Edgar Filing: CSC HOLDINGS LLC

form10q.htm

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 March 31, 2012

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 Registrants were required to submit and post such files).

Yes

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

CSC Holdings, LLC

Yes

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 April 30, 2012:

Cablevision NY Group Class A Common Stock -	216,962,246
Cablevision NY Group Class B Common Stock -	54,137,673
CSC Holdings, LLC Interests of Member -	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.

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 - March 31, 2012 and December 31, 2011 (unaudited)	2

	Condensed Consolidated Statements of Income - Three Months Ended March 31, 2012 and 2011 (unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income - Three Months Ended March 31, 2012 and 2011 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2012 and 2011 (unaudited)	6

	Financial Statements of CSC Holdings, LLC and Subsidiaries

	Condensed Consolidated Balance Sheets - March 31, 2012 and December 31, 2011 (unaudited)	7

	Condensed Consolidated Statements of Income - Three Months Ended March 31, 2012 and 2011 (unaudited)	9

	Condensed Consolidated Statements of Comprehensive Income - Three Months Ended March 31, 2012 and 2011 (unaudited)	10

	Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2012 and 2011 (unaudited)	11

	Combined Notes to Condensed Consolidated Financial Statements (unaudited)	12

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	57

Item 4.	Controls and Procedures	59

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	59

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60

Item 6.	Exhibits	60

SIGNATURES		61

Table of Contents

PART I.

FINANCIAL INFORMATION

This Quarterly Report on Form 10-Q for the period ended March 31, 2012 is separately filed by Cablevision Systems Corporation ("Cablevision") and CSC Holdings, LLC ("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 results and future financial performance. Words such as "expects", "anticipates", "believes", "estimates", "may", "will", "should", "could", "potential", "continue", "intends", "plans" and similar words and terms used in the discussion of future operating results 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 for subscribers from existing competitors (such as telephone companies and direct broadcast satellite ("DBS") distributors) and new competitors (such as high-speed wireless providers) entering our franchise areas;

●

demand for our 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 12 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 in our newspapers along with subscriber and single copy outlet sales demand for our newspapers;

●

the level of our capital expenditures;

●

the level of our expenses;

●

future acquisitions and dispositions of assets;

●

market demand for new services;

●

demand for advertising inventory;

●

the tax-free treatment of the MSG Distribution and the AMC Networks Distribution (each as defined herein);

●

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

●

other risks and uncertainties inherent in the cable television, 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.

Table of Contents

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	March 31, 2012		December 31, 2011
ASSETS

Current Assets:

Cash and cash equivalents	$	493,543	$	611,947
Restricted cash		33,197		29,068
Accounts receivable, trade (less allowance for doubtful accounts of $15,290 and $14,907)		251,653		295,277
Prepaid expenses and other current assets		149,118		135,579
Amounts due from affiliates		1,869		6,818
Deferred tax asset		109,712		84,925
Investment securities pledged as collateral		322,272		191,338
Total current assets		1,361,364		1,354,952

Property, plant and equipment, net of accumulated depreciation of $9,374,807 and $9,221,694		3,243,197		3,269,232
Other receivables		4,856		3,279
Investment securities pledged as collateral		322,272		317,896
Derivative contracts		-		18,617
Other assets		50,365		53,871
Amortizable intangible assets, net of accumulated amortization of $128,525 and $115,043		240,250		252,871
Indefinite-lived cable television franchises		1,240,228		1,240,228
Other indefinite-lived intangible assets		55,895		55,895
Goodwill		442,773		442,773
Deferred financing and other costs, net of accumulated amortization of $82,471 and $81,269		127,332		133,711
	$	7,088,532	$	7,143,325

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (cont'd)

(In thousands, except share and per share amounts)

(Unaudited)

	March 31, 2012			December 31, 2011
LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:

Accounts payable	$	411,203		$	455,654
Accrued liabilities		535,701			604,240
Amounts due to affiliates		32,858			32,682
Deferred revenue		62,653			61,599
Liabilities under derivative contracts		104,999			75,223
Credit facility debt		116,816			103,245
Collateralized indebtedness		207,178			148,175
Capital lease obligations		9,056			9,174
Notes payable		11,092			17,614
Senior notes		87,822			87,822
Total current liabilities		1,579,378			1,595,428

Deferred revenue		10,843			10,896
Liabilities under derivative contracts		39,200			3,141
Other liabilities		228,475			220,865
Deferred tax liability		143,187			80,546
Credit facility debt		5,046,371			5,080,949
Collateralized indebtedness		248,760			307,763
Capital lease obligations		31,320			33,589
Notes payable		7,695			11,613
Senior notes and debentures		5,362,906			5,358,838
Total liabilities		12,698,135			12,703,628

Commitments and contingencies

Redeemable noncontrolling interests		13,368			13,761

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, 285,073,518 and 281,833,547 shares issued and 217,810,866 and 220,170,261 shares outstanding		2,851			2,818
CNYG Class B common stock, $.01 par value, 320,000,000 shares authorized, 54,137,673 shares issued and outstanding		541			541
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		1,024,629			1,051,435
Accumulated deficit		(5,188,236	)		(5,245,483	)
		(4,160,215	)		(4,190,689	)
Treasury stock, at cost (67,262,652 and 61,663,286 CNYG Class A common shares)		(1,442,615	)		(1,363,698	)
Accumulated other comprehensive loss		(21,419	)		(21,468	)
Total stockholders' deficiency		(5,624,249	)		(5,575,855	)
Noncontrolling interest		1,278			1,791
Total deficiency		(5,622,971	)		(5,574,064	)
	$	7,088,532		$	7,143,325

