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	September 30, 2018		December 31, 2017
Assets:
Money market funds	Level I	$	296,123	$	5,949
Investment securities pledged as collateral	Level I	1,521,045		1,720,357
Prepaid forward contracts	Level II	31,510		52,545
Interest rate swap contracts	Level II	3,269		—
Liabilities:
Prepaid forward contracts	Level II	10,131		162,049
Interest rate swap contracts	Level II	143,719		77,902
Contingent consideration related to 2017 and 2018 acquisitions	Level III	6,733		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 as of September 30, 2018 related to the acquisitions in the third quarter of 2018 and fourth quarter of 2017 amounted to approximately $4,500 and $2,233, respectively. The estimated amount recorded as of September 30, 2018 is 100% of the contractual amount related to the acquisition in the third quarter 2018 and 51% of the contractual amount related to the acquisition in the fourth quarter 2017. The fair value of the consideration was estimated based on a probability assessment of attaining the targets as of September 30, 2018.

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, 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 condensed consolidated balance sheets, are summarized as follows:



		September 30, 2018				December 31, 2017
	Fair Value Hierarchy	Carrying Amount (a)		Estimated Fair Value		Carrying Amount (a)		Estimated Fair Value
CSC Holdings debt instruments:
Credit facility debt	Level II	$	4,980,221	$	5,033,750	$	3,393,306	$	3,435,000
Collateralized indebtedness	Level II	1,400,398		1,352,771		1,349,474		1,305,932
Senior guaranteed notes	Level II	3,284,419		3,293,125		2,291,185		2,420,000
Senior notes and debentures	Level II	5,610,048		6,245,760		6,409,889		7,221,846
Notes payable	Level II	42,810		42,653		56,956		55,289
Cablevision senior notes:
Senior notes and debentures	Level II	1,076,681		1,189,098		1,818,115		1,931,239
Cequel debt instruments:
Cequel credit facility debt	Level II	1,241,272		1,249,188		1,250,217		1,258,675
Senior secured notes	Level II	2,573,423		2,604,930		2,570,506		2,658,930
Senior notes	Level II	2,811,167		3,013,615		2,770,737		2,983,615
Notes payable	Level II	34,281		34,281		8,946		8,946
		$	23,054,720	$	24,059,171	$	21,919,331	$	23,279,472


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

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.

Fair Value of Non-financial Assets and Liabilities

The Company’s non-financial assets such as cable-television franchises, property, plant, and equipment, other intangible assets and cost-method investments, are not measured at fair value on a recurring basis, however, they are subject to fair value adjustments whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. No material impairments were recorded during the three and nine months ended September 30, 2018 and 2017.