10-K 1 cvc-12312014x10k.htm 10-K 12-31-14 CVC-12.31.2014-10K
 
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, 2014
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, 2014$3,648,276,512

Number of shares of common stock outstanding as of February 19, 2015:
 
 
Cablevision NY Group Class A Common Stock   -
220,077,601
 
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.
 
 
 
 
 
1A.
 
 
 
 
 
1B.
 
 
 
 
 
2.
 
 
 
 
 
3.
 
 
 
 
 
4.
 
 
 
 
Part II
 
 
 
 
5.
 
 
 
 
 
6.
 
 
 
 
 
7.
 
 
 
 
 
7A.
 
 
 
 
 
8.
 
 
 
 
 
9.
 
 
 
 
 
9A.
 
 
 
 
 
9B.
 
 
 
 
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.

*
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 $2.8 billion of senior notes which amount does not include approximately $611 million of its senior notes held by Newsday Holdings LLC ("Newsday Holdings"), its 97.2% owned subsidiary.  The $611 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, 2014, we served approximately 2.7 million video customers in and around the New York metropolitan area.  We believe that our cable systems (also referred to as our broadband network) in the New York metropolitan area comprise the largest metropolitan cluster of cable 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 broadband network.  Through Cablevision Lightpath, Inc. ("Lightpath"), our wholly-owned subsidiary, we provide Ethernet-based data, Internet, voice and video transport and managed services, to the business market in the New York metropolitan area.  In addition, through Newsday Holdings, we own approximately 97.2% of Newsday LLC ("Newsday") which operates a newspaper publishing business.  We also own a cable television advertising sales business and regional news programming services businesses.
We classify our operations into three reportable segments: (1) Cable, consisting principally of our video, high-speed data, and VoIP services; (2) Lightpath; and (3) Other, consisting principally of (i) Newsday, which includes the Newsday daily newspaper, amNew York, Star Community Publishing Group, and online websites, (ii) the News 12 Networks, which provide regional news programming services, (iii) Cablevision Media Sales Corporation ("Cablevision Media Sales"), a cable television advertising company, and (iv) certain other businesses and unallocated corporate costs.  Refer to Note 17 to our consolidated financial statements included in this Annual Report on Form 10-K for financial information about our segments.
On June 27, 2013, we completed the sale of substantially all of our Clearview Cinemas' theaters ("Clearview Cinemas") pursuant to an asset purchase agreement entered into in April 2013 (the "Clearview Sale").  On July 1, 2013, we completed the sale of our Bresnan Broadband Holdings, LLC subsidiary ("Bresnan Cable") pursuant to a purchase agreement entered into in February 2013 (the "Bresnan Sale").  For additional information concerning the Clearview Sale and the Bresnan Sale, see "Item 8.  Financial Statements and Supplementary Data".
Effective as of the closing dates of the Clearview Sale and the Bresnan Sale, the Company no longer consolidates the financial results of Clearview Cinemas and Bresnan Cable.  Accordingly, the historical financial results of Clearview Cinemas and Bresnan Cable have been reflected in the Company's consolidated financial statements as discontinued operations for all periods presented. 
Cable
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.
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



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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 segment 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, equipment charges and other fees.  We also provide high-speed data services using our 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 services to our residential and small business Optimum Online customers, marketed as "Optimum Voice". Our video, high-speed data and VoIP services accounted for 53%, 22% and 14%, respectively, of our consolidated revenues, net of inter-segment eliminations, for the year ended December 31, 2014. Certain services and equipment provided by substantially all of our cable systems are subject to regulation.  See "Regulation".
The following table sets forth certain statistical data regarding our video, high-speed data and VoIP operations as of the dates indicated:
 
As of December 31,
 
2014
 
2013
 
2012 (e)
 
(in thousands, except per customer amounts)
 
 
 
 
 
 
Total customers (a)
3,118

 
3,188

 
3,230

Video customers (b)
2,681

 
2,813

 
2,893

High-speed data customers
2,760

 
2,780

 
2,763

Voice customers
2,229

 
2,272

 
2,264

 


 


 


Serviceable passings (c)
5,046

 
5,034

 
4,979

 


 


 


Penetration:
 

 
 

 
 

Total customers to serviceable passings
61.8
%
 
63.3
%
 
64.9
%
Video customers to serviceable passings
53.1
%
 
55.9
%
 
58.1
%
High-speed data customers to serviceable passings
54.7
%
 
55.2
%
 
55.5
%
Voice customers to serviceable passings
44.2
%
 
45.1
%
 
45.5
%
 


 


 


Average Monthly Revenue per Customer ("RPC") (d)
$
155.20

 
$
147.34

 
$
137.51

 
(a)
Represents number of households/businesses that receive at least one of the Company's services.
(b)
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 (e) 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.
(c)
Represents the estimated number of single residence homes, apartment and condominium units passed by the cable distribution network in areas serviceable without further extending the transmission lines. In addition, it includes commercial establishments that have connected to our cable distribution network.
(d)
RPC is calculated by dividing the average monthly U.S. generally accepted accounting principles ("GAAP") revenues for the Cable segment for the fourth quarter of each year presented by the average number of total customers served by our cable systems for the same period. 
(e)
Amounts exclude customers that were located in the areas most severely impacted by Superstorm Sandy who we were unable to contact and those whose billing we decided to suspend temporarily during restoration of their homes.  These



2


customers represent approximately 11 thousand total, 10 thousand video, 9 thousand high-speed data and 7 thousand voice customers.  Because of Superstorm Sandy, we suspended our normal collection efforts and non-pay disconnect policy during the fourth quarter of 2012.  As a result, the customer information in the table above includes delinquent customer accounts that exceeded our normal disconnect timeline.  Of these delinquent accounts, we estimated the number of accounts that we believed would be disconnected in 2013 as our normal collection and disconnect procedures resumed and our customer counts as of December 31, 2012 were reduced accordingly (27 thousand total, 24 thousand video, 23 thousand high-speed data and 19 thousand voice customers).
Subscriber Services
Video Services
Our cable 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.
All of our cable 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, Fox News Channel, CNBC, TLC, ESPN, AMC, the Disney Channel, and regional sports networks such as MSG Network.  For additional charges, our cable systems provide premium services such as HBO, Showtime, Cinemax, Starz, Encore and The Movie Channel, which may be purchased either individually or in tiers.
Our digital video programming services currently offered to subscribers, branded "Optimum" TV, include:
Up to 610 standard definition and high definition ("HD") entertainment channels,
90 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,
50 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 a sports and entertainment package with over 40 channels,
Up to 108 international channels from around the world,
Up to 169 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 (not available in Litchfield, Connecticut), Newsday TV (Long Island only), Newsday Cars and Newsday Homes, MSG Interactive, MSG Varsity Interactive and Tag Games.
Mobile access to content from 149 networks, including News 12, HBO, Starz ESPN, The NFL Network and The Disney Channel, via the Internet and phone/tablet app experiences,
Multi-Room DVR, a remote-storage digital video recorder ("DVR") providing subscribers the ability to record 15 shows simultaneously while watching any live or pre-recorded show. Recordings can be played back on 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.
The Optimum App, available for the iPad, iPhone, iPod touch, laptop, Kindle Fire and select Android phones and tablets, extends the Optimum television experience to these devices. App features, depending on the platform, include the ability to watch live TV, stream on-demand titles and use the device as a remote to control the customer's digital set top box while inside the home.  The App also allows customers 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.  Offerings include various levels of programming including premium channels, news, sports, children's programming, general entertainment, international channels and digital music at various price points. 
Since our cable systems have 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.



3


Optimum Online
Optimum Online is our high-speed data offering, which connects customers to the Internet using the same network that delivers our video service.
Our current Internet speed tiers deliver up to: (i) 5 megabits per second ("Mbps") downstream and 1Mbps upstream for our Optimum Online Internet Basics level of service (currently available in certain portions of our service area), (ii) 15Mbps downstream and 5Mbps upstream for our Optimum Online level of service, (iii) 50Mbps downstream and 25Mbps upstream for our Optimum Online Ultra 50 level of service, (iv) 75Mbps downstream and 35Mbps upstream for our Optimum Online Ultra 75 level of service, and (v) 101Mbps downstream and 35Mbps upstream for our Optimum Online Ultra 101 level of service.
Optimum Online and Internet Basics are available on an à la carte basis. Customers can upgrade to Optimum Online Ultra 50, Optimum Online Ultra 75 or Optimum Online Ultra 101 for an additional charge per month.  Business customers can add Static IP (permanently assigned IP addresses) as well. Discount and promotional pricing are available when Optimum Online is combined with our other service offerings.
Optimum Online service includes access to complimentary features such as a free to use wireless "smart router", as well as Internet security software, including anti-virus, anti-spyware, personal firewall, and anti-spam protection.  Our Optimum Online Ultra 50, Optimum Online Ultra 75 and Optimum Online Ultra 101 levels also include web hosting and other features.
We have deployed a broadband wireless network ("WiFi") across our service area.  The WiFi network allows Optimum Online customers to access the service while they are away from their home or office.  WiFi is delivered via wireless access points mounted on our broadband network, in certain retail partner locations, certain NJ Transit rail stations, New York City parks and special venues, such as MacArthur Airport and Nassau Coliseum.  Similarly, our WiFi network is available in customer homes via a second network included with our "smart router" product. WiFi has been activated across our entire service area, and has over 1 million available hotspots throughout our service area, including our "smart router" product. WiFi is offered as a free value added benefit to Optimum Online customers and for a fee to non-customers in certain locations. Our WiFi service also allows our Optimum Online customers to access the WiFi networks of Comcast Corporation ("Comcast"), Time Warner Cable Inc., Bright House Networks, LLC and Cox Communications, Inc.
We recently launched Freewheel, a new all-WiFi phone service providing unlimited data, talk and text. The service works anywhere in the world where WiFi is accessible, and operates only when the device is connected to a WiFi signal. Freewheel customers have automatic access to the Optimum WiFi network. The service costs $29.95 per month or $9.95 per month for Optimum Online customers.  The service comes with no annual contract. Freewheel is available exclusively on the Motorola Moto G device, which is being offered for purchase at a price of $99.95.
Optimum Voice
Optimum Voice is a VoIP service available 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 are 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.  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 offers 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.  Optional add on services, such as international calling, toll free calling and virtual receptionists, are also available for business customers.
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.



