Edgar Filing: CSC HOLDINGS LLC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2010

o	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, LLC	27-0726696
	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, LLC		Yes x		No 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 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, LLC

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, LLC		Yes o		No x

Number of shares of common stock outstanding as of July 30, 2010:

Cablevision NY Group Class A Common Stock -		250,452,613
Cablevision NY Group Class B Common Stock -		54,354,251
CSC Holdings, LLC Membership Units -		14,432,750

CSC Holdings, LLC 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, LLC.

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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 - June 30, 2010 (unaudited) and December 31, 2009	3

	Condensed Consolidated Statements of Operations - Three and Six Months Ended June 30, 2010 and 2009 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2010 and 2009 (unaudited)	6

	Financial Statements of CSC Holdings, LLC and Subsidiaries

	Condensed Consolidated Balance Sheets - June 30, 2010 (unaudited) and December 31, 2009	7

	Condensed Consolidated Statements of Operations - Three and Six Months Ended June 30, 2010 and 2009 (unaudited)	9

	Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2010 and 2009 (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	39

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	80

Item 4.	Controls and Procedures	82

PART II.	OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	83

Item 6.	Exhibits	83

SIGNATURES		84

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PART I. FINANCIAL INFORMATION

This Quarterly Report on Form 10-Q for the period ended June 30, 2010 is separately filed by Cablevision Systems Corporation (“Cablevision”) and CSC Holdings, LLC (formerly 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 telephone companies and direct broadcast satellite (“DBS”) operators) 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 in Note 16 of the combined notes to our 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;

· the tax-free treatment of Cablevision’s distribution to its stockholders on February 9, 2010 of all of the outstanding common stock of Madison Square Garden, Inc., a company which owns the sports, entertainment and media businesses previously owned and operated by the Company’s Madison Square Garden segment (the “MSG Distribution”);

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· whether pending uncompleted transactions, including the acquisition of Bresnan Broadband Holdings, LLC and its subsidiaries by our subsidiary BBHI Holdings LLC, 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;

· 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.

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Item 1. Financial Statements

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	June 30,		December 31,
	2010		2009
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	517,458	$	245,032
Accounts receivable, trade (less allowance for doubtful accounts of $23,615 and $23,500)	494,886		484,400
Prepaid expenses and other current assets	204,927		147,445
Program rights, net	173,495		162,741
Deferred tax asset	353,084		522,799
Advances to affiliates	5,573		14,278
Investment securities pledged as collateral	186,533		136,059
Derivative contracts	13,756		37,137
Assets distributed to shareholders in 2010	—		530,559
Total current assets	1,949,712		2,280,450
Property, plant and equipment, net of accumulated depreciation of $8,515,642 and $8,154,738	2,892,010		2,973,581
Other receivables	33,164		29,590
Advances to affiliates	4,225		4,920
Investment securities pledged as collateral	186,533		226,054
Derivative contracts	15,079		8,361
Other assets	50,293		56,790
Deferred tax asset	37,133		—
Program rights, net	569,171		520,565
Deferred carriage fees, net	80,404		91,170
Affiliation, broadcast and other agreements, net of accumulated amortization of $562,540 and $526,790	381,214		416,964
Other amortizable intangible assets, net of accumulated amortization of $131,531 and $115,803	117,434		132,132
Indefinite-lived cable television franchises	731,848		731,848
Other indefinite-lived intangible assets	90,913		90,913
Goodwill	358,210		358,210
Deferred financing and other costs, net of accumulated amortization of $76,413 and $79,407	134,252		111,742
Assets distributed to shareholders in 2010	—		1,522,440
	$	7,631,595	$	9,555,730

See accompanying combined notes to condensed consolidated financial statements.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Cont’d)

(Dollars in thousands, except per share amounts)

	June 30,			December 31,
	2010			2009
	(Unaudited)
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current Liabilities:
Accounts payable	$	413,592		$	394,243
Accrued liabilities	617,547			650,193
Accounts payable to affiliates	26,659			21,088
Deferred revenue	71,114			66,879
Program rights obligations	125,926			118,956
Liabilities under derivative contracts	8,813			9,294
Bank debt	174,362			360,000
Collateralized indebtedness	176,263			171,401
Capital lease obligations	5,956			5,745
Senior notes	325,719			—
Notes payable to affiliate	—			190,000
Liabilities distributed to shareholders in 2010	—			307,526
Total current liabilities	1,945,951			2,295,325
Deferred revenue	12,606			13,944
Program rights obligations	344,376			316,896
Liabilities under derivative contracts	201,042			211,696
Other liabilities	343,357			331,216
Deferred tax liability	—			47,197
Bank debt	5,129,211			4,938,750
Collateralized indebtedness	183,823			204,431
Capital lease obligations	48,589			50,796
Senior notes and debentures	5,282,257			5,321,883
Senior subordinated notes	323,944			323,817
Liabilities distributed to shareholders in 2010	—			643,038
Total liabilities	13,815,156			14,698,989
Commitments and contingencies
Redeemable noncontrolling interests	15,595			12,175
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, 278,899,653 and 274,133,498 shares issued and 250,430,144 and 247,668,143 shares outstanding	2,789			2,741
CNYG Class B common stock, $.01 par value, 320,000,000 shares authorized, 54,354,251 shares issued and outstanding	544			544
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	7,057			89,741
Accumulated deficit	(5,678,698		)	(4,749,714		)
	(5,668,308		)	(4,656,688		)
Treasury stock, at cost (28,469,509 and 26,465,355 CNYG Class A common shares)	(494,312		)	(449,507		)
Accumulated other comprehensive loss	(36,934		)	(49,760		)
Total stockholders’ deficiency	(6,199,554		)	(5,155,955		)
Noncontrolling interest	398			521
Total deficiency	(6,199,156		)	(5,155,434		)
	$	7,631,595		$	9,555,730