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended March 31, 2012 and 2011

(In thousands, except per share amounts)

(Unaudited)

	2012			2011
Revenues, net (including revenues, net from affiliates of $1,957 and $819, respectively)	$	1,658,757		$	1,655,124

Operating expenses:
Technical and operating (excluding depreciation, amortization and impairments shown below and including charges from affiliates of $45,788 and $44,513, respectively)		784,615			737,988
Selling, general and administrative (net of charges from (to) affiliates of $74 and $(4,697), respectively)		371,029			374,184
Restructuring expense (credits)		(298	)		171
Depreciation and amortization (including impairments)		253,347			245,183
		1,408,693			1,357,526

Operating income		250,064			297,598

Other income (expense):
Interest expense, net		(181,831	)		(191,084	)
Gain on investments, net		135,325			59,072
Loss on equity derivative contracts, net		(111,194	)		(40,058	)
Loss on interest rate swap contracts, net		(1,645	)		(4,189	)
Miscellaneous, net		545			217
		(158,800	)		(176,042	)
Income from continuing operations before income taxes		91,264			121,556
Income tax expense		(34,160	)		(52,543	)
Income from continuing operations		57,104			69,013
Income from discontinued operations, net of income taxes		-			35,031
Net income		57,104			104,044
Net loss attributable to noncontrolling interests		143			21
Net income attributable to Cablevision Systems Corporation stockholders	$	57,247		$	104,065

Basic net income per share attributable to Cablevision Systems Corporation stockholders:

Income from continuing operations	$	0.21		$	0.24

Income from discontinued operations	$	-		$	0.12

Net income	$	0.21		$	0.37

Basic weighted average common shares (in thousands)		267,419			282,123

Diluted net income per share attributable to Cablevision Systems Corporation stockholders:

Income from continuing operations	$	0.21		$	0.24

Income from discontinued operations	$	-		$	0.12

Net income	$	0.21		$	0.36

Diluted weighted average common shares (in thousands)		274,038			291,221

Amounts attributable to Cablevision Systems Corporation stockholders:
Income from continuing operations, net of income taxes	$	57,247		$	69,034
Income from discontinued operations, net of income taxes		-			35,031
Net income	$	57,247		$	104,065
Cash dividends declared and paid per share of common stock	$	0.15		$	0.125

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31, 2012 and 2011

(In thousands)

(Unaudited)

	2012		2011

Net income	$	57,104	$	104,044

Other comprehensive income, net of tax:
Defined benefit pension plans and postretirement plans:
Amortization of actuarial losses, net		49		318
Other comprehensive income		57,153		104,362
Comprehensive loss attributable to noncontrolling interests		143		21
Comprehensive income attributable to Cablevision Systems Corporation stockholders	$	57,296	$	104,383

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31, 2012 and 2011

(In thousands)

(Unaudited)

	2012			2011
Cash flows from operating activities:
Income from continuing operations	$	57,104		$	69,013
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization (including impairments)		253,347			245,183
Gain on investments, net		(135,325	)		(59,072	)
Loss on equity derivative contracts, net		111,194			40,058
Amortization of deferred financing costs and discounts on indebtedness		10,693			11,545
Share-based compensation expense related to equity classified awards		10,344			12,399
Deferred income taxes		37,820			40,155
Provision for doubtful accounts		10,843			9,627
Changes in other assets and liabilities		(121,629	)		(5,573	)
Net cash provided by operating activities		234,391			363,335

Cash flows from investing activities:
Capital expenditures		(216,097	)		(131,014	)
Proceeds (payments) related to the sale of equipment, net of costs of disposal		(520	)		1,162
Additions to other intangible assets		(565	)		(478	)
Contributions to AMC Networks		-			(20,813	)
Decrease in restricted cash		573			-
Net cash used in investing activities		(216,609	)		(151,143	)

Cash flows from financing activities:
Proceeds from credit facility debt		-			325,000
Repayment of credit facility debt		(21,258	)		(39,363	)
Proceeds from collateralized indebtedness		-			125,140
Repayment of collateralized indebtedness and related derivative contracts		-			(105,028	)
Proceeds from stock option exercises		3,195			2,317
Dividend distributions to common stockholders		(46,406	)		(37,753	)
Principal payments on capital lease obligations		(2,387	)		(355	)
Deemed repurchases of restricted stock		(19,764	)		(32,762	)
Purchase of shares of CNYG Class A common stock, pursuant to a share repurchase program, held as treasury shares		(48,692	)		(250,658	)
Additions to deferred financing costs		(738	)		-
Contributions from (distributions to) noncontrolling partners, net		(64	)		21
Net cash used in financing activities		(136,114	)		(13,441	)

Net increase (decrease) in cash and cash equivalents from continuing operations		(118,332	)		198,751

Cash flows of discontinued operations:
Net cash provided by (used in) operating activities		(72	)		61,636
Net cash used in investing activities		-			(1,533	)
Net cash used in financing activities		-			(42,780	)
Effect of change in cash related to discontinued operations		-			(4,113	)
Net increase (decrease) in cash and cash equivalents from discontinued operations		(72	)		13,210

Cash and cash equivalents at beginning of year		611,947			313,991

Cash and cash equivalents at end of period	$	493,543		$	525,952

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CSC HOLDINGS, LLC AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	March 31, 2012		December 31, 2011
ASSETS

Current Assets:

Cash and cash equivalents	$	462,692	$	611,054
Restricted cash		33,197		29,068
Accounts receivable, trade (less allowance for doubtful accounts of $15,290 and $14,907)		251,653		295,277
Prepaid expenses and other current assets		144,237		129,282
Amounts due from affiliates (primarily due from Cablevision)		516,022		503,576
Deferred tax asset		38,469		91,372
Investment securities pledged as collateral		322,272		191,338
Total current assets		1,768,542		1,850,967

Property, plant and equipment, net of accumulated depreciation of $9,374,807 and $9,221,694		3,243,197		3,269,232
Other receivables		3,078		3,279
Investment securities pledged as collateral		322,272		317,896
Derivative contracts		-		18,617
Other assets		50,365		53,871
Amortizable intangible assets, net of accumulated amortization of $128,525 and $115,043		240,250		252,871
Indefinite-lived cable television franchises		1,240,228		1,240,228
Other indefinite-lived intangible assets		55,895		55,895
Goodwill		442,773		442,773
Deferred financing and other costs, net of accumulated amortization of $72,744 and $72,664		90,900		96,156
	$	7,457,500	$	7,601,785

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CSC HOLDINGS, LLC AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED BALANCE SHEETS (cont'd)

(In thousands, except membership unit amounts)

(Unaudited)

	March 31, 2012			December 31, 2011
LIABILITIES AND MEMBER DEFICIENCY

Current Liabilities:

Accounts payable	$	411,203		$	455,654
Accrued liabilities		473,097			554,050
Amounts due to affiliates		32,484			30,065
Deferred revenue		62,653			61,599
Liabilities under derivative contracts		104,999			75,223
Credit facility debt		116,816			103,245
Collateralized indebtedness		207,178			148,175
Capital lease obligations		9,056			9,174
Notes payable		11,092			17,614
Senior notes		60,997			60,997
Total current liabilities		1,489,575			1,515,796

Deferred revenue		10,843			10,896
Liabilities under derivative contracts		39,200			3,141
Other liabilities		227,497			218,312
Deferred tax liability		600,096			600,420
Credit facility debt		5,046,371			5,080,949
Collateralized indebtedness		248,760			307,763
Capital lease obligations		31,320			33,589
Notes payable		7,695			11,613
Senior notes and debentures		3,222,430			3,218,697
Total liabilities		10,923,787			11,001,176

Commitments and contingencies

Redeemable noncontrolling interests		13,368			13,761

Member's Deficiency:
Accumulated deficit		(3,400,714	)		(3,492,409	)
Senior notes due from Cablevision		(753,717	)		(753,717	)
Other member's equity (14,432,750 membership units issued and outstanding)		694,917			852,651
		(3,459,514	)		(3,393,475	)
Accumulated other comprehensive loss		(21,419	)		(21,468	)

Total member's deficiency		(3,480,933	)		(3,414,943	)
Noncontrolling interest		1,278			1,791
Total deficiency		(3,479,655	)		(3,413,152	)
	$	7,457,500		$	7,601,785

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CSC HOLDINGS, LLC AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended March 31, 2012 and 2011

(In thousands)

(Unaudited)

	2012			2011
Revenues, net (including revenues, net from affiliates of $1,957 and $819, respectively)	$	1,658,757		$	1,655,124

Operating expenses:
Technical and operating (excluding depreciation, amortization and impairments shown below and including charges from affiliates of $45,788 and $44,513, respectively)		784,615			737,988
Selling, general and administrative (net of charges from (to) affiliates of $74 and $(4,697), respectively)		371,029			374,184
Restructuring expense (credits)		(298	)		171
Depreciation and amortization (including impairments)		253,347			245,183
		1,408,693			1,357,526

Operating income		250,064			297,598

Other income (expense):
Interest expense		(136,225	)		(145,340	)
Interest income		15,086			14,835
Gain on investments, net		135,325			59,072
Loss on equity derivative contracts, net		(111,194	)		(40,058	)
Loss on interest rate swap contracts, net		(1,645	)		(4,189	)
Miscellaneous, net		545			217
		(98,108	)		(115,463	)
Income from continuing operations before income taxes		151,956			182,135
Income tax expense		(60,404	)		(77,130	)
Income from continuing operations		91,552			105,005
Income from discontinued operations, net of income taxes		-			35,031
Net income		91,552			140,036
Net loss attributable to noncontrolling interests		143			21
Net income attributable to CSC Holdings, LLC's sole member	$	91,695		$	140,057

Amounts attributable to CSC Holdings, LLC's sole member:
Income from continuing operations, net of income taxes	$	91,695		$	105,026
Income from discontinued operations, net of income taxes		-			35,031
Net income	$	91,695		$	140,057

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CSC HOLDINGS, LLC AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31, 2012 and 2011

(In thousands)

(Unaudited)

	2012		2011

Net income	$	91,552	$	140,036

Other comprehensive income, net of tax:
Defined benefit pension plans and postretirement plans:
Amortization of actuarial losses, net		49		318
Other comprehensive income		91,601		140,354
Comprehensive loss attributable to noncontrolling interests		143		21
Comprehensive income attributable to CSC Holdings, LLC's sole member	$	91,744	$	140,375

See accompanying combined notes to condensed consolidated financial statements.