4


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.  We also offer promotional and other pricing discounts as part of our competitive and retention strategies.
Eligible residential subscribers to all three of our services are entitled to "Optimum Rewards", which provide subscribers with exclusive discounts and offers for shopping, dining, and other benefits.  Additionally, a triple multi-product monthly discount is available to eligible residential customers not already on certain promotional or discounted pricing plans.
System Capacity
Our cable plant network uses state of the art hybrid fiber/coax architecture with an average of 300 homes per fiber node. The network is a two-way interactive system with a minimum of 750 MHz offering HD digital channels, high-speed data and voice services.
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, on the number of customers 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, and Connecticut 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, 2014, our ten largest franchise areas comprised approximately 57% of our total video customers and of those, two franchises, Newark, New Jersey and the Town of Hempstead, New York, comprising an aggregate of approximately 136,000 video customers, were expired.  The Newark, New Jersey franchise agreement was renewed in January 2015. We are currently lawfully operating in the Town of Hempstead, New York franchise area under temporary authority recognized by the State of New York. 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.



5


Lightpath
Lightpath is a regional provider to businesses of fiber based telecommunications, including Ethernet, data transport, Internet protocol ("IP") based virtual private networks, Internet access, voice services, including session initiation protocol ("SIP") trunking, and VoIP services. Lightpath also provides managed information technology services to businesses, including hosted voice services (cloud based SIP-based private branch exchange ("IP-PBX")), managed WiFi, managed desktop and server backup, and managed collaboration services including audio and web conferencing. Lightpath's customers include, among others, companies in health care, financial, education, legal and professional services, and other industries, as well as the public sector and telecommunication providers (wireless telecommunication companies, incumbent local exchange carriers ("ILEC"), and competitive local exchange carriers ("CLEC")).
As of December 31, 2014, Lightpath had over 7,300 buildings connected to its fiber network. Lightpath has built an advanced fiber optic network extending more than 6,100 route miles, which includes approximately 317,000 miles of fiber, throughout the New York metropolitan area. 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 the renewal process with New York City is 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.  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 weekly shopper publication, 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.
Cablevision Media Sales
Cablevision Media Sales is a cable television advertising company that derives its revenues primarily from the sale of local and regional commercial advertising time on cable television networks in the New York metropolitan area, which 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 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.
Bresnan Cable
On July 1, 2013, the Company completed the sale of Bresnan Cable for a purchase price of $1.625 billion, receiving net cash of approximately $675 million, which reflects certain adjustments, including an approximate $962 million reduction for certain funded indebtedness of Bresnan Cable, and transaction costs.  Bresnan Cable includes cable systems in Montana, Wyoming, Colorado and Utah, previously included in the Company's Cable segment.  The Company recorded a pre-tax gain of approximately $408 million for the year ended December 31, 2013 relating to the Bresnan Sale. During 2014, the Company recorded an additional



6


pre-tax gain of approximately $5.8 million relating primarily to the settlement of a contingency related to Montana property taxes associated with Bresnan Cable.
Clearview Cinemas
On June 27, 2013, the Company completed the sale of substantially all of its Clearview Cinemas' theaters pursuant to the asset purchase agreement entered into in April 2013.  The Company recognized a pretax loss in connection with the Clearview Sale of approximately $19.3 million.
Competition
Cable
Our cable systems operate in an intensely competitive environment, competing with a variety of video, data and voice providers and delivery systems, including telephone companies, wireless data and voice providers, satellite-delivered video signals, Internet-delivered video content, and broadcast television signals available to homes within our market by over-the-air reception.
Telephone Companies.  We face competition from two telephone companies.  Verizon Communications, Inc. ("Verizon") and Frontier Communications Corp. ("Frontier") (who recently acquired AT&T Inc.'s ("AT&T") Connecticut operation) offer video programming in addition to their high-speed data and VoIP services to residential and business customers in our service area.  The attractive demographics of our service territory make this region a desirable location for investment in distribution technologies by these companies. 
We face intense competition from Verizon who has constructed a fiber to the home network plant that passes a significant number of households in our service area.  Verizon does not publicly report the extent of their build-out or penetration by area. Our estimate of Verizon's build out and sales activity in our service area is difficult to assess because it is based upon visual inspections and other limited estimating techniques, and therefore serves only as an approximation.  We estimate that Verizon is currently able to sell a fiber-based video service, as well as high-speed data and VoIP services, to at least half of the households in our service area.  In certain other portions of our service area, Verizon has also built its fiber network where we believe it is not currently able to sell its fiber-based video service, but is able to sell its high-speed data and VoIP services.  In these areas (as well as other parts of our service area) Verizon markets direct broadcast satellite ("DBS") services along with its high-speed data and VoIP services. Verizon’s fiber network also passes areas where we believe it is not currently able to sell its video, high-speed data or VoIP services. Accordingly, Verizon may increase the number of customers in our service area to whom it is able to sell video, high speed data and VoIP services in the future.
Frontier offers video service, as well as high-speed data and VoIP services, in competition with us in most of our Connecticut service area.  Frontier also markets DBS services in this service area. Verizon and Frontier have made and may continue to make promotional offers at prices lower than ours. Verizon has significantly greater financial resources than we do.
This competition affects our ability to add or retain customers and creates pressure upon the pricing of our services. Competition, particularly from Verizon, has negatively impacted our revenues and caused subscriber declines in our service areas. To the extent Verizon and Frontier continue to offer competitive and promotional packages, our ability to maintain or increase our existing customers and revenue will continue to be negatively impacted. See "Regulation" for a discussion of regulatory and legislative issues.
DBS.  We also face competition from DBS service providers in our service area.  The two major DBS services, DISH Network and DIRECTV, are available to the vast majority of our customers.  These companies each offer video programming that is substantially similar to the video service 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.  Each of these competitors has significantly greater financial resources than we do.  See "Regulation" for a discussion of regulatory and legislative issues. DBS providers have tested the use of certain spectrum to offer satellite-based high-speed data services.
We compete in our service areas with DISH Network and DIRECTV by "bundling" our service offerings with products that these companies cannot efficiently provide at this time, such as high-speed data, voice service and interactive services carried over the cable distribution plant.
Other Competitors and Video Programming Sources.  Another source of competition for our Cable segment is the delivery of video content over the Internet directly to subscribers.  This competition comes from a number of different sources, including companies that deliver movies, television shows and other video programming over broadband Internet connections, such as Netflix, Google



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Inc.'s "YouTube" and Amazon.com, Inc.'s "Instant Video".  Recently, Verizon announced a mobile video delivery service and DISH Network introduced a product offering Internet delivery of a number of cable networks. Increasingly, content owners are utilizing Internet-based delivery of content directly to consumers, some without charging a fee for access to the content. Furthermore, due to consumer electronics innovations, consumers are able to watch such Internet-delivered content on television sets and mobile devices.  The availability of these services has and will continue to adversely affect customer demand for our video services, including premium and on-demand services.  Our video service also faces 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.  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 video service offering less profitable or even obsolete.
Internet access services are also offered by providers of wireless services, including traditional cellular phone carriers and others focused solely on wireless data services.  The Federal Communications Commission ("FCC") is likely to continue to make additional radio spectrum available for these wireless Internet access services.
Our VoIP service also faces 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
Lightpath operates as a CLEC in a highly competitive business telecommunications market and competes against the very largest telecommunications companies - including ILECs, other CLECs, and long distance voice service companies.  More specifically, Lightpath faces substantial competition from Verizon, AT&T and Frontier which are the dominant providers of local telephone and broadband services in their respective service areas.  ILECs have significant advantages over Lightpath, including greater capital resources, an existing fully operational local network, and long standing relationships with customers.
While Lightpath competes with the ILECs, it also enters into interconnection agreements with ILECs so that its 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 facilities and services necessary for connection, at prices subject to regulation.  The specific price, terms and conditions of each agreement, however, depend on the outcome of negotiations between Lightpath and each ILEC.  Interconnection agreements are also subject to approval by the state regulatory commissions, which may arbitrate negotiation impasses.  Lightpath has entered into interconnection agreements with Verizon for New York, New Jersey, and portions of Connecticut, and with Frontier for portions of Connecticut, which have been approved by the respective state commissions.  Lightpath also has entered into interconnection agreements with other ILECs in New York and New Jersey.  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 also faces competition from one or more competitive access providers and other new entrants in the local telecommunications and data marketplace.  In addition to ILECs and other CLECs, potential competitors capable of offering voice or broadband services include electric utilities, long distance carriers, microwave carriers, wireless system operators (operating both mobile and fixed networks), 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.
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, including other newspapers that reach a similar audience, 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.
The newspaper industry generally has experienced significant declines in circulation and readership levels continue to be adversely affected by competition from new media news formats and less reliance on newspapers by some consumers.  Readership and circulation levels, as well as economic conditions and the existence of other advertising outlets, impact the demand for and level of advertising.  These factors will continue to negatively impact Newsday’s revenues.



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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 and other statutes.  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 applicants that seek to compete with us.  The states in which we operate, New York, New Jersey and Connecticut, have enacted comprehensive cable and video service regulation statutes that are applicable to cable operators and other providers of video service, such as Verizon and Frontier.  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.  The Federal Cable Act 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 our cable 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, upon request and 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 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, Congress enacted some minor reforms to the retransmission consent scheme that restrict broadcasters from employing specific negotiation techniques. Congress also directed the FCC to reexamine its standards for determining whether a party is negotiating in good faith as required by the rules. The FCC also has an ongoing 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



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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 currently 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 rule requiring cable operators to separate security from non-security functions in digital set-top boxes that they lease to their subscribers was recently repealed by Congress. The repeal will go into effect on December 4, 2015, after which time cable operators will be allowed to provide navigation devices in which the security functions and other functions are fully integrated to subscribers that elect to lease such boxes. Congress has also directed the FCC to establish a Working Group to identify and recommend voluntary standards for a uniform downloadable security system that promote the competitive availability of retail 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.  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.  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 are unfair and 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 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 sought formal comment on proposals for 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.
Exclusive Access to Multitenant Buildings.  The FCC has prohibited cable operators from entering into or enforcing exclusive 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.