See accompanying combined notes to condensed consolidated financial statements.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three and Six Months Ended June 30, 2010 and 2009

(Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Revenues, net (including revenues, net from Madison Square Garden of $2,130 , $2,490, $4,559 and $4,764, respectively)	$	1,802,180		$	1,702,857		$	3,554,581		$	3,368,469
Operating expenses:
Technical and operating (excluding depreciation, amortization and impairments shown below and including charges from Madison Square Garden of $38,051, $29,535, $76,083 and $59,055, respectively)	725,969			695,168			1,463,565			1,398,882
Selling, general and administrative (net of charges to Madison Square Garden of $2,385, $7,065, $5,583 and $13,030, respectively)	414,667			406,536			832,715			813,386
Restructuring expense (credit)	110			4,028			(99		)	3,856
Depreciation and amortization (including impairments)	244,651			258,201			486,544			521,464
	1,385,397			1,363,933			2,782,725			2,737,588
Operating income	416,783			338,924			771,856			630,881
Other income (expense):
Interest expense	(207,870		)	(187,992		)	(391,171		)	(382,105		)
Interest income	768			781			1,409			2,739
Gain on sale of programming interests, net	102			453			204			1,219
Gain (loss) on investments, net	(31,364		)	18,390			10,928			(51,892		)
Gain (loss) on equity derivative contracts, net	32,292			(15,887		)	(2,741		)	42,738
Gain (loss) on interest rate swap contracts, net	(21,771		)	13,907			(56,880		)	(19,829		)
Loss on extinguishment of debt and write-off of deferred financing costs	(110,049		)	(187		)	(110,049		)	(22,044		)
Miscellaneous, net	53			187			426			329
	(337,839		)	(170,348		)	(547,874		)	(428,845		)
Income from continuing operations before income taxes	78,944			168,576			223,982			202,036
Income tax expense	(17,863		)	(80,925		)	(84,591		)	(97,494		)
Income from continuing operations	61,081			87,651			139,391			104,542
Income (loss) from discontinued operations, net of income taxes	—			(592		)	(4,122		)	3,535
Net income	61,081			87,059			135,269			108,077
Net loss (income) attributable to noncontrolling interests	(217		)	(51		)	(245		)	148
Net income attributable to Cablevision Systems Corporation shareholders	$	60,864		$	87,008		$	135,024		$	108,225
Basic net income (loss) per share attributable to Cablevision Systems Corporation shareholders:
Income from continuing operations	$	0.21		$	0.30		$	0.47		$	0.36
Income (loss) from discontinued operations	$	—		$	—		$	(0.01	)	$	0.01
Net income	$	0.21		$	0.30		$	0.46		$	0.37
Basic weighted average common shares (in thousands)	295,762			291,121			294,828			290,946
Diluted net income (loss) per share attributable to Cablevision Systems Corporation shareholders:
Income from continuing operations	$	0.20		$	0.29		$	0.46		$	0.35
Income (loss) from discontinued operations	$	—		$	—		$	(0.01	)	$	0.01
Net income	$	0.20		$	0.29		$	0.45		$	0.37
Diluted weighted average common shares (in thousands)	303,914			297,726			303,373			296,079
Amounts attributable to Cablevision Systems Corporation shareholders:
Income from continuing operations, net of income taxes	$	60,864		$	87,600		$	139,146		$	104,690
Income (loss) from discontinued operations, net of income taxes	—			(592		)	(4,122		)	3,535
Net income	$	60,864		$	87,008		$	135,024		$	108,225
Cash dividends declared per share of common stock	$	0.125		$	0.10		$	0.225		$	0.20

See accompanying combined notes to condensed consolidated financial statements.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30, 2010 and 2009

(Dollars in thousands)

(Unaudited)

	2010			2009
Cash flows from operating activities:
Income from continuing operations	$	139,391		$	104,542
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization (including impairments)	486,544			521,464
Gain on sale of programming interests, net	(204		)	(1,219		)
Loss (gain) on investments, net	(10,928		)	51,892
Loss (gain) on equity derivative contracts, net	2,741			(42,738		)
Loss on extinguishment of debt and write-off of deferred financing costs	110,049			22,044
Amortization of deferred financing costs, discounts on indebtedness and other costs	21,959			24,647
Amortization of other deferred costs	12,584			11,824
Share-based compensation expense related to equity classified awards	28,547			29,525
Deferred income taxes	71,257			88,785
Amortization and write-off of program rights	96,927			86,057
Provision for doubtful accounts	27,208			33,572
Changes in program rights and program rights obligations	(122,386		)	(105,600		)
Changes in other assets and liabilities	(76,786		)	(80,861		)
Net cash provided by operating activities	786,903			743,934
Cash flows from investing activities:
Capital expenditures	(355,241		)	(355,036		)
Proceeds from sale of equipment, net of costs of disposal	2,829			2,549
Payments for acquisitions, net	(135		)	(187		)
Proceeds from sale of programming interests	250			1,425
Decrease in investment securities and other investments	100			1,120
Decrease in restricted cash	—			4,875
Capital contributions to Madison Square Garden	—			(148		)
Additions to other intangible assets	(1,099		)	(166		)
Net cash used in investing activities	(353,296		)	(345,568		)
Cash flows from financing activities:
Proceeds from bank debt	400,000			—
Repayment of bank debt	(395,177		)	(195,000		)
Proceeds from issuance of senior notes	1,250,000			1,250,920
Repurchase of senior notes and debentures, including tender premiums and fees	(1,078,212		)	(1,277,598		)
Repayment of note payable due to Madison Square Garden	(190,000		)	—
Proceeds from collateralized indebtedness	97,863			75,398
Repayment of collateralized indebtedness	(97,863		)	(75,398		)
Proceeds from stock option exercises	16,749			2,360
Dividend distributions to common stockholders	(67,503		)	(59,340		)
Principal payments on capital lease obligations	(2,719		)	(2,066		)
Deemed repurchases of restricted stock	(17,623		)	(11,801		)
Purchase of shares of CNYG Class A common stock held as treasury shares	(27,180		)	—
Additions to deferred financing costs	(39,866		)	(28,986		)
Distributions to noncontrolling interests	(635		)	(698		)
Net cash used in financing activities	(152,166		)	(322,209		)
Net increase in cash and cash equivalents from continuing operations	281,441			76,157
Cash flows of discontinued operations:
Net cash provided by (used in) operating activities	(29,132		)	37,517
Net cash used in investing activities	(5,997		)	(29,066		)
Net cash used in financing activities	(8,204		)	(461		)
Effect of change in cash related to discontinued operations	34,318			8,742
Net increase (decrease) in cash and cash equivalents from discontinued operations	(9,015		)	16,732
Cash and cash equivalents at beginning of year	245,032			252,029
Cash and cash equivalents at end of period	$	517,458		$	344,918