Table of Contents

CSC HOLDINGS, LLC AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31, 2012 and 2011

(In thousands)

(Unaudited)

	2012			2011
Cash flows from operating activities:
Income from continuing operations	$	91,552		$	105,005
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization (including impairments)		253,347			245,183
Gain on investments, net		(135,325	)		(59,072	)
Loss on equity derivative contracts, net		111,194			40,058
Amortization of deferred financing costs and discounts on indebtedness		9,236			10,204
Share-based compensation expense related to equity classified awards		10,344			12,399
Deferred income taxes		52,545			64,742
Provision for doubtful accounts		10,843			9,627
Excess tax benefit on share-based awards		(11,518	)		-
Changes in other assets and liabilities		(130,540	)		(29,542	)
Net cash provided by operating activities		261,678			398,604

Cash flows from investing activities:
Capital expenditures		(216,097	)		(131,014	)
Proceeds (payments) related to the sale of equipment, net of costs of disposal		(520	)		1,162
Additions to other intangible assets		(565	)		(478	)
Contributions to AMC Networks		-			(20,813	)
Decrease in restricted cash		573			-
Net cash used in investing activities		(216,609	)		(151,143	)

Cash flows from financing activities:
Proceeds from credit facility debt		-			325,000
Repayment of credit facility debt		(21,258	)		(39,363	)
Proceeds from collateralized indebtedness		-			125,140
Repayment of collateralized indebtedness and related derivative contracts		-			(105,028	)
Distributions to Cablevision		(180,430	)		(307,899	)
Excess tax benefit on share-based awards		11,518			-
Principal payments on capital lease obligations		(2,387	)		(355	)
Additions to deferred financing costs		(738	)		-
Contributions from (distributions to) noncontrolling partners, net		(64	)		21
Net cash used in financing activities		(193,359	)		(2,484	)

Net increase (decrease) in cash and cash equivalents from continuing operations		(148,290	)		244,977

Cash flows of discontinued operations:
Net cash provided by (used in) operating activities		(72	)		61,636
Net cash used in investing activities		-			(1,533	)
Net cash used in financing activities		-			(42,780	)
Effect of change in cash related to discontinued operations		-			(4,113	)
Net increase (decrease) in cash and cash equivalents from discontinued operations		(72	)		13,210

Cash and cash equivalents at beginning of year		611,054			266,914

Cash and cash equivalents at end of period	$	462,692		$	525,101

See accompanying combined notes to condensed consolidated financial statements.

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

(In thousands, except share and per share amounts)

(Unaudited)

NOTE 1.

BUSINESS

Cablevision Systems Corporation ("Cablevision"), its wholly-owned subsidiary CSC Holdings, LLC ("CSC Holdings," and collectively with Cablevision, the "Company") and their subsidiaries own and operate cable television systems and own companies that provide regional news, other programming and advertising sales services for the cable television industry, provide commercial data and voice services, operate motion picture theatres and operate a newspaper publishing business. The Company classifies its operations into two 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; and (2) Other, consisting principally of (i) Newsday, which includes the Newsday daily newspaper, amNew York, Star Community Publishing Group, and online websites including newsday.com and exploreLI.com, (ii) a motion picture theatre business ("Clearview Cinemas"), (iii) the News 12 Networks, which provide regional news programming services, (iv) the MSG Varsity network, a network dedicated entirely to showcasing high school sports and activities, (v) a cable television advertising company, Cablevision Media Sales Corporation ("Cablevision Media Sales"), and (vi) certain other businesses and unallocated corporate costs.

On June 30, 2011, Cablevision distributed to its stockholders all of the outstanding common stock of AMC Networks Inc., formerly Rainbow Media Holdings LLC, ("AMC Networks"), a company which consists principally of national programming networks, including AMC, WE tv, IFC and Sundance Channel, previously owned and operated by the Company's Rainbow segment (the "AMC Networks Distribution"). The AMC Networks Distribution took the form of a distribution by Cablevision of one share of AMC Networks Class A Common Stock for every four shares of Cablevision NY Group ("CNYG") Class A Common Stock held of record on June 16, 2011 (the "AMC Networks Distribution Record Date") and one share of AMC Networks Class B Common Stock for every four shares of CNYG Class B Common Stock held of record on the AMC Networks Distribution Record Date. As a result of the AMC Networks Distribution, the Company no longer consolidates the financial results of AMC Networks for the purpose of its own financial reporting and the historical financial results of AMC Networks have been reflected in the Company's condensed consolidated financial statements as discontinued operations for the three months ended March 31, 2011.

Accounts payable to and advances to AMC Networks that were previously eliminated in consolidation are now presented as amounts due to affiliates or amounts due from 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.

The interim condensed consolidated 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, 2011.

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

(In thousands, except share and per share amounts)

(Unaudited)

The financial statements as of March 31, 2012 and for the three months ended March 31, 2012 and 2011 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 income of Cablevision are essentially identical to the condensed consolidated balance sheets and statements of income for CSC Holdings, with the following significant exceptions: Cablevision has $2,167,301 of senior notes outstanding at March 31, 2012 (excluding the $753,717 aggregate principal 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, and income tax expense. CSC Holdings' results of operations include incremental interest income from the Cablevision senior notes held by Newsday Holdings LLC, 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 condensed consolidated financial statements. Intercompany transactions between Cablevision and CSC Holdings do not eliminate in the CSC Holdings condensed consolidated financial statements, but do eliminate in the Cablevision condensed 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, 2012.

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.

Recently Adopted Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU No. 2011-08 is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities an option to perform a "qualitative" assessment to determine whether further impairment testing is necessary. Under the amended rule, a company will not be required to calculate the fair value of a business that contains recorded goodwill unless it concludes, based on the qualitative assessment, that it is more likely than not that the fair value of that business is less than its book value. If such a decline in fair value is deemed more likely than not to have occurred, then the quantitative goodwill impairment test that exists under current GAAP must be completed; otherwise, goodwill is deemed to be not impaired and no further testing is required until the next annual test date (or sooner if conditions or events before that date raise concerns of potential impairment in the business). The amended goodwill impairment guidance does not affect the manner in which a company estimates fair value. ASU No. 2011-08 was effective for the Company on January 1, 2012 and the Company adopted this guidance in connection with its annual goodwill impairment test performed during the three months ended March 31, 2012. The adoption of ASU No. 2011-08 had no impact on the financial statements of the Company as of March 31, 2012.

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

(In thousands, except share and per share amounts)

(Unaudited)

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. ASU No. 2011-04 provides amendments to Topic 820 that change the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. Provisions of the amendment include a requirement that for recurring Level III fair value measurements, entities disclose quantitative information about unobservable inputs, a description of the valuation process used and qualitative details about the sensitivity of the measurements. In addition, for items not carried at fair value but for which fair value is disclosed, entities are required to disclose the level within the fair value hierarchy that applies to the fair value measurement disclosed. The adoption of ASU No. 2011-04 by the Company on January 1, 2012 had no impact on the Company's fair value measurements, financial condition, results of operations or cash flows, however additional disclosures are included in Note 9.

NOTE 3.

DIVIDENDS

During the three months ended March 31, 2012, the Board of Directors of Cablevision declared the following cash dividends to stockholders of record on both its Cablevision NY Group ("CNYG") Class A common stock and CNYG Class B common stock:

Declaration Date	Dividend per Share	Record Date	Payment Date

February 22, 2012	$0.15	March 9, 2012	March 30, 2012

Cablevision paid dividends aggregating $46,406 during the three months ended March 31, 2012, primarily from the proceeds of equity distribution payments from CSC Holdings. In addition, as of March 31, 2012, up to approximately $3,294 will be paid when, and if, restrictions lapse on restricted shares outstanding.

During the three months ended March 31, 2012, CSC Holdings made equity distribution payments to Cablevision aggregating $180,430. These distribution payments were funded from cash on hand and cash from operations. The proceeds were used to fund:

●

Cablevision's dividends paid;

●

Cablevision's interest payments on its senior notes;

●

Cablevision's payments for the acquisition of treasury shares related to statutory minimum tax withholding obligations upon the vesting of certain restricted shares; and

●

the repurchase of CNYG Class A common stock under Cablevision's share repurchase program.

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

(In thousands, except share and per share amounts)

(Unaudited)

NOTE 4.

NET INCOME PER SHARE ATTRIBUTABLE TO STOCKHOLDERS

Cablevision

Basic net income per common share attributable to Cablevision stockholders is computed by dividing net income attributable to Cablevision stockholders by the weighted average number of common shares outstanding during the period. Diluted net income per common share attributable to Cablevision stockholders reflects the dilutive effects of stock options (including those held by AMC Networks and The Madison Square Garden Company ("Madison Square Garden") employees) and restricted stock (including shares held by AMC Networks and Madison Square Garden employees).

A reconciliation of the denominator of the basic and diluted net income per share attributable to Cablevision stockholders calculation for the three months ended March 31, 2012 and 2011 is as follows:

	2012		2011
	(in thousands)

Basic weighted average shares outstanding		267,419		282,123

Effect of dilution:
Stock options		2,901		3,395
Restricted stock awards		3,718		5,703
Diluted weighted average shares outstanding		274,038		291,221

Anti-dilutive shares (options whose exercise price exceeds the average market price of Cablevision's common stock during the period and certain restricted shares) totaling approximately 1,274,300 and 15,000 shares, have been excluded from diluted weighted average shares outstanding for the three months ended March 31, 2012 and 2011, respectively. In addition, approximately 507,000 and 407,000 restricted shares for the three months ended March 31, 2012 and 2011, respectively, and approximately 12,617,000 options for the three months ended March 31, 2012, issued pursuant to the Company's employee stock plan have also been excluded from the diluted weighted average shares outstanding for the respective periods, as the performance criteria on these awards have 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.