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Privacy and Data Security.    In the course of providing service, we collect certain information about our subscribers and their use of our services.  We also collect certain information regarding potential subscribers and other individuals.  Our collection, use, disclosure and other handling of information 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.  We are subject to data security obligations, as well as requirements to provide notice to individuals and governmental entities in the event of certain data security breaches, and such breaches, depending on their scope and consequences, may lead to litigation and enforcement actions or adversely affect our brand.  As cable operators provide interactive and other advanced services, additional privacy and data security requirements may arise either through legislation or judicial decisions. For example, the Video Privacy Protection Act has been extended to cover online interactive services through which customers can buy or rent movies.  In addition, Congress, the Federal Trade Commission, and other lawmakers and regulators are all considering whether to adopt additional measures that would impact the collection, use, and disclosure of subscriber information in connection with the delivery of advertising to consumers that is customized to their interests.  These include measures focused on the privacy implications of Internet-based advertising and other uses of data from online users.
Federal Copyright Regulation.  We are required to pay copyright royalty fees on a semi-annual basis to receive a statutory compulsory license to carry broadcast television signals.  The amount of these fees are determined by a statutory formula that takes into account various factors, including the amount of “gross receipts” received from subscribers for “basic” service, the number of “distant” broadcast signals carried, and the characteristics of those distant signals (e.g., network or independent or noncommercial).   Certain elements of the royalty formula are subject to adjustment from time to time, which can lead to increases in the amount of our semi-annual royalty payments.  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. In December 2014, the Copyright Office passed rules that would, for the first time, allow content owners to audit the copyright Statements of Account of cable providers.
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, and will shortly be required to ensure aural accessibility of emergency information, and accessibility of navigation devices.
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 until October 2015, unless the FCC extends it.  All of our systems 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, 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 access services) have traditionally been classified by the FCC as "information services" for regulatory purposes, a type of service that traditionally was subjected to a lesser degree of regulation than "telecommunications services."  Some parties, including the President of the United States, have asked the FCC to reverse this determination and classify broadband Internet access services as "telecommunications services," and the FCC reportedly plans to do so in February 2015.  If the FCC classifies broadband Internet access services as telecommunications services, our high-speed data service could be subject to substantially greater regulation, although the FCC has indicated it may not apply all telecommunications service obligations to broadband.
Access Obligations and "Net Neutrality".  In December 2010, the FCC adopted a net neutrality framework applicable to broadband Internet access service. In January 2014, portions of these rules were struck down in federal court. The FCC has been conducting a proceeding to promulgate new net neutrality rules that comport with the court's ruling, and those new rules are expected to be



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issued in February 2015.  The FCC has announced that those rules will prohibit providers of broadband Internet access service from blocking lawful content, applications, services, or nonharmful devices, subject to reasonable network management as defined by the rules; from impairing or degrading lawful Internet traffic on the basis of content, applications, services, or non-harmful devices; from favoring some lawful Internet traffic over other lawful traffic in exchange for consideration; and from prioritizing content and services of their affiliates.  The new rules will also create a general Open Internet conduct standard that broadband Internet access providers cannot harm consumers or edge providers, and will impose greater transparency requirements.
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 entities 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.  In addition, our provision of Internet services also subjects us to the limitations on use and disclosure of user communications and records contained in the Electronic Communications Privacy Act.  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 other lawmakers and regulators are all considering whether to adopt additional 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, and privacy and data security laws.  Online content we provide is also subject to some of 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 and data security obligations, cyber security requirements; 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 universal service fund ("USF") used to subsidize voice services provided to low income households, and voice and broadband services to rural and high cost areas, and other communications services provided to schools, libraries, and rural health care providers.  The amount of universal service contribution required of interconnected VoIP service providers is based on a percentage of revenues earned from interstate and international services provided to end users.  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.  States in which we operate have not imposed universal service fund contributions for VoIP providers.  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. That order was upheld by the U.S. Court of Appeals for the 10th Circuit, though certain parties have requested a writ of certiorari for parts of the 10th Circuit order to the U.S. Supreme Court.
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



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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 whether all current numbering requirements should be extended to interconnected VoIP services. 
Intercarrier Compensation.  In an October 2011 reform order and subsequent clarifying orders, the FCC revised the regime governing payments among providers of voice services for the exchange of calls between and among different networks ("intercarrier compensation") to, among other things, include interconnected VoIP.  The FCC addressed compensation applicable to traffic terminating on carriers' networks, clarifying that prospectively, VoIP traffic exchanged with a carrier in TDM format must be compensated at applicable TDM terminating interstate rates 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 was upheld on appeal to 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 and other privacy and data security requirements; comply with disabilities access requirements and service discontinuance obligations; comply with call signaling requirements; and comply with CALEA standards.  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 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
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 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 is entitled, in some cases, to compensation from carriers when they terminate their originating calls on Lightpath's network and in other cases are required to compensate another carrier for utilizing that carrier's network to terminate traffic that originates on Lightpath’s network.  The FCC and state regulatory commissions, including those in the states in which we operate, have adopted limits on the amounts of compensation that may be charged for certain types of traffic.  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 is required to contribute to the federal USF.  Currently, the FCC assesses USF contributions from Lightpath and other telecommunications carriers on the basis of a percentage of interstate and international revenue they receive from end-user customers.  The FCC limits the amount carriers may place on universal service line items on their customer bills.  Lightpath is also 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.  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 is subject to other FCC requirements in connection with the services it provides, including protecting customer proprietary network information from unauthorized disclosure to third parties; meeting certain notice requirements in



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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, as well as additional privacy and data security requirements.
State Regulation.  Lightpath is subject to regulation by state commissions in each state in which it provides service.  In order to provide service, Lightpath must seek approval from the state regulatory commission or be registered to provide service in each state in which it operates and may at times require local approval to construct facilities.  Lightpath is currently authorized and provides service in New York, Connecticut and New Jersey.  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 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.
Employees and Labor Relations
As of December 31, 2014, we had 13,656 full-time, 755 part-time and 557 temporary employees of which 486, 519 and 54, respectively, were covered under collective bargaining agreements.  We believe that our relations with employees are satisfactory.
In February 2015, the Company and the Communication Workers of America entered into a collective bargaining agreement which covers approximately 262 of the Company's workforce, primarily technicians in Brooklyn, New York.
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 continue to be harmed by the significant and credible risks of competition in our Cable and Lightpath segments.
Competition has adversely affected our business and financial results and may continue to do so.  The effects of 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.
Our cable systems operate in an intensely competitive environment, competing with a variety of video, data and voice providers and delivery systems, including telephone companies, wireless data and voice providers, satellite-delivered video signals, Internet-delivered video content, and broadcast television signals available to homes within our market by over-the-air reception.
We face competition from two telephone companies, Verizon and Frontier, who offer video programming in addition to high-speed data and VoIP services to residential and business customers in our service area.  The attractive demographics of our service territory make this region a desirable location for investment in distribution technologies by these companies. 



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We face intense competition from Verizon who has constructed a fiber to the home network plant that passes a significant number of households in our service area.  Verizon does not publicly report the extent of their build-out or penetration by area. Our estimate of Verizon's build out and sales activity in our service area is difficult to assess because it is based upon visual inspections and other limited estimating techniques, and therefore serves only as an approximation.  We estimate that Verizon is currently able to sell a fiber-based video service, as well as high-speed data and VoIP services, to at least half of the households in our service area.  In certain other portions of our service area, Verizon has also built its fiber network where we believe it is not currently able to sell its fiber-based video service, but is able to sell its high-speed data and VoIP services.  In these areas (as well as other parts of our service area) Verizon markets DBS services along with its high-speed data and VoIP services. Verizon’s fiber network also passes areas where we believe it is not currently able to sell its video, high-speed data or VoIP services. Accordingly, Verizon may increase the number of customers in our service area to whom it is able to sell video, high speed data and VoIP services in the future.
Frontier offers video service, as well as high-speed data and VoIP services, in competition with us in most of our Connecticut service area.  Frontier also markets DBS services in this service area. Verizon and Frontier have made and may continue to make promotional offers at prices lower than ours. Verizon has significantly greater financial resources than we do.
This competition affects our ability to add or retain customers and creates pressure upon the pricing of our services. Competition, particularly from Verizon, has negatively impacted our revenues and caused subscriber declines in our service areas. To the extent Verizon and Frontier continue to offer competitive and promotional packages, our ability to maintain or increase our existing customers and revenue will continue to be negatively impacted. Verizon also has its own cellular phone facilities and may expand its bundled product offerings to include cellular phone services which could compete with our new Freewheel all-WiFi phone service and could adversely affect our competitive position. See "Regulation" for a discussion of regulatory and legislative issues.
We also compete in our service area 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.  These companies each offer video programming that is substantially similar to the video service 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.  Each of these competitors has significantly greater financial resources than we do.  DBS providers have tested the use of certain spectrum to offer satellite-based high-speed data services.
Another source of competition for our Cable segment is the delivery of video content over the Internet directly to subscribers.  This competition comes from a number of different sources, including companies that deliver movies, television shows and other video programming over broadband Internet connections, such as Netflix, Google Inc.'s "YouTube" and Amazon.com, Inc.'s "Instant Video".  Recently, Verizon announced a mobile video delivery service and DISH Network introduced a product offering Internet delivery of a number of cable networks. Increasingly, content owners are utilizing Internet-based delivery of content directly to consumers, some without charging a fee for access to the content. Furthermore, due to consumer electronics innovations, consumers are able to watch such Internet-delivered content on television and mobile devices.  The availability of these services has and will continue to adversely affect customer demand for our video services, including premium and on-demand services.  Our video service also faces 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, and OVS operators.  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 video service offering less profitable or even obsolete.
Internet access services are also offered by providers of wireless services, including traditional cellular phone carriers and others focused solely on wireless data services.  The FCC is likely to continue to make additional radio spectrum available for these wireless Internet access services.
Our VoIP service also faces 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 also competes with Verizon, AT&T and Frontier and other CLECs and long distance companies. Verizon has significant advantages over Lightpath, 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 may be negatively impacted.
See a further discussion regarding competition in "Item 1.  Business - Competition".



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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 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 segment 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 segment 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 broadcast network or 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 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.
Market disruptions in the past were accompanied by a broader economic downturn, which led to lower demand for our products, such as video services, as well as lower levels of television and newspaper advertising, and increased incidence of customers' inability to pay for the services we provide.  A recurrence 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 facility.
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



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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 facility 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, upgrade our cable plant and acquire other cable systems, sources of programming and other businesses.  We have also incurred substantial indebtedness in order to offer 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 (substantially all of whose assets were sold in 2013), 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, which was sold in 2013.  We may continue to incur substantial amounts of debt in the future.  At December 31, 2014, our total aggregate indebtedness was approximately $9.7 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.



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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 systems and other businesses.  Cablevision's ability to pay interest and principal on 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.  In addition, Newsday 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 systems requires significant amounts of cash payments to third parties.  Capital expenditures were $891.7 million, $951.7 million and $991.6 million, in 2014, 2013 and 2012, respectively, and primarily include payments for customer premise equipment, such as new digital video cable boxes and modems, as well as infrastructure and capital expenditures related to our cable and Lightpath 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. For example, we have deployed WiFi access points throughout our footprint. 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:
eliminate or reduce the quarterly dividend and/or share repurchase program;
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 recur.  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



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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 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 businesses.  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.  For example, new requirements giving third parties access to our network or other assets, limits on how we offer broadband service or the rates we charge for it, or new regulations that confer asymmetrical benefits on online video distributors 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, 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 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, 2014, our ten largest franchise areas comprised approximately 57% of our total video customers and of those, two franchises, Newark, New Jersey, and the Town of Hempstead, New York, comprising an aggregate of approximately 136,000 video customers, were expired.  The Newark, New Jersey franchise agreement was renewed in January 2015. We are currently lawfully operating in the Town of Hempstead, New York franchise area under temporary authority recognized by the State of New York.
We rely on network and information systems for our operations, and a disruption or failure of those systems may disrupt our operations.
Network and information systems are essential to our ability to deliver our services to our customers. We have in place multiple 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.  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 and our results of operations could suffer.
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.



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If we experience a significant data security breach or fail to detect and appropriately respond to a significant data security breach, our results of operations and reputation could suffer.
The nature of our business involves the receipt and storage of information about our customers and employees.  We have procedures in place to detect and respond to data security incidents.  However, because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect for long periods of time, we may be unable to anticipate these techniques or implement adequate preventive measures.  In addition, hardware, software or applications we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security.  Unauthorized parties may also attempt to gain access to our systems or facilities.  If our efforts to protect the security of information about our customers and employees are unsuccessful, a significant data security breach may result in costly government enforcement actions, private litigation, and negative publicity resulting in reputation or brand damage with customers, and our results of operations could suffer.
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, 2014, 486 of our full-time employees were covered by collective bargaining agreements.  In February 2015, the Company and the Communication Workers of America ("CWA") entered into a collective bargaining agreement which covers approximately 262 of our workforce, primarily technicians in Brooklyn, New York.  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 $37.7 million, $71.1 million, and $47.0 million for the years ended December 31, 2014, 2013, and 2012, respectively, which included impairments of intangible assets of $5.8 million, $37.5 million, and $13.0 million in 2014, 2013 and 2012, respectively.  Operating losses are expected to continue in the future.  As of December 31, 2014, Newsday had a credit facility outstanding which consisted of a $480 million floating rate term loan guaranteed by CSC Holdings.  In addition, at December 31, 2014, Newsday Holdings held approximately $611 million aggregate principal amount of senior notes issued by Cablevision.  Newsday 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, including other newspapers that reach a similar audience, 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.
The newspaper industry generally has 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.  Newsday has experienced similar advertising revenue declines. 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, 2014, we reported approximately $6.8 billion of consolidated total assets, of which approximately $1.0 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



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operating business.  We urge you to read carefully our consolidated financial statements contained herein, which provide more detailed information about these intangible assets.
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 (whereby 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) and the AMC Networks Distribution (whereby Cablevision distributed to its stockholders all of the outstanding common stock of AMC Networks, a company which consisted principally of national programming networks, including AMC, WE tv, IFC and Sundance Channel, previously owned and operated by the Company's Rainbow segment) 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.
We 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 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 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 Chief Executive Officer, James L. Dolan, also serves as the Executive Chairman of Madison Square Garden.  This arrangement is similar to the historical situation whereby Mr. Dolan had served as a senior officer of Madison Square Garden and Charles F. Dolan provided senior leadership to our Rainbow segment.  In February 2015, our Vice Chairman and Chief Financial Officer, Gregg G. Seibert, was appointed as Vice Chairman of both Madison Square Garden and AMC Networks. As a result, three senior executives of the Company are not devoting their full time and attention to the Company's affairs.  In addition, six 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 executives 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



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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 19, 2015, 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, approximately 2% of Cablevision's outstanding Class A common stock and approximately 72% 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 42% 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 stockholders’ agreement pursuant to which, among other things, the voting power of the Class B stockholders will be cast as a block with respect to all matters to be voted on by the Class B stockholders.  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 stockholders’ 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.



22


Item 2.        Properties
We own our headquarters building located in Bethpage, New York with approximately 558,000 square feet of space. We also own 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, as well as other properties, aggregating approximately 2,480,000 square feet of space primarily in New York, New Jersey and Connecticut.
We also lease business offices in Jericho, New York with approximately 621,000 square feet of space.  Of this amount, we currently sublease approximately 295,000 square feet of space to third party tenants and approximately 16,000 square feet of space is currently vacant. 
In addition, Newsday leases properties aggregating approximately 707,000 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 operations, including our headend equipment (towers, antennae, electronic equipment and satellite earth stations), cable system plant (distribution equipment, amplifiers, subscriber drops and hardware), converters, test equipment, program production equipment, tools and maintenance equipment.  We also generally own our service and other vehicles.
We believe our properties are adequate for our use.
Item 3.        Legal Proceedings
Refer to Note 16 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, 2014:
 
 
 
First Quarter
$
18.28

 
$
15.69

Second Quarter
17.79

 
15.92

Third Quarter
20.42

 
17.41

Fourth Quarter
21.97

 
16.94

 
High
 
Low
Year Ended December 31, 2013:
 
 
 
First Quarter
$
15.96

 
$
13.62

Second Quarter
17.01

 
13.88

Third Quarter
20.16

 
16.71

Fourth Quarter
18.05

 
14.65

As of February 19, 2015, there were 1,087 holders of record of CNYG Class A common stock.



23


There is no public trading market for the CNYG Class B common stock, par value $.01 per share.  As of February 19, 2015, there were 23 holders of record of CNYG Class B common stock.
All membership interests in CSC Holdings are held by Cablevision.
Stockholder Dividends and Distributions
Cablevision
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
November 5, 2014
 
$
0.15

 
November 21, 2014
 
December 12, 2014
July 29, 2014
 
$
0.15

 
August 15, 2014
 
September 5, 2014
May 6, 2014
 
$
0.15

 
May 23, 2014
 
June 13, 2014
February 25, 2014
 
$
0.15

 
March 14, 2014
 
April 3, 2014
 
 
 
 
 
 
 
November 6, 2013
 
$
0.15

 
November 22, 2013
 
December 13, 2013
July 30, 2013
 
$
0.15

 
August 15, 2013
 
September 5, 2013
May 7, 2013
 
$
0.15

 
May 24, 2013
 
June 14, 2013
February 26, 2013
 
$
0.15

 
March 15, 2013
 
April 3, 2013
Cablevision paid dividends aggregating $160.5 million and $159.7 million in 2014 and 2013, respectively, primarily from the proceeds of equity distribution payments from CSC Holdings.  In addition, as of December 31, 2014, up to approximately $8.3 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, 2014 and 2013, CSC Holdings made equity distribution cash payments to Cablevision, its sole member, aggregating approximately $396.4 million and $501.2 million, respectively.  These distribution payments were funded from cash on hand.  The proceeds were used to fund:
Cablevision's dividends paid;
Cablevision's interest on its senior notes;
Cablevision's repurchases of certain outstanding senior notes; and
Cablevision's payments for the acquisition of treasury shares related to statutory minimum tax withholding obligations upon the vesting of certain restricted shares.
CSC Holdings may make distributions on its membership interests only if sufficient funds exist as determined under Delaware law.
CSC Holdings' indentures and the CSC Holdings credit agreement restrict the amount of dividends and distributions in respect of any equity interest that can be made.
Equity Compensation Plan Information
The Equity Compensation Plan information under which Cablevision's equity securities are authorized for issuance required under Item 5 is hereby incorporated by reference from Cablevision's definitive proxy statement for its Annual Meeting of Stockholders or, if such definitive proxy statement is not filed with the Securities and Exchange Commission prior to 120 days after the close of its fiscal year, an amendment to this Annual Report on Form 10-K filed under cover of Form 10-K/A.



24


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, 2009 through December 31, 2014.  As required by the SEC, the values shown assume the reinvestment of all dividends and also reflect the effect of the AMC Networks 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 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 2014:  Comcast Corporation, Mediacom Communications Corporation (until March 4, 2011 when Mediacom stock ceased trading), Time Warner Cable Inc., and Charter Communications.  The chart assumes $100 was invested on December 31, 2009 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
.
 
Dec 2009
 
Dec 2010
 
Dec 2011
 
Dec 2012
 
Dec 2013
 
Dec 2014
CNYG CLASS A
$100
 
$162
 
$100
 
$109
 
$136
 
$162
S&P 500 INDEX
$100
 
$115
 
$117
 
$136
 
$180
 
$205
PEER GROUP
$100
 
$140
 
$151
 
$239
 
$345
 
$395



25


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,
 
2014
 
2013
 
2012 (a)
 
2011
 
2010
 
(Dollars in thousands)
Revenues, net
$
6,460,946

 
$
6,232,152

 
$
6,131,675

 
$
6,162,608

 
$
6,087,864

Operating expenses:
 

 
 

 
 

 
 

 
 

Technical and operating (excluding depreciation, amortization and impairments shown below)
3,136,808

 
3,079,226

 
3,001,577

 
2,653,978

 
2,563,575

Selling, general and administrative
1,533,898

 
1,521,005

 
1,454,045

 
1,398,061

 
1,421,737

Restructuring expense (credits)
2,480

 
23,550

 
(770
)
 
6,311

 
(58
)
Depreciation and amortization (including impairments)
866,502

 
909,147

 
907,775

 
846,533

 
874,334

Operating income
921,258

 
699,224

 
769,048

 
1,257,725

 
1,228,276

Other income (expense):
 

 
 

 
 

 
 

 
 

Interest expense, net
(575,580
)
 
(600,637
)
 
(660,074
)
 
(685,967
)
 
(704,162
)
Gain on sale of affiliate interests

 

 
716

 
683

 
2,051

Gain on investments, net
129,659

 
313,167

 
294,235

 
37,384

 
109,813

Gain (loss) on equity derivative contracts, net
(45,055
)
 
(198,688
)
 
(211,335
)
 
1,454

 
(72,044
)
Loss on interest rate swap contracts, net

 

 
(1,828
)
 
(7,973
)
 
(85,013
)
Loss on extinguishment of debt and write-off of deferred financing costs
(10,120
)
 
(22,542
)
 
(66,213
)
 
(92,692
)
 
(110,049
)
Miscellaneous, net
4,988

 
2,436

 
1,770

 
1,265

 
1,448

 
 
 
 
 
 
 
 
 
 
Income from continuing operations before income taxes
425,150

 
192,960

 
126,319

 
511,879

 
370,320

Income tax expense
(115,768
)
 
(65,635
)
 
(51,994
)
 
(220,552
)
 
(133,378
)
Income from continuing operations, net of income taxes
309,382

 
127,325

 
74,325

 
291,327

 
236,942

Income from discontinued operations, net of income taxes (b)
2,822

 
338,316

 
159,288

 
954

 
124,655

Net income
312,204

 
465,641

 
233,613

 
292,281

 
361,597

Net loss (income) attributable to noncontrolling interests
(765
)
 
20

 
(90
)
 
(424
)
 
(649
)
Net income attributable to Cablevision Systems Corporation stockholders
$
311,439

 
$
465,661

 
$
233,523

 
$
291,857

 
$
360,948

 
(a)
See Note 19 to our consolidated financial statements for information regarding the impact of Superstorm Sandy.
(b)
See Note 5 to our consolidated financial statements for additional information regarding discontinued operations.  




26


 
Cablevision Systems Corporation
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
2011
 
2010
 
(Dollars in thousands, except per share data)
INCOME PER SHARE:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic income per share attributable to Cablevision Systems Corporation stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations, net of income taxes
$
1.17

 
$
0.49

 
$
0.28

 
$
1.05

 
$
0.81

 
 
 
 
 
 
 
 
 
 
Income from discontinued operations, net of income taxes
$
0.01

 
$
1.30

 
$
0.61

 
$

 
$
0.43

 
 
 
 
 
 
 
 
 
 
Net income
$
1.18

 
$
1.79

 
$
0.89

 
$
1.06

 
$
1.23

 
 
 
 
 
 
 
 
 
 
Basic weighted average common shares (in thousands)
264,623

 
260,763

 
262,258

 
276,369

 
293,165

 
 
 
 
 
 
 
 
 
 
Diluted income per share attributable to Cablevision Systems Corporation stockholders:
 

 
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
Income from continuing operations, net of income taxes
$
1.14

 
$
0.48

 
$
0.28

 
$
1.02

 
$
0.78

 
 
 
 
 
 
 
 
 
 
Income from discontinued operations, net of income taxes
$
0.01

 
$
1.27

 
$
0.60

 
$

 
$
0.41

 
 
 
 
 
 
 
 
 
 
Net income
$
1.15

 
$
1.75

 
$
0.87

 
$
1.02

 
$
1.20

 
 
 
 
 
 
 
 
 
 
Diluted weighted average common shares (in thousands)
270,703

 
265,935

 
267,330

 
284,904

 
301,880

 
 
 
 
 
 
 
 
 
 
Cash dividends declared and paid per common share
$
0.600

 
$
0.600

 
$
0.600

 
$
0.575

 
$
0.475

 
 
 
 
 
 
 
 
 
 
Amounts attributable to Cablevision Systems Corporation stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations, net of income taxes
$
308,617

 
$
127,345

 
$
74,235

 
$
290,903

 
$
236,293

Income from discontinued operations, net of income taxes
2,822

 
338,316

 
159,288

 
954

 
124,655

Net income
$
311,439

 
$
465,661

 
$
233,523

 
$
291,857

 
$
360,948




27


 
CSC Holdings, LLC
 
Years Ended December 31,
 
2014
 
2013
 
2012 (a)
 
2011
 
2010
 
(Dollars in thousands)
Revenues, net
$
6,460,946

 
$
6,232,152

 
$
6,131,675

 
$
6,162,608

 
$
6,087,864

Operating expenses:
 

 
 

 
 

 
 

 
 

Technical and operating (excluding depreciation, amortization and impairments shown below)
3,136,808

 
3,079,226

 
3,001,577

 
2,653,978

 
2,563,575

Selling, general and administrative
1,533,898

 
1,521,005

 
1,454,045

 
1,398,061

 
1,421,737

Restructuring expense (credits)
2,480

 
23,550

 
(770
)
 
6,311

 
(58
)
Depreciation and amortization (including impairments)
866,502

 
909,147

 
907,775

 
846,533

 
874,334

Operating income
921,258

 
699,224

 
769,048

 
1,257,725

 
1,228,276

Other income (expense):
 

 
 

 
 

 
 

 
 

Interest expense, net
(304,831
)
 
(315,572
)
 
(406,783
)
 
(443,385
)
 
(463,749
)
Gain on sale of affiliate interests

 

 
716

 
683

 
2,051

Gain on investments, net
129,659

 
313,167

 
294,235

 
37,384

 
109,813

Gain (loss) on equity derivative contracts, net
(45,055
)
 
(198,688
)
 
(211,335
)
 
1,454

 
(72,044
)
Loss on interest rate swap contracts, net

 

 
(1,828
)
 
(7,973
)
 
(85,013
)
Loss on extinguishment of debt and write-off of deferred financing costs
(9,618
)
 
(23,144
)
 
(66,213
)
 
(92,692
)
 

Miscellaneous, net
4,988

 
2,436

 
1,770

 
1,265

 
1,434

Income from continuing operations before income taxes
696,401

 
477,423

 
379,610

 
754,461

 
720,768

Income tax expense
(236,450
)
 
(188,079
)
 
(152,547
)
 
(328,714
)
 
(270,497
)
Income from continuing operations, net of income taxes
459,951

 
289,344

 
227,063

 
425,747

 
450,271

Income from discontinued operations, net of income taxes (b)
2,822

 
330,711

 
159,288

 
954

 
124,655

Net income
462,773

 
620,055

 
386,351

 
426,701

 
574,926

Net loss (income) attributable to noncontrolling interests
(765
)
 
20

 
(90
)
 
(424
)
 
(649
)
Net income attributable to CSC Holdings, LLC's sole member
$
462,008

 
$
620,075

 
$
386,261

 
$
426,277

 
$
574,277

 
 
 
 
 
 
 
 
 
 
Amounts attributable to CSC Holdings, LLC's sole member:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations, net of income taxes
$
459,186

 
$
289,364

 
$
226,973

 
$
425,323

 
$
449,622

Income from discontinued operations, net of income taxes
2,822

 
330,711

 
159,288

 
954

 
124,655

Net income
$
462,008

 
$
620,075

 
$
386,261

 
$
426,277

 
$
574,277

 
(a)
See Note 19 to our consolidated financial statements for information regarding the impact of Superstorm Sandy.
(b)
See Note 5 to our consolidated financial statements for additional information regarding discontinued operations.  



28


Balance Sheet Data:
 
 
Cablevision Systems Corporation
 
December 31,
 
2014
 
2013
 
2012
 
2011
 
2010
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
Total assets
$
6,765,171

 
$
6,591,076

 
$
7,250,289

 
$
7,152,747

 
$
8,889,548

Credit facility debt
2,780,649

 
3,766,145

 
3,914,001

 
4,433,460

 
4,999,111

Collateralized indebtedness
986,183

 
817,950

 
556,152

 
455,938

 
352,606

Senior notes and debentures
5,855,867

 
5,138,515

 
5,488,219

 
5,196,660

 
5,318,193

Notes payable
23,911

 
5,334

 
12,585

 
29,227

 

Capital lease obligations
46,412

 
31,290

 
56,569

 
42,763

 
31,237

Total debt
9,693,022

 
9,759,234

 
10,027,526

 
10,158,048

 
10,701,147

Redeemable noncontrolling interest
8,676

 
9,294

 
11,999

 
13,761

 
14,698

Stockholders' deficiency
(5,041,469
)
 
(5,284,330
)
 
(5,639,164
)
 
(5,575,855
)
 
(6,296,918
)
Noncontrolling interests
779

 
786

 
1,158

 
1,791

 
1,485

Total deficiency
(5,040,690
)
 
(5,283,544
)
 
(5,638,006
)
 
(5,574,064
)
 
(6,295,433
)
 
 
 
 
 
 
 
 
 
 
 
CSC Holdings, LLC
 
December 31,
 
2014
 
2013
 
2012
 
2011
 
2010
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
Total assets
$
6,648,031

 
$
6,448,547

 
$
7,454,169

 
$
7,611,206

 
$
9,194,747

Credit facility debt
2,780,649

 
3,766,145

 
3,914,001

 
4,433,460

 
4,999,111

Collateralized indebtedness
986,183

 
817,950

 
556,152

 
455,938

 
352,606

Senior notes and debentures
3,062,126

 
2,309,403

 
2,596,683

 
3,029,694

 
3,152,505

Notes payable
23,911

 
5,334

 
12,585

 
29,227

 

Capital lease obligations
46,412

 
31,290

 
56,569

 
42,763

 
31,237

Total debt
6,899,281

 
6,930,122

 
7,135,990

 
7,991,082

 
8,535,459

Redeemable noncontrolling interest
8,676

 
9,294

 
11,999

 
13,761

 
14,698

Member's deficiency
(2,528,298
)
 
(2,644,072
)
 
(2,851,773
)
 
(3,414,943
)
 
(4,150,245
)
Noncontrolling interests
779

 
786

 
1,158

 
1,791

 
1,485

Total deficiency
(2,527,519
)
 
(2,643,286
)
 
(2,850,615
)
 
(3,413,152
)
 
(4,148,760
)



29


Statistical Data (Unaudited):
 
As of December 31,
 
2014
 
2013
 
2012 (e)
 
(in thousands, except per customer amounts)
 
 
 
 
 
 
Total customers (a)
3,118

 
3,188

 
3,230

Video customers (b)
2,681

 
2,813

 
2,893

High-speed data customers
2,760

 
2,780

 
2,763

Voice customers
2,229

 
2,272

 
2,264

 
 
 
 
 
 
Serviceable passings (c)
5,046

 
5,034

 
4,979

 
 
 
 
 
 
Penetration:
 

 
 

 
 

Total customers to serviceable passings
61.8
%
 
63.3
%
 
64.9
%
Video customers to serviceable passings
53.1
%
 
55.9
%
 
58.1
%
High-speed data customers to serviceable passings
54.7
%
 
55.2
%
 
55.5
%
Voice customers to serviceable passings
44.2
%
 
45.1
%
 
45.5
%
Average Monthly Revenue per Customer ("RPC") (d)
$
155.20

 
$
147.34

 
$
137.51

 
(a)
Represents number of households/businesses that receive at least one of the Company's services.
(b)
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 (e) 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.
(c)
Represents the estimated number of single residence homes, apartment and condominium units passed by the cable distribution network in areas serviceable without further extending the transmission lines. In addition, it includes commercial establishments that have connected to our cable distribution network.
(d)
RPC is calculated by dividing the average monthly U.S. generally accepted accounting principles ("GAAP") revenues for the Cable segment for the fourth quarter of each year presented by the average number of total customers served by our cable systems for the same period. 
(e)
Amounts exclude customers that were located in the areas most severely impacted by Superstorm Sandy who we were unable to contact and those whose billing we decided to suspend temporarily during restoration of their homes.  These customers represent approximately 11 thousand total, 10 thousand video, 9 thousand high-speed data and 7 thousand voice customers.  Because of Superstorm Sandy, we suspended our normal collection efforts and non-pay disconnect policy during the fourth quarter of 2012.  As a result, the customer information in the table above includes delinquent customer accounts that exceeded our normal disconnect timeline.  Of these delinquent accounts, we estimated the number of accounts that we believed would be disconnected in 2013 as our normal collection and disconnect procedures resumed and our customer counts as of December 31, 2012 were reduced accordingly (27 thousand total, 24 thousand video, 23 thousand high-speed data and 19 thousand voice customers).



30


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, future financial performance and future events identify forward looking statements.  Investors are cautioned that such forward looking statements are not guarantees of future performance, results or events 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, direct broadcast satellite ("DBS") distributors, and Internet-based providers) and new competitors entering our franchise areas;
demand for our video, high-speed data and voice services, which is impacted by competition from other services and changes in technology and consumer expectations and behavior;
the level of our expenses, including the cost of programming;
the level of our capital expenditures;
changes in the laws or regulations under which we operate;
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;
market demand for new services;
demand for advertising on our cable television systems;
industry conditions;
the outcome of litigation and other proceedings, including the matters described under Item 3.  Legal Proceedings;
future acquisitions and dispositions of assets;
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 business, the newspaper publishing business, 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 herein.
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 and per share data, included in the following discussion under this Item 7, are presented in thousands.
Summary
Our future performance is dependent, to a large extent, on the impact of direct competition, general economic conditions (including capital and credit market conditions), our ability to manage our businesses effectively, and our relative strength and leverage in the marketplace, both with suppliers and customers.  See "Item 1A. Risk Factors".
In 2013, we completed the Clearview Sale and the Bresnan Sale (see Note 1 to our consolidated financial statements). Effective as of the closing dates of the Clearview Sale and the Bresnan Sale, we no longer consolidate the financial results of Clearview Cinemas and Bresnan Cable.  Accordingly, the historical financial results of Clearview Cinemas and Bresnan Cable have been reflected in our consolidated financial statements as discontinued operations for all periods presented.
Cable
Our Cable segment, which accounted for 90% of our consolidated revenues, net of inter-segment eliminations, for the year ended December 31, 2014, derives revenues principally through monthly charges to subscribers of our video, high-speed data and VoIP services which accounted for 53%, 22% and 14%, respectively, of our consolidated revenues, net of inter-segment eliminations, for the year ended December 31, 2014. These monthly charges include fees for video programming, high-speed data and VoIP services, as well as equipment rental, digital video recorder ("DVR"), video-on-demand, pay-per-view, installation and home



31


shopping commissions. We also derive revenues from the sale of advertising time available on the programming carried on our cable television systems.
Revenue increases are derived from rate increases, increases in the number of subscribers to our services, including additional services sold to our existing subscribers, programming package upgrades by our video customers, speed tier upgrades by our high-speed data customers, 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 passed by the cable distribution network in areas serviceable without further extending the transmission lines, including commercial establishments that have connected to our cable distribution network).  As penetration rates increase, the number of available homes to which we can market our services generally decreases.  Due to the high penetration of our video, high-speed data and VoIP services (53.1%, 54.7% and 44.2%, respectively, of serviceable passings at December 31, 2014), our ability to maintain or increase our existing customers and revenue in the future will continue to be negatively impacted.
We face competition from telephone companies, DBS service providers, and others, including the delivery of video content over the Internet directly to subscribers.  As discussed in greater detail under “Competition” above, we face intense competition from Verizon. Verizon has constructed a fiber to the home network plant that passes a significant number of households in our service area.  Verizon does not publicly report the extent of their build-out or penetration by area. Our estimate of Verizon's build out and sales activity in our service area is difficult to assess because it is based upon visual inspections and other limited estimating techniques, and therefore serves only as an approximation.  We estimate that Verizon is currently able to sell a fiber-based video service, as well as high-speed data and VoIP services, to at least half of the households in our service area.  In certain other portions of our service area, Verizon has also built its fiber network where we believe it is not currently able to sell its fiber-based video service, but is able to sell its high-speed data and VoIP services.  In these areas (as well as other parts of our service area) Verizon markets DBS services along with its high-speed data and VoIP services. Verizon’s fiber network also passes areas where we believe it is not currently able to sell its video, high-speed data or VoIP services. Accordingly, Verizon may increase the number of customers in our service area to whom it is able to sell video, high speed data and VoIP services in the future.
Frontier offers video service, as well as high-speed data and VoIP services, in competition with us in most of our Connecticut service area.  Frontier also markets DBS services in this service area. Verizon and Frontier have made and may continue to make promotional offers at prices lower than ours. Verizon has significantly greater financial resources than we do.
This competition affects our ability to add or retain customers and creates pressure upon the pricing of our services. Competition, particularly from Verizon, has negatively impacted our revenues and caused subscriber declines in our service areas. To the extent Verizon and Frontier continue to offer competitive and promotional packages, our ability to maintain or increase our existing customers and revenue will continue to be negatively impacted. 
The two major DBS services, DISH Network and DIRECTV, are available to the vast majority of our customers.  These companies each offer video programming that is substantially similar to the video service that we offer, at competitive prices. Each of these competitors has significantly greater financial resources than we do. 
In addition, our revenues have been negatively impacted by the prolonged weak economic conditions as customers with less disposable income may have been more willing to obtain services from our competitors or other sources.  Our revenues may continue to be negatively impacted by the prolonged weak economic conditions in certain portions of our service area. 
Historically, we have made substantial investments in our network and the development of new and innovative products and other service offerings for our customers as a way of differentiating ourselves from our competitors and may continue to do so in the future.  For example, we have deployed WiFi access points throughout our footprint.
Our programming costs, which are the most significant component of our Cable segment's operating expenses, have increased and are expected to continue to increase primarily as a result of contractual rate increases and new channel launches.  See "Business Segments Results - Cable" below for a further discussion of revenues and operating expenses and "Liquidity and Capital Resources - Capital Expenditures" for additional information regarding our capital expenditures.
Lightpath
Lightpath accounted for 5% of our consolidated revenues, net of inter-segment eliminations, for the year ended December 31, 2014.  Lightpath derives revenues from the sale of fiber based telecommunications services to the business market. Lightpath operates in a highly competitive business telecommunications market and competes against the very largest telecommunications companies - incumbent local exchange carriers such as Verizon and AT&T, other competitive local exchange companies, and long distance companies.  To the extent our competitors reduce their prices, future success of our Lightpath business may be negatively impacted.



32


Other
Our Other segment, which accounted for 5% of our consolidated revenues, net of inter-segment eliminations, for the year ended December 31, 2014, includes the operations of (i) Newsday, which includes the Newsday daily newspaper, amNew York, Star Community Publishing Group, and online websites, (ii) the News 12 Networks, our regional news programming services, (iii) Cablevision Media Sales, a cable television advertising company, and (iv) certain other businesses and unallocated corporate costs.
Newsday
Newsday's revenue is derived primarily from the sale of advertising and the sale of the Newsday daily newspaper, including home delivery, digital subscriptions, and single copy sales through local retail outlets ("circulation revenue").  For the year ended December 31, 2014, advertising revenues accounted for 65% and circulation revenues accounted for 34% of the total revenues of Newsday. 
The newspaper industry generally has experienced significant declines in circulation and readership levels due to competition from new media news formats and less reliance on newspapers by consumers. Readership and circulation levels, as well as economic conditions and the existence of other advertising outlets, impact the demand for and level of our advertising.  These factors will continue to negatively impact Newsday’s revenues.
Newsday's largest categories of operating expenses relate to the production and distribution of its print products.  These costs are driven by volume (number of newspapers printed and number of pages printed) and the number of pages printed are impacted by the volume of advertising and editorial pages.  The majority of Newsday's other costs, such as editorial content creation, rent and general and administrative expenses do not directly fluctuate with changes in advertising and circulation revenue.
News 12 Networks
Our News 12 Networks, which include seven 24-hour local news channels and five traffic and weather services dedicated to covering areas within the New York metropolitan area, derives its revenues from the sale of advertising on its networks and affiliation fees paid by cable operators, principally Cablevision.
Cablevision Media Sales
Cablevision Media Sales is a cable television advertising company that derives its revenues primarily from the sale of local and regional commercial advertising time on cable television networks in the New York metropolitan area, which offers advertisers the opportunity to target geographic and demographic audiences.
Critical Accounting Policies
In preparing its financial statements, the Company is required to make certain estimates, judgments and assumptions that it believes are reasonable based upon the information available.  These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented.  The significant accounting policies, which we believe are the most critical to aid in fully understanding and evaluating our reported financial results, include the following:
Impairment of Long-Lived and Indefinite-Lived Assets:
The Company's long-lived and indefinite-lived assets at December 31, 2014 include goodwill of $264,690, other intangible assets of $775,879 ($739,098 of which are indefinite-lived intangible assets), and $3,025,747 of property, plant and equipment.  Such assets accounted for approximately 60% of the Company's consolidated total assets.  Goodwill and identifiable indefinite-lived intangible assets, which represent primarily the Company's cable television franchises and various trademarks, are tested annually for impairment during the first quarter ("annual impairment test date") and upon the occurrence of certain events or substantive changes in circumstances.
We assess qualitative factors for certain of our reporting units that carry goodwill. Among other relevant events and circumstances that affect the fair value of these reporting units, we assess individual factors such as:
macroeconomic conditions;
industry and market conditions;
cost factors;
overall financial performance of the reporting unit;
changes in management, strategy or customers;
relevant reporting unit specific events such as a change in the carrying amount of net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit; and
sustained decrease in share price, as applicable.



33


The Company assesses these qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test.  This quantitative test is required only if the Company concludes that it is more likely than not that a reporting unit's fair value is less than its carrying amount.
When the qualitative assessment is not used, or if the qualitative assessment is not conclusive, the Company is required to determine goodwill impairment using a two-step process.  The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill utilizing an enterprise-value based premise approach.  If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any.  The second step of the goodwill impairment test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill.  If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.  The implied fair value of goodwill is determined in the same manner as the amount of goodwill that would be recognized in a business combination.  For the purpose of evaluating goodwill impairment at the annual impairment test date, the Company had two reporting units containing approximately 97% of the Company's goodwill balance of $264,690.  These reporting units are Cable ($234,290) and Lightpath ($21,487).
The Company assesses the qualitative factors discussed above to determine whether it is necessary to perform the one-step quantitative identifiable indefinite-lived intangible assets impairment test.  This quantitative test is required only if the Company concludes that it is more likely than not that a unit of accounting’s fair value is less than its carrying amount.  When the qualitative assessment is not used, or if the qualitative assessment is not conclusive, the impairment test for identifiable indefinite-lived intangible assets requires a comparison of the estimated fair value of the intangible asset with its carrying value.  If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.  The following table sets forth the amount of identifiable indefinite-lived intangible assets reported in the Company's consolidated balance sheet as of December 31, 2014:
Reportable Segment
 
Unit of Accounting
 
Identifiable Indefinite-
Lived Intangible
Assets Balance
 
 
 
 
 
Cable
 
Cable Television Franchises
 
$
731,848

 
 
 
 
 

Other
 
Newsday Trademarks
 
7,000

 
 
 
 
 

Cable
 
Other indefinite-lived intangibles
 
250

 
 
   
 
$
739,098

For other long-lived assets, including intangible assets that are amortized, the Company evaluates assets for recoverability when there is an indication of potential impairment.  If the undiscounted cash flows from a group of assets being evaluated is less than the carrying value of that group of assets, the fair value of the asset group is determined and the carrying value of the asset group is written down to fair value.
In assessing the recoverability of the Company's goodwill and other long-lived assets, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets.  These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and also the magnitude of any such charge.  Fair value estimates are made at a specific point in time, based on relevant information.  These estimates are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.  Estimates of fair value are primarily determined using discounted cash flows and comparable market transactions.  These valuations are based on estimates and assumptions including projected future cash flows, discount rate, determination of appropriate market comparables and determination of whether a premium or discount should be applied to comparables.  For the Cable reportable segment, these valuations also include assumptions for average annual revenue per customer, number of serviceable passings, operating margin and market penetration as a percentage of serviceable passings, among other assumptions.  Further, the projected cash flow assumptions consider contractual relationships, customer attrition, eventual development of new technologies and market competition.  For Newsday, these valuations also include assumptions for advertising and circulation revenue trends, operating margin, market participant synergies, and market multiples for comparable companies.  If these estimates or material related assumptions change in the future, the Company may be required to record impairment charges related to its long-lived assets.



34


Based on the Company's annual impairment test during the first quarter of 2014, the Company's reporting units had significant safety margins, representing the excess of the estimated fair value of each reporting unit less its respective carrying value (including goodwill allocated to each respective reporting unit).  In order to evaluate the sensitivity of the estimated fair value calculations of the Company's reporting units on the annual impairment calculation for goodwill, the Company applied hypothetical 10%, 20% and 30% decreases to the estimated fair values of each reporting unit.  These hypothetical decreases of 10%, 20% and 30% would have no impact on the goodwill impairment analysis for the Company's Cable or Lightpath reporting units.
The Company's identifiable indefinite-lived intangible assets that represent approximately 99% of the total indefinite-lived intangibles recorded on the consolidated balance sheet at December 31, 2014 are the Company's cable television franchises and various reporting unit trademarks, which are valued using an income approach or market approach.  The Company's cable television franchises are the largest of the Company's identifiable indefinite-lived intangible assets and reflect agreements we have with state and local governments that allow us to construct and operate a cable business within a specified geographic area.  Our cable television franchises are valued using a discounted cash flows ("DCF") methodology.  The DCF methodology used to value cable television franchises entails identifying the projected discrete cash flows related to such cable television franchises and discounting them back to the valuation date.  The projected discrete cash flows related to such cable television franchises represent the rights to solicit and the right to service potential customers in the service areas defined by franchise rights currently held by the Company.  Significant judgments inherent in a valuation include the selection of appropriate discount rates, estimating the amount and timing of estimated future cash flows attributable to the cable television franchises and identification of appropriate continuing growth rate assumptions.  The discount rates used in the DCF analysis are intended to reflect the risk inherent in the projected future cash flows generated by the respective intangible assets.
Based on the Company's annual impairment test during the first quarter of 2014, the Company's cable television franchises within the Cable reporting unit have significant safety margins, representing the excess of the identifiable indefinite-lived intangible assets' estimated fair value unit of accounting over their respective carrying values.  In order to evaluate the sensitivity of these fair value calculations, the Company applied hypothetical 10%, 20% and 30% decreases to the estimated fair value of these identifiable indefinite-lived intangibles. These hypothetical decreases would not have resulted in any impairment charges.
In addition, the Company recorded impairment charges of $200, $25,100 and $13,000, in the fourth quarter of 2014, 2013 and 2012, respectively, related to Newsday trademarks, reflecting the excess of the carrying values over the estimated fair values. The estimated fair values of Newsday's trademarks were based on discounted future cash flows calculated based on the relief-from-royalty method. The reduction in estimated fair values of the trademarks under the relief-from-royalty method was primarily due to a decrease in the assumed royalty rate from 2% for 2012 to 0.5% for 2013 and 2014.  These decreases are primarily due to the lower projected margins for the Newsday print newspaper.  In addition, declines in the Company's revenue projections for the Newsday print newspaper and changes in the discount rate from 11.5% for 2012 to 12.0% for 2013 and 11% for 2014 also impacted the estimated fair values. Changes in such estimates or the application of alternative assumptions could produce significantly different results.
In addition, in 2014 and 2013, the Company recorded an impairment charge of $5,631 and $12,358, respectively, relating to the excess of the carrying value over the estimated fair values of Newsday's amortizing subscriber relationships and advertising relationships, respectively.  The decrease in fair values, which were determined based on discounted cash flows, resulted primarily from the decline in projected cash flows related to these assets.
Valuation of Deferred Tax Assets:
Deferred tax assets have resulted primarily from the Company's future deductible temporary differences and net operating loss carry forwards ("NOLs"). In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company's ability to realize its deferred tax assets depends upon the generation of sufficient future taxable income and tax planning strategies to allow for the utilization of its NOLs and deductible temporary differences. If such estimates and related assumptions change in the future, the Company may be required to record additional valuation allowances against its deferred tax assets, resulting in additional income tax expense in the Company's consolidated statement of operations. Management evaluates the realizability of the deferred tax assets and the need for additional valuation allowances quarterly. At this time, based on current facts and circumstances, management believes that it is more likely than not that the Company will realize benefit for its gross deferred tax assets, except those deferred tax assets against which a valuation allowance has been recorded which relate to certain state NOLs. The Company decreased the valuation allowance by $344 and $1,974 in 2014 and 2013, respectively, and increased the valuation allowance by $5,480 in 2012. During 2014 and 2013 certain state NOLs either expired or a determination was made that they could not be utilized in the future. The deferred tax asset corresponding to the expired NOLs had been fully offset by a valuation allowance. The associated deferred tax



