this service area, compete across all of our telecommunications products.  Verizon has made and may continue to make promotional offers to customers in our New York metropolitan service area at prices lower than ours.  The attractive demographics of our service territory make this region a desirable location for investment in video distribution technologies by these companies.  Verizon has constructed fiber to the home network plant that passes a significant number of households in our New York metropolitan service area.  Verizon does not publicly report the extent of their build-out or penetration by area. We estimate that Verizon passes approximately half of the households in our New York metropolitan service area.  Verizon's passings in our service area are difficult to assess because they are based upon visual inspections and other limited estimating techniques, and therefore our estimate serves only as an approximation. Verizon has obtained authority to provide video service for a majority of these homes passed, on a statewide basis in New Jersey, in numerous local franchises in New York State, including all of New York City, and in a small portion of Connecticut.  AT&T offers video service in competition with us in most of our Connecticut service area.  This competition impacts our video revenue in these areas and may continue to do so in the future.  See "Regulation" for a discussion of regulatory and legislative issues.  Verizon and AT&T also market direct broadcast satellite ("DBS") services in our New York metropolitan service area.  Each of these companies has significantly greater financial resources than we do.

DBS.  We also face competition from DBS service providers in our New York metropolitan service area and in our Optimum West service area.  The two major DBS services, DISH Network and DirecTV, are available to the vast majority of our customers.  These services each offer programming that is substantially similar to the programming that we offer, at competitive prices.  Our ability to compete with these DBS services is affected by the quality and quantity of programming available to us and to them.  DirecTV has exclusive arrangements with the National Football League that gives it access to programming that we cannot offer.  We compete in our service areas with these DBS competitors by "bundling" our service offerings with products that the DBS companies cannot efficiently provide at this time, such as high-speed Internet access service, voice service and interactive services carried over the cable distribution plant.

Other Competitors and Video Programming Sources.  Another source of competition for cable television systems is the delivery of video content over the Internet directly to subscribers.  Consumers are able to watch much of this Internet-delivered content on Internet-ready television sets and mobile devices.  Cable television systems also face competition from broadcast television stations, entities that make digital video recorded movies and programs available for home rental or sale, satellite master antenna television ("SMATV") systems, which generally serve large multiple dwelling units under an agreement with the landlord and  service providers, and "open video system" ("OVS") operators.  RCN Corporation ("RCN") is authorized to operate OVS systems that compete with us in New York City.  The FCC also has made radio spectrum available for the provision of multichannel video service.
 
 
There can be no assurance that these or other existing, proposed, or as yet undeveloped technologies will not become dominant in the future and render our cable television systems less profitable or even obsolete.

High-Speed Data

Our high-speed data service offered in our New York metropolitan service area faces intense competition from other providers of high-speed Internet access, including Verizon and AT&T.  Our high-speed data offering in our Optimum West service area, also branded Optimum Online, faces competition from CenturyLink, Inc. ("CenturyLink").  In addition, DBS providers have tested the use of certain spectrum to offer satellite-based high-speed data services.  Cellular phone providers are also increasing the speeds of their Internet access offerings, and the FCC has made other radio spectrum available for wireless high-speed Internet access.

VoIP

Our VoIP service in our New York metropolitan service area, branded Optimum Voice, faces intense competition from other providers of voice services, including carriers such as Verizon and AT&T.  Our VoIP service in our Optimum West service area, also branded Optimum Voice, faces competition from other carriers, such as CenturyLink.  We must also negotiate interconnection agreements with these carriers.  Our VoIP services also face competition from other competitive providers of voice services, including wireless voice providers, as well as VoIP providers like Vonage that do not own networks but can provide service to any person with a broadband connection.
 
Lightpath and the Bresnan CLECs

Lightpath operates as a competitive local exchange carrier ("CLEC") in the most competitive business telecommunications market in the country and competes against the very largest telecommunications companies – including incumbent local exchange carriers ("ILECs"), other CLECs, and long distance companies.  More specifically, Lightpath faces substantial competition from Verizon and AT&T, which are the dominant providers of local telephone and broadband services in their respective service areas.  We also operate CLECs in each state within the Optimum West service area (the "Bresnan CLECs"), which compete against ILECs and Century Link.  ILECs have significant advantages over Lightpath and the Bresnan CLECs, including greater capital resources, an existing fully operational local network, and long-standing relationships with customers.

While Lightpath and the Bresnan CLECs compete with the ILECs, they also enter into interconnection agreements with ILECs so that their customers can make and receive calls to and from customers served by the ILECs and other telecommunications providers.  Federal and state law and regulations require ILECs to enter into such agreements and provide such facilities and services, at prices subject to regulation.  The specific price, terms and conditions of each agreement, however, depend on the outcome of negotiations between Lightpath and the Bresnan CLECs with each ILEC.  Agreements are also subject to approval by the state regulatory commissions.  Lightpath has entered into interconnection agreements with Verizon for New York, New Jersey, and portions of Connecticut, and with AT&T for portions of Connecticut, which have been approved by the respective state commissions.  Lightpath also entered into interconnection agreements with regional carriers in New York and New Jersey.  The Bresnan CLECs also have interconnection agreements in their service areas.  These agreements, like all interconnection agreements, are for limited terms and upon expiration are subject to renegotiation, potential arbitration, and approval under the laws in effect at that time.

Lightpath and the Bresnan CLECs also face competition from one or more competitive access providers and other new entrants in the local telecommunications and data marketplace.  In addition to the ILECs and other CLECs, other potential competitors capable of offering voice or broadband services include electric utilities, long distance carriers, microwave carriers, wireless telephone system operators (such as cellular, PCS, and specialized mobile radio), VoIP service providers, and private networks built by large end users.  A continuing trend toward business combinations and alliances in the telecommunications industry may create stronger competition for Lightpath and the Bresnan CLECs.
 
 
Newsday

Newsday operates in a highly competitive market, which may adversely affect advertising and circulation revenues.  Newsday faces significant competition for advertising revenue from a variety of media sources.  Newsday also faces competition from other newspapers that reach a similar audience in the same geographic area, as well as from magazines, shopping guides, yellow pages, websites, mobile-device platforms, broadcast and cable television, radio and direct marketing; particularly if those media sources provide advertising services that could substitute for those provided by Newsday within the same geographic area.  Specialized websites for real estate, automobile and help wanted advertising have become increasingly competitive with our newspapers and websites for classified advertising and further development of additional targeted websites is likely.

Newsday and the newspaper industry generally have experienced significant declines in advertising and circulation revenue as circulation and readership levels continue to be adversely affected by competition from new media news formats and less reliance on newspapers by some consumers, particularly younger consumers, as a source of news and classifieds.  A prolonged decline in circulation levels would also have a material adverse effect on the rate and volume of advertising revenues.

Clearview Cinemas

Clearview Cinemas, as a smaller regional film exhibitor, competes with a number of large theatre chains and independent theatres with respect to acquiring licenses to films and attracting patrons.  The principal competitive factors in obtaining films from distributors include licensing terms, seating capacity, location, prestige of the theatre chain and of the particular theatre, and quality of projection and sound equipment.  Most of our competitors are in a stronger competitive position than Clearview Cinemas based upon these factors.  We believe that the principal competitive factors in attracting film audiences are the availability of marketable films, the location of theatres, theatre comfort and environment, projection and sound quality, 3D capability, level of service and ticket price.  The theatre exhibition industry also faces competition from other motion picture exhibition delivery systems, such as network, syndicated, on-demand and pay television; DVD, and other home video systems; DVD by mail services such as Netflix and Red Box and the availability of films over the Internet.

Regulation

Cable Television

Our cable television systems are subject to extensive federal, state and local regulations.  Our systems are regulated under congressionally imposed uniform national guidelines, first set forth in the Cable Communications Policy Act of 1984 and amended by the Cable Television Consumer Protection and Competition Act of 1992 and the Telecommunications Act of 1996 (collectively, the "Federal Cable Act"), as well as under other provisions of the Federal Communications Act of 1934, as amended.  The Federal Cable Act, Federal Communications Act, and the regulations and policies of the FCC affect significant aspects of the Company's cable system operations.

The following paragraphs describe the existing legal and regulatory requirements that are most significant to our business today.
 
 
Franchising.  The Federal Cable Act requires cable operators to obtain a franchise in order to provide cable service.  Regulatory responsibility for awarding franchises rests with state and local franchising authorities.  Federal law prohibits our franchising authorities from granting an exclusive cable franchise to us, and they cannot unreasonably refuse to award an additional franchise to compete with us.  The states in which we operate, New York, New Jersey and Connecticut, have enacted comprehensive cable regulation statutes that are applicable to cable operators and other providers of video service, such as Verizon and AT&T.  Although the terms of franchise agreements differ from jurisdiction to jurisdiction, they typically require payment of franchise fees and contain regulatory provisions addressing, among other things, service quality, cable service to schools and other public institutions, insurance, and indemnity.  State and local franchising authority, however, must be exercised consistently with the Federal Cable Act, which sets limits on franchising authorities' powers.  It restricts franchising authorities from imposing franchise fees greater than 5% of gross revenues from the provision of cable television service, prohibits franchising authorities from requiring us to carry specific programming services, and protects us in seeking franchise renewals by limiting the factors a franchising authority may consider and requiring a due process hearing before denial of renewal.

Pricing and Packaging.  The Federal Cable Act and the FCC's rules regulate the rates that cable operators may charge for basic video service, equipment and installation.  None of these rules applies to cable systems that the FCC determines are subject to effective competition, or where franchising authorities have chosen not to regulate rates.  In both our New York metropolitan service area and Optimum West service area cable television systems, the FCC has made "effective competition" findings in the majority of our communities covering substantially all of our customer base.

In areas not subject to effective competition, the Federal Cable Act and the FCC's rules also require us to establish a "basic service" package consisting, at a minimum, of all local broadcast signals that we carry, as well as, if the locality requests, all public, educational and governmental access programming carried by our systems.  All subscribers are required to purchase this tier as a condition of gaining access to any other programming that we provide.  From time to time, Congress or the FCC may consider imposing new pricing or packaging regulations, including proposals requiring cable operators to offer programming services on an unbundled basis rather than as part of a tier or to provide a greater array of tiers to give subscribers the option of purchasing a more limited number of programming services.

Must-Carry/Retransmission Consent.  Cable operators are required by the "must carry" provisions of federal law to carry, without compensation, the programming transmitted by most local broadcast stations, and, in cable systems that are not fully digital, to offer analog-only customers low-cost set-top boxes to make those signals "viewable".

Alternatively, local television stations may elect retransmission consent.  Stations making such an election give up their must-carry right and negotiate with cable systems the terms on which the cable systems carry the stations.  Cable systems generally may not carry a broadcast station that has elected retransmission consent without the station's consent.  The terms of retransmission consent agreements frequently include the payment of compensation to the station.  A substantial number of local broadcast stations currently carried by our cable television systems have elected to negotiate for retransmission consent.  While we currently have retransmission consent agreements with all such broadcast stations, the potential remains for carriage of such stations to be discontinued if any of such agreements is not renewed following its expiration.

In the wake of publicized disputes between several cable operators and broadcasters, several members of Congress have expressed concern that current retransmission consent requirements and practices have had a negative effect on consumers, and stated that it is time for Congress to reexamine those requirements.  Other members of Congress have suggested that binding arbitration may be an appropriate means of resolving such disputes.  The FCC has initiated a proceeding to consider changes to its rules governing retransmission consent negotiations.
 
 
Ownership Limitations.  Congress has required the FCC to set a national limit on the number of subscribers a cable company can serve, and a limit on the number of channels on a cable television system that can be occupied by video programming services in which the operator of that system has an attributable interest.  The FCC established a national limit of 30% on the number of multichannel video households that a single cable operator can serve, but that limit was invalidated by a federal court in August 2009 and the FCC has not yet established a new limit.  The FCC also created a limit of 40% on the number of channels on a cable television system that can be occupied by video programming services in which the operator of that system has an attributable interest, but that rule was invalidated by a federal court in 2001 and the FCC has not yet established a new limit.

Set Top Boxes.  The FCC requires cable operators to separate the security functions of set-top boxes from the channel navigation and other functions of those boxes, in order to promote a retail market in these boxes and other so-called "navigation devices."  Operators must provide a security card (called a CableCARD) to consumers who purchase televisions and other consumer electronics equipment with an appropriate card slot so that they can connect those devices directly to digital cable television systems to receive one-way digital programming without the need for a set-top box.  The FCC also requires cable operators to separate security from non-security functions in digital set-top boxes with DVR functionality or two-way capabilities that the operators themselves provide to subscribers.  The FCC has an ongoing proceeding to examine whether it should take further steps to promote a retail market for cable service navigation devices, including requirements to facilitate access to Internet-based video offerings via subscribers' television sets, which may entail further mandates in connection with the support and deployment of set top boxes.

PEG and Leased Access.  Localities may require free access to, and support of, public, educational, or governmental ("PEG") channels on our cable systems.  In addition to providing PEG channels, we must make a limited number of commercial leased access channels available to third parties (including parties with potentially competitive video services) at regulated rates.

Pole Attachments.  The FCC has authority to regulate utility company rates for the rental of pole and conduit space used by companies, including cable operators, to provide cable, telecommunications services, and Internet access services, unless states establish their own regulations in this area.  With the exception of Wyoming, Montana and Colorado, the states in which we operate have adopted such regulations.  Utilities must provide nondiscriminatory access to any pole, conduit, or rights-of-way controlled by the utility.  The FCC held that the pole attachment rate for commingled services (e.g., cable and Internet access) cannot exceed the rate it has established for telecommunications attachments.

Program Access.  In 1992, Congress enacted the "program access" provisions of the Federal Cable Act.  The program access rules prohibit a cable operator from unduly or improperly influencing the decision of a satellite-delivered cable programming service in which a cable operator holds an attributable interest, such as AMC Networks, to sell to an unaffiliated distributor.  The rules also bar cable-affiliated programmers from discriminating in the prices, terms, and conditions of sale of a programming service; permit competing distributors to challenge exclusive distribution arrangements between cable operators and cable-affiliated programmers if the competitor believes that such arrangements significantly hinder or prevent the competitor from providing satellite cable programming; and allow a competing distributor to bring complaint against a cable-affiliated terrestrially-delivered programming service, such as Madison Square Garden Network, or its affiliated cable operator, for acts or practices that the competitor alleges are unfair or deceptive and that significantly hinder or prevent the competitor from providing satellite cable programming.

Program Carriage.  The FCC's program carriage rules govern disputes between cable operators and unaffiliated programming services over the terms of carriage.  We may not require an unaffiliated programming service to grant us a financial interest or exclusive carriage rights as a condition of its carriage on our cable television systems, and we may not discriminate against such programming services in the terms and conditions of carriage on the basis of their affiliation or nonaffiliation with us.
 
 
In 2011, the FCC adopted changes to its program carriage rules, which govern disputes between programmers and multichannel video programming distributors ("MVPDs") over carriage terms.  The new rules, among other things, clarify what is required for a programmer to establish a prima facie case under the program carriage rules, permit a programmer that is seeking a renewal of a carriage agreement with a MVPD and who brings a complaint under the program carriage rules relating to such renewal to seek a temporary standstill requiring the MVPD to continue carrying the programming network during the pendency of the complaint, and clarify a number of procedural issues.  The new rules have been challenged in federal court.  In addition, the FCC sought formal comment on proposals for additional changes to its program carriage rules, including a proposal to require programmers and MVPDs to enter into "last best offer" style arbitration when they cannot reach agreement over carriage terms, to expand the scope of the discrimination provision to preclude a vertically-integrated MVPD from discriminating on the basis of a programming vendor's affiliation with another MVPD, and a proposal to allow the FCC to require MVPDs that are found to violate the program carriage rules to pay damages to complainants.  The FCC has not yet acted on this proposal.  On October 12, 2011, Game Show Network ("GSN") filed a program carriage complaint against us, alleging that we discriminated against it in the terms and conditions of carriage based on GSN's lack of affiliation with us.  We believe GSN's claims are without merit and we are defending ourselves vigorously.

Violent Programming.  Recent events have led to an interest by some members of Congress in the alleged effects of violent programming, which could lead to a renewal of interest in limiting the availability of such programming or prohibiting it.

Exclusive Access to Multitenant Buildings.  The FCC has prohibited cable operators from entering into or enforcing agreements with owners of multitenant buildings under which the operator is the only MVPD with access to the building.

CALM Act.  FCC rules require us to ensure that all commercials carried on our cable service comply with specified volume standards.

Privacy.  In the course of providing service, we collect certain information about our subscribers and their use of our services.  Our collection and use of personally identifiable information about our subscribers is subject to a variety of Federal and state privacy requirements, including those imposed specifically on cable operators by the Federal Cable Act.  The Communications Act sets limits, subject to certain exceptions, on our disclosure of that information to third parties.  As cable operators provide interactive and other advanced services, additional privacy considerations may arise. Congress, the Federal Trade Commission, and the U.S. Department of Commerce are all considering whether to adopt measures that would govern the collection, use, and disclosure of subscriber information in connection with the delivery of advertising to consumers that is customized to their interests.  These efforts are currently focused on the privacy implications of online advertising.

Federal Copyright Regulation.  We are required to pay copyright royalty fees to receive a statutory compulsory license to carry broadcast television signals.  The U.S. Copyright Office has increased our royalty fees from time to time and has, at times, recommended to Congress changes in or elimination of the statutory compulsory licenses for cable television carriage of broadcast signals.  Changes to copyright regulations could adversely affect the ability of our cable television systems to obtain such programming, and could increase the cost of such programming.

Access for Persons with Disabilities.  FCC rules require us to ensure that persons with disabilities can more fully access the programming we carry.  We are required to provide closed captions and pass through video description to subscribers on some networks we carry.
 
 
Encryption of the Basic Service Tier.  If a cable operator decides to encrypt the basic tier on its all-digital system, the FCC rules require operators of such systems to offer certain affected subscribers free equipment or CableCARDs for a period of one to five years, and require certain larger cable operators, including the Company, to also offer a solution to provide basic service tier access to certain third-party IP-enabled devices.  This latter requirement applies for the next three years, unless the FCC extends it.  Many of our systems, including all of the systems in New York, New Jersey, and Connecticut, are all-digital; in the New York City franchise areas, Cablevision has encrypted its systems' basic service tier pursuant to the terms of a 2010 waiver from the FCC.
 
Other Regulation.  We are subject to various other regulations, including those related to political broadcasting; home wiring; the blackout of certain network, sports, and syndicated programming; prohibitions on transmitting obscene programming; limitations on advertising in children's programming; and standards for emergency alerts, as well as telemarketing and general consumer protection laws.  The FCC also imposes various technical standards on our operations.  In the aftermath of Superstorm Sandy, the FCC and the states are examining whether new requirements are necessary to improve the resiliency of communications networks, potentially including cable networks.

High-Speed Data

Regulatory Classification.  High-speed Internet access services (often called "broadband" Internet services) are classified by the FCC as "information services" for regulatory purposes.  The FCC has traditionally subjected information services to a lesser degree of regulation than "telecommunications services," which are offered to the public for a fee on a common carrier basis.  Some parties have asked the FCC to reverse this determination and classify broadband Internet access services as "telecommunications services."  The FCC thus far has declined to do so.  If the FCC changes the classification of these services, our high-speed data service could be subject to substantially greater regulation.

Access Obligations and "Net Neutrality."  In December 2010, the FCC adopted a net neutrality framework applicable to broadband Internet access service that prohibits wireline broadband providers from blocking lawful content, applications, services, or non-harmful devices, subject to reasonable network management as defined by the rules; bars such providers from unreasonably discriminating in transmitting lawful network traffic over a consumer's broadband Internet access service; and requires providers to disclose information about their broadband Internet access service and their network management practices.  These rules went into effect in November 2011.  The rules have been challenged in federal court.  Some parties have advocated that the FCC also require broadband providers to make transmission capacity available to third parties on a resale basis, but the FCC thus far has declined to do so.
 
Access For Persons With Disabilities.  FCC rules require us to ensure that persons with disabilities have access to "advanced communications services" ("ACS"), such as electronic messaging and interoperable video conferencing.  They also require that certain video programming delivered via Internet Protocol include closed captioning and require cable operators distributing such programming to end users to pass through such captions and identify programming that should be captioned.

Other Regulation.  Currently, the Federal Cable Act's limitations on our collection and disclosure of cable subscribers' personally identifiable information also apply with respect to broadband Internet access service provided by cable operators.  Broadband Internet access service is also subject to other federal and state privacy laws applicable to electronic communications.  As noted above, Congress, the Federal Trade Commission and the U.S. Department of Commerce are all considering whether to adopt measures that would govern the collection, use, and disclosure of subscriber information in connection with the delivery of advertising to consumers that is customized to their interests.  Additionally, providers of broadband Internet access services must comply with the Communications Assistance for Law Enforcement Act ("CALEA"), which requires providers to make their services and facilities accessible for law enforcement intercept requests.  Various other federal and state laws apply to providers of services that are accessible through broadband Internet access service, including copyright laws, telemarketing laws, prohibitions on obscenity, and a ban on unsolicited commercial e-mail.  Online content we provide is also subject to these laws.
 
 
Other forms of regulation of high-speed Internet access service currently being considered by the FCC, Congress or state legislatures include consumer protection requirements; additional privacy obligations, as noted above; consumer service standards; requirements to contribute to universal service programs; and requirements to protect personally identifiable customer data from theft.

VoIP Services

The regulatory obligations of VoIP services are the subject of periodic examination and review by the FCC, Congress, and state public service commissions.  In 2004, for instance, the FCC initiated a generic rulemaking proceeding concerning the legal and regulatory implications of IP-based services, including VoIP services.  Also in 2004, the FCC determined that VoIP services with certain characteristics are interstate services subject to federal rather than state jurisdiction and preempted conflicting state laws.  The FCC's determination was upheld by a federal court of appeals, although the court found that the FCC's order did not squarely address the classification of cable-provided VoIP services.  While the FCC has not concluded its generic rulemaking proceeding, it has applied some regulations to VoIP service providers that exchange traffic with traditional telephone carriers like Verizon (these services are known as "interconnected VoIP services").  Some states have asserted the right to regulate cable VoIP service, while others have adopted laws that bar the state commission from regulating VoIP service.

Universal Service.  Interconnected VoIP services must contribute to the federal fund used to subsidize voice services provided to low income households and rural areas and other communications services provided to schools, libraries, and rural health care providers (the "universal service fund").  The amount of universal service contribution for interconnected VoIP service providers is based on a percentage of revenues earned from end user interstate services.  We allocate our end user revenues and remit payments to the universal service fund in accordance with FCC rules.  The FCC has ruled that states may impose state universal service fees on certain types of VoIP providers, which may include cable VoIP providers. Our interconnected VoIP service contributes to the state universal service fund in Wyoming.  In October 2011, the FCC adopted an order that fundamentally revised its federal universal service fund programs to transition support to broadband networks and services, as well as voice services provided over broadband.

Local Number Portability.  The FCC requires interconnected VoIP service providers and their "numbering partners" to ensure that their customers have the ability to port their telephone numbers when changing providers to or from the interconnected VoIP service.  The FCC also has clarified that local exchange carriers and commercial mobile radio service providers have an obligation to port numbers to interconnected VoIP service providers upon a valid port request.  Interconnected VoIP service providers are also required to contribute to federal funds to meet the shared costs of local number portability ("LNP") and the costs of North American Numbering Plan Administration.

The FCC is reviewing the implementation of LNP for interconnected VoIP services, including whether all current numbering requirements should be extended to interconnected VoIP services.  The FCC has also adopted rules requiring providers to process standard telephone number ports within one business day.

Intercarrier Compensation.  In October 2011 and through subsequent orders, the FCC revised the current regime governing payments among providers of voice services for the exchange of calls between and among different networks ("intercarrier compensation") to include interconnected VoIP.  The FCC addressed the compensation applicable to traffic terminating on carriers' networks.  Specifically, the FCC clarified that prospectively, VoIP traffic exchanged with another carrier in time division multiplexing ("TDM") format must be compensated at applicable TDM terminating interstate rate for all toll traffic and at applicable rates for local traffic.  In April 2012, the FCC clarified that compensation paid to carriers for originating VoIP traffic exchanged within the same state would be subject to intrastate toll rates until July 1, 2014.  After that date, compensation for such traffic would be reduced to interstate rates.  Intercarrier compensation for all terminating traffic, including VoIP traffic exchanged in TDM format, will be phased down over several years to a "bill-and-keep" regime, with no compensation between carriers for most traffic exchanged.  The FCC's authority to establish these rules is subject to appeals consolidated in the U.S. Court of Appeals for the 10th Circuit.
 
 
Other Regulation.  Interconnected VoIP service providers are required to provide enhanced 911 emergency services to their customers; protect customer proprietary network information from unauthorized disclosure to third parties; report to the FCC on service outages; comply with telemarketing regulations; comply with disabilities access requirements and service discontinuance obligations; and comply with call signaling requirements.  Interconnected VoIP service providers are also required to comply with CALEA standards.  As noted above, the FCC is examining whether new requirements are necessary to improve the resiliency of communications networks.

Other Services

We may provide other services and features over our cable television system, such as games and interactive advertising, that may be subject to a range of federal, state, and local laws such as privacy and consumer protection regulations.  We also maintain various websites that provide information and content regarding our businesses and offer merchandise for sale.  The operation of these websites is also subject to a similar range of regulations.

Lightpath and the Bresnan CLECs

The Telecommunications Act of 1996 was enacted to remove barriers to entry in the local telephone market that continues to be dominated by the Bell Operating Companies ("BOCs") and other ILECs by preempting state and local laws that restrict competition and by requiring ILECs to provide competitors, such as cable operators and long distance companies, with nondiscriminatory access and interconnection to the BOC and ILEC networks and access to certain portions of their communications networks (known as network elements) at cost-based rates.  The 1996 Telecommunications Act entitles our Lightpath and the Bresnan CLEC subsidiaries to certain rights, but as telecommunications carriers, it also subjects them to regulation by the FCC and the states.  Their designation as telecommunications carriers also results in other regulations that may affect them and the services they offer.

Interconnection and Intercarrier Compensation. The 1996 Telecommunications Act requires telecommunications carriers to interconnect directly or indirectly with other telecommunications carriers.  Under the FCC's intercarrier compensation rules, Lightpath and the Bresnan CLECs are entitled, in some cases, to compensation from carriers when they terminate their originating calls on their networks and in other cases are required to compensate another carrier for utilizing that carrier's network to terminate traffic.  The FCC has adopted limits on the amounts of compensation that may be charged for certain types of traffic.  As noted above, the FCC has revised its intercarrier compensation rules to phase intercarrier compensation rates for terminating traffic down over several years to eventually establish a "bill-and-keep" regime, where most traffic is exchanged between carriers without compensation.

Universal Service.  Lightpath and the Bresnan CLECs are required to contribute to federal and state universal service funds.  Currently, the FCC assesses them for payments and other subsidies on the basis of a percentage of interstate revenue they receive from certain customers.  The FCC limits the amount carriers may place on universal service line items on their customer bills.  Lightpath is required to contribute to the New York Targeted Accessibility Fund ("TAF"), which includes state support for universal service.  State universal service funds have not been established in other states in which Lightpath operates.  The Bresnan CLECs are required to contribute to state universal service funds in Colorado, Utah and Wyoming.  No state universal service fund has been established in Montana.  As noted above, the FCC has made fundamental changes to its federal universal service fund programs, reorienting universal service support programs to the provision of broadband services through a new Connect America Fund ("CAF").
 
 
Other Regulation.  Lightpath and the Bresnan CLECs are also subject to other FCC requirements in connection with the interstate long distance services they provide, including protecting customer proprietary network information from unauthorized disclosure to third parties; meeting certain notice requirements in the event of service termination; compliance with disabilities access requirements; compliance with CALEA standards; outage reporting; and the payment of fees to fund local number portability administration and the North American Numbering Plan.  As noted above, the FCC and states are examining whether new requirements are necessary to improve the resiliency of communications networks.  Communications with our customers are also subject to FCC, Federal Trade Commission, and state regulations on telemarketing and the sending of unsolicited commercial e-mail and fax messages.

State Regulation.  Lightpath and the Bresnan CLECs are also subject to regulation by the state commissions in each state in which they provide service.  In order to provide service, they must seek approval from the state regulatory commission or be registered to provide service in each state in which they operate and may at times require local approval to construct facilities.  Lightpath is currently authorized and provides service in New York, Connecticut and New Jersey; the Bresnan CLECs are currently authorized or registered and provide service in Colorado, Montana, Utah, and Wyoming.  Regulatory obligations vary from state to state and include some or all of the following requirements: filing tariffs (rates, terms and conditions); filing operational, financial, and customer service reports; seeking approval to transfer the assets or capital stock of the telephone company; seeking approval to issue stocks, bonds and other forms of indebtedness of the telephone company; reporting customer service and quality of service requirements; outage reporting; making contributions to state universal service support programs; paying regulatory and state Telecommunications Relay Service and E911 fees; geographic build-out; and other matters relating to competition.

Programming and Entertainment

Cable television programming networks, such as the News 12 Networks and MSG Varsity, are regulated by the FCC in certain respects.  These regulations include requirements that certain of our networks must provide closed-captioning of programming for the hearing impaired.

Wireless Licenses

Through subsidiaries, we hold interests in two sets of wireless licenses.  First, an indirect subsidiary of the Company leases MVDDS licenses in four metropolitan areas.  These licenses, which permit the use of one-way video and data services, expire in September 2014.  We are required under the terms of our lease to take commercially reasonable efforts to demonstrate that we are providing "substantial service" in order for the licensee to renew the licenses.  As of January 31, 2013, we were using these licenses to provide service to approximately 1,600 customers in Florida.  In connection with the litigation settlement with DISH Network LLC ("DISH Network") relating to VOOM HD (see Note 20 to our consolidated financial statements), we agreed to sell the MVDDS licenses to DISH Network while retaining a right to continue operating in the Florida markets pursuant to a lease from DISH and options to acquire leases from DISH Network in other markets on certain terms set forth in the purchase agreement.

A wholly-owned subsidiary of Bresnan Cable holds three licenses that permit us to provide wireless broadband services in parts of Montana and Wyoming.  In order to fully retain the licenses, we are required to meet specified coverage requirements by June 2013 and at the end of the license term in June 2019.  We are not currently using these licenses to provide commercial service.  These licenses will be transferred to Charter Communications Operating, LLC as part of the sale of our Bresnan Broadband Holdings, LLC subsidiary described under "Business - Bresnan Cable".
 
 
Employees and Labor Relations

As of December 31, 2012, we had 16,433 full-time, 1,570 part-time and 886 temporary employees of which 547, 573 and 22, respectively, were covered under collective bargaining agreements.  We believe that our relations with employees are satisfactory.

Approximately 258 of the Company's technician workforce, primarily in Brooklyn, New York are represented by the Communication Workers of America.  As of December 31, 2012, these employees were not covered by a collective bargaining agreement.

Available Information and Website

We make available free of charge, through our investor relations section at our website, http://www.cablevision.com/investor/index.jsp, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K reports and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the U.S. Securities and Exchange Commission ("SEC").

The public may read and copy any materials the Company files with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, DC 20549.  In addition, the public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at its web site http://www.sec.gov.

Item 1A.
Risk Factors

Our financial performance may be harmed by the significant and credible risks of competition in our Telecommunications Services segment.

Competition has adversely affected our business and financial results and may continue to do so.  Competition may adversely affect our ability to service our debt.  This risk is heightened by the rapid technological change inherent in our business and the need to acquire, develop and adopt new technology to differentiate our products and services from our competitors.  We may need to anticipate far in advance which technology we should use for the development of new products and services or the enhancement of existing products and services.  In addition, changes in the regulatory and legislative environments may result in changes to the competitive landscape.

In our New York metropolitan service area, we face intense competition from two incumbent telephone companies, Verizon and AT&T, which offer video programming in addition to their voice and high-speed Internet access services, and compete across all of our telecommunications products.  Verizon has constructed fiber to the home network plant that passes a significant number of households in our New York metropolitan service area.  Verizon does not publicly report the extent of their build-out or penetration by area. We estimate that Verizon passes approximately half of the households in our New York metropolitan service area. Verizon's passings in our service area are difficult to assess because they are based upon visual inspections and other limited estimating techniques, and therefore our estimate serves only as an approximation. Verizon has obtained authority to provide video service for a majority of these homes passed, on a statewide basis in New Jersey, in numerous local franchises in New York State, including all of New York City, and in a small portion of Connecticut. AT&T offers video service in competition with us in most of our Connecticut service area.  Each of these companies has significantly greater financial resources than we do.  The attractive demographics of our New York metropolitan service territory make this region a desirable location for investment in video distribution technologies by these companies.  Verizon has made and may continue to make promotional offers to customers in our New York metropolitan service area at prices lower than ours.  This intense competition affects our ability to add or retain customers and creates pressure upon our pricing of telecommunications services and our ability to expand services purchased by our customers.  Verizon and AT&T have their own wireless phone facilities, and may expand their product offerings to include wireless phone services.  Because we do not have wireless phone facilities, our inability to provide a competitive product offering could adversely affect our competitive position.
 
 
We also compete in our service areas with the two major providers of DBS service in the United States, DISH Network and DirecTV, each with significantly higher numbers of subscribers than we have.  Another source of competition for cable television systems is the delivery of video content over the Internet directly to subscribers.  In addition, consumers are able to watch such Internet-delivered content on Internet-ready television sets and mobile devices.  Some of these services charge a nominal or no fee for access to their content.  The availability of these services could adversely affect customer demand for our video services, including premium and on-demand services.  Cable television systems also face competition from broadcast television stations, entities that make digital video recorded movies and programs available for home rental or sale, SMATV systems, which generally serve large multiple dwelling units under an agreement with the landlord and service providers that utilize the public rights-of-way and operate an OVS system.  RCN is authorized to operate OVS systems that compete with us in New York City.  The FCC also has made radio spectrum available for the provision of multichannel video service.

Our high-speed data offering to consumers faces intense competition from other providers of high-speed Internet access including services offered by local telephone providers such as Verizon, AT&T in our New York metropolitan service area and CenturyLink in our Optimum West service area.  In addition, DBS providers have tested the use of certain spectrum to offer satellite-based high-speed data services.  Cellular phone providers are also increasing the speeds of their Internet access offerings, and the FCC has made other radio spectrum available for wireless high-speed Internet access.

Our voice service offerings to consumers face intense competition from other providers of voice services, including carriers such as Verizon, AT&T, CenturyLink, and other competitive providers of voice services, as well as VoIP service providers like Vonage.

Lightpath also competes with Verizon, AT&T and other competitive local exchange carriers and long distance companies.  Our Bresnan CLECs compete against Century Link and smaller ILECs.  ILECs have significant advantages over Lightpath and the Bresnan CLECs, including greater capital resources, an existing fully operational local network, and long-standing relationships with customers. To the extent these competitors decide to reduce their prices, future success of our Lightpath business and our Bresnan CLECs may be negatively impacted.

See a further discussion regarding competition in "Item 1.  Business - Competition".

We face significant risks as a result of rapid changes in technology and consumer expectations and behavior.

The Telecommunications services industry has undergone significant technological development over time and these changes continue to affect our business.  Such changes have had, and will continue to have, a profound impact on consumer expectations and behavior.  Our video business faces technological change risks as a result of the continuing development of new and changing methods for delivery of programming content such as Internet based delivery of movies, shows and other content which can be viewed on televisions, wireless devices and other developing mobile devices.  A proliferation of delivery systems for video content can adversely affect our ability to attract and retain subscribers and the demand for our services and it can also decrease advertising demand on our delivery systems.  Our high-speed data business faces technological challenges from rapidly evolving wireless Internet solutions.  Our voice service offerings, including our CLECs, face technological developments in the proliferation of voice delivery systems including those based on Internet and wireless delivery.  If we do not develop or acquire and successfully implement new technologies, we will limit our ability to compete effectively for subscribers, content and advertising.  In addition, we may be required to make material capital and other investments to anticipate and to keep up with technological change.  These challenges could adversely affect our business.
 
 
Programming costs of our cable television systems are increasing and we may not have the ability to pass these increases on to our subscribers.  Disputes with programmers can adversely affect our relationship with subscribers and lead to subscriber losses.

Programming costs paid by our cable television systems are one of our largest categories of expenses.  These costs have increased rapidly and are expected to continue to increase, particularly with respect to costs for sports programming and broadcast networks.  We may not be able to pass programming cost increases on to our subscribers due to the increasingly competitive environment.  If we are unable to pass these increased programming costs on to our subscribers, our operating results would be adversely affected.

We attempt to control our programming costs and, therefore, the cost of our video services to our customers by negotiating favorable terms for the renewal of our affiliation agreements with programmers.  On certain occasions in the past, such negotiations have led to disputes with programmers that have resulted in temporary periods where we were not carrying a particular programming service or services.  Such disputes may inconvenience some of our subscribers and can lead to customer dissatisfaction and, in certain cases, the loss of customers.

The financial markets are subject to volatility and disruptions, which have in the past, and may in the future, adversely affect our business, including by affecting the cost of new capital, our ability to refinance our scheduled debt maturities and our ability to meet our other obligations as they come due.  The recent economic downturn has adversely affected our business and future downturns may continue to do so.

The capital and credit markets experience volatility and disruption.  At times, the markets have exerted extreme downward pressure on stock prices and upward pressure on the cost of new debt capital and have severely restricted credit availability for most issuers.

The market disruptions in recent years were accompanied by a broader economic downturn, which led to lower demand for our products, such as cable television services and entertainment, as well as lower levels of television and newspaper advertising, and increased incidence of customers' inability to pay for the services we provide.  Continuation of those conditions may further adversely impact our results of operations, cash flows and financial position.

We rely on the capital markets, particularly for offerings of debt securities, as well as the credit markets, to meet our financial commitments and liquidity needs.  Disruptions and/or volatility in the capital and credit markets could adversely affect our ability to refinance on satisfactory terms, or at all, our scheduled debt maturities and could adversely affect our ability to draw on our revolving credit facilities.

Economic downturns may impact our ability to comply with the covenants and restrictions in our indentures, credit facilities and agreements governing our other indebtedness and may impact our ability to pay our indebtedness as it comes due.  If we do not repay our debt obligations when they become due and do not otherwise comply with the covenants and restrictions in our indentures, credit facilities and agreements governing our other indebtedness, we would be in default under those agreements, and the debt incurred under those agreements could then be declared immediately due and payable.  In addition, any default under our indentures, credit facilities or agreements governing our other indebtedness could lead to an acceleration of debt under other debt instruments that contain cross acceleration or cross-default provisions.  If the indebtedness under our indentures, credit facilities and our other debt instruments were accelerated, we would not have sufficient assets to repay amounts due thereunder.  To avoid a default, we could be required to defer capital expenditures, sell assets, seek strategic investments from third parties or reduce or eliminate dividend payments and stock repurchases or other discretionary uses of cash.  However, if such measures were to become necessary, there can be no assurance that we would be able to sell sufficient assets or raise strategic investment capital sufficient to meet our scheduled debt maturities as they come due.  In addition, any significant reduction in necessary capital expenditures could adversely affect our ability to retain our existing customer base and obtain new customers, which would adversely affect our future operating results, cash flows and financial position.
 
 
Disruptions in the capital and credit markets can also result in higher interest rates on publicly issued debt securities and increased costs under credit facilities.  Such disruptions would increase our interest expense, adversely affecting our results of operations and financial position.

Our access to funds under our revolving credit facilities is dependent on the ability of the financial institutions that are parties to those facilities to meet their funding commitments.  Those financial institutions may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time. Moreover, the obligations of the financial institutions under our revolving credit facilities are several and not joint and, as a result, a funding default by one or more institutions does not need to be made up by the others.

Longer term, volatility and disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation of financial institutions, reduced alternatives or failures of significant financial institutions could adversely affect our access to the liquidity needed for our businesses.  Such disruptions could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged.

We have substantial indebtedness and we are highly leveraged, which reduces our capability to withstand adverse developments or business conditions.

We have incurred substantial amounts of indebtedness to finance operations, to upgrade our cable plant and acquire other cable television systems, sources of programming and other businesses.  We also have incurred substantial indebtedness in order to offer our new or upgraded services to our current and potential customers and to pursue activities outside our core businesses such as our acquisitions of Clearview Cinemas, Newsday, an electronics retailer and our development of Rainbow DBS. In 2006, CSC Holdings incurred $3.5 billion of debt, approximately $3.0 billion of which was distributed to Cablevision to fund a $10 per share dividend on its common stock and approximately $414 million of which was used to repay existing indebtedness, including interest, fees and expenses.  In December 2010, we incurred approximately $1.4 billion of indebtedness to finance our acquisition of Bresnan Cable.  We may continue to incur substantial amounts of debt in the future.  At December 31, 2012, our total indebtedness aggregated approximately $11.0 billion.  Because of our substantial indebtedness, we are highly leveraged and we will continue to be highly leveraged.  This means that our payments on our borrowings are significant in relation to our revenues and cash flow.  This leverage exposes us to significant risk in the event of downturns in our businesses (whether through competitive pressures or otherwise), in our industries or in the economy generally, because although our cash flows would decrease in this scenario, our required payments in respect of indebtedness would not.

We have in past periods incurred substantial losses from continuing operations, we have a significant stockholders' deficiency, and we may in the future incur losses from continuing operations which could be substantial, which may reduce our ability to raise needed capital.

We have in the past reported losses from continuing operations and we may do so in the future.  Significant losses from continuing operations could adversely affect our ability to comply with the covenants and restrictions in our debt agreements and could limit our ability to raise needed financing, or to do so on favorable terms, as such losses could be taken into account by potential investors, lenders and the organizations that issue investment ratings on our indebtedness.
 
 
A lowering or withdrawal of the ratings assigned to our debt securities by ratings agencies may further increase our future borrowing costs and reduce our access to capital.

The debt ratings for our debt securities are below the "investment grade" category, which results in higher borrowing costs as well as a reduced pool of potential purchasers of our debt as some investors will not purchase debt securities that are not rated in an investment grade rating category.  In addition, there can be no assurance that any rating assigned will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency, if in that rating agency's judgment, future circumstances relating to the basis of the rating, such as adverse changes, so warrant.  A lowering or withdrawal of a rating may further increase our future borrowing costs and reduce our access to capital.

Our ability to meet our obligations under our indebtedness may be restricted by limitations on our subsidiaries' ability to send us funds.

Cablevision's sole subsidiary is CSC Holdings.  CSC Holdings' principal subsidiaries include various entities that own cable television systems and other businesses.  Cablevision's ability to pay interest on and repay principal of its outstanding indebtedness is dependent upon the operations of CSC Holdings and its subsidiaries and the distributions or other payments of the cash they generate to Cablevision in the form of distributions, loans or advances.  Similarly, CSC Holdings' ability to pay interest and principal on its indebtedness is dependent in part on distributions from its subsidiaries.  The Company's subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due on the Company's indebtedness or to make any funds available to the Company to do so.  Bresnan Cable is a party to a credit agreement and indenture that contain various financial and operating covenants that restrict the payment of dividends or other distributions.  In addition, Newsday LLC is a party to a credit agreement that contains various financial and operating covenants that restrict the payment of dividends or other distributions.  Also, our subsidiaries' creditors, including trade creditors, in the event of a liquidation or reorganization of any subsidiary, would be entitled to a claim on the assets of such subsidiaries, including any assets transferred to those subsidiaries, prior to any of our claims as a stockholder and those creditors are likely to be paid in full before any distribution is made to us.  To the extent that we are a creditor of a subsidiary, our claims could be subordinated to any security interest in the assets of that subsidiary and/or any indebtedness of that subsidiary senior to that held by us.

Our ability to incur debt and the use of our funds are limited by significant restrictive covenants in financing agreements.

Our credit facilities and debt instruments contain various financial and operating covenants that, among other things, require the maintenance of financial ratios and restrict the relevant borrower's ability to incur debt from other sources and to use funds for various purposes, including investments in some subsidiaries.  Violation of these covenants could result in a default that would permit the parties who have lent money under such credit facilities and such other debt instruments to:
 
 
·
restrict the ability to borrow undrawn funds under such credit facilities, and
 
 
·
require the immediate repayment of the borrowings thereunder.
 
These events would be likely to have a material adverse effect on the value of our debt and equity securities.
 
 
We will need to raise significant amounts of funding over the next several years to fund capital expenditures, repay existing obligations and meet other obligations and the failure to do so successfully could adversely affect our business.  We may also engage in extraordinary transactions that involve the incurrence of large amounts of debt.

Our business is very capital intensive.  Operating and maintaining our cable television plant requires significant amounts of cash payments to third parties.  Capital expenditures for our businesses were $1,075.3 million, $814.8 million and $823.2 million, in 2012, 2011 and 2010, respectively, and primarily include payments for customer premises equipment, such as new digital video cable boxes and modems, as well as infrastructure and capital expenditures related to our cable and Lightpath telecommunications networks, in addition to the capital requirements of our other businesses.  Historically, we have made substantial investments in the development of new and innovative programming options and other service offerings for our customers as a way of differentiating ourselves from our competitors.  We expect these capital expenditures to continue to be significant as we further enhance our service offerings.  We have substantial future capital commitments in the form of long-term contracts that require substantial payments over a period of time.  We will not be able to generate sufficient cash internally to fund anticipated capital expenditures, meet these obligations and repay our indebtedness at maturity.  Accordingly, we will have to do one or more of the following:
 
 
·
refinance existing obligations to extend maturities,
 
 
·
raise additional capital, through debt or equity issuances or both,
 
 
·
cancel or scale back current and future spending programs, or
 
 
·
sell assets or interests in one or more of our businesses.
 
However, you should not assume that we will be able to refinance existing obligations or raise any required additional capital or to do so on favorable terms.  Borrowing costs related to future capital raising activities may be significantly higher than our current borrowing costs and we may not be able to raise additional capital on favorable terms, or at all, if unsettled conditions in financial markets continue to exist.  If we are unable to pursue our current and future spending programs, we may be forced to cancel or scale back those programs.  Our choice of which spending programs to cancel or reduce may be limited.  Failure to successfully pursue our capital expenditure and other spending plans could materially and adversely affect our ability to compete effectively.  It is possible that in the future we may also engage in extraordinary transactions and such transactions could result in the incurrence of substantial additional indebtedness.