NOTE 5.

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 months ended March 31, 2012 and 2011, the amount of franchise fees included as a component of net revenue aggregated $36,452 and $36,822, respectively.

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

(In thousands, except share and per share amounts)

(Unaudited)

NOTE 6.

SUPPLEMENTAL CASH FLOW INFORMATION

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. The carrying amount of cash and cash equivalents either approximates fair value due to the short-term maturity of these instruments or are at fair value.

During the three months ended March 31, 2012 and 2011, the Company's non-cash investing and financing activities and other supplemental data were as follows:

	Three Months Ended March 31,
	2012		2011
Non-Cash Investing and Financing Activities of Cablevision and CSC Holdings:

Cablevision and CSC Holdings:
Continuing Operations:
Redemption of collateralized indebtedness with related equity derivative contracts	$	-	$	26,008

Non-Cash Investing and Financing Activities of Cablevision:
Dividends payable on unvested restricted share awards		729		1,110
Property and equipment accrued but unpaid		74,630		46,496

Supplemental Data:
Continuing Operations:
Cash interest paid (Cablevision)		175,604		172,198
Cash interest paid (CSC Holdings)		136,791		133,384
Income taxes paid, net (Cablevision and CSC Holdings)		2,496		7,789
Discontinued Operations:
Cash interest paid (Cablevision and CSC Holdings)		-		32,421
Income taxes paid, net (Cablevision and CSC Holdings)		-		4,171

NOTE 7.

DISCONTINUED OPERATIONS

On June 30, 2011, the Company completed the AMC Networks Distribution (see Note 1). As a result, the operating results of the Company's Rainbow segment through the date of the AMC Networks Distribution, as well as transaction costs, have been classified in the condensed consolidated statements of income as discontinued operations through the distribution date, which includes the three months ended March 31, 2011. Operating results of discontinued operations for the three months ended March 31, 2011 are summarized below:

	Three Months Ended March 31, 2011
	AMC Networks

Revenues, net	$	266,430

Income before income taxes	$	60,470
Income tax expense		(25,439	)
Income from discontinued operations, net of income taxes	$	35,031

AMC Networks' results of operations reported on a stand-alone basis will differ from results presented above due to certain reclassifications and adjustments made for purposes of discontinued operations reporting.

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

(In thousands, except share and per share amounts)

(Unaudited)

NOTE 8.

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 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 March 31, 2012, 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. 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 (57% being fixed rate obligations and 24% is effectively fixed through utilization of these interest rate swap contracts) as of March 31, 2012. The table below summarizes certain terms of these interest rate swap contracts as of March 31, 2012:

Maturity Date	Notional Amount		Weighted Average Fixed Rate Paid by the Company			Weighted Average Effective Floating Rate Received by the Company at March 31, 2012*

June 2012	$	2,600,000		4.86	%		0.47	%

*	Represents the weighted average effective floating rate received by the Company under its interest rate swap contracts at March 31, 2012.

The Company has also entered into various transactions to limit the exposure against equity price risk on its shares of Comcast Corporation ("Comcast") common stock. The Company has 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)

(In thousands, except share and 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 March 31, 2012 and December 31, 2011:

Derivatives Not		Asset Derivatives				Liability Derivatives
Designated as Hedging Instruments	Balance Sheet Location	Fair Value at March 31, 2012		Fair Value at December 31, 2011		Fair Value at March 31, 2012		Fair Value at December 31, 2011

Interest rate swap contracts	Current derivative contracts	$	-	$	-	$	28,641	$	55,383

Prepaid forward contracts	Current derivative contracts		-		-		76,358		19,840

Prepaid forward contracts	Long-term derivative contracts		-		18,617		39,200		3,141

Total derivative contracts		$	-	$	18,617	$	144,199	$	78,364

The following represents the impact and location of the Company's derivative instruments within the condensed consolidated statements of income for the three months ended March 31, 2012 and 2011:

		Amount of Loss Recognized
Derivatives Not Designated as		Three Months Ended March 31,
Hedging Instruments	Location of Loss Recognized	2012			2011

Interest rate swap contracts	Loss on interest rate swap contracts, net	$	(1,645	)	$	(4,189	)
Prepaid forward contracts	Loss on equity derivative contracts, net		(111,194	)		(40,058	)
Total derivative contracts		$	(112,839	)	$	(44,247	)

NOTE 9.

FAIR VALUE MEASUREMENT

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

●

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

●

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

●

Level III - Instruments whose significant value drivers are unobservable.

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

(In thousands, except share and per share amounts)

(Unaudited)

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 March 31, 2012 and December 31, 2011:

At March 31, 2012:
	Level I		Level II		Level III		Total
Assets:

Money market funds	$	428,693	$	-	$	-	$	428,693
Restricted money market funds		32,624		-		-		32,624
Investment securities		107		-		-		107
Investment securities pledged as collateral		644,544		-		-		644,544

Liabilities:

Liabilities under derivative contracts:
Prepaid forward contracts		-		115,558		-		115,558
Interest rate swap contracts		-		28,641		-		28,641

At December 31, 2011:
	Level I		Level II		Level III		Total
Assets:

Money market funds	$	556,853	$	-	$	-	$	556,853
Restricted money market funds		27,920		-		-		27,920
Investment securities		113		-		-		113
Investment securities pledged as collateral		509,234		-		-		509,234
Prepaid forward contracts		-		18,617		-		18,617

Liabilities:

Liabilities under derivative contracts:
Prepaid forward contracts		-		22,981		-		22,981
Interest rate swap contracts		-		55,383		-		55,383

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

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

The Company considers the impact of credit risk when measuring the fair value of its derivative asset and/or liability positions, as applicable.

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

(In thousands, except share and per share amounts)

(Unaudited)

Fair Value of Financial Instruments

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

Credit Facility Debt, Collateralized Indebtedness, Senior Notes and Debentures and Notes Payable

The fair values of each of the Company's debt instruments are based on quoted market prices for the same or similar issues or on the current rates offered to the Company for instruments of the same remaining maturities.

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

		March 31, 2012
	Fair Value Hierarchy	Carrying Amount		Estimated Fair Value
CSC Holdings notes receivable:
Cablevision senior notes held by Newsday Holdings LLC(a)	Level I	$	753,717	$	790,962

Debt instruments:
Credit facility debt(b)	Level II	$	5,163,187	$	5,182,101
Collateralized indebtedness	Level II		455,938		444,098
Senior notes and debentures	Level I		3,283,427		3,624,946
Notes payable	Level II		18,787		18,787
CSC Holdings total debt instruments			8,921,339		9,269,932

Cablevision senior notes and debentures	Level I		2,167,301		2,319,280
Cablevision total debt instruments		$	11,088,640	$	11,589,212

	December 31, 2011
	Carrying Amount		Estimated Fair Value
CSC Holdings notes receivable:
Cablevision senior notes held by Newsday Holdings LLC(a)	$	753,717	$	802,268

Debt instruments:
Credit facility debt(b)	$	5,184,194	$	5,198,987
Collateralized indebtedness		455,938		446,660
Senior notes and debentures		3,279,694		3,627,852
Notes payable		29,227		29,227
CSC Holdings total debt instruments		8,949,053		9,302,726

Cablevision senior notes and debentures		2,166,966		2,355,160
Cablevision total debt instruments	$	11,116,019	$	11,657,886

(a)	These notes are eliminated at the consolidated Cablevision level.

(b)	The carrying value of the Company's credit facility debt, the substantial portion of which bears interest at variable rates, approximates its fair value.

Fair value estimates related to the Company's debt instruments and senior notes receivable presented above are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

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

(In thousands, except share and per share amounts)

(Unaudited)

NOTE 10.

INCOME TAXES

The Company

In general, the Company is required to use an estimated annual effective tax rate to measure the income tax expense recognized in an interim period. The estimated annual effective tax rate is revised on a quarterly basis and therefore may be different from the rate used in a prior interim period. In addition, certain items included in income tax expense as well as the tax impact of certain items included in pretax income from continuing operations must be treated as discrete items. The income tax expense or benefit associated with these discrete items is fully recognized in the interim period in which the items occur.

Cablevision

Cablevision recorded income tax expense of $34,160 for the three months ended March 31, 2012, reflecting an effective tax rate of 37%. A nontaxable gain at an entity that is consolidated for financial reporting purposes but not for income tax purposes resulted in a tax benefit of $2,889. Absent this tax benefit, the effective tax rate for the three months ended March 31, 2012 would have been 41%. Income tax expense for the three-month period included tax expense of $695 relating to nondeductible expenses and tax expense of $880 resulting from an increase in the valuation allowance for certain state net operating loss carry forwards.

Cablevision recorded income tax expense of $52,543 for the three months ended March 31, 2011, reflecting an effective tax rate of 43%. Income tax expense for the three-month period included tax expense of $1,977 relating to nondeductible expenses and tax expense of $322 resulting from an increase in the valuation allowance for certain state net operating loss carry forwards.

Subsequent to the utilization of Cablevision's net operating loss and tax credit carry forwards, payments for income taxes are expected to increase significantly. Cablevision's net operating loss carry forward as of March 31, 2012 was approximately $1,700,000. Approximately $263,000 of Cablevision's net operating loss carry forwards were allocated to AMC Networks in connection with the AMC Networks Distribution (see Note 1).

CSC Holdings

CSC Holdings recorded income tax expense of $60,404 for the three months ended March 31, 2012, reflecting an effective tax rate of 40%. A nontaxable gain at an entity that is consolidated for financial reporting purposes but not for income tax purposes resulted in a tax benefit of $2,889. Absent this tax benefit, the effective tax rate for the three months ended March 31, 2012 would have been 42%. Income tax expense for the three-month period included tax expense of $695 relating to nondeductible expenses and tax expense of $880 resulting from an increase in the valuation allowance for certain state net operating loss carry forwards.

CSC Holdings recorded income tax expense of $77,130 for the three months ended March 31, 2011, reflecting an effective tax rate of 42%. Income tax expense for the three-month period included tax expense of $1,977 relating to nondeductible expenses and tax expense of $322 resulting from an increase in the valuation allowance for certain state net operating loss carry forwards.

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

(In thousands, except share and per share amounts)

(Unaudited)

As of March 31, 2012, on a stand-alone basis CSC Holdings had consolidated federal net operating loss carry forwards of approximately $281,000. CSC Holdings has recorded a deferred tax asset related to approximately $64,000 of such federal net operating loss carry forwards. A deferred tax asset has not been recorded for the remaining federal net operating loss carry forwards as this portion relates to excess tax benefits that have not yet been realized, including 'windfall' deductions on share-based awards and amortization of certain tax deductible goodwill. However, on a stand-alone basis CSC Holdings realized excess state tax benefit of $11,518 during the three months ending March 31, 2012. Such excess tax benefit resulted in an increase to additional paid-in capital. Subsequent to the utilization of CSC Holdings' net operating loss and tax credit carry forwards, including the portion relating to remaining excess tax benefits not yet realized, obligations to Cablevision pursuant to the tax allocation policy will increase significantly.

NOTE 11.

EQUITY PLANS

Cablevision's Equity Plans

Stock Option Award Activity

During the three months ended March 31, 2012, Cablevision granted options that are scheduled to vest over a two year period in 50% annual increments and expire 10 years from the date of grant. These options are performance based and will vest based on the achievement of certain performance criteria. Cablevision calculates the fair value of each option award on the date of grant using the Black-Scholes option pricing model. Cablevision's computation of expected life was determined based on the simplified method (the average of the vesting period and option term) due to the Company's lack of recent historical data for similar awards. Cablevision has not, in its recent history, granted options with performance criteria or with similar terms. Additionally, these options were issued subsequent to a change in Cablevision’s structure in connection with the AMC Networks Distribution and the distribution of Madison Square Garden in February 2010 (the "MSG Distribution"). The interest rate for periods within the contractual life of the stock option is based on interest yields for U.S. Treasury instruments in effect at the time of grant. Cablevision's computation of expected volatility is based on historical volatility of its common stock.

The following assumptions were used to calculate the fair value of stock option awards granted in the first quarter of 2012:

Risk-free interest rate		1.14	%

Expected life (in years)		5.75

Dividend yield		3.52	%

Volatility		43.20	%

Grant date fair value	$	4.06

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

(In thousands, except share and per share amounts)

(Unaudited)

The following table summarizes activity relating to Company employees who held Cablevision stock options for the three months ended March 31, 2012:

	Shares Under Option						Weighted Average		Weighted Average Remaining
	Time Vesting Options			Performance Vesting Options			Exercise Price Per Share		Contractual Term (in years)		Aggregate Intrinsic Value(a)
Balance, December 31, 2011		5,440,662			403,200		$	8.27		3.37	$	35,607
Granted		-			12,783,000			13.93
Exercised		(449,954	)		-			6.53
Forfeited/Expired		(14,671	)		(165,600	)		14.03

Balance, March 31, 2012		4,976,037			13,020,600		$	12.27		7.84	$	44,004

Options exercisable at March 31, 2012		4,776,037			403,200		$	8.01		2.77	$	34,541

Options expected to vest in the future		200,000			11,472,008		$	14.00		9.88	$	8,604

(a)

The aggregate intrinsic value is calculated as the difference between (i) the exercise price of the underlying award and (ii) the quoted price of CNYG Class A common stock on March 31, 2012 or December 31, 2011, as indicated, and March 31, 2012 in the case of the options exercisable and options expected to vest in the future.

In addition, the following table summarizes activity relating to AMC Networks and Madison Square Garden employees who held Cablevision stock options for the three months ended March 31, 2012:

	Shares Under Option					Weighted Average		Weighted Average Remaining
	Time Vesting Options			Performance Vesting Options		Exercise Price Per Share		Contractual Term (in years)		Aggregate Intrinsic Value(a)
Balance, December 31, 2011		753,908			32,400	$	7.97		3.10	$	4,933
Exercised		(37,187	)		-		6.93
Forfeited		(6,100	)		-		14.98

Balance, March 31, 2012		710,621			32,400	$	7.96		3.00	$	5,000

Options exercisable at March 31, 2012		710,621			32,400	$	7.96		3.00	$	5,000

(a)	The aggregate intrinsic value is calculated as the difference between (i) the exercise price of the underlying award and (ii) the quoted price of CNYG Class A common stock on March 31, 2012 or December 31, 2011, as indicated, and March 31, 2012 in the case of the options exercisable.

Cablevision recognizes compensation expense for stock options issued to its employees using a straight-line amortization method, based on the grant date fair value price of CNYG Class A common stock over the vesting period reduced for estimated forfeitures. Cablevision stock options held by AMC Networks and Madison Square Garden employees are not expensed by the Company, however such stock options do have a dilutive effect on net income per share attributable to Cablevision stockholders.

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

(In thousands, except share and per share amounts)

(Unaudited)

Restricted Stock Award Activity

The following table summarizes activity relating to Company employees who held Cablevision restricted shares for the three months ended March 31, 2012:

Number of

Restricted

Number of

Performance

Restricted

Weighted

Average Fair

Value Per

Share at Date of

Grant

Unvested award balance, December 31, 2011