Edgar Filing: CSC HOLDINGS INC

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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	11-3415180
	Delaware
	1111 Stewart Avenue
	Bethpage, New York 11714
	(516) 803-2300

1-9046	CSC Holdings, Inc.	11-2776686
	Delaware
	1111 Stewart Avenue
	Bethpage, New York 11714
	(516) 803-2300

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, Inc.		Yes x		No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its 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 Registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether each Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined 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 x

Yes o

No x

Yes o

No x

CSC Holdings, Inc.

Yes o

No x

Yes o

No x

Yes x

No o

Yes o

No x

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, Inc.		Yes o		No x

Number of shares of common stock outstanding as of October 29, 2009:

Cablevision NY Group Class A Common Stock -		246,913,909
Cablevision NY Group Class B Common Stock -		54,873,351
CSC Holdings, Inc. Common Stock -		14,432,750

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

Table of Contents

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

			Page

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements of Cablevision Systems Corporation and Subsidiaries

		Condensed Consolidated Balance Sheets - September 30, 2009 (unaudited) and December 31, 2008	3

		Condensed Consolidated Statements of Operations – Three and Nine Months Ended September 30, 2009 and 2008 (unaudited)	5

		Condensed Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2009 and 2008 (unaudited)	6

	Financial Statements of CSC Holdings, Inc. and Subsidiaries

		Condensed Consolidated Balance Sheets - September 30, 2009 (unaudited) and December 31, 2008	7

		Condensed Consolidated Statements of Operations – Three and Nine Months Ended September 30, 2009 and 2008 (unaudited)	9

		Condensed Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2009 and 2008 (unaudited)	10

		Combined Notes to Condensed Consolidated Financial Statements (unaudited)	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		40

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		84

Item 4.	Controls and Procedures		86

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings		86

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		87

Item 6.	Exhibits		87

SIGNATURES			88

Table of Contents

PART I. FINANCIAL INFORMATION

This Quarterly Report on Form 10-Q for the period ended September 30, 2009 is separately filed by Cablevision Systems Corporation (“Cablevision”) and CSC Holdings, Inc. (“CSC Holdings” and collectively with Cablevision and their subsidiaries, the “Company”, “we”, “us” or “our”).

This Quarterly Report contains statements that constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995. In this Quarterly Report there are statements concerning our future operating 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 and future financial performance identify forward-looking statements. Investors are cautioned that such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties and that actual results or developments may differ materially from the forward-looking statements as a result of various factors. Factors that may cause such differences to occur include, but are not limited to:

· the level of our revenues;

· competition from existing competitors (such as direct broadcast satellite (“DBS”) operators and telephone companies) and new competitors (such as high-speed wireless providers) entering our franchise areas;

· demand for our basic video, digital video, high-speed data and voice services, which are impacted by competition from other services and the other factors discussed herein;

· the cost of programming and industry conditions;

· changes in the laws or regulations under which we operate;

· the outcome of litigation and other proceedings, including the matters described under Part II, Item 1. Legal Proceedings and Note 17 of the condensed consolidated financial statements;

· general economic conditions in the areas in which we operate;

· the state of the market for debt securities and bank loans;

· demand for advertising inventory;

· demand for advertising in our newspapers along with subscriber and single copy outlet sales demand for our newspapers;

· our ability to obtain or produce content for our programming businesses;

· the level of our capital expenditures;

· the level of our expenses;

· future acquisitions and dispositions of assets;

· the demand for our programming among cable television system operators, DBS operators and telephone companies and our ability to maintain and renew affiliation agreements with cable television system operators, DBS operators and telephone companies;

· market demand for new services;

· whether pending uncompleted transactions, if any, are completed on the terms and at the times set forth (if at all);

· other risks and uncertainties inherent in the cable television, programming, entertainment and newspaper publishing businesses, and our other businesses;

Table of Contents

· financial community and rating agency perceptions of our business, operations, financial condition and the industries in which we operate; and

· the factors described in our filings with the Securities and Exchange Commission, including under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein.

We disclaim any obligation to update or revise the forward-looking statements contained herein, except as otherwise required by applicable federal securities laws.

Table of Contents

Item 1. Financial Statements

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	September 30,		December 31,
	2009		2008
	(unaudited)
ASSETS

Current Assets:

Cash and cash equivalents	$	336,571	$	322,755
Restricted cash	13,769		10,720
Accounts receivable, trade (less allowance for doubtful accounts of $24,940 and $22,082)	557,679		604,801
Prepaid expenses and other current assets	221,745		233,166
Program rights, net	183,196		157,277
Deferred tax asset	445,472		285,305
Investment securities pledged as collateral	181,378		181,271
Derivative contracts	68,037		63,574
Total current assets	2,007,847		1,858,869

Property, plant and equipment, net of accumulated depreciation of $8,363,358 and $7,778,359	3,324,566		3,472,640
Notes and other receivables	36,715		45,485
Investment securities pledged as collateral	181,378		181,271
Derivative contracts	3,136		50,163
Other assets (including approximately $869,600 in 2009 of cash held to repurchase senior notes due in 2011 and 2012)	995,083		131,012
Program rights, net	498,082		495,219
Deferred carriage fees, net	101,190		118,593
Affiliation, broadcast and other agreements, net of accumulated amortization of $563,779 and $520,784	519,954		581,422
Other amortizable intangible assets, net of accumulated amortization of $155,271 and $127,273	208,029		231,256
Indefinite-lived cable television franchises	731,848		731,848
Other indefinite-lived intangible assets	251,008		251,008
Goodwill	1,100,702		1,100,333
Deferred financing and other costs, net of accumulated amortization of $87,184 and $94,616	168,460		134,089
	$	10,127,998	$	9,383,208

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Cont’d)

(Dollars in thousands, except share and per share amounts)

	September 30,			December 31,
	2009			2008
	(unaudited)
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

Current Liabilities:

Accounts payable	$	362,451		$	385,966
Accrued liabilities	820,778			895,517
Deferred revenue	230,294			182,155
Program rights obligations	126,852			127,271
Liabilities under derivative contracts	19,405			3,327
Bank debt	310,000			310,000
Collateralized indebtedness	244,161			234,264
Capital lease obligations	5,581			5,318
Notes payable	—			6,230
Senior notes and debentures	—			148,881
Total current liabilities	2,119,522			2,298,929