Our business is subject to extensive government regulation and changes in current or future laws or regulations could restrict our ability to operate our business as we currently do.

Our cable television and other telecommunications businesses are heavily regulated and operate pursuant to detailed statutory and regulatory requirements at the federal, state and local level.  See "Item 1.  Business - Regulation".  In certain of our service areas, state or local franchising authorities regulate the basic service tier rates we may charge our customers for certain of our video services in accordance with FCC rules.  The FCC and state and local governments also regulate us in other ways that affect the daily conduct of our video delivery and video programming businesses, our voice business and our high-speed Internet access business.  In addition, our businesses are dependent upon governmental authorizations to carry on their operations. See discussion under "Item 1.  Business -Regulation".

Legislative enactments, court actions, and federal, state, and local regulatory proceedings frequently modify the terms under which we offer our services and operate.  The results of these legislative, judicial and administrative actions may materially adversely affect our business or results of operations.  New requirements giving third parties access to our network or other assets, for example, could materially affect our ability to compete.  Changes to regulations from which we benefit and on which we depend to run our businesses also could materially affect our operations.  Any action with respect to these or other matters by the courts, Congress, the FCC, the states of New York, New Jersey, Connecticut, Utah, Colorado, Wyoming, or Montana, or concerted action by local regulators, the likelihood or extent of which we cannot predict, could have a material adverse effect on us.
 
 
Our current franchises are non-exclusive and our franchisors need not renew our franchises.

Our cable television systems are operated primarily under non-exclusive franchise agreements with state or municipal government franchising authorities, with the latter in some states also subject to approval of state regulatory authorities.  Consequently, our business is dependent on our ability to obtain and renew our franchises.  Although we have never lost a franchise as a result of a failure to obtain a renewal, our franchises are subject to non renewal or termination under some circumstances.  In some cases in New York and New Jersey, franchise agreements have not been renewed by the expiration date, and we operate under temporary authority routinely granted from the state while negotiating renewal terms with the franchise authorities.  As of December 31, 2012, our ten largest franchise areas comprised approximately 48% of our total video customers and of those, one franchise, Newark, New Jersey comprising approximately 57,000 video customers, is expired.  We are currently lawfully operating in this franchise area under temporary authority recognized by the State of New Jersey.  In Montana, Wyoming, Colorado and Utah, franchises must be renewed prior to their expiration date, subject to the protections of federal law.  Neither the Company nor its predecessor in those states, Bresnan Communications, has ever lost a franchise.

A portion of our workforce is represented by labor unions.  Collective bargaining agreements can increase our expenses.  Labor disruptions could adversely affect our operations.

As of December 31, 2012, approximately 547 of our full-time employees were covered by collective bargaining agreements.  In addition, approximately 258 of our technician workforce in Brooklyn, New York are represented by the Communication Workers of America ("CWA").  Negotiations to reach a collective bargaining agreement with the CWA are ongoing.  On February 7, 2013, a petition was filed by members of the Brooklyn technician workforce with the National Labor Relations Board, seeking an election to vote on whether or not to decertify the CWA as their representative.  Collective bargaining agreements with the CWA covering this group of employees or agreements with other unionized employees may increase our expenses.  In addition, any disruptions to our operations due to labor related problems could have an adverse effect on our business.

Our Newsday business has suffered operating losses historically and such losses are expected to continue in the future.

Newsday suffered operating losses of $47.0 million, $31.7 million, and $12.6 million for the years ended December 31, 2012, 2011, and 2010, respectively, which included impairments of indefinite-lived intangible assets of $13.0 million, $11.0 million, and $7.8 million in 2012, 2011 and 2010, respectively.  Operating losses are expected to continue in the future.  In connection with the formation of a company through which we have an approximate 97.2% interest in Newsday, its subsidiary, Newsday LLC incurred $650.0 million of indebtedness under a senior secured loan facility and $630.0 million of the proceeds of these borrowings were paid to Newsday's former owner, Tribune Company.  These borrowings are guaranteed by CSC Holdings.  In addition, at December 31, 2012, Newsday Holdings LLC held $753.7 million aggregate principal amount of senior notes issued by Cablevision.  Newsday LLC has agreed that it will hold Cablevision or CSC Holdings senior notes or cash balances in excess of the amount of borrowings outstanding under its senior secured credit facility until it matures.

Demand for advertising, increased competition and declines in circulation affect Newsday.

A majority of the revenues of our Newsday business are from advertising.  Expenditures by advertisers generally reflect economic conditions and declines in national and local economic conditions affect demand for advertising and the levels of advertising revenue for Newsday.

Newsday operates in a highly competitive market which may adversely affect advertising and circulation revenues.  Newsday faces significant competition for advertising revenue from a variety of media sources.  The most direct source of competition is other newspapers that reach a similar audience in the same geographic area.  Newsday also faces competition from magazines, shopping guides, yellow pages, websites, mobile-device platforms, broadcast and cable television, radio and direct marketing; particularly if those media sources provide advertising services that could substitute for those provided by Newsday within the same geographic area.  Specialized websites for real estate, automobile and help wanted advertising have become increasingly competitive with our newspapers and websites for classified advertising and further development of additional targeted websites is likely.
 
 
Newsday and the newspaper industry generally have also experienced significant declines in advertising and circulation revenue as circulation and readership levels continue to be adversely affected by competition from new media news formats and less reliance on newspapers by some consumers as a source of news, particularly younger consumers.  A prolonged decline in circulation would have a material adverse effect on the rate and volume of advertising revenues.

A significant amount of our book value consists of intangible assets that may not generate cash in the event of a voluntary or involuntary sale.

At December 31, 2012, we reported approximately $7.2 billion of consolidated total assets, of which $1.9 billion were intangible.  Intangible assets include franchises from city and county governments to operate cable television systems and goodwill.  While we believe that the carrying values of our intangible assets are recoverable, you should not assume that we would receive any cash from the voluntary or involuntary sale of these intangible assets, particularly if we were not continuing as an operating business.  We urge you to read carefully our consolidated financial statements contained herein, which provide more detailed information about these intangible assets.

We rely on network and information systems for our operations, and a disruption or failure of those systems may disrupt our operations.

We have in place layered and multi-threaded security systems designed to protect against intentional or unintentional disruption, failure, misappropriation or corruption of our network and information systems.  A problem of this type might be caused by events such as computer hacking, computer viruses, worms and other destructive or disruptive software, "cyber attacks" and other malicious activity, as well as natural disasters, power outages, terrorist attacks and similar events.  Such events could have an adverse impact on us and our customers, including degradation of service, service disruption, excessive call volume to call centers and damage to our plant, equipment and data.  In addition, our future results could be adversely affected due to the theft, destruction, loss, misappropriation or release of confidential customer data or intellectual property.  Operational or business delays may result from the disruption of network or information systems and the subsequent remediation activities.  Moreover, these events may create negative publicity resulting in reputation or brand damage with customers.

We have expended, and expect to continue to spend in the future, significant amounts to protect our network and information systems; however, there can be no assurance that these efforts will prevent any of the problems identified above.

The MSG Distribution and the AMC Networks Distribution could result in significant tax liability.

We have received private letter rulings from the IRS to the effect that, among other things, the MSG Distribution and the AMC Networks Distribution and certain related transactions, will qualify for tax-free treatment under the Internal Revenue Code of 1986, as amended (the "Code").

Although a private letter ruling from the IRS generally is binding on the IRS, if the factual representations or assumptions made in the letter ruling request are untrue or incomplete in any material respect, we will not be able to rely on the ruling.  Furthermore, the IRS will not rule on whether a distribution satisfies certain requirements necessary to obtain tax-free treatment under the Code.  Rather, the ruling is based upon our representations that these conditions have been satisfied, and any inaccuracy in such representations could invalidate the ruling.
 
 
If the MSG Distribution or the AMC Networks Distribution does not qualify for tax-free treatment for U.S. federal income tax purposes, then, in general, we would be subject to tax as if we had sold the Madison Square Garden common stock or AMC Networks common stock, as the case may be, in a taxable sale for its fair value.  Cablevision stockholders would be subject to tax as if they had received a distribution equal to the fair value of Madison Square Garden common stock or AMC Networks common stock, as the case may be, that was distributed to them, which generally would be treated as a taxable dividend.  It is expected that the amount of any such taxes to Cablevision's stockholders and us would be substantial.

The tax rules applicable to the AMC Networks Distribution may restrict us from engaging in certain corporate transactions or from raising equity capital beyond certain thresholds for a period of time after the AMC Networks Distribution, as applicable.

To preserve the tax-free treatment of the AMC Networks Distribution to AMC Network's and Cablevision's stockholders, under a tax disaffiliation agreement between Cablevision and AMC Networks, for the two-year period following the AMC Networks Distribution, we will be subject to restrictions with respect to our activities, including restrictions relating to certain issuances or repurchases of Cablevision's common stock, asset sales, mergers and liquidations.

These restrictions may limit Cablevision's ability during that two-year period to pursue strategic transactions of a certain magnitude that involve the issuance or acquisition of Cablevision's stock or engage in new businesses or other transactions that might increase the value of our business.  These restrictions may also limit our ability to raise significant amounts of cash through the issuance of stock, especially if Cablevision's stock price were to suffer substantial declines, or through the sale of certain of our assets.

We may not enjoy all of the benefits of scale that we achieved prior to the MSG Distribution and the AMC Networks Distribution.

Prior to the MSG Distribution and the AMC Networks Distribution, we shared benefits of scope and scale in costs and expenses resulting from various factors including financial reporting, costs associated with complying with federal securities laws (including compliance with the Sarbanes-Oxley Act of 2002), tax administration, legal and human resources related functions.  While we entered into agreements with Madison Square Garden and AMC Networks that govern a number of our commercial and other relationships after the MSG Distribution and AMC Networks Distribution, those arrangements do not fully capture the benefits we enjoyed as a result of common ownership prior thereto.  In addition, in connection with the AMC Networks Distribution, we terminated an agreement pursuant to which we received a management fee that was based upon revenues of the AMC and WE tv networks.  This fee, which amounted to approximately $14.0 million for the six months ended June 30, 2011, was previously included in the operating income of our Telecommunications Services segment and has been reclassified to discontinued operations.  As a result of the MSG Distribution and the AMC Networks Distribution, we now carry a relatively larger share of our administrative and other overhead expenses.  The loss of these benefits as a consequence of the MSG Distribution and AMC Networks Distribution could have an adverse effect on our results of operations and financial condition.
 
 
In connection with the MSG Distribution and AMC Networks Distribution, we will rely on Madison Square Garden's and AMC Networks' performance under various agreements.

In connection with the MSG Distribution and the AMC Networks Distribution, we entered into various agreements with Madison Square Garden and AMC Networks, respectively, including a distribution agreement, a tax disaffiliation agreement, a transition services agreement, an employee matters agreement and certain related party arrangements.  These agreements govern our relationship with those entities subsequent to the distributions and provide for the allocation of employee benefits, taxes and certain other liabilities and obligations attributable to periods prior to the distributions.  These agreements also include arrangements with respect to transition services and a number of on-going commercial relationships.  The distribution agreements include agreements that we and those entities agree to provide each other with indemnities with respect to liabilities arising out of the businesses we transferred to those entities.  We are also party to other arrangements with Madison Square Garden and AMC Networks, such as affiliation agreements covering the MSG networks and Fuse, AMC, WE tv, IFC and Sundance Channel.  We and these entities will rely on the other to perform its obligations under these agreements.  If Madison Square Garden or AMC Networks were to breach or to be unable to satisfy its material obligations under these agreements, including a failure to satisfy its indemnification obligations, we could suffer operational difficulties or significant losses.

We share certain key executives and directors with Madison Square Garden and AMC Networks, which means those executives will not devote their full time and attention to our affairs.

As a result of the AMC Networks Distribution, our Chairman, Charles F. Dolan, serves as Executive Chairman of AMC Networks.  As a result of the MSG Distribution, our President and Chief Executive Officer, James L. Dolan, also serves as the Executive Chairman of Madison Square Garden and our Vice Chairman, Hank J. Ratner, serves as President and Chief Executive Officer of Madison Square Garden.  This arrangement is similar to the historical situation whereby Messrs. Dolan and Ratner have served as senior officers of Madison Square Garden and Charles F. Dolan provided senior leadership to our Rainbow segment.  As a result, since the MSG Distribution and AMC Networks Distribution, three senior officers of the Company are not devoting their full time and attention to the Company's affairs.  In addition, eight members of our Board of Directors are also directors of Madison Square Garden and eight members of our Board of Directors are also directors of AMC Networks.

Our overlapping directors and executive officers may result in the diversion of corporate opportunities and other potential conflicts.

Our Board of Directors has adopted a policy that acknowledges that directors and officers of the Company may also be serving as directors, officers, employees or agents of Madison Square Garden or AMC Networks and their respective subsidiaries and that the Company may engage in material business transactions with such entities.  The Company renounced its rights to certain business opportunities and the new policy provides that no director or officer of the Company who is also serving as a director, officer, employee or agent of Madison Square Garden or AMC Networks and their respective subsidiaries will be liable to the Company or its stockholders for breach of any fiduciary duty that would otherwise exist by reason of the fact that any such individual directs a corporate opportunity (other than certain limited types of opportunities set forth in the policy) to Madison Square Garden or AMC Networks or any of their respective subsidiaries instead of the Company, or does not refer or communicate information regarding such corporate opportunities to the Company.  The policy expressly validates certain contracts, agreements, assignments and transactions (and amendments, modifications or terminations thereof) between the Company and Madison Square Garden or AMC Networks and/or any of their respective subsidiaries and, to the fullest extent permitted by law, provides that the actions of the overlapping directors or officers in connection therewith are not breaches of fiduciary duties owed to the Company, any of its subsidiaries or their respective stockholders.

We are controlled by the Dolan family.  As a result of their control of us, the Dolan family has the ability to prevent or cause a change in control or approve, prevent or influence certain actions by us.

Cablevision has two classes of common stock:
 
 
·
Class B common stock, which is generally entitled to ten votes per share and is entitled collectively to elect 75% of the Cablevision Board of Directors, and
 
 
·
Class A common stock, which is entitled to one vote per share and is entitled collectively to elect the remaining 25% of the Cablevision Board of Directors.
 
 
As of February 22, 2013, the Dolan family, including trusts for the benefit of members of the Dolan family, collectively beneficially owned all of Cablevision's Class B common stock, less than 2% of Cablevision's outstanding Class A common stock and approximately 73% of the total voting power of all the outstanding Cablevision common stock.  Of this amount, our Chairman, Charles F. Dolan, beneficially owned approximately 59% of Cablevision's outstanding Class B common stock, less than 1% of Cablevision's outstanding Class A common stock and approximately 43% of the total voting power of all the outstanding Cablevision common stock.  The members of the Dolan family holding Class B common stock have executed a voting agreement that has the effect of causing the voting power of the Class B stockholders to be cast as a block with respect to the election of the directors elected by the Class B stockholders and any change of control transaction.  The Dolan family is able to prevent a change in control of Cablevision and no person interested in acquiring Cablevision will be able to do so without obtaining the consent of the Dolan family.  In the past, the Dolan family has made proposals to take Cablevision private, including a 2007 transaction that was submitted to a vote of Cablevision's stockholders but that did not receive shareholder approval.  In each such case, the Dolan family stated that they were only interested in pursuing their proposed transaction and would not sell their stake in Cablevision.  There can be no assurances that the Dolan family will not propose, undertake or consummate a similar transaction in the future.

As a result of the Dolan family's ownership of all of the Class B common stock, the Dolan family has the power to elect all the directors of Cablevision subject to election by holders of Class B common stock.  Those directors constitute a majority of Cablevision's Board of Directors.  In addition, Dolan family members may control stockholder decisions on matters in which holders of all classes of Cablevision common stock vote together as a single class.  These matters could include the amendment of some provisions of Cablevision's certificate of incorporation and the approval of fundamental corporate transactions.  In addition, the affirmative vote or consent of the holders of at least 66-2⁄3% of the outstanding shares of the Class B common stock, voting separately as a class, is required to approve the authorization or issuance of any additional shares of Class B common stock.  Furthermore, the Dolan family members also have the power to prevent any amendment, alteration or repeal of any of the provisions of Cablevision's certificate of incorporation that adversely affects the powers, preferences or rights of the Class B common stock.

One purpose of the voting agreement referred to above is to consolidate Dolan family control of Cablevision.  The Dolan family requested Cablevision's Board of Directors to exercise Cablevision's right, as a "controlled company", to opt-out of the New York Stock Exchange listing standards that, among other things, require listed companies to have a majority of independent directors on their board and to have an independent corporate governance and nominating committee.  Cablevision's Board of Directors and the directors elected by holders of Class A common stock each approved this request on March 8, 2004.

Item 1B.
Unresolved Staff Comments

None.

Item 2.
Properties

We own our headquarters building located in Bethpage, New York with approximately 558,000 square feet of space, and certain other real estate where our earth stations, headend equipment and microwave receiving antennae are located primarily in New York, New Jersey and Connecticut, aggregating approximately 719,000 square feet of space.
 
 
We lease real estate where certain of our business offices, earth stations, transponders, microwave towers, warehouses, headend equipment, hub sites, access studios and microwave receiving antennae are located, aggregating approximately 2,193,000 square feet of space primarily in New York, New Jersey and Connecticut.  We also own approximately 111,000 square feet and lease approximately 216,000 square feet of certain other real estate where certain of our offices, earth stations, headend equipment and microwave receiving antennae are located throughout our Optimum West service area.

We lease several business offices in Woodbury, New York with an aggregate of approximately 120,000 square feet of space and business offices in Jericho, New York with approximately 621,000 square feet of space.  Of those amounts, we currently sublease approximately 288,000 square feet of space to third party tenants and approximately 33,000 square feet of space is currently vacant.  We also lease an office in Purchase, New York with approximately 31,000 square feet of space.  In addition, Newsday leases properties aggregating approximately 774,000 square feet of space which includes approximately 527,000 square feet relating to its administrative and printing facility in Melville, New York.

We generally own all assets (other than real property) related to our cable television operations, including our program production equipment, headend equipment (towers, antennae, electronic equipment and satellite earth stations), cable television system plant (distribution equipment, amplifiers, subscriber drops and hardware), converters, test equipment, tools and maintenance equipment.  We also generally own our service and other vehicles.

Clearview Cinemas leases 38 theatres (22 in New Jersey, 14 in New York and two in Pennsylvania) with approximately 33,000 seats and owns an additional nine theatres (five in New York and four in New Jersey) with approximately 5,700 seats.

We believe our properties are adequate for our use.

Item 3.
Legal Proceedings

Refer to Note 17 to our consolidated financial statements included in this Annual Report on Form 10-K for a discussion of our legal proceedings.

Item 4.
Mine Safety Disclosures

Not applicable.
 
 
PART II

Item 5.
Market for the Registrants' Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

CNYG Class A common stock is traded on the New York Stock Exchange ("NYSE") under the symbol "CVC."

Price Range of Cablevision NY Group Class A Common Stock

The following tables set forth for the periods indicated the intra-day high and low sales prices per share of the CNYG Class A common stock as reported on the NYSE:

   
High
   
Low
 
Year Ended December 31, 2012:
           
First Quarter
  $ 16.63     $ 13.65  
Second Quarter
    15.24       10.76  
Third Quarter
    17.43       12.66  
Fourth Quarter
    18.86       13.21  

   
High
   
Low
 
Year Ended December 31, 2011:
           
First Quarter(1)
  $ 38.08     $ 33.26  
Second Quarter(1)
    36.86       32.80  
Third Quarter
    27.60       15.40  
Fourth Quarter
    18.25       11.57  
 

(1) 
Share prices through June 30, 2011 do not reflect the impact of the AMC Networks Distribution.

As of February 22, 2013, there were 1,069 holders of record of CNYG Class A common stock.

There is no public trading market for the CNYG Class B common stock, par value $.01 per share.  As of February 22, 2013, there were 24 holders of record of CNYG Class B common stock.

All membership interests in CSC Holdings are held by Cablevision.
 
 
Stockholder Dividends and Distributions

Cablevision

On June 30, 2011, Cablevision distributed to its stockholders all of the outstanding common stock of AMC Networks, a company which consists principally of national programming networks, including AMC, WE tv, IFC and Sundance Channel, previously owned and operated by the Company's Rainbow segment.  The AMC Networks Distribution took the form of a distribution by Cablevision of one share of AMC Networks Class A Common Stock for every four shares of CNYG Class A Common Stock held of record on June 16, 2011 and one share of AMC Networks Class B Common Stock for every four shares of CNYG Class B Common Stock held of record on June 16, 2011.

The Board of Directors of Cablevision declared the following cash dividends to stockholders of record on both its CNYG Class A common stock and CNYG Class B common stock:

Declaration Date
 
Dividend per Share
 
Record Date
 
Payment Date
             
October 24, 2012
  $0.15  
November 7, 2012
 
November 28, 2012
August 1, 2012
  $0.15  
August 14, 2012
 
September 4, 2012
May 1, 2012
  $0.15  
May 17, 2012
 
June 1, 2012
February 22, 2012
  $0.15  
March 9, 2012
 
March 30, 2012
             
October 27, 2011
  $0.15  
November 11, 2011
 
December 2, 2011
August 5, 2011
  $0.15  
August 19, 2011
 
September 9, 2011
May 4, 2011
  $0.15  
May 16, 2011
 
June 6, 2011
February 15, 2011
  $0.125  
February 28, 2011
 
March 21, 2011

Cablevision paid dividends aggregating $163.9 million and $162.0 million in 2012 and 2011, respectively, primarily from the proceeds of equity distribution payments from CSC Holdings.  In addition, as of December 31, 2012, up to approximately $5.7 million will be paid when, and if, restrictions lapse on restricted shares outstanding.

Cablevision may pay dividends on its capital stock only from net profits and surplus as determined under Delaware law.  If dividends are paid on the CNYG common stock, holders of the CNYG Class A common stock and CNYG Class B common stock are entitled to receive dividends, and other distributions in cash, stock or property, equally on a per share basis, except that stock dividends with respect to CNYG Class A common stock may be paid only with shares of CNYG Class A common stock and stock dividends with respect to CNYG Class B common stock may be paid only with shares of CNYG Class B common stock.

Cablevision's indentures restrict the amount of dividends and distributions in respect of any equity interest that can be made.

CSC Holdings

During the years ended December 31, 2012 and 2011, CSC Holdings made equity distribution payments to Cablevision, its sole member, aggregating approximately $671.8 million and $929.9 million, respectively.  These distribution payments were funded from cash on hand and cash from operations.  The proceeds were used to fund:
 
 
·
Cablevision's dividends paid;
 
 
·
Cablevision's interest and principal payments on its senior notes;
 
 
·
Cablevision's payments for the acquisition of treasury shares related to statutory minimum tax withholding obligations upon the vesting of certain restricted shares; and
 
 
·
the repurchase of CNYG Class A common stock under Cablevision's share repurchase program.
 
 
Additionally on June 30, 2011, CSC Holdings distributed to Cablevision all of the outstanding common stock of AMC Networks.

CSC Holdings may make distributions on its membership interests only if sufficient funds exist as determined under Delaware law.

CSC Holdings' indentures and CSC Holdings credit agreement restrict the amount of dividends and distributions in respect of any equity interest that can be made.

Recent Sales and Use of Proceeds

In June 2010, Cablevision's Board of Directors authorized the repurchase of up to $500 million of CNYG Class A common stock.  In February 2011, Cablevision's Board of Directors authorized the repurchase of up to an additional $500 million of CNYG Class A common stock.  In May 2012, Cablevision's Board of Directors authorized the repurchase of up to another $500 million of CNYG Class A common stock giving the Company the ability to repurchase up to a total of $1.5 billion of CNYG Class A common stock since inception of the program.  Under the repurchase program, shares of CNYG Class A common stock may be purchased from time to time in the open market.  The program does not have an expiration date and may be suspended at any time at the discretion of the Board of Directors.  There were no repurchases during the fourth quarter of 2012.  As of December 31, 2012, the Company had $455.3 million of availability remaining under its stock repurchase authorizations.
 
 
CNYG Stock Performance Graph

The chart below compares the performance of the Company's CNYG Class A common stock with the performance of the S&P 500 Index and a Peer Group Index by measuring the changes in CNYG Class A common stock prices from December 31, 2007 through December 31, 2012.  As required by the SEC, the values shown assume the reinvestment of all dividends and also reflect the effect of the AMC Distribution and MSG Distribution.  Because no published index of comparable media companies currently reports values on a dividends-reinvested basis, the Company has created a Peer Group Index for purposes of this graph in accordance with the requirements of the SEC.  The Peer Group Index is made up of companies that engage in cable television operations as a significant element of their business, although not all of the companies included in the Peer Group Index participate in all of the lines of business in which the Company is engaged and some of the companies included in the Peer Group Index also engage in lines of business in which the Company does not participate.  Additionally, the market capitalizations of many of the companies included in the Peer Group are quite different from that of the Company.  The common stocks of the following companies have been included in the Peer Group Index for 2012:  Comcast Corporation, Mediacom Communications Corporation (until March 4, 2011 when Mediacom stock ceased trading), Time Warner Cable Inc. (from January 5, 2007, when Time Warner Cable stock began trading), and Charter Communications (from December 2, 2009, when Charter emerged from bankruptcy).  The chart assumes $100 was invested on December 31, 2007 in each of the Company's CNYG Class A common stock, the S&P 500 Index and in a Peer Group Index and reflects reinvestment of dividends on a quarterly basis and market capitalization weighting.

Image
 
   
Dec 2007
   
Dec 2008
   
Dec 2009
   
Dec 2010
   
Dec 2011
   
Dec 2012
 
CNYG CLASS A
  $ 100     $ 69     $ 109     $ 176     $ 109     $ 119  
S&P 500 INDEX
  $ 100     $ 63     $ 80     $ 92     $ 94     $ 109  
PEER GROUP
  $ 100     $ 89     $ 100     $ 143     $ 152     $ 239  
 
 
Item 6.
Selected Financial Data

The operating and balance sheet data included in the following selected financial data have been derived from the consolidated financial statements of Cablevision and CSC Holdings.  The selected financial data presented below should be read in conjunction with the audited consolidated financial statements of Cablevision and CSC Holdings and the notes thereto included in Item 8 of this Report.

Operating Data:
     
   
Cablevision Systems Corporation
 
   
Years Ended December 31,
 
   
2012
   
2011
   
2010(a)
   
2009
   
2008
 
   
(Dollars in thousands)
 
                               
Revenues, net
  $ 6,705,461     $ 6,700,848     $ 6,177,575     $ 5,900,074     $ 5,480,799  
Operating expenses:
                                       
Technical and operating (excluding depreciation, amortization and impairments shown below)
    3,323,655       2,968,540       2,663,748       2,532,844       2,391,392  
Selling, general and administrative
    1,544,109       1,482,344       1,440,731       1,389,525       1,253,863  
Restructuring expense (credits)
    (770 )     6,311       (58 )     5,583       3,049  
Depreciation and amortization (including impairments)
    1,078,957       1,014,974       887,092       916,408       1,333,101  
Operating income
    759,510       1,228,679       1,186,062       1,055,714       499,394  
Other income (expense):
                                       
Interest expense, net
    (719,671 )     (745,706 )     (710,751 )     (669,814 )     (687,725 )
Gain on sale of affiliate interests
    716       683       2,051       -       -  
Gain (loss) on investments, net
    294,235       37,384       109,813       (977 )     (33,176 )
Gain (loss) on equity derivative contracts, net
    (211,335 )     1,454       (72,044 )     631       51,772  
Loss on interest rate swap contracts, net
    (1,828 )     (7,973 )     (85,013 )     (75,631 )     (202,840 )
Loss on extinguishment of debt and write-off of deferred financing costs
    (66,213 )     (92,692 )     (110,049 )     (73,457 )     -  
Miscellaneous, net
    1,770       1,265       1,447       543       885  
                                         
Income (loss) from continuing operations before income taxes
    57,184       423,094       321,516       237,009       (371,690 )
Income tax benefit (expense)
    (23,821 )     (184,436 )     (113,767 )     (113,177 )     113,918  
Income (loss) from continuing operations
    33,363       238,658       207,749       123,832       (257,772 )
Income from discontinued operations, net of income taxes
    200,250       53,623       153,848       161,467       21,600  
Net income (loss)
    233,613       292,281       361,597       285,299       (236,172 )
Net loss (income) attributable to noncontrolling interests
    (90 )     (424 )     (649 )     273       8,108  
Net income (loss) attributable to Cablevision Systems Corporation stockholders
  $ 233,523     $ 291,857     $ 360,948     $ 285,572     $ (228,064 )
 

(a)
Amounts include the operating results of Bresnan Cable from the date of acquisition on December 14, 2010.
 
 
   
Cablevision Systems Corporation
 
   
Years Ended December 31,
 
   
2012
   
2011
   
2010(a)
   
2009
   
2008
 
   
(Dollars in thousands, except per customer, per unit and per share data)
 
INCOME (LOSS) PER SHARE:
                             
                               
Basic net income (loss) per share attributable to Cablevision Systems Corporation stockholders:
                             
                               
Income (loss) from continuing operations
  $ 0.13     $ 0.86     $ 0.71     $ 0.43     $ (0.86 )
                                         
Income (loss) from discontinued operations
  $ 0.76     $ 0.19     $ 0.52     $ 0.55     $ 0.07  
                                         
Net income (loss)
  $ 0.89     $ 1.06     $ 1.23     $ 0.98     $ (0.79 )
                                         
Basic weighted average common shares (in thousands)
    262,258       276,369       293,165       291,759       290,286  
                                         
Diluted net income (loss) per share attributable to Cablevision Systems Corporation stockholders:
                                       
                                         
Income (loss) from continuing operations
  $ 0.12     $ 0.84     $ 0.69     $ 0.42     $ (0.86 )
                                         
Income (loss) from discontinued operations
  $ 0.75     $ 0.19     $ 0.51     $ 0.54     $ 0.07  
                                         
Net income (loss)
  $ 0.87     $ 1.02     $ 1.20     $ 0.96     $ (0.79 )
                                         
Diluted weighted average common shares (in thousands)
    267,330       284,904       301,880       298,444       290,286  
                                         
Cash dividends declared and paid per common share
  $ 0.600     $ 0.575     $ 0.475     $ 0.40     $ 0.20  
                               
Amounts attributable to Cablevision Systems Corporation stockholders:
                             
                               
Income (loss) from continuing operations, net of income taxes
  $ 33,273     $ 238,234     $ 207,100     $ 124,105     $ (249,664 )
Income from discontinued operations, net of income taxes
    200,250       53,623       153,848       161,467       21,600  
Net income (loss)
  $ 233,523     $ 291,857     $ 360,948     $ 285,572     $ (228,064 )
 

(a)
Amounts include the operating results of Bresnan Cable from the date of acquisition on December 14, 2010.
 
 
   
CSC Holdings, LLC
 
   
Years Ended December 31,
 
   
2012
   
2011
   
2010(a)
   
2009
   
2008
 
   
(Dollars in thousands)
 
                               
Revenues, net
  $ 6,705,461     $ 6,700,848     $ 6,177,575     $ 5,900,074     $ 5,480,799  
Operating expenses:
                                       
Technical and operating (excluding depreciation, amortization and impairments shown below)
    3,323,655       2,968,540       2,663,748       2,532,844       2,391,392  
Selling, general and administrative
    1,544,109       1,482,344       1,440,731       1,389,525       1,253,863  
Restructuring expense (credits)
    (770 )     6,311       (58 )     5,583       3,049  
Depreciation and amortization (including impairments)
    1,078,957       1,014,974       887,092       916,408       1,333,101  
Operating income
    759,510       1,228,679       1,186,062       1,055,714       499,394  
Other income (expense):
                                       
Interest expense, net
    (466,380 )     (503,124 )     (470,338 )     (493,672 )     (536,287 )
Gain on sale of affiliate interests
    716       683       2,051       -       -  
Gain (loss) on investments, net
    294,235       37,384       109,813       (977 )     (33,176 )
Gain (loss) on equity derivative contracts, net
    (211,335 )     1,454       (72,044 )     631       51,772  
Loss on interest rate swap contracts, net
    (1,828 )     (7,973 )     (85,013 )     (75,631 )     (202,840 )
Loss on extinguishment of debt and write-off of deferred financing costs
    (66,213 )     (92,692 )     -       (72,870 )     -  
Miscellaneous, net
    1,770       1,265       1,433       543       881  
Income (loss) from continuing operations before income taxes
    310,475       665,676       671,964       413,738       (220,256 )
Income tax benefit (expense)
    (124,374 )     (292,598 )     (250,886 )     (184,255 )     54,273  
Income (loss) from continuing operations
    186,101       373,078       421,078       229,483       (165,983 )
Income from discontinued operations, net of income taxes
    200,250       53,623       153,848       161,467       21,600  
Net income (loss)
    386,351       426,701       574,926       390,950       (144,383 )
Net loss (income) attributable to noncontrolling interests
    (90 )     (424 )     (649 )     273       8,108  
Net income (loss) attributable to CSC Holdings, LLC's sole member
  $ 386,261     $ 426,277     $ 574,277     $ 391,223     $ (136,275 )
                                         
Amounts attributable to CSC Holdings, LLC's sole member:
                             
                               
Income (loss) from continuing operations, net of income taxes
  $ 186,011     $ 372,654     $ 420,429     $ 229,756     $ (157,875 )
Income from discontinued operations, net of income taxes
    200,250       53,623       153,848       161,467       21,600  
Net income (loss)
  $ 386,261     $ 426,277     $ 574,277     $ 391,223     $ (136,275 )
 

(a)
Amounts include the operating results of Bresnan Cable from the date of acquisition on December 14, 2010.
 
 
Balance Sheet Data:
     
   
Cablevision Systems Corporation
 
   
December 31,
 
   
2012
   
2011
   
2010
   
2009
   
2008
 
   
(Dollars in thousands)
 
       
Total assets
  $ 7,246,224     $ 7,143,325     $ 8,867,092     $ 9,676,772     $ 9,971,684  
Credit facility debt
    4,658,106       5,184,194       5,756,510       4,718,750       4,953,750  
Collateralized indebtedness
    556,152       455,938       352,606       375,832       448,738  
Senior notes and debentures
    5,738,219       5,446,660       5,568,193       5,022,600       5,197,278  
Notes payable
    12,585       29,227       -       -       6,230  
Capital lease obligations
    56,569       42,763       31,237       31,930       33,286  
Total debt
    11,021,631       11,158,782       11,708,546       10,149,112       10,639,282  
Redeemable noncontrolling interest
    11,999       13,761       14,698       12,175       12,012  
Stockholders' deficiency
    (5,639,164 )     (5,575,855 )     (6,296,918 )     (5,155,955 )     (5,367,991 )
Noncontrolling interests
    1,158       1,791       1,485       521       333  
Total deficiency
    (5,638,006 )     (5,574,064 )     (6,295,433 )     (5,155,434 )     (5,367,658 )
       
   
CSC Holdings, LLC
 
   
December 31,
 
      2012       2011       2010       2009       2008  
   
(Dollars in thousands)
 
       
Total assets
  $ 7,448,145     $ 7,601,785     $ 9,172,292     $ 9,872,523     $ 10,225,595  
Credit facility debt
    4,658,106       5,184,194       5,756,510       4,718,750       4,953,750  
Collateralized indebtedness
    556,152       455,938       352,606       375,832       448,738  
Senior notes and debentures
    2,846,683       3,279,694       3,402,505       3,134,909       3,697,278  
Notes payable
    12,585       29,227       -       -       6,230  
Capital lease obligations
    56,569       42,763       31,237       31,930       33,286  
Total debt
    8,130,095       8,991,816       9,542,858       8,261,421       9,139,282  
Redeemable noncontrolling interest
    11,999       13,761       14,698       12,175       12,012  
Stockholder's deficiency
    -       -       -       -       (3,603,782 )
Member's deficiency
    (2,851,773 )     (3,414,943 )     (4,150,245 )     (3,090,152 )     -  
Noncontrolling interests
    1,158       1,791       1,485       521       333  
Total deficiency
    (2,850,615 )     (3,413,152 )     (4,148,760 )     (3,089,631 )     (3,603,449 )

 
 

Statistical Data (Unaudited):
 
   
New York Metropolitan Service Area
   
Optimum West Service Area
   
Total (f)
 
   
As of December 31,
 
   
2012(g)
   
2011
   
2010
   
2012
   
2011
   
2010(a)
   
2012(g)
   
2011
   
2010
 
   
(in thousands, except per customer amounts)
 
                                                       
Customer relationships(b)
    3,230       3,255       3,298       370       356       350       3,601       3,611       3,648  
Video customers(c)
    2,893       2,947       3,008       304       303       306       3,197       3,250       3,314  
High-speed data customers
    2,763       2,701       2,653       292       264       239       3,055       2,965       2,892  
Voice customers
    2,264       2,201       2,138       170       156       131       2,433       2,357       2,269  
                                                                         
Serviceable passings(d)
    4,979       4,922       4,882       667       662       650       5,646       5,584       5,532  
                                                                         
Penetration:
                                                                       
Customers relationships  to serviceable passings
    64.9 %     66.1 %     67.6 %     55.5 %     53.7 %     53.8 %     63.8 %     64.7 %     65.9 %
Video customers to serviceable passings
    58.1 %     59.9 %     61.6 %     45.6 %     45.7 %     47.1 %     56.6 %     58.2 %     59.9 %
High-speed data customers to serviceable passings
    55.5 %     54.9 %     54.3 %     43.8 %     39.9 %     36.8 %     54.1 %     53.1 %     52.3 %
Voice customers to serviceable passings
    45.5 %     44.7 %     43.8 %     25.4 %     23.5 %     20.2 %     43.1 %     42.2 %     41.0 %
                                                                         
Average Monthly Revenue per Customer Relationship ("RPC")(e)
  $ 137.51     $ 141.37     $ 137.73     $ 118.84     $ 114.85       N/A     $ 135.61     $ 138.77       N/A  
Average Monthly Revenue per Video Customer ("RPS")(e)
  $ 153.22     $ 156.09     $ 150.68     $ 143.99     $ 134.60       N/A     $ 152.35     $ 154.10       N/A  
 

N/A
Not meaningful.
(a)
Reflects data related to Bresnan Cable, which was acquired by the Company on December 14, 2010.
(b)
Represents number of households/businesses that receive at least one of the Company's services (see footnote (g) below).
(c)
Video customers represent each customer account (set up and segregated by customer name and address), weighted equally and counted as one customer, regardless of size, revenue generated, or number of boxes, units, or outlets.  In calculating the number of customers, we count all customers other than inactive/disconnected customers (see footnote (g) below).  Free accounts are included in the customer counts along with all active accounts, but they are limited to a prescribed group such as our current and retired employees.  Most of these accounts are also not entirely free, as they typically generate revenue through pay-per-view or other pay services.  Free status is not granted to regular customers as a promotion.  We count a bulk commercial customer, such as a hotel, as one customer, and do not count individual room units at that hotel.  In counting bulk residential customers, such as an apartment building, we count each subscribing family unit within the building as one customer, but do not count the master account for the entire building as a customer.
(d)
Represents the estimated number of single residence homes, apartment and condominium units and commercial establishments passed by the cable distribution network in areas serviceable without further extending the transmission lines.
(e)
RPC is calculated by dividing the average monthly U.S. generally accepted accounting principles ("GAAP") revenues for the Telecommunications Services segment, less the revenue attributable to Lightpath, for the fourth quarter of each year presented by the average number of customer relationships served by our cable television systems for the same period.  RPS is calculated using these same revenues divided by the average number of video customers for the respective periods.  For purposes of this calculation, both revenue and average number of video customers exclude our Lightpath operations because Lightpath's third-party revenues are unrelated to our cable television system customers.
(f)
The sum of the customer data by service area may not equal the total amount presented due to rounding.
(g)
Amounts exclude customers that were located in the areas most severely impacted by Superstorm Sandy who we have been unable to contact and those whose billing we have decided to suspend temporarily during restoration of their homes.  These customers represent approximately 11 thousand customer relationships, 10 thousand video, 9 thousand high-speed data and 7 thousand voice.  Because of Superstorm Sandy, we suspended our normal collection efforts and non-pay disconnect policy.  As a result, the customer information in the table above includes delinquent customer accounts that exceed our normal disconnect timeline.  Of these delinquent accounts, we estimated the number of accounts that we believe will be disconnected in 2013 as our normal collection and disconnect procedures resume and our customer counts as of December 31, 2012 have been reduced accordingly (27 thousand customer relationships, 24 thousand video, 23 thousand high-speed data and 19 thousand voice).
 
 
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations

This Form 10-K contains statements that constitute forward looking information within the meaning of the Private Securities Litigation Reform Act of 1995.  In this Form 10-K there are statements concerning our future operating results and future financial performance.  Words such as "expects", "anticipates", "believes", "estimates", "may", "will", "should", "could", "potential", "continue", "intends", "plans" and similar words and terms used in the discussion of future operating results and future financial performance identify forward looking statements.  Investors are cautioned that such forward looking statements are not guarantees of future performance or results and involve risks and uncertainties and that actual results or developments may differ materially from the forward looking statements as a result of various factors.  Factors that may cause such differences to occur include, but are not limited to:
 
 
·
the level of our revenues;
 
·
competition for subscribers from existing competitors (such as telephone companies and direct broadcast satellite ("DBS") distributors) and new competitors (such as high-speed wireless providers) entering our franchise areas;
 
·
demand for our video, high-speed data and voice services, which are impacted by competition from other services and the other factors discussed herein;
 
·
industry conditions;
 
·
changes in the laws or regulations under which we operate;
 
·
the outcome of litigation and other proceedings, including the matters described under Item 3.  Legal Proceedings;
 
·
general economic conditions in the areas in which we operate;
 
·
the state of the market for debt securities and bank loans;
 
·
demand for advertising in our newspapers along with subscriber and single copy outlet sales demand for our newspapers;
 
·
the level of our capital expenditures;
 
·
the level of our expenses, including the cost of programming;
 
·
future acquisitions and dispositions of assets;
 
·
market demand for new services;
 
·
demand for advertising;
 
·
the tax-free treatment of the MSG Distribution and the AMC Networks Distribution (each as defined herein);
 
·
whether pending uncompleted transactions, if any, are completed on the terms and at the times set forth (if at all);
 
·
other risks and uncertainties inherent in the cable television and newspaper publishing businesses, and our other businesses;
 
·
financial community and rating agency perceptions of our business, operations, financial condition and the industries in which we operate; and
 
·
the factors described in our filings with the Securities and Exchange Commission, including under the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein.
 
We disclaim any obligation to update or revise the forward looking statements contained herein, except as otherwise required by applicable federal securities laws.
 
 
CABLEVISION SYSTEMS CORPORATION
 
All dollar amounts, except per customer, per unit, per share data, and tender prices per note, included in the following discussion under this Item 7, are presented in thousands.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Summary

Our future performance is dependent, to a large extent, on general economic conditions including capital and credit market conditions, the impact of direct competition, our ability to manage our businesses effectively, and our relative strength and leverage in the marketplace, both with suppliers and customers.

Capital and credit market disruptions often cause broader economic downturns, which may lead to lower demand for our products, such as cable television services, as well as lower levels of television and newspaper advertising, and increased incidence of customers' inability to pay for the services we provide.  We have experienced some of the effects of the recent economic downturn.  Events such as these may adversely impact our results of operations, cash flows and financial position.

On October 29, 2012, Superstorm Sandy made landfall in our New York metropolitan service area, resulting in widespread power outages and service disruptions for almost 60% of our customers in this service area, as well as damage to certain portions of our cable network.  See discussion below in "Business Segments Results - Telecommunications Services" for a summary of service outage credits, incremental costs and capital expenditures related to Superstorm Sandy.

On June 30, 2011, we distributed to our stockholders all of the outstanding common stock of  AMC Networks Inc., a company which consists principally of national programming networks, including AMC, WE tv, IFC and Sundance Channel, previously owned and operated by our Rainbow segment.

On February 9, 2010, we distributed to our stockholders all of the outstanding common stock of Madison Square Garden, a company which owns the sports, entertainment and media businesses previously owned and operated by our Madison Square Garden segment.

As a result of the AMC Networks Distribution and the MSG Distribution, we no longer consolidate the financial results of AMC Networks or Madison Square Garden for the purpose of our own financial reporting and the historical financial results of AMC Networks and Madison Square Garden have been reflected in our consolidated financial statements as discontinued operations for all periods presented through the AMC Networks Distribution date and the MSG Distribution date.

Telecommunications Services

Our Telecommunications Services segment, which accounted for 94% of our consolidated revenues, net of inter-segment eliminations, for the year ended December 31, 2012, derives revenues principally through monthly charges to subscribers of our video, high-speed data (often called "broadband" Internet access), and Voice over Internet Protocol ("VoIP") services and commercial data and voice services operations.  These monthly charges include fees for cable television programming, high-speed data and voice services, as well as equipment rental, digital video recorder ("DVR"), video-on-demand, pay-per-view, installation and home shopping commissions.  Revenue increases are derived from rate increases, increases in the number of subscribers to these services, including additional services sold to our existing subscribers, upgrades by video customers in the level of programming package to which they subscribe, and acquisition transactions that result in the addition of new subscribers.  Our ability to increase the number of subscribers to our services is significantly related to our penetration rates (the number of subscribers to our services as a percentage of serviceable passings, which represent the estimated number of single residence homes, apartment and condominium units and commercial establishments passed by the cable distribution network in areas serviceable without further extending the transmission lines, including our commercial data and voice customers).  As penetration rates increase, the number of available homes to which we can market our services generally decreases.  We also derive revenues from the sale of advertising time available on the programming carried on our cable television systems.  Programming costs are the most significant part of our operating expenses and are expected to continue to increase primarily as a result of contractual rate increases and additional service offerings.