See accompanying combined notes to condensed consolidated financial statements.

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CSC HOLDINGS, LLC AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	June 30, 2010		December 31, 2009
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	439,119	$	204,040
Accounts receivable, trade (less allowance for doubtful accounts of $23,615 and $23,500)	494,886		484,400
Prepaid expenses and other current assets	204,885		147,426
Program rights, net	173,495		162,741
Deferred tax asset	194,254		320,840
Advances to affiliates (primarily due from Cablevision)	485,277		527,559
Investment securities pledged as collateral	186,533		136,059
Derivative contracts	13,756		37,137
Assets distributed to member in 2010	—		530,559
Total current assets	2,192,205		2,550,761
Property, plant and equipment, net of accumulated depreciation of $8,515,642 and $8,154,738	2,892,010		2,973,581
Other receivables	33,164		29,590
Advances to affiliates	4,225		4,920
Investment securities pledged as collateral	186,533		226,054
Derivative contracts	15,079		8,361
Other assets	50,293		56,790
Program rights, net	569,171		520,565
Deferred carriage fees, net	80,404		91,170
Affiliation, broadcast and other agreements, net of accumulated amortization of $562,540 and $526,790	381,214		416,964
Other amortizable intangible assets, net of accumulated amortization of $131,531 and $115,803	117,434		132,132
Indefinite-lived cable television franchises	731,848		731,848
Other indefinite-lived intangible assets	90,913		90,913
Goodwill	358,210		358,210
Deferred financing and other costs, net of accumulated amortization of $74,174 and $63,803	90,422		87,184
Assets distributed to member in 2010	—		1,522,440
	$	7,793,125	$	9,801,483

See accompanying combined notes to condensed consolidated financial statements.

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CSC HOLDINGS, LLC AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED BALANCE SHEETS (Cont’d)

(Dollars in thousands)

	June 30, 2010			December 31, 2009
	(Unaudited)
LIABILITIES AND TOTAL DEFICIENCY
Current Liabilities:
Accounts payable	$	413,592		$	394,243
Accrued liabilities	569,301			606,655
Accounts payable to affiliates	26,387			21,088
Deferred revenue	71,114			66,879
Program rights obligations	125,926			118,956
Liabilities under derivative contracts	8,813			9,294
Bank debt	174,362			360,000
Collateralized indebtedness	176,263			171,401
Capital lease obligations	5,956			5,745
Senior notes	325,719			—
Notes payable to affiliate	—			190,000
Liabilities distributed to member in 2010	—			307,526
Total current liabilities	1,897,433			2,251,787
Deferred revenue	12,606			13,944
Program rights obligations	344,376			316,896
Liabilities under derivative contracts	201,042			211,696
Other liabilities	340,039			327,901
Deferred tax liability	241,824			161,691
Bank debt	5,129,211			4,938,750
Collateralized indebtedness	183,823			204,431
Capital lease obligations	48,589			50,796
Senior notes and debentures	3,117,168			3,434,192
Senior subordinated notes	323,944			323,817
Liabilities distributed to member in 2010	—			643,038
Total liabilities	11,840,055			12,878,939
Commitments and contingencies
Redeemable noncontrolling interests	15,595			12,175
Total Deficiency:
Senior notes due from Cablevision	(753,717		)	(660,951		)
Accumulated deficit	(3,338,329		)	(3,363,682		)
Other member’s equity (14,432,750 membership units issued and outstanding)	66,057			984,241
	(4,025,989		)	(3,040,392		)
Accumulated other comprehensive loss	(36,934		)	(49,760		)
Total member’s deficiency	(4,062,923		)	(3,090,152		)
Noncontrolling interest	398			521
Total deficiency	(4,062,525		)	(3,089,631		)
	$	7,793,125		$	9,801,483

See accompanying combined notes to condensed consolidated financial statements.

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CSC HOLDINGS, LLC AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three and Six Months Ended June 30, 2010 and 2009

(Dollars in thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Revenues, net (including revenues, net from Madison Square Garden of $2,130, $2,490, $4,559 and $4,764, respectively)	$	1,802,180		$	1,702,857		$	3,554,581		$	3,368,469
Operating expenses:
Technical and operating (excluding depreciation, amortization and impairments shown below and including charges from Madison Square Garden of $38,051, $29,535, $76,083 and $59,055, respectively)	725,969			695,168			1,463,565			1,398,882
Selling, general and administrative (net of charges to Madison Square Garden of $2,385 , $7,065, $5,583 and $13,030, respectively)	414,667			406,536			832,715			813,386
Restructuring expense (credit)	110			4,028			(99		)	3,856
Depreciation and amortization (including impairments)	244,651			258,201			486,544			521,464
	1,385,397			1,363,933			2,782,725			2,737,588
Operating income	416,783			338,924			771,856			630,881
Other income (expense):
Interest expense	(160,230		)	(167,325		)	(302,765		)	(331,249		)
Interest income	15,918			16,222			32,255			33,658
Gain on sale of programming interests, net	102			453			204			1,219
Gain (loss) on investments, net	(31,364		)	18,390			10,928			(51,892		)
Gain (loss) on equity derivative contracts, net	32,292			(15,887		)	(2,741		)	42,738
Gain (loss) on interest rate swap contracts, net	(21,771		)	13,907			(56,880		)	(19,829		)
Loss on extinguishment of debt and write-off of deferred financing costs	—			(170		)	—			(21,457		)
Miscellaneous, net	53			187			426			329
	(165,000		)	(134,223		)	(318,573		)	(346,483		)
Income from continuing operations before income taxes	251,783			204,701			453,283			284,398
Income tax expense	(88,275		)	(96,025		)	(174,790		)	(131,652		)
Income from continuing operations	163,508			108,676			278,493			152,746
Income (loss) from discontinued operations, net of income taxes	—			(592		)	(4,122		)	3,535
Net income	163,508			108,084			274,371			156,281
Net loss (income) attributable to noncontrolling interests	(217		)	(51		)	(245		)	148
Net income attributable to CSC Holdings, LLC’s sole member	$	163,291		$	108,033		$	274,126		$	156,429
Amounts attributable to CSC Holdings, LLC’s sole member:
Income from continuing operations, net of income taxes	$	163,291		$	108,625		$	278,248		$	152,894
Income (loss) from discontinued operations, net of income taxes	—			(592		)	(4,122		)	3,535
Net income	$	163,291		$	108,033		$	274,126		$	156,429

See accompanying combined notes to condensed consolidated financial statements.

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CSC HOLDINGS, LLC AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30, 2010 and 2009

(Dollars in thousands)

(Unaudited)

	2010			2009
Cash flows from operating activities:
Income from continuing operations	$	278,493		$	152,746
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization (including impairments)	486,544			521,464
Gain on sale of programming interests, net	(204		)	(1,219		)
Loss (gain) on investments, net	(10,928		)	51,892
Loss (gain) on equity derivative contracts, net	2,741			(42,738		)
Loss on extinguishment of debt and write-off of deferred financing costs	—			21,457
Amortization of deferred financing costs, discounts on indebtedness and other costs	19,188			22,854
Accretion of discount on Cablevision senior notes held by Newsday Holdings LLC	(3,131		)	(3,775		)
Amortization of other deferred costs	12,584			11,824
Share-based compensation expense related to equity classified awards	28,547			29,525
Deferred income taxes	155,077			121,275
Amortization and write-off of program rights	96,927			86,057
Provision for doubtful accounts	27,208			33,572
Changes in program rights and program rights obligations	(122,386		)	(105,600		)
Changes in other assets and liabilities	(47,363		)	(69,525		)
Net cash provided by operating activities	923,297			829,809
Cash flows from investing activities:
Capital expenditures	(355,241		)	(355,036		)
Proceeds from sale of equipment, net of costs of disposal	2,829			2,549
Payments for acquisitions, net	(135		)	(187		)
Proceeds from sale of programming interests	250			1,425
Decrease in investment securities and other investments	100			1,120
Decrease in restricted cash	—			4,875
Capital contributions to Madison Square Garden	—			(148		)
Additions to other intangible assets	(1,099		)	(166		)
Net cash used in investing activities	(353,296		)	(345,568		)
Cash flows from financing activities:
Proceeds from bank debt	400,000			—
Repayment of bank debt	(395,177		)	(195,000		)
Proceeds from issuance of senior notes	—			1,250,920
Repurchase of senior notes and debentures, including tender premiums and fees	—			(777,083		)
Repayment of note payable due to Madison Square Garden	(190,000		)	—
Proceeds from collateralized indebtedness	97,863			75,398
Repayment of collateralized indebtedness	(97,863		)	(75,398		)
Dividend payments to Cablevision, net	(124,011		)	(662,410		)
Principal payments on capital lease obligations	(2,719		)	(2,066		)
Additions to deferred financing costs	(13,365		)	(28,986		)
Distributions to noncontrolling interests	(635		)	(698		)
Net cash used in financing activities	(325,907		)	(415,323		)
Net increase in cash and cash equivalents from continuing operations	244,094			68,918
Cash flows of discontinued operations:
Net cash provided by (used in) operating activities	(29,132		)	37,517
Net cash used in investing activities	(5,997		)	(29,066		)
Net cash used in financing activities	(8,204		)	(461		)
Effect of change in cash related to discontinued operations	34,318			8,742
Net increase (decrease) in cash and cash equivalents from discontinued operations	(9,015		)	16,732
Cash and cash equivalents at beginning of year	204,040			224,095
Cash and cash equivalents at end of period	$	439,119		$	309,745

See accompanying combined notes to condensed consolidated financial statements.

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COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

NOTE 1. BUSINESS

Cablevision Systems Corporation (“Cablevision”) and its wholly-owned subsidiary CSC Holdings, LLC (“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. 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 three reportable segments: (1) Telecommunications Services, consisting principally of its video, high-speed data, Voice over Internet Protocol and its commercial data and voice services operations; (2) Rainbow, consisting principally of national and regional television programming services, including AMC, WE tv, IFC, Sundance Channel, News 12, and IFC Entertainment; and (3) Newsday, consisting of the Newsday daily newspaper, amNew York, Star Community Publishing Group, and online websites including newsday.com and exploreLI.com.

On February 9, 2010, Cablevision distributed to its stockholders all of the outstanding common stock of Madison Square Garden, Inc. (“Madison Square Garden”), a company which owns the sports, entertainment and media businesses previously owned and operated by the Company’s Madison Square Garden segment (the “MSG Distribution”). The MSG Distribution took the form of a distribution by Cablevision of one share of Madison Square Garden Class A Common Stock for every four shares of Cablevision NY Group Class A Common Stock held of record at the close of business in New York City on January 25, 2010 (the “Record Date”) and one share of Madison Square Garden Class B Common Stock for every four shares of Cablevision NY Group Class B Common Stock held of record on the Record Date. On January 12, 2010, the Company transferred to Madison Square Garden the Company’s subsidiaries which owned, directly or indirectly, all of the partnership interests in Madison Square Garden, L.P. As a result of the MSG Distribution on February 9, 2010, the Company no longer consolidates the financial results of Madison Square Garden for the purpose of its own financial reporting and the historical financial results of Madison Square Garden have been reflected in the Company’s consolidated financial statements as discontinued operations for all periods presented through the MSG Distribution date.

