UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2008
OR
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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Commission File |
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Registrant; State of Incorporation; |
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IRS Employer |
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1-14764 |
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Cablevision Systems Corporation |
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11-3415180 |
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Delaware |
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1111 Stewart Avenue |
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Bethpage, New York 11714 |
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(516) 803-2300 |
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1-9046 |
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CSC Holdings, Inc. |
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11-2776686 |
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Delaware |
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1111 Stewart Avenue |
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Bethpage, New York 11714 |
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(516) 803-2300 |
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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.
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Cablevision Systems Corporation |
Yes |
x |
No |
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CSC Holdings, Inc. |
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).
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Large accelerated |
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Accelerated |
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Non-accelerated |
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Smaller |
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Cablevision Systems Corporation |
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Yes x |
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No o |
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Yes o |
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No x |
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Yes o |
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No x |
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Yes o |
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No x |
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CSC Holdings, Inc. |
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Yes o |
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No x |
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Yes o |
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No x |
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Yes x |
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No o |
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Yes o |
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No x |
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Indicate by check mark whether the Registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).
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Cablevision Systems Corporation |
Yes |
o |
No |
x |
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CSC Holdings, Inc. |
Yes |
o |
No |
x |
Number of shares of common stock outstanding as of October 31, 2008:
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Cablevision NY Group Class A Common Stock - |
233,754,025 |
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Cablevision NY Group Class B Common Stock - |
63,265,676 |
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CSC Holdings, Inc. Common Stock - |
12,825,631 |
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CSC Holdings, Inc. meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format applicable to CSC Holdings, Inc.
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
FORM 10-Q
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Financial Statements of Cablevision Systems Corporation and Subsidiaries |
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Condensed Consolidated Balance Sheets - September 30, 2008 (unaudited) and December 31, 2007 |
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Financial Statements of CSC Holdings, Inc. and Subsidiaries |
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Condensed Consolidated Balance Sheets - September 30, 2008 (unaudited) and December 31, 2007 |
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Combined Notes to Condensed Consolidated Financial Statements (unaudited) |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
43 |
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This Quarterly Report on Form 10-Q for the period ended September 30, 2008 is separately filed by Cablevision Systems Corporation (“Cablevision”) and CSC Holdings, Inc. (“CSC Holdings” and collectively with Cablevision and their subsidiaries, the “Company”, “we”, “us” or “our”).
This Quarterly Report contains statements that constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995. In this Quarterly Report there are statements concerning our future operating and future financial performance. Words such as “expects”, “anticipates”, “believes”, “estimates”, “may”, “will”, “should”, “could”, “potential”, “continue”, “intends”, “plans” and similar words and terms used in the discussion of future operating and future financial performance identify forward-looking statements. Investors are cautioned that such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties and that actual results or developments may differ materially from the forward-looking statements as a result of various factors. Factors that may cause such differences to occur include, but are not limited to:
· the level of our revenues;
· competition from existing competitors (such as direct broadcast satellite (“DBS”) operators and telephone companies) and new competitors (such as high-speed wireless providers) entering our franchise areas;
· demand for our basic video, digital video, high-speed data and voice services, which are impacted by competition from other services and the other factors discussed herein;
· the cost of programming and industry conditions;
· changes in the laws or regulations under which we operate;
· developments in the government investigations and litigation related to past practices of the Company in connection with grants of stock options and stock appreciation rights (“SARs”);
· developments in the government investigations relating to improper expense recognition and the timing of recognition of launch support, marketing and other payments under affiliation agreements;
· the outcome of litigation and other proceedings, including the matters described under Part II, Item 1. Legal Proceedings;
· general economic conditions in the areas in which we operate;
· the state of the market for securities and bank loans;
· demand for advertising inventory;
· advertiser demand for 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 and DBS operators and telephone companies and our ability to maintain and renew affiliation agreements with cable television system and DBS operators and telephone companies;
· market demand for new services;
· whether pending uