FAIR VALUE MEASUREMENT

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity's pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels:


•	Level I - Quoted prices for identical instruments in active markets.


•	Level II - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.


•	Level III - Instruments whose significant value drivers are unobservable.

The following table presents for each of these hierarchy levels, the Company's financial assets and financial liabilities that are measured at fair value on a recurring basis:



	Fair Value Hierarchy	December 31, 2017		December 31, 2016
Assets:
Money market funds (of which $14,700 is classified as restricted cash as of December 31, 2016)	Level I	$	5,949	$	100,139
Investment securities pledged as collateral	Level I	1,720,357		1,483,030
Prepaid forward contracts	Level II	52,545		10,956
Liabilities:
Prepaid forward contracts	Level II	162,049		13,158
Interest rate swap contracts	Level II	77,902		78,823
Contingent consideration related to 2017 acquisitions	Level III	32,233		—

The Company's cash equivalents, investment securities and investment securities pledged as collateral are classified within Level I of the fair value hierarchy because they are valued using quoted market prices.

The Company's derivative contracts and liabilities under derivative contracts on the Company's balance sheets are valued using market-based inputs to valuation models. These valuation models require a variety of inputs, including contractual terms, market prices, yield curves, and measures of volatility. When appropriate, valuations are adjusted for various factors such as liquidity, bid/offer spreads and credit risk considerations. Such adjustments are generally based on available market evidence. Since model inputs can generally be verified and do not involve significant management judgment, the Company has concluded that these instruments should be classified within Level II of the fair value hierarchy.

The fair value of the contingent consideration related to acquisitions in the first and fourth quarters of 2017 of $30,000 and $2,233, respectively, was estimated based on a probability assessment of attaining the targets. The estimated amount recorded as of December 31, 2017 is the full contractual amount for the first quarter acquisition and approximately 51% of the contractual amount for the acquisition that occurred in the fourth quarter.

Fair Value of Financial Instruments

The following methods and assumptions were used to estimate fair value of each class of financial instruments for which it is practicable to estimate:

Credit Facility Debt, Collateralized Indebtedness, Senior Notes and Debentures, Senior Secured Notes, Senior Guaranteed Notes, Notes Payable to Affiliates and Related Parties and Notes Payable

The fair values of each of the Company's debt instruments are based on quoted market prices for the same or similar issues or on the current rates offered to the Company for instruments of the same remaining maturities. The fair value of notes payable is based primarily on the present value of the remaining payments discounted at the borrowing cost.

The carrying values, estimated fair values, and classification under the fair value hierarchy of the Company's financial instruments, excluding those that are carried at fair value in the accompanying consolidated balance sheets, are summarized as follows:



		December 31, 2017				December 31, 2016
	Fair Value Hierarchy	Carrying Amount (a)		Estimated Fair Value		Carrying Amount (a)		Estimated Fair Value
Altice USA debt instruments:
Notes payable to affiliates and related parties	Level II	$	—	$	—	$	1,750,000	$	1,837,876
CSC Holdings debt instruments:
Credit facility debt	Level II	3,393,306		3,435,000		2,631,887		2,675,256
Collateralized indebtedness	Level II	1,349,474		1,305,932		1,286,069		1,280,048
Senior guaranteed notes	Level II	2,291,185		2,420,000		2,289,494		2,416,375
Senior notes and debentures	Level II	6,409,889		7,221,846		6,732,816		7,731,150
Notes payable	Level II	56,956		55,289		13,726		13,260
Cablevision senior notes	Level II	1,818,115		1,931,239		2,742,082		2,920,056
Cequel debt instruments:
Cequel credit facility	Level II	1,250,217		1,258,675		812,903		815,000
Senior secured notes	Level II	2,570,506		2,658,930		2,566,802		2,689,750
Senior notes	Level II	2,770,737		2,983,615		3,176,131		3,517,275
Notes payable	Level II	8,946		8,946		—		—
		$	21,919,331	$	23,279,472	$	24,001,910	$	25,896,046


(a)	Amounts are net of unamortized deferred financing costs and discounts/premiums.

The fair value estimates related to the Company's debt instruments presented above are made at a specific point in time, based on relevant market information and information about the financial instrument. 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.