Assets and liabilities related to the MSG Distribution on the Company’s condensed consolidated balance sheet as of December 31, 2009 and related footnotes have been reclassified as assets distributed to shareholders/member in 2010 and liabilities distributed to shareholders/member in 2010. All assets and liabilities distributed to shareholders/member in 2010 are excluded from the footnotes unless otherwise noted. Amounts due to or due from Madison Square Garden that were previously eliminated in consolidation are now being presented as accounts payable to affiliates or advances to affiliates on the Company’s condensed consolidated balance sheets.

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.

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

(Dollars in thousands, except per share amounts)

(Unaudited)

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, 2009 and in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 21, 2010.

The financial statements as of June 30, 2010 and for the three and six months ended June 30, 2010 and 2009 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 business operations independent of its CSC Holdings subsidiary, whose operating results and financial position are consolidated into Cablevision. The condensed consolidated balance sheets and statements of operations of Cablevision are essentially identical to the condensed consolidated balance sheets and statements of operations for CSC Holdings, with the following significant exceptions: Cablevision has $2,165,089 of senior notes outstanding at June 30, 2010 (excluding the $753,717 face amount of Cablevision notes held by its subsidiary Newsday Holdings LLC) that were issued to third party investors, cash, deferred financing costs and accrued interest related to its senior notes, deferred taxes and accrued dividends on its balance sheet and CSC Holdings and its subsidiaries have certain intercompany receivables from Cablevision. Differences between Cablevision’s results of operations from those of CSC Holdings primarily include incremental interest expense, interest income, loss on extinguishment of debt, write-off of deferred financing costs, and income tax expense or benefit. CSC Holdings’ results of operations include incremental interest income from the Cablevision senior notes held by Newsday Holdings LLC and the accretion of the discount on the 8% senior notes due 2012 issued by Cablevision to CSC Holdings that were redeemed during the second quarter of 2010, all of which eliminate in Cablevision’s results of operations.

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 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, 2010.

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.

NOTE 3. DIVIDENDS

On February 24, 2010 and May 5, 2010, the Board of Directors of Cablevision declared a cash dividend of $0.10 and $0.125 per share, respectively, which were paid on March 29, 2010 and June 7, 2010, 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 8, 2010 and May 17, 2010, respectively.

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

(Dollars in thousands, except per share amounts)

(Unaudited)

During the six months ended June 30, 2010, CSC Holdings paid cash dividends to Cablevision aggregating $124,011. The proceeds were used to fund (i) Cablevision’s dividends paid on March 29, 2010; (ii) Cablevision’s interest payments on certain of its senior notes; and (iii) Cablevision’s payments of payroll related taxes upon the vesting of certain restricted shares.

NOTE 4. NET INCOME PER SHARE ATTRIBUTABLE TO SHAREHOLDERS

Cablevision

Basic net income per common share 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 per common share attributable to Cablevision shareholders reflects the dilutive effects of stock options (including those held by Madison Square Garden employees), restricted stock (including shares held by Madison Square Garden employees) and restricted stock units.

A reconciliation of the denominator of the basic and diluted net income per share attributable to Cablevision shareholders calculation for the three and six months ended June 30, 2010 and 2009 is as follows:

	Three Months	Six Months	Three Months	Six Months
	Ended June 30, 2010		Ended June 30, 2009
	(in thousands)
Basic weighted average shares outstanding	295,762	294,828	291,121	290,946
Effect of dilution:
Stock options	3,106	3,241	2,382	1,748
Restricted stock awards	5,046	5,304	4,223	3,385
Diluted weighted average shares outstanding	303,914	303,373	297,726	296,079

Anti-dilutive shares (options whose exercise price exceeds the average market price of Cablevision’s common stock during the period) totaling 330,889 and 360,220 (which include Company options held by Madison Square Garden employees), have been excluded from diluted weighted average shares outstanding for the three and six months ended June 30, 2010, respectively. For the three and six months ended June 30, 2009, anti-dilutive shares of 2,016,235 and 2,857,276 (which include Company options held by Madison Square Garden employees), have been excluded from diluted weighted average shares outstanding, respectively. In addition, 913,400 restricted shares issued pursuant to the Company’s employee stock plan have been excluded from the diluted weighted average shares outstanding for the three and six months ended June 30, 2010 as the performance criteria on these awards has not yet been satisfied.

CSC Holdings

Net income per membership unit for CSC Holdings is not presented since CSC Holdings is a limited liability company and a wholly-owned subsidiary of Cablevision.

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

(Dollars in thousands, except per share amounts)

(Unaudited)

NOTE 5. COMPREHENSIVE INCOME

The following table presents comprehensive income for the three and six months ended June 30, 2010 and 2009:

	Three Months Ended June 30,
	2010						2009
	Cablevision			CSC Holdings			Cablevision			CSC Holdings
Net income	$	61,081		$	163,508		$	87,059		$	108,084
Other comprehensive income:
Amortization of prior service cost and gains and losses included in net periodic benefit cost, net of income taxes	746			746			663			663
Comprehensive income	61,827			164,254			87,722			108,747
Comprehensive income attributable to noncontrolling interests	(217		)	(217		)	(51		)	(51		)
Comprehensive income attributable to Cablevision shareholders and CSC Holdings’ member	$	61,610		$	164,037		$	87,671		$	108,696

	Six Months Ended June 30,
	2010						2009
	Cablevision			CSC Holdings			Cablevision		CSC Holdings
Net income	$	135,269		$	274,371		$	108,077	$	156,281
Other comprehensive income:
Amortization of prior service cost and gains and losses included in net periodic benefit cost, net of income taxes	1,744			1,744			1,325		1,325
Comprehensive income	137,013			276,115			109,402		157,606
Comprehensive loss (income) attributable to noncontrolling interests	(245		)	(245		)	148		148
Comprehensive income attributable to Cablevision shareholders and CSC Holdings’ member	$	136,768		$	275,870		$	109,550	$	157,754

NOTE 6. 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 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 six months ended June 30, 2010 and 2009, the amount of franchise fees included as a component of net revenue aggregated $33,864 and $66,905 and $32,064 and $63,393, respectively.