Deferred revenue	14,951			13,235
Program rights obligations	314,021			342,373
Liabilities under derivative contracts	227,808			263,240
Other liabilities	414,987			374,837
Deferred tax liability	418,247			160,510
Bank debt	5,031,250			5,343,750
Collateralized indebtedness	157,864			214,474
Capital lease obligations	52,267			56,531
Senior notes and debentures due in 2009	—			1,250,920
Senior notes and debentures due after 2009	6,246,689			4,096,491
Senior subordinated notes	323,754			323,564
Total liabilities	15,321,360			14,738,854

Commitments and contingencies

Redeemable noncontrolling interests	11,371			12,012

Stockholders’ Deficiency:
Preferred Stock, $.01 par value, 50,000,000 shares authorized, none issued	—			—
CNYG Class A common stock, $.01 par value, 800,000,000 shares authorized, 273,084,885 and 267,249,234 shares issued and 246,861,276 and 242,258,240 shares outstanding	2,731			2,672
CNYG Class B common stock, $.01 par value, 320,000,000 shares authorized, 54,873,351 shares issued and outstanding	549			549
RMG Class A common stock, $.01 par value, 600,000,000 shares authorized, none issued	—			—
RMG Class B common stock, $.01 par value, 160,000,000 shares authorized, none issued	—			—
Paid-in capital	98,969			132,425
Accumulated deficit	(4,827,972		)	(5,035,286		)
	(4,725,723		)	(4,899,640		)
Treasury stock, at cost (26,223,609 and 24,990,994 CNYG Class A common shares)	(445,704		)	(433,326		)
Accumulated other comprehensive loss	(33,330		)	(35,025		)
Total stockholders’ deficiency	(5,204,757		)	(5,367,991		)
Noncontrolling interest	24			333
Total deficiency	(5,204,733		)	(5,367,658		)
	$	10,127,998		$	9,383,208

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three and Nine Months Ended September 30, 2009 and 2008

(Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008

Revenues, net	$	1,839,895		$	1,747,560		$	5,628,312		$	5,186,344

Operating expenses:
Technical and operating (excluding depreciation, amortization and impairments shown below)	728,563			737,460			2,390,225			2,243,920
Selling, general and administrative	460,878			443,570			1,395,777			1,288,896
Restructuring expense (credits)	1,834			366			5,690			(1,247		)
Depreciation and amortization (including impairments)	266,975			277,541			818,935			826,155
	1,458,250			1,458,937			4,610,627			4,357,724

Operating income	381,645			288,623			1,017,685			828,620

Other income (expense):
Interest expense	(183,997		)	(196,554		)	(568,222		)	(594,750		)
Interest income	1,296			2,807			5,487			12,023
Gain (loss) on investments, net	51,543			13,324			(349		)	(75,811		)
Gain (loss) on equity derivative contracts, net	(43,833		)	(4,731		)	(1,095		)	62,490
Loss on interest rate swap contracts, net	(44,146		)	(29,852		)	(63,975		)	(21,942		)
Write-off of deferred financing costs	—			—			(549		)	—
Loss on extinguishment of debt	—			—			(21,495		)	(2,424		)
Miscellaneous, net	695			476			4,243			1,636
	(218,442		)	(214,530		)	(645,955		)	(618,778		)
Income from continuing operations before income taxes	163,203			74,093			371,730			209,842
Income tax expense	(64,604		)	(42,723		)	(165,036		)	(112,844		)
Income from continuing operations	98,599			31,370			206,694			96,998
Income (loss) from discontinued operations, net of taxes	—			32			(18		)	(944		)
Net income	98,599			31,402			206,676			96,054
Net loss (income) attributable to noncontrolling interests	343			(454		)	491			(963		)
Net income attributable to Cablevision Systems Corporation shareholders	$	98,942		$	30,948		$	207,167		$	95,091

Basic net income per share:
Income from continuing operations attributable to Cablevision Systems Corporation shareholders	$	0.34		$	0.11		$	0.71		$	0.33
Income (loss) from discontinued operations attributable to Cablevision Systems Corporation shareholders	$	—		$	—		$	—		$	—
Net income attributable to Cablevision Systems Corporation shareholders	$	0.34		$	0.11		$	0.71		$	0.33

Basic weighted average common shares (in thousands)	292,346			290,365			291,418			290,150

Diluted net income per share:
Income from continuing operations attributable to Cablevision Systems Corporation shareholders	$	0.33		$	0.10		$	0.70		$	0.33
Income (loss) from discontinued operations attributable to Cablevision Systems Corporation shareholders	$	—		$	—		$	—		$	—
Net income attributable to Cablevision Systems Corporation shareholders	$	0.33		$	0.10		$	0.70		$	0.32

Diluted weighted average common shares (in thousands)	300,079			295,921			297,418			294,995

Amounts attributable to Cablevision Systems Corporation shareholders:
Income from continuing operations, net of taxes	$	98,942		$	30,916		$	207,185		$	96,035
Income (loss) from discontinued operations, net of taxes	—			32			(18		)	(944		)
Net income	$	98,942		$	30,948		$	207,167		$	95,091

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2009 and 2008

(Dollars in thousands)

(Unaudited)

	2009			2008
Cash flows from operating activities:
Income from continuing operations	$	206,694		$	96,998
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization (including impairments)	818,935			826,155
Gain on sale of programming interests, net	(1,674		)	(448		)
Loss on investments, net	349			75,811
Loss (gain) on equity derivative contracts, net	1,095			(62,490		)
Write-off of deferred financing costs	549			—
Loss on extinguishment of debt	21,495			2,424
Amortization of deferred financing costs, discounts on indebtedness and other costs	36,040			33,398
Amortization of other deferred costs	25,084			20,509
Share-based compensation expense related to equity classified awards	48,223			47,263
Deferred income taxes	149,532			101,696
Amortization and write-off of program rights	135,401			118,225
Provision for doubtful accounts	51,406			42,049
Changes in other assets and liabilities	(286,920		)	(211,871		)
Net cash provided by operating activities	1,206,209			1,089,719

Cash flows from investing activities:
Capital expenditures	(583,160		)	(633,579		)
Proceeds from sale of equipment, net of costs of disposal	2,649			377
Payments for acquisitions, net	(187		)	(725,357		)
Proceeds from sale of programming interests	1,950			500
Decrease (increase) in investment securities and other investments	1,129			(37,529		)
Increase in restricted cash	(381		)	(14,814		)
Additions to other intangible assets	(4,372		)	(7,038		)
Net cash used in investing activities	(582,372		)	(1,417,440		)

Cash flows from financing activities:
Proceeds from bank debt	—			875,000
Repayment of bank debt	(312,500		)	(117,500		)
Proceeds from issuance of senior notes	2,138,284			500,000
Repayment and repurchase of senior notes and debentures, including tender premiums and fees	(1,421,378		)	(500,000		)
Cash held for repurchase of senior notes	(869,600		)	—
Proceeds from collateralized indebtedness	114,791			171,401
Repayment of collateralized indebtedness	(114,791		)	(536,061		)
Proceeds from stock option exercises	10,998			6,645
Dividend distribution to common stockholders	(90,686		)	(32,021		)
Principal payments on capital lease obligations	(4,001		)	(4,345		)
Deemed repurchase of restricted stock	(12,378		)	(222		)
Additions to deferred financing costs	(47,975		)	(35,887		)
Distributions to noncontrolling partners	(754		)	(998		)
Net cash provided by (used in) financing activities	(609,990		)	326,012

Net increase (decrease) in cash and cash equivalents from continuing operations	13,847			(1,709		)

Cash flows of discontinued operations:
Net cash used in operating activities	(31		)	(59,904		)
Net cash provided by investing activities	—			52,838
Net effect of discontinued operations on cash and cash equivalents	(31		)	(7,066		)

Cash and cash equivalents at beginning of year	322,755			360,662

Cash and cash equivalents at end of period	$	336,571		$	351,887

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	September 30, 2009		December 31, 2008
	(unaudited)
ASSETS

Current Assets:

Cash and cash equivalents	$	296,141	$	294,821
Restricted cash	13,769		10,720
Accounts receivable, trade (less allowance for doubtful accounts of $24,940 and $22,082)	557,679		604,801
Prepaid expenses and other current assets	221,708		232,943
Program rights, net	183,196		157,277
Deferred tax asset	386,904		360,822
Advances to affiliates (primarily due from Cablevision)	528,271		516,219
Investment securities pledged as collateral	181,378		181,271
Derivative contracts	68,037		63,574
Total current assets	2,437,083		2,422,448

Property, plant and equipment, net of accumulated depreciation of $8,363,358 and $7,778,359	3,324,566		3,472,640
Notes and other receivables	36,715		45,485
Investment securities pledged as collateral	181,378		181,271
Derivative contracts	3,136		50,163
Other assets	125,483		131,012
Program rights, net	498,082		495,219
Deferred carriage fees, net	101,190		118,593
Affiliation, broadcast and other agreements, net of accumulated amortization of $563,779 and $520,784	519,954		581,422
Other amortizable intangible assets, net of accumulated amortization of $155,271 and $127,273	208,029		231,256
Indefinite-lived cable television franchises	731,848		731,848
Other indefinite-lived intangible assets	251,008		251,008
Goodwill	1,100,702		1,100,333
Deferred financing and other costs, net of accumulated amortization of $72,656 and $71,623	142,862		124,885
	$	9,662,036	$	9,937,583

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED BALANCE SHEETS (Cont’d)

(Dollars in thousands, except share and per share amounts)

	September 30, 2009			December 31, 2008
	(unaudited)
LIABILITIES AND STOCKHOLDER’S DEFICIENCY

Current Liabilities:

Accounts payable	$	362,451		$	385,966
Accrued liabilities	773,703			862,131
Deferred revenue	230,294			182,155
Program rights obligations	126,852			127,271
Liabilities under derivative contracts	19,405			3,327
Bank debt	310,000			310,000
Collateralized indebtedness	244,161			234,264
Capital lease obligations	5,581			5,318
Notes payable	—			6,230
Senior notes and debentures	—			148,881
Total current liabilities	2,072,447			2,265,543

Deferred revenue	14,951			13,235
Program rights obligations	314,021			342,373
Liabilities under derivative contracts	227,808			263,240
Other liabilities	412,409			373,961
Deferred tax liability	653,561			484,938
Bank debt	5,031,250			5,343,750
Collateralized indebtedness	157,864			214,474
Capital lease obligations	52,267			56,531
Senior notes and debentures due in 2009	—			750,920
Senior notes and debentures due after 2009	4,359,279			3,096,491
Senior subordinated notes	323,754			323,564
Total liabilities	13,619,611			13,529,020

Commitments and contingencies

Redeemable noncontrolling interests	11,371			12,012

Stockholder’s deficiency:
Series A Cumulative Convertible Preferred Stock, 200,000 shares authorized, none issued	—			—
Series B Cumulative Convertible Preferred Stock, 200,000 shares authorized, none issued	—			—
8% Series D Cumulative Preferred Stock, $.01 par value, 112,500 shares authorized, none issued ($100 per share liquidation preference)	—			—
Common Stock, $.01 par value, 20,000,000 shares authorized, 12,825,631 shares issued and outstanding	128			128
Paid-in capital	197,524			839,135
8% Senior notes due from Cablevision	(658,914		)	(653,115		)
Accumulated deficit	(3,474,378		)	(3,754,905		)
	(3,935,640		)	(3,568,757		)
Accumulated other comprehensive loss	(33,330		)	(35,025		)
Total stockholder’s deficiency	(3,968,970		)	(3,603,782		)
Noncontrolling interest	24			333
Total deficiency	(3,968,946		)	(3,603,449		)
	$	9,662,036		$	9,937,583

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three and Nine Months Ended September 30, 2009 and 2008

(Dollars in thousands)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008

Revenues, net	$	1,839,895		$	1,747,560		$	5,628,312		$	5,186,344

Operating expenses:
Technical and operating (excluding depreciation, amortization and impairments shown below)	728,563			737,460			2,390,225			2,243,920
Selling, general and administrative	460,878			443,570			1,395,777			1,288,896
Restructuring expense (credits)	1,834			366			5,690			(1,247		)
Depreciation and amortization (including impairments)	266,975			277,541			818,935			826,155
	1,458,250			1,458,937			4,610,627			4,357,724

Operating income	381,645			288,623			1,017,685			828,620

Other income (expense):
Interest expense	(161,498		)	(166,223		)	(494,867		)	(500,802		)
Interest income	17,247			13,314			52,357			22,158
Gain (loss) on investments, net	51,543			13,324			(349		)	(75,811		)
Gain (loss) on equity derivative contracts, net	(43,833		)	(4,731		)	(1,095		)	62,490
Loss on interest rate swap contracts, net	(44,146		)	(29,852		)	(63,975		)	(21,942		)
Write-off of deferred financing costs	—			—			(477		)	—
Loss on extinguishment of debt	—			—			(20,980		)	(2,424		)
Miscellaneous, net	695			476			4,243			1,636
	(179,992		)	(173,692		)	(525,143		)	(514,695		)
Income from continuing operations before income taxes	201,653			114,931			492,542			313,925
Income tax expense	(77,898		)	(58,914		)	(212,488		)	(156,043		)
Income from continuing operations	123,755			56,017			280,054			157,882
Income (loss) from discontinued operations, net of taxes	—			32			(18		)	(944		)
Net income	123,755			56,049			280,036			156,938
Net loss (income) attributable to noncontrolling interests	343			(454		)	491			(963		)
Net income attributable to CSC Holdings, Inc. shareholder	$	124,098		$	55,595		$	280,527		$	155,975

Amounts attributable to CSC Holdings, Inc. shareholder:
Income from continuing operations, net of taxes	$	124,098		$	55,563		$	280,545		$	156,919
Income (loss) from discontinued operations, net of taxes	—			32			(18		)	(944		)
Net income	$	124,098		$	55,595		$	280,527		$	155,975

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2009 and 2008

(Dollars in thousands)

(Unaudited)

	2009			2008
Cash flows from operating activities:
Income from continuing operations	$	280,054		$	157,882
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization (including impairments)	818,935			826,155
Gain on sale of programming interests, net	(1,674		)	(448		)
Loss on investments, net	349			75,811
Loss (gain) on equity derivative contracts, net	1,095			(62,490		)
Write-off of deferred financing costs	477			—
Loss on extinguishment of debt	20,980			2,424
Amortization of deferred financing costs, discounts on indebtedness and other costs	33,474			29,768
Accretion of discount on Cablevision senior notes held by Newsday	(5,799		)	(1,266		)
Amortization of other deferred costs	25,084			20,509
Share-based compensation expense related to equity classified awards	48,223			47,263
Deferred income taxes	194,504			142,753
Amortization and write-off of program rights	135,401			118,225
Provision for doubtful accounts	51,406			42,049
Changes in other assets and liabilities	(311,156		)	(312,194		)

Net cash provided by operating activities	1,291,353			1,086,441

Cash flows from investing activities:
Capital expenditures	(583,160		)	(633,579		)
Proceeds from sale of equipment, net of costs of disposal	2,649			377
Payments for acquisitions, net	(187		)	(725,357		)
Proceeds from sale of programming interests	1,950			500
Decrease (increase) in investment securities and other investments	1,129			(37,529		)
Increase in restricted cash	(381		)	(14,814		)
Additions to other intangible assets	(4,372		)	(7,038		)
Net cash used in investing activities	(582,372		)	(1,417,440		)

Cash flows from financing activities:
Proceeds from bank debt	—			875,000
Repayment of bank debt	(312,500		)	(117,500		)
Proceeds from issuance of senior notes	1,250,920			500,000
Repurchase of senior notes and debentures, including tender premiums and fees	(920,863		)	(500,000		)
Proceeds from collateralized indebtedness	114,791			171,401
Repayment of collateralized indebtedness	(114,791		)	(536,061		)
Capital contribution from (dividend payments to) Cablevision, net	(691,442		)	(21,393		)
Principal payments on capital lease obligations	(4,001		)	(4,345		)
Additions to deferred financing costs	(28,990		)	(35,877		)
Distributions to noncontrolling partners	(754		)	(998		)
Net cash provided by (used in) financing activities	(707,630		)	330,227

Net increase (decrease) in cash and cash equivalents from continuing operations	1,351			(772		)

Cash flows of discontinued operations:
Net cash used in operating activities	(31		)	(59,904		)
Net cash provided by investing activities	—			52,838
Net effect of discontinued operations on cash and cash equivalents	(31		)	(7,066		)

Cash and cash equivalents at beginning of year	294,821			331,901

Cash and cash equivalents at end of period	$	296,141		$	324,063

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 1. BUSINESS

Cablevision Systems Corporation (“Cablevision”) and its wholly-owned subsidiary CSC Holdings, Inc. (“CSC Holdings,” and collectively with Cablevision, the “Company”) own and operate cable television systems and through Rainbow Media Holdings LLC, a wholly-owned subsidiary of CSC Holdings, have ownership interests in companies that produce and distribute national entertainment and regional news programming services, and Madison Square Garden, L.P. (see Note 19). The Company also owns companies that provide advertising sales services for the cable television industry, provide telephone service, operate motion picture theaters and operate a newspaper publishing business. The Company classifies its business interests into four reportable segments: Telecommunications Services, consisting principally of its video, high-speed data, Voice over Internet Protocol and its commercial data and voice services operations; Rainbow, consisting principally of interests in national and regional television programming networks, including AMC, WE tv, IFC, Sundance Channel (as of June 16, 2008), News 12, IFC Entertainment, and the VOOM HD Networks (the U.S. domestic programming of which ceased in January 2009); Madison Square Garden, consisting principally of a media business that includes regional sports programming networks (MSG network and MSG Plus) and a national music programming network (Fuse), an entertainment business that creates, produces and/or presents a variety of live productions, and a sports business that owns and operates professional sports franchises and presents a variety of live sporting events; and Newsday (as of July 29, 2008), consisting of the Newsday daily newspaper, amNew York, Star Community Publishing Group, and online websites including newsday.com and exploreLI.com.

NOTE 2. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Cablevision and CSC Holdings have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all the information and notes required for complete annual financial statements.

The interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 and its unaudited condensed consolidated financial statements and notes thereto included in its quarterly reports on Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009.

The financial statements as of September 30, 2009 and for the three and nine months ended September 30, 2009 and 2008 presented in this Form 10-Q are unaudited; however, in the opinion of management, such financial statements include all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented.

The accompanying condensed consolidated financial statements of Cablevision include the accounts of Cablevision and its majority-owned subsidiaries and the accompanying condensed consolidated financial statements of CSC Holdings include the accounts of CSC Holdings and its majority-owned subsidiaries. Cablevision has no operations independent of its CSC Holdings subsidiary, whose operating results and financial position are consolidated into Cablevision. The condensed consolidated balance sheets and condensed statements of operations for Cablevision are essentially identical to the condensed consolidated balance sheets and condensed consolidated statements of operations for CSC Holdings, with the following significant exceptions: Cablevision has a total of approximately $1.9 billion of senior notes outstanding at September 30, 2009 issued in September 2009 and April 2004 to third party investors, cash, deferred financing costs and accrued interest related to its senior notes, deferred taxes and accrued

Table of Contents

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

dividends on its balance sheet and CSC Holdings and its subsidiaries have certain intercompany receivables from Cablevision. In July 2008, CSC Holdings received a capital contribution in the form of a note receivable from Cablevision (reflected as a reduction to equity on its condensed consolidated balance sheet) of $650,000 ($682,000 face amount) relating to 8% senior notes due 2012 issued by Cablevision. At September 30, 2009, the accreted value of the note receivable was $658,914. CSC Holdings in turn contributed such notes to its subsidiary, Newsday Holdings LLC. The contribution of Cablevision notes to CSC Holdings has no impact on CSC Holdings’ total stockholder’s equity and the Cablevision notes eliminate in the condensed consolidated balance sheet of Cablevision. Differences between Cablevision’s results of operations from those of CSC Holdings primarily include incremental interest expense, interest income and income tax expense or benefit and CSC Holdings’ results of operations include incremental interest income from the 8% senior notes of $41,380 for the nine months ended September 30, 2009 and the accretion of the discount on the notes issued by Cablevision to CSC Holdings of $5,799 for the nine months ended September 30, 2009.

The combined notes to the condensed consolidated financial statements relate to the Company, which, except as noted, are essentially identical for Cablevision and CSC Holdings. All significant intercompany transactions and balances between Cablevision and CSC Holdings and their respective consolidated subsidiaries are eliminated in both sets of condensed consolidated financial statements. Intercompany transactions between Cablevision and CSC Holdings do not eliminate in the CSC Holdings consolidated financial statements, but do eliminate in the Cablevision consolidated financial statements.

The results of operations for the interim periods are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending December 31, 2009.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain reclassifications have been made to the 2008 financial statements to conform to the 2009 presentation.

NOTE 3. RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

Recently Adopted Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (“FASB”) issued guidance now codified under Accounting Standards Codification (“ASC”) Topic 105-10, which establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with GAAP. ASC Topic 105-10 explicitly recognizes rules and interpretive releases of the SEC under federal securities laws as authoritative GAAP for Securities and Exchange Commission (“SEC”) registrants. Upon adoption of this guidance under ASC Topic 105-10, the Codification superseded all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification became non-authoritative. The guidance under ASC Topic 105-10 became effective for the Company as of September 30, 2009. References made to authoritative FASB guidance throughout this document have been updated to the applicable Codification section.

Table of Contents

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

In May 2009, the FASB issued guidance now codified under ASC Topic 855-10, which requires an entity, after the balance sheet date, to evaluate events or transactions that may occur for potential recognition or disclosure in its financial statements. ASC Topic 855-10 determines the circumstances under which the entity shall recognize these events or transactions in its financial statements and provides the disclosures that an entity shall make about them including disclosing the date through which the entity evaluated these events or transactions, as well as whether that date is the date the entity’s financial statements were issued or the date the financial statements were available to be issued. The guidance under ASC Topic 855-10 became effective for the Company as of June 30, 2009. The Company has provided the required disclosures regarding subsequent events in Note 20.

In March 2008, the FASB issued guidance now codified under ASC Topic 815-10. ASC Topic 815-10 requires specific disclosures regarding the location and amounts of derivative instruments in the Company’s financial statements; how derivative instruments and related hedged items are accounted for; and how derivative instruments and related hedged items affect the Company’s financial position, financial performance, and cash flows. The guidance under ASC Topic 815-10 became effective as of January 1, 2009 for the Company. The Company has provided the required disclosures regarding derivative instruments in Note 11.

In December 2007, the FASB issued guidance now codified under ASC Topic 810-10. ASC Topic 810-10 clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. The guidance under ASC Topic 810-10 became effective as of January 1, 2009 for the Company.

In connection with the guidance now codified under ASC Topic 810-10, the SEC issued additional guidance now codified under ASC Topic 480-10, which sets forth the SEC Staff’s views regarding the interaction between Topic D-98 and ASC Topic 810-10. ASC Topic 480-10 indicates that the classification, measurement, and earnings-per-share guidance required by Topic D-98 applies to noncontrolling interests (e.g., when the noncontrolling interest is redeemable at a fixed price by the holder or upon the occurrence of an event that is not solely within the control of the issuer). This includes noncontrolling interests redeemable at fair value. The guidance under ASC Topic 480-10 became effective as of January 1, 2009 for the Company.

As a result of the adoption of the guidance now codified under ASC Topic 810-10 and ASC Topic 480-10, the Company:

· Reclassified the carrying value of noncontrolling interests of certain consolidated entities of $333 as of December 31, 2008 from the liability section of the balance sheet to equity.

· Reclassified redeemable noncontrolling interests, primarily relating to Tribune Company’s interest in Newsday, from the liability section of the balance sheet to the mezzanine section. In addition, the Company adjusted the carrying value of these redeemable noncontrolling interests as of December 31, 2008 to their estimated fair values of approximately $12,012, which represents the estimated amount that would be paid to the noncontrolling interests if redeemed at their respective estimated fair values. The adjustment to bring the carrying value of these redeemable noncontrolling interests to their estimated fair value was recorded to paid-in capital.

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.

Table of Contents

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

In connection with the adoption of the guidance now codified under ASC Topics 480-10 and 810-10, the Company has reclassified amounts in the accompanying consolidated balance sheets, consolidated statements of operations, and consolidated statements of cash flow related to noncontrolling interests for the 2008 periods.

Under ASC Topic 810-10, net income attributable to noncontrolling interests is no longer included in the determination of net income, and as a result, the net income for the three months ended September 30, 2008 increased by $454, while the net income for the nine months ended September 30, 2008 increased by $963, from previously reported amounts. Although the earnings per share presentation has been modified, the adoption of the guidance now codified under ASC Topic 810-10 had no impact on the Company’s calculation of earnings per share.

In December 2007, the FASB issued guidance now codified under ASC Topic 805. ASC Topic 805 requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date. Also, in April 2009, the FASB issued guidance now codified under ASC Topic 805-20, to address some of the application issues under ASC Topic 805. ASC Topic 805-20 deals with the initial recognition and measurement of an asset acquired or a liability assumed in a business combination that arises from a contingency (provided the fair value on the date of acquisition of the related asset or liability can be determined). Both the guidance under ASC Topics 805 and 805-20 became effective as of January 1, 2009 for the Company. Accordingly, any business combination completed prior to January 1, 2009 was accounted for pursuant to SFAS No. 141, Business Combinations. Business combinations completed subsequent to January 1, 2009, will be accounted for pursuant to ASC Topics 805 and 805-20. The impact that ASC Topics 805 and 805-20 will have on the Company’s consolidated financial statements will depend upon the nature, terms and size of such business combinations, if any.

In September 2006, the FASB issued guidance now codified under ASC Topic 820. ASC Topic 820 defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. Under ASC Topic 820, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. It also clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. ASC Topic 820 applies under other accounting pronouncements that require or permit fair value measurements. Accordingly, ASC Topic 820 does not require any new fair value measurements. The guidance under ASC Topic 820 became effective for the Company on January 1, 2008 with respect to financial assets and financial liabilities. The additional disclosures required by ASC Topic 820 are included in Note 12.

The adoption of the guidance now codified under ASC Topic 820 for nonfinancial assets and nonfinancial liabilities which include goodwill, intangible assets, and long-lived assets measured at fair value for impairment assessments, and nonfinancial assets and nonfinancial liabilities initially measured at fair value in a business combination, became effective for the Company on January 1, 2009. The adoption of the guidance under ASC Topic 820 for nonfinancial assets and nonfinancial liabilities did not have an impact on the Company’s consolidated financial position or results of operations.

In April 2009, the FASB issued guidance now codified under ASC Topic 825-10, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies, as well as in annual financial statements. ASC Topic 825-10 also amends the disclosure requirements of ASC Topic 270-10, to require those disclosures in summarized financial information at interim reporting periods. The guidance under ASC Topic 825-10 became effective for the Company during the quarter ended June 30, 2009. The additional disclosures required by ASC Topic 825-10 are included in Note 13.

Table of Contents

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

In April 2008, the FASB issued guidance now codified under ASC Topics 350-30 and 275-10, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under ASC Topic 350. The guidance under ASC Topics 350-30 and 275-10 became effective as of January 1, 2009 for the Company. The adoption of ASC Topics 350-30 and 275-10 did not have a material effect on the Company’s condensed consolidated financial statements.

In December 2007, the FASB issued guidance now codified under ASC Topic 808-10, which defines collaborative arrangements and establishes reporting requirements for transactions between participants in a collaborative arrangement and between participants in the arrangement and third parties. ASC Topic 808-10 also establishes the appropriate income statement presentation and classification for joint operating activities and payments between participants, as well as the disclosure requirements related to these arrangements. The guidance under ASC Topic 808-10 became effective as of January 1, 2009 for the Company. The adoption of the guidance under ASC Topic 808-10 did not have a material effect on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2008, the FASB issued guidance under ASC Topic 715-20, which requires more detailed disclosures about employers’ plan assets, including employers’ investment strategies, major categories of plan assets, concentrations of risk within plan assets, and valuation techniques used to measure the fair value of plan assets. The guidance in ASC Topic 715-20 will be effective for the Company in the fourth quarter of 2009.

In August 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05, Measuring Liabilities at Fair Value, which provides clarification that in circumstances where a quoted market price in an active market for an identical liability is not available, a reporting entity must measure fair value of the liability using one of the following techniques: (a) the quoted price of the identical liability when traded as an asset; (b) quoted prices for similar liabilities or similar liabilities when traded as assets; or (c) another valuation technique, such as a present value technique or the amount that the reporting entity would pay to transfer the identical liability or would receive to enter into the identical liability that is consistent with the provisions of ASC Topic 820. The guidance in ASU 2009-05 will be effective for the Company in the fourth quarter of 2009.

In September 2009, the FASB issued ASU No. 2009-12, Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which provides guidance on how to determine the fair value of an alternative investment when fair value is not readily determinable and an investor is provided only with a net asset value per share (or its equivalent) by the investee that has been calculated in a manner consistent with GAAP for investment companies (ASC Topic 946). ASU No. 2009-12 requires an investor to disclose (a) by major category of investment the attributes of each investment it holds that meet the criteria of ASU No. 2009-12 and (b) the investment strategies of the investees. The guidance in ASU 2009-12 will be effective for the Company in the fourth quarter of 2009.

In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements, which provides amendments that (a) update the criteria for separating consideration in multiple-deliverable arrangements, (b) establish a selling price hierarchy for determining the selling price of a deliverable, and (c) replace the term “fair value” in the revenue allocation guidance with the term “selling price” to clarify that the allocation of revenue is based on entity-specific assumptions. ASU No. 2009-13 eliminates the residual method of allocating arrangement consideration to deliverables, requires the use of the relative selling price method and requires that a vendor determine its best estimate of selling price in a

Table of Contents

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

manner consistent with that used to determine the price to sell the deliverable on a standalone basis. ASU No. 2009-13 requires a vendor to significantly expand the disclosures related to multiple-deliverable revenue arrangements with the objective to provide information about the significant judgments made and changes to those judgments and how the application of the relative selling-price method affects the timing or amount of revenue recognition. ASU No. 2009-13 is required to be adopted on a prospective basis to revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted.

NOTE 4. DIVIDENDS

On February 25, 2009, May 6, 2009 and July 29, 2009, the Board of Directors of Cablevision declared a cash dividend of $0.10 per share payable on March 31, 2009, June 9, 2009 and September 1, 2009, respectively, to stockholders of record on both its Cablevision NY Group (“CNYG”) Class A common stock and CNYG Class B common stock as of March 9, 2009, May 18, 2009 and August 10, 2009, respectively.

During the nine months ended September 30, 2009, CSC Holdings paid cash dividends to Cablevision aggregating approximately $693,521. The proceeds were used to fund (i) Cablevision’s repurchase of a portion of Cablevision’s floating rate senior notes due April 1, 2009 pursuant to the tender offer completed in March 2009 ($196,269) (see Note 10); (ii) Cablevision’s repayment of the remaining outstanding balance of its floating rate senior notes due April 1, 2009 upon their maturity ($303,731) (see Note 10); (iii) Cablevision’s dividends paid on March 31, 2009, June 9, 2009 and September 1, 2009; (iv) Cablevision’s interest payments on certain of its senior notes; and (v) Cablevision’s payments of payroll related taxes upon the vesting of certain restricted shares.

NOTE 5. INCOME ATTRIBUTABLE TO SHAREHOLDERS

Cablevision

Basic net income attributable to Cablevision shareholders is computed by dividing net income attributable to Cablevision shareholders by the weighted average number of common shares outstanding during the period. Diluted net income attributable to Cablevision shareholders reflects the dilutive effects of stock options and restricted stock.

A reconciliation of the denominator of the basic and diluted net income per share attributable to Cablevision shareholders calculation for the three and nine months ended September 30, 2009 and 2008 is as follows:

	Three Months	Nine Months	Three Months	Nine Months
	Ended September 30, 2009		Ended September 30, 2008
Basic weighted average shares outstanding	292,346	291,418	290,365	290,150
Effect of dilution:
Stock options	3,018	2,172	2,402	2,312
Restricted stock awards	4,715	3,828	3,154	2,533
Diluted weighted average shares outstanding	300,079	297,418	295,921	294,995

Anti-dilutive shares (options whose exercise price exceeds the average market price of Cablevision’s common stock during the period) totaling 636 and 2,117 for the three and nine months ended

Table of Contents

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

September 30, 2009, respectively, and 391 and 939 for the three and nine months ended September 30, 2008, respectively, have been excluded from diluted weighted average shares outstanding.

CSC Holdings

Net income per common share attributable to the CSC Holdings shareholder is not presented since CSC Holdings is a wholly-owned subsidiary of Cablevision.

NOTE 6. COMPREHENSIVE INCOME

The following table presents comprehensive income for the three and nine months ended September 30, 2009 and 2008:

	Three Months Ended September 30,
	2009				2008
	Cablevision		CSC Holdings		Cablevision			CSC Holdings
Net income	$	98,599	$	123,755	$	31,402		$	56,049
Amortization of prior service cost and gains and losses included in net periodic benefit cost, net of taxes	370		370		(246		)	(246		)
Comprehensive income	98,969		124,125		31,156			55,803
Comprehensive loss (income) attributable to the noncontrolling interests	343		343		(454		)	(454		)
Comprehensive income attributable to Cablevision and CSC Holdings shareholder(s)	$	99,312	$	124,468	$	30,702		$	55,349

	Nine Months Ended September 30,
	2009				2008
	Cablevision		CSC Holdings		Cablevision			CSC Holdings
Net income	$	206,676	$	280,036	$	96,054		$	156,938
Amortization of prior service cost and gains and losses included in net periodic benefit cost, net of taxes	1,695		1,695		(738		)	(738		)
Comprehensive income	208,371		281,731		95,316			156,200
Comprehensive loss (income) attributable to the noncontrolling interests	491		491		(963		)	(963		)
Comprehensive income attributable to Cablevision and CSC Holdings shareholder(s)	$	208,862	$	282,222	$	94,353		$	155,237

Table of Contents

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 7. GROSS VERSUS NET REVENUE RECOGNITION

In the normal course of business, the Company is assessed non-income related taxes by governmental authorities, including franchising authorities, and generally collects such taxes from its customers. The Company’s policy is that, in instances where the tax is being assessed directly on the Company, amounts paid to the governmental authorities and amounts received from the customers are recorded on a gross basis. That is, amounts paid to the governmental authorities are recorded as technical and operating expenses and amounts received from the customer are recorded as revenues. For the three and nine months ended September 30, 2009 and 2008, the amount of franchise fees included as a component of net revenue aggregated $32,055 and $95,448 and $30,456 and $90,967, respectively.

NOTE 8. CASH FLOWS

For purposes of the condensed consolidated statements of cash flows, the Company considers the balance of its investment in funds that substantially hold securities that mature within three months or less from the date the fund purchases these securities to be cash equivalents.

During the nine months ended September 30, 2009 and 2008, the Company’s non-cash investing and financing activities and other supplemental data were as follows:

	Nine Months Ended September 30,
	2009		2008
Non-Cash Investing and Financing Activities of Cablevision and CSC Holdings:
Continuing Operations:
Value of General Electric Company common stock exchanged in the acquisition of the Sundance Channel	$	—	$	369,137
Redemption of collateralized indebtedness with related equity derivative contracts	51,599		50,931
Leasehold improvements paid by landlord	308		—
Capitalized share-based compensation	596		—
Asset retirement obligations	—		9,243

Non-Cash Investing Activity of CSC Holdings:
Continuing Operations:
Contribution of 8% senior notes due 2012 from Cablevision	—		650,000

Supplemental Data:
Cash interest paid - continuing operations (Cablevision)	518,482		558,337
Cash interest paid - continuing operations (CSC Holdings)	458,769		493,824
Income taxes paid, net (Cablevision and CSC Holdings)	16,506		10,622

Table of Contents

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 9. INTANGIBLE ASSETS

The following table summarizes information relating to the Company’s acquired intangible assets at September 30, 2009 and December 31, 2008:

	September 30,			December 31,
	2009			2008
Gross carrying amount of affiliation, broadcast and other agreements
Affiliation agreements and affiliate relationships	$	1,038,143		$	1,056,616
Broadcast rights and other agreements	45,590			45,590
	1,083,733			1,102,206
Accumulated amortization
Affiliation agreements and affiliate relationships	(522,597		)	(480,741		)
Broadcast rights and other agreements	(41,182		)	(40,043		)
	(563,779		)	(520,784		)
Affiliation, broadcast and other agreements, net of accumulated amortization	$	519,954		$	581,422

Gross carrying amount of other amortizable intangible assets
Season ticket holder relationships	$	75,005		$	75,005
Suite holder relationships	15,394			15,394
Advertiser relationships	149,803			149,679
Other amortizable intangibles	123,098			118,451
	363,300			358,529
Accumulated amortization
Season ticket holder relationships	(25,014		)	(20,927		)
Suite holder relationships	(6,295		)	(5,246		)
Advertiser relationships	(80,545		)	(67,787		)
Other amortizable intangibles	(43,417		)	(33,313		)
	(155,271		)	(127,273		)
Other amortizable intangible assets, net of accumulated amortization	$	208,029		$	231,256

Indefinite-lived intangible assets
Sports franchises	$	96,215		$	96,215
FCC licenses and other intangibles	6,913			6,913
Trademarks	147,880			147,880
Other indefinite-lived intangible assets	$	251,008		$	251,008

Affiliation, broadcast and other agreements, net of accumulated amortization	$	519,954		$	581,422
Other amortizable intangible assets, net of accumulated amortization	208,029			231,256
Indefinite-lived cable television franchises	731,848			731,848
Other indefinite-lived intangible assets	251,008			251,008
Goodwill	1,100,702			1,100,333

Total intangible assets, net	$	2,811,541		$	2,895,867

Aggregate amortization expense
Nine months ended September 30, 2009	$	89,466

Estimated amortization expense
Year ending December 31, 2009	$	118,740
Year ending December 31, 2010	115,644
Year ending December 31, 2011	114,330
Year ending December 31, 2012	95,364
Year ending December 31, 2013	54,016

Table of Contents

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

The changes in the carrying amount of goodwill for the nine months ended September 30, 2009 are as follows:

	Tele- communication Services			Madison Square Garden		Rainbow			Newsday			Other		Total
Balance as of December 31, 2008	$	252,090		$	742,492	$	89,749		$	2,444		$	13,558	$	1,100,333
Adjustments to preliminary purchase price allocations	477		(a)	—		(89		)(b)	(100		)	—		288
Other acquisitions	—			—		81		(c)	—			—		81
Balance as of September 30, 2009	$	252,567		$	742,492	$	89,741		$	2,344		$	13,558	$	1,100,702

(a) Adjustment to purchase accounting related to the acquisition of 4Connections LLC which is included in the Lightpath reporting unit.

(b) Adjustment to purchase accounting related to the acquisition of Sundance Channel.

During the second quarter of 2009, the Company’s Madison Square Garden segment management changed how it reports financial information to the Company. As a result, in preparing the Company’s consolidated financial statements, the Company determined that the reporting units historically used for the Madison Square Garden reportable segment during the Company’s annual goodwill impairment test should be revised. The Madison Square Garden reportable segment continues to have three reporting units, but the operating businesses within these reporting units were reassigned to reflect how the business units within Madison Square Garden are currently managed. The three reporting units are now identified as MSG Media, MSG Entertainment and MSG Sports. The Company performed an impairment analysis of goodwill for the period ended June 30, 2009 using the new reporting units for the Madison Square Garden reportable segment and each reporting unit’s fair value continues to be in excess of its respective carrying value (including goodwill allocated to each respective reporting unit).

NOTE 10. DEBT

Amendment of Credit Facility

On May 27, 2009, CSC Holdings entered into an agreement that provides for an extension of the maturity date from March 29, 2013 to March 29, 2016 of approximately $1,167,000 of the $3,395,000 outstanding principal amount of the term B loan under its principal credit facility. Consenting lenders received a one-time amendment fee of five basis points (.05%) on their total loan commitments. Lenders electing to extend their loan commitments will be paid an annual extension fee of 1.5% of their loan commitments through maturity on March 29, 2016.

Issuance of Debt Securities

On September 23, 2009, Cablevision issued $900,000 face amount of 8-5/8% senior notes due September 15, 2017. These notes are senior unsecured obligations and are not guaranteed by any of Cablevision’s subsidiaries. Cablevision may redeem all or a portion of the notes at any time at a price

Table of Contents

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

equal to 100% of the principal amount of the notes redeemed plus accrued and unpaid interest to the redemption date plus a “make-whole” premium. Gross proceeds from the issuance were approximately $887,364 after giving effect to the original issue discount of approximately $12,636. The net proceeds were used in connection with the September 2009 tender offers (see Note 20). In connection with the issuance of these debt securities, the Company incurred deferred financing costs of $18,985, which are being amortized to interest expense over the term of the senior notes.

On February 12, 2009, CSC Holdings issued $526,000 face amount of 8-5/8% senior notes due February 15, 2019. These notes are senior unsecured obligations and are not guaranteed by any of CSC Holdings’ subsidiaries. CSC Holdings may redeem all or a portion of the notes at any time at a price equal to 100% of the principal amount of the notes redeemed plus accrued and unpaid interest to the redemption date plus a “make-whole” premium. Gross proceeds from the issuance were approximately $500,731 after giving effect to the original issue discount of approximately $25,269. The proceeds were used in connection with the February 2009 tender offers discussed below and to repay a portion of the outstanding $500,000 face amount of Cablevision floating rate senior notes due April 1, 2009 (“April 2009 Notes”). In connection with the issuance of these debt securities, the Company incurred deferred financing costs of $10,837, which are being amortized to interest expense over the term of the senior notes.

On January 13, 2009, CSC Holdings issued $844,000 face amount of 8-1/2% senior notes due April 15, 2014. These notes are senior unsecured obligations and are not guaranteed by any of CSC Holdings’ subsidiaries. CSC Holdings may redeem all or a portion of the notes at any time at a price equal to 100% of the principal amount of the notes redeemed plus accrued and unpaid interest to the redemption date plus a “make-whole” premium. Gross proceeds from the issuance were approximately $750,189, after giving effect to the original issue discount of approximately $93,811. The proceeds were used in connection with the February 2009 tender offers discussed below and to fund a dividend to Cablevision that was used by Cablevision to repay a portion of the Cablevision April 2009 Notes. In connection with the issuance of these debt securities, the Company incurred deferred financing costs of $16,434, which are being amortized to interest expense over the term of the senior notes.

Tender Offers for Debt (tender prices per note in dollars)

February 2009 Tender Offer

On February 13, 2009, Cablevision commenced a cash tender offer (the “Cablevision February Tender”) for its outstanding April 2009 Notes for total consideration of $1,002.50 per $1,000.00 principal amount of notes tendered for purchase, consisting of tender offer consideration of $997.50 per $1,000.00 principal amount of notes plus an early tender premium of $5.00 per $1,000.00 principal amount of notes. Concurrently, CSC Holdings announced that it commenced a cash tender offer (the “CSC Holdings February Tender”) for (1) its outstanding $500,000 face amount of 8-1/8% senior notes due July 15, 2009 (“July 2009 Notes”) for total consideration of $1,022.84 per $1,000.00 principal amount of notes tendered for purchase, consisting of tender offer consideration of $1,000.00 per $1,000.00 principal amount of notes plus an early tender premium of $22.84 per $1,000.00 principal amount of notes, and (2) its outstanding $400,000 face amount of 8-1/8% senior debentures due August 15, 2009 (“August 2009 Debentures”) for total consideration of $1,027.63 per $1,000.00 principal amount of debentures tendered for purchase, consisting of tender offer consideration of $1,000.00 per $1,000.00 principal amount of debentures plus an early tender premium of $27.63 per $1,000.00 principal amount of debentures.

Pursuant to the Cablevision February Tender and CSC Holdings February Tender, Cablevision repurchased $196,269 aggregate principal amount of the April 2009 Notes and CSC Holdings

Table of Contents

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

repurchased $449,430 aggregate principal amount of the July 2009 Notes and $306,791 aggregate principal amount of the August 2009 Debentures. The tender premiums aggregating approximately $490 for the Cablevision April 2009 Notes and $18,726 for CSC Holdings July 2009 Notes and August 2009 Debentures, have been recorded in loss on extinguishment of debt in the condensed consolidated statements of operations for the nine months ended September 30, 2009.

Repayment of Debt

On July 15, 2009 and August 15, 2009, upon their maturity, CSC Holdings repaid the remaining outstanding balances of its July 2009 Notes and August 2009 Debentures, discussed below, aggregating $50,570 and $93,209, respectively with cash on hand.

On April 1, 2009, upon their maturity, Cablevision repaid the remaining outstanding balance of its April 2009 Notes aggregating $303,731 with cash on hand.