35


asset and valuation allowance were both reduced by $6,735 and $303 in 2014 and 2013, respectively. Pursuant to certain LLC conversions during 2012, state NOLs for which the deferred tax asset had been offset by a valuation allowance were eliminated. The associated deferred tax asset and valuation allowance were both reduced by $3,074 in 2012.
Plant and Equipment:
Costs incurred in the construction of the Company's cable systems, including line extensions to, and upgrade of, the Company's hybrid fiber/coaxial infrastructure and headend facilities are capitalized.  These costs consist of materials, subcontractor labor, direct consulting fees, and internal labor and related costs associated with the construction activities.  The internal costs that are capitalized consist of salaries and benefits of the Company's employees and the portion of facility costs, including rent, taxes, insurance and utilities, that supports the construction activities.  These costs are depreciated over the estimated life of the plant (10 to 25 years) and headend facilities (4 to 25 years).  Costs of operating the plant and the technical facilities, including repairs and maintenance, are expensed as incurred.
Costs incurred to connect businesses or residences that have not been previously connected to the infrastructure or digital platform are also capitalized.  These costs include materials, subcontractor labor, internal labor, and other related costs associated with the connection activities.  In addition, on-site and remote technical assistance during the provisioning process for new digital product offerings are capitalized.  The departmental activities supporting the connection process are tracked through specific metrics, and the portion of departmental costs that is capitalized is determined through a time weighted activity allocation of costs incurred based on time studies used to estimate the average time spent on each activity.  New connections are amortized over the estimated useful lives of 5 years or 12 years for residence wiring and feeder cable to the home, respectively.  The portion of departmental costs related to reconnection, programming service up- grade and down- grade, repair and maintenance, and disconnection activities are expensed as incurred.
The estimated useful lives assigned to our property, plant and equipment are reviewed on an annual basis or more frequently if circumstances warrant and such lives are revised to the extent necessary due to changing facts and circumstances.  Any changes in estimated useful lives are reflected prospectively.
Refer to Note 2 to our consolidated financial statements included in this Annual Report on Form 10-K for a discussion of our accounting policies with respect to the policies discussed above and other items.
Legal Contingencies
The Company is party to various lawsuits and proceedings and is subject to other claims that arise in the ordinary course of business, some involving claims for substantial damages.  The Company records an estimated liability for these claims when management believes the loss from such matters is probable and reasonably estimable.  The Company reassesses the risk of loss as new information becomes available and adjusts liabilities as necessary.  The actual cost of resolving a claim may be substantially different from the amount of the liability recorded.  Refer to Note 16 to our consolidated financial statements included in this Annual Report on Form 10-K for a discussion of our legal contingencies.
Certain Transactions
The following transactions occurred during the periods covered by this Management's Discussion and Analysis of Financial Condition and Results of Operations:
2013 Transactions
On June 27, 2013, we completed the Clearview Sale and on July 1, 2013, we completed the Bresnan Sale.  As a result, we no longer consolidate the financial results of Clearview Cinemas and Bresnan Cable.  Accordingly, the historical financial results of Clearview Cinemas and Bresnan Cable have been reflected in our consolidated financial statements as discontinued operations for all periods presented.
Litigation Settlement
In connection with the AMC Networks Distribution in June 2011, CSC Holdings and AMC Networks and its subsidiary, Rainbow Programming Holdings, LLC (the "AMC Parties") entered into an agreement (the "VOOM Litigation Agreement") which provided that CSC Holdings and the AMC Parties would share equally in the proceeds (including in the value of any non-cash consideration) of any settlement or final judgment in the litigation with DISH Network, LLC ("DISH Network") that were received by subsidiaries of AMC Networks from VOOM HD Holdings LLC.



36


In October 2012, we and AMC Networks settled the litigation with DISH Network.  Pursuant to the settlement agreement, DISH Network paid $700,000 to a joint escrow account for the benefit of us and AMC Networks.  On April 8, 2013, we and AMC Networks reached agreement, pursuant to the VOOM Litigation Agreement, on the final allocation of the proceeds of the settlement.  The parties agreed that (a) we would be allocated a total of $525,000 of the cash settlement payment; and (b) AMC Networks would retain $175,000 of the cash settlement payment (in addition to the long-term affiliation agreements entered into with DISH Network as part of the settlement).  The final allocation was approved by independent committees of the Boards of Directors of the Company and AMC Networks.  On April 9, 2013, we received $175,000 from AMC Networks (in addition to the $350,000 initially distributed to us from the joint escrow account in December 2012).  The proceeds of $175,000 and $350,000 was recorded as a gain in discontinued operations for the years ended December 31, 2013 and 2012, respectively.
Non-GAAP Financial Measures
We define adjusted operating cash flow ("AOCF"), which is a non-GAAP financial measure, as operating income (loss) before depreciation and amortization (including impairments), excluding share-based compensation expense or benefit and restructuring expense or credits.  Because it is based upon operating income (loss), AOCF also excludes interest expense (including cash interest expense) and other non-operating income and expense items.  We believe that the exclusion of share-based compensation expense allows investors to better track the performance of the various operating units of our business without regard to expense associated with awards that are not expected to be made in cash, in the case of of restricted shares, restricted stock units and stock options, and the distortive effects of fluctuating stock prices in the case of stock appreciation rights.
We present AOCF as a measure of our ability to service our debt and make continuing investments, including in our capital infrastructure.  We believe AOCF is an appropriate measure for evaluating the operating performance of our business segments and the Company on a consolidated basis.  AOCF and similar measures with similar titles are common performance measures used by investors, analysts and peers to compare performance in our industry.  Internally, we use net revenues and AOCF measures as the most important indicators of our business performance, and evaluate management's effectiveness with specific reference to these indicators.  AOCF should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with U.S. generally accepted accounting principles ("GAAP").  Since AOCF is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies.  Each presentation of AOCF in this Annual Report on Form 10-K includes a reconciliation of AOCF to operating income (loss).



37


Results of Operations - Cablevision Systems Corporation
The following table sets forth on a historical basis certain items related to operations as a percentage of net revenues for the periods indicated:
STATEMENT OF INCOME DATA
 
Years Ended December 31,
 
 
 
2014
 
2013
 
 
 
Amount
 
% of Net
Revenues
 
Amount
 
% of Net
Revenues
 
Favorable
(Unfavorable)
 
 
 
 
 
 
 
 
 
 
Revenues, net
$
6,460,946

 
100
 %
 
$
6,232,152

 
100
 %
 
$
228,794

 
 
 
 
 
 
 
 
 
 
Operating expenses:
 

 
 

 
 

 
 

 
 

Technical and operating (excluding depreciation, amortization and impairments shown below)
3,136,808

 
49

 
3,079,226

 
49

 
(57,582
)
Selling, general and administrative
1,533,898

 
24

 
1,521,005

 
24

 
(12,893
)
Restructuring expense
2,480

 

 
23,550

 

 
21,070

Depreciation and amortization (including impairments)
866,502

 
13

 
909,147

 
15

 
42,645

Operating income
921,258

 
14

 
699,224

 
11

 
222,034

Other income (expense):
 

 
 

 
 

 
 

 
 

Interest expense, net
(575,580
)
 
(9
)
 
(600,637
)
 
(10
)
 
25,057

Gain on investments, net
129,659

 
2

 
313,167

 
5

 
(183,508
)
Loss on equity derivative contracts, net
(45,055
)
 
(1
)
 
(198,688
)
 
(3
)
 
153,633

Loss on extinguishment of debt and write-off of deferred financing costs
(10,120
)
 

 
(22,542
)
 

 
12,422

Miscellaneous, net
4,988

 

 
2,436

 

 
2,552

Income from continuing operations before income taxes
425,150

 
7

 
192,960

 
3

 
232,190

Income tax expense
(115,768
)
 
(2
)
 
(65,635
)
 
(1
)
 
(50,133
)
Income from continuing operations, net of income taxes
309,382

 
5

 
127,325

 
2

 
182,057

Income from discontinued operations, net of income taxes
2,822

 

 
338,316

 
5

 
(335,494
)
Net income
312,204

 
5

 
465,641

 
7

 
(153,437
)
Net loss (income) attributable to noncontrolling interests
(765
)
 

 
20

 

 
(785
)
Net income attributable to Cablevision Systems Corporation stockholders
$
311,439

 
5
 %
 
$
465,661

 
7
 %
 
$
(154,222
)
The following is a reconciliation of operating income to AOCF:
 
Years Ended December 31,
 
 
 
2014
 
2013
 
Favorable
(Unfavorable)
 
Amount
 
Amount
 
 
 
 
 
 
 
Operating income
$
921,258

 
$
699,224

 
$
222,034

Share-based compensation
43,984

 
52,715

 
(8,731
)
Restructuring expense
2,480

 
23,550

 
(21,070
)
Depreciation and amortization (including impairments)
866,502

 
909,147

 
(42,645
)
AOCF
$
1,834,224

 
$
1,684,636

 
$
149,588




38


STATEMENT OF INCOME DATA (continued)
 
Years Ended December 31,
 
 
 
2013
 
2012
 
 
 
Amount
 
% of Net
Revenues
 
Amount
 
% of Net
Revenues
 
Favorable
(Unfavorable)
 
 
 
 
 
 
 
 
 
 
Revenues, net
$
6,232,152

 
100
 %
 
$
6,131,675

 
100
 %
 
$
100,477

 
 
 
 
 
 
 
 
 
 
Operating expenses:
 

 
 

 
 

 
 

 
 

Technical and operating (excluding depreciation, amortization and impairments shown below)
3,079,226

 
49

 
3,001,577

 
49

 
(77,649
)
Selling, general and administrative
1,521,005

 
24