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

(Dollars in thousands, except per share amounts)

(Unaudited)

NOTE 7. 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 six months ended June 30, 2010 and 2009, the Company’s non-cash investing and financing activities and other supplemental data were as follows:

	Six Months Ended June 30,
	2010		2009
Non-Cash Investing and Financing Activities of Cablevision and CSC Holdings:
Continuing Operations:
Redemption of collateralized indebtedness with related equity derivative contracts	$	15,745	$	29,825
Capital lease obligations	889		—
Distribution of the Madison Square Garden business	1,113,488		—
Gain on redemption of Cablevision notes held by Newsday Holdings LLC recognized in equity (CSC Holdings)	87,090		—
Supplemental Data:
Cash interest paid - continuing operations (Cablevision)	364,091		361,811
Cash interest paid - continuing operations (CSC Holdings)	284,386		302,099
Cash interest paid - discontinued operations (Cablevision and CSC Holdings)	558		2,136
Income taxes paid, net (Cablevision and CSC Holdings)	13,598		14,194

NOTE 8. DISCONTINUED OPERATIONS AND NET ASSETS DISTRIBUTED TO SHAREHOLDERS IN 2010

On February 9, 2010, the Company completed the MSG Distribution (see Note 1). As a result, the operating results of the Company’s Madison Square Garden segment through the date of the MSG Distribution, as well as transaction costs, have been classified in the condensed consolidated statements of operations as discontinued operations for all periods presented. No gain or loss was recognized in connection with the MSG Distribution. Operating results of discontinued operations for the period from January 1, 2010 through February 9, 2010 and for the three and six months ended June 30, 2009 are summarized below:

January 1, 2010 through February 9, 2010

	Madison Square Garden
Revenues, net	$	131,695
Income before income taxes	$	7,090
Income tax expense(a)	(11,212		)
Loss from discontinued operations, net of income taxes	$	(4,122	)

(a) Income tax expense includes $7,368 resulting from the non-deductibility of certain transaction costs associated with the MSG Distribution.

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

(Dollars in thousands, except per share amounts)

(Unaudited)

Three Months Ended June 30, 2009

	Madison Square Garden
Revenues, net	$	172,888
Loss before income taxes	$	(867	)
Income tax benefit	275
Loss from discontinued operations, net of income taxes	$	(592	)

	Six Months Ended June 30, 2009
	Madison Square Garden			Other			Total
Revenues, net	$	419,948		$	—		$	419,948
Income (loss) before income taxes	$	6,491		$	(31	)	$	6,460
Income tax benefit (expense)	(2,938		)	13			(2,925		)
Income (loss) from discontinued operations, net of income taxes	$	3,553		$	(18	)	$	3,535

The assets and liabilities of Madison Square Garden have been classified in the condensed consolidated balance sheet as of December 31, 2009 as assets and liabilities distributed to shareholders/member in 2010 and consist of the following:

Cash and cash equivalents	$	109,716
Accounts receivable, prepaid expenses and other current assets	230,843
Advances due from Cablevision	190,000
Property and equipment, net and other long-term assets	473,825
Intangible assets	1,048,615
Total assets distributed in 2010	$	2,052,999
Accounts payable and accrued expenses	$	170,565
Other current liabilities	136,961
Deferred tax liability	495,233
Other long-term liabilities	147,805
Total liabilities distributed in 2010	950,564
Net assets distributed in 2010	$	1,102,435

The following table summarizes the net impact of the MSG Distribution on February 9, 2010 to Cablevision’s stockholders’ deficiency and CSC Holdings’ member’s deficiency:

	Cablevision			CSC Holdings
Increase in total member’s deficiency	$	—		$	(1,124,570	)
Decrease in paid-in capital	(87,396		)	—
Increase in accumulated deficit	(1,037,174		)	—
Decrease in accumulated other comprehensive loss	11,082			11,082
Net assets distributed to shareholders/member in 2010	$	(1,113,488	)	$	(1,113,488	)

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

(Dollars in thousands, except per share amounts)

(Unaudited)

NOTE 9. INTANGIBLE ASSETS

The following table summarizes information relating to the Company’s acquired intangible assets at June 30, 2010 and December 31, 2009:

	June 30,			December 31,
	2010			2009
Gross carrying amount of affiliation, broadcast and other agreements
Affiliation agreements and affiliate relationships	$	913,373		$	913,373
Broadcast rights and other agreements	30,381			30,381
	943,754			943,754
Accumulated amortization
Affiliation agreements and affiliate relationships	(532,159		)	(496,409		)
Broadcast rights and other agreements	(30,381		)	(30,381		)
	(562,540		)	(526,790		)
Affiliation, broadcast and other agreements, net of accumulated amortization	$	381,214		$	416,964

Gross carrying amount of other amortizable intangible assets
Advertiser relationships	$	137,017		$	137,017
Other amortizable intangibles	111,948			110,918
	248,965			247,935
Accumulated amortization
Advertiser relationships	(85,105		)	(75,353		)
Other amortizable intangibles	(46,426		)	(40,450		)
	(131,531		)	(115,803		)
Other amortizable intangible assets, net of accumulated amortization	$	117,434		$	132,132

Other Indefinite-lived intangible assets
FCC licenses and other intangibles	$	6,913		$	6,913
Trademarks	84,000			84,000
Other indefinite-lived intangible assets	$	90,913		$	90,913

Affiliation, broadcast and other agreements, net of accumulated amortization	$	381,214		$	416,964
Other amortizable intangible assets, net of accumulated amortization	117,434			132,132
Other indefinite-lived intangible assets	90,913			90,913
Indefinite-lived cable television franchises	731,848			731,848
Goodwill	358,210			358,210
Total intangible assets, net	$	1,679,619		$	1,730,067

Aggregate amortization expense
Six months ended June 30, 2010	$	51,549

Estimated amortization expense
Year ending December 31, 2010	$	102,815
Year ending December 31, 2011	94,574
Year ending December 31, 2012	78,399
Year ending December 31, 2013	42,279
Year ending December 31, 2014	17,852

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

(Dollars in thousands, except per share amounts)

(Unaudited)

NOTE 10. DEBT

Amendment of Credit Facility

On April 13, 2010, CSC Holdings and certain of its subsidiaries (the “Restricted Subsidiaries”) entered into an amended credit agreement (the “Amended Credit Agreement”), providing for (i) an amendment and restatement of the credit agreement, dated as of February 24, 2006, as first amended and restated in its entirety as of May 27, 2009 and further amended and restated in its entirety as of April 13, 2010 (as amended and restated, the “Credit Agreement”), and (ii) an amendment to the Incremental Term Supplement, dated as of March 29, 2006 and amended as of May 27, 2009.

Among other things, the Amended Credit Agreement provides for the specific mechanics of extending, from time to time, the revolving credit commitments, term A loans, incremental term loans and any additional facility commitments or additional facility loans, as applicable, with the terms of such extended facility to be documented at the time of such extension in an extended facility agreement. Under the terms of the Credit Agreement, CSC Holdings entered into three extended facilities as of April 13, 2010, as follows:

· an extended revolving credit facility agreement (the “Extended Revolving Credit Facility”) that provided for the extension of the availability period for lenders holding approximately $820,000 of revolving credit commitments under CSC Holdings’ $1,000,000 Revolving Credit Facility to March 31, 2015. Lenders under the Extended Revolving Credit Facility are entitled to an extension fee payment of between 2.00% and 2.50% per annum of the outstanding loans under the Extended Revolving Credit Facility, based upon the cash flow ratio applicable from time to time. In addition, revolving credit lenders with revolving credit commitments in the aggregate amount of $412,000 executed joinders to the Credit Agreement agreeing to provide increased revolving credit commitments with an availability period expiring on March 31, 2015.

· an extended term A facility agreement (the “extended term A facility”) that provided for the extension of the maturity date for lenders holding approximately $480,000 of loans under CSC Holdings’ existing $650,000 Term A facility, at the time of the launch of the transaction, to March 31, 2015, with the principal amount of the extended term A facility to be repaid in quarterly installments through its maturity date in March 2015. Lenders under the extended term A facility are entitled to an extension fee payment of between 2.00% and 2.50% per annum of the outstanding loans under the extended term A facility, based upon the cash flow ratio applicable from time to time.

· an extended incremental term facility agreement (the “term B-3 extended loan facility”) that provided for the extension of the maturity date for lenders holding approximately $1,678,000 under CSC Holdings’ existing $2,200,000 incremental term facility, at the time of the launch of the transaction, to March 29, 2016, with the principal amount of the term B-3 extended loan facility to be repaid quarterly in equal installments of approximately $4,196 through December 2015 and a final payment of approximately $1,581,933 upon maturity in March 2016. Lenders under the term B-3 extended loan facility are entitled to an extension fee payment of 1.25% per annum of the outstanding loans under the term B-3 extended loan facility.

In April 2010, the Company utilized $200,000 of its increased revolver commitments to make a $200,000 pre-payment of the unextended term B loan facility.

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

(Dollars in thousands, except per share amounts)

(Unaudited)

On June 30, 2010, the availability period for $20,000 of revolving credit commitments under CSC Holdings’ Revolving Credit Facility was extended to March 31, 2015 and the maturity date of $4,786 of loans under CSC Holdings’ existing term A facility was extended to March 31, 2015. Based on this extension and the extension entered into on April 13, 2010 (discussed above), the principal amount of the extended term A facility will be repaid in quarterly installments of approximately $12,142 through March 2012, approximately $18,213 beginning in June 2012 through March 2013, approximately $24,284 beginning in June 2013 through March 2014 and approximately $54,640 beginning in June 2014 through its maturity date in March 2015. In connection with the Amended Credit Agreement, the Company incurred deferred financing costs of $12,740, which are being amortized to interest expense over the term of the credit agreement.

Issuance of Debt Securities

On April 15, 2010, Cablevision issued $750,000 aggregate principal amount of 7-3/4% senior notes due April 15, 2018 and $500,000 aggregate principal amount of 8% senior notes due April 15, 2020 (collectively, the “Notes”) in a registered public offering. The Notes are Cablevision’s senior unsecured obligations and rank equally in right of payment with all of Cablevision’s other existing and future unsecured and unsubordinated indebtedness. Cablevision 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. The Company used the net proceeds of the offering to repurchase the April Notes (as defined below) in the tender offer Cablevision commenced on April 12, 2010 discussed below and for general corporate purposes. In connection with the issuance of these senior notes, the Company incurred deferred financing costs of $26,481, which are being amortized to interest expense over the term of these senior notes.

Tender Offers for 8% Senior Notes due 2012 (tender prices per note in dollars)

On April 12, 2010, Cablevision announced that it commenced a cash tender offer for its outstanding $1,000,000 aggregate principal amount of 8% senior notes due April 2012 (“April Notes”) for total consideration of $1,105.00 per $1,000.00 principal amount of notes tendered for purchase, consisting of tender offer consideration of $1,045.00 per $1,000.00 principal amount of notes plus an early tender premium of $60.00 per $1,000.00 principal amount of notes. In connection with the tender offer, the Company repurchased $973,175 aggregate principal amount of the April Notes in the second quarter of 2010. Tender premiums aggregating approximately $102,000, along with other transaction costs of approximately $3,000, have been recorded in loss on extinguishment of debt in the condensed consolidated statements of operations for the three and six months ended June 30, 2010. In addition, unamortized deferred financing costs related to the April Notes aggregating approximately $5,000 were written-off during the quarter ended June 30, 2010.

In connection with the tender offer described above, and in accordance with the Company’s agreements with Tribune Company, Cablevision redeemed all of its April Notes held by Newsday Holdings LLC with a face value of $682,000 for $753,717. Newsday Holdings LLC received $487,500 of Cablevision 7-3/4% senior notes due 2018 and $266,217 of Cablevision 8% senior notes due 2020, all in accordance with the terms of the Newsday $650,000 senior secured credit facility. The foregoing transaction was consummated on a cashless basis. As a result of the redemption of the April Notes, CSC Holdings recorded an increase to other member’s equity of $87,090.

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

(Dollars in thousands, except per share amounts)

(Unaudited)

NOTE 11. DERIVATIVE CONTRACTS AND COLLATERALIZED INDEBTEDNESS

To manage interest rate risk, the Company has entered into interest rate swap contracts to adjust the proportion of total debt that is subject to variable and fixed interest rates. Such contracts effectively fix the borrowing rates on floating rate debt to limit the exposure against the risk of rising rates. The Company does not enter into interest rate swap contracts for speculative or trading purposes and it has only entered into transactions with counterparties that are rated investment grade. The Company monitors the financial institutions that are counterparties to its interest rate swap contracts and it diversifies its swap contracts among various counterparties to mitigate exposure to any single financial institution.

As of June 30, 2010, CSC Holdings was party to several interest rate swap contracts with an aggregate notional amount of $2,600,000 that effectively fixed borrowing rates on a portion of the Company’s floating rate debt. Interest rate swap contracts with an aggregate notional amount of $1,100,000 matured in March 2010. These contracts are not designated as hedges for accounting purposes. As a result of the CSC Holdings interest rate swap transactions, the interest rate paid on approximately 81% of the Company’s outstanding debt (excluding capital leases and collateralized indebtedness) is effectively fixed (58% being fixed rate obligations and 23% is effectively fixed through utilization of these interest rate swap contracts) as of June 30, 2010. The table below summarizes certain terms of these interest rate swap contracts as of June 30, 2010:

Maturity Date	Notional Amount		Weighted Average Fixed Rate Paid by the Company		Weighted Average Effective Floating Rate Received by the Company at June 30, 2010*
June 2012	$	2,600,000	4.86	%	0.54	%

* Represents the floating rate received by the Company under its interest rate swap contracts at June 30, 2010 and does not represent the rates to be received by the Company on future payments.

The Company has also entered into various transactions to limit the exposure against equity price risk on its shares of Comcast Corporation common stock. The Company had monetized all of its stock holdings in Comcast Corporation through the execution of prepaid forward contracts, collateralized by an equivalent amount of the respective underlying stock. At maturity, the contracts provide for the option to deliver cash or shares of Comcast stock with a value determined by reference to the applicable stock price at maturity. These contracts, at maturity, are expected to offset declines in the fair value of these securities below the hedge price per share while allowing the Company to retain upside appreciation from the hedge price per share to the relevant cap price.

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

(Dollars in thousands, except per share amounts)

(Unaudited)

The following represents the location of the assets and liabilities associated with the Company’s derivative instruments within the condensed consolidated balance sheets at June 30, 2010 and December 31, 2009:

Derivatives Not Designated as		Asset Derivatives				Liability Derivatives
Hedging Instruments Under ASC Topic 815	Balance Sheet Location	Fair Value at June 30, 2010		Fair Value at December 31, 2009		Fair Value at June 30, 2010		Fair Value at December 31, 2009
Interest rate swap contracts	Current derivative contracts	$	—	$	—	$	—	$	9,294
Interest rate swap contracts	Long-term derivative contracts	—		—		198,504		202,168
Prepaid forward contracts	Current derivative contracts	13,756		37,137		8,813		—
Prepaid forward contracts	Long-term derivative contracts	15,079		8,361		2,538		9,528
Total derivative contracts		$	28,835	$	45,498	$	209,855	$	220,990

The following represents the impact and location of the Company’s derivative instruments within the condensed consolidated statements of operations for the three and six months ended June 30, 2010 and 2009:

Derivatives Not Designated as Hedging		Amount of Gain (Loss) Recognized						Amount of Gain (Loss) Recognized
Instruments Under	Location of Gain	Three Months Ended June 30,						Six Months Ended June 30,
ASC Topic 815:	(Loss) Recognized	2010			2009			2010			2009
Interest rate swap contracts	Gain (loss) on interest rate swap contracts, net	$	(21,771	)	$	13,907		$	(56,880	)	$	(19,829	)
Prepaid forward contracts	Gain (loss) on equity derivative contracts, net	32,292			(15,887		)	(2,741		)	42,738
Total derivative contracts		$	10,521		$	(1,980	)	$	(59,621	)	$	22,909

NOTE 12. FAIR VALUE MEASUREMENT

The fair value hierarchy as outlined in ASC Topic 820 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:

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

(Dollars in thousands, except per share amounts)

(Unaudited)

· 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 at June 30, 2010 and December 31, 2009:

At June 30, 2010:

	Level I		Level II		Level III		Total
Assets:

Cash equivalents(a)	$	482,497	$	—	$	—	$	482,497
Investment securities	83		—		—		83
Investment securities pledged as collateral	373,066		—		—		373,066
Derivative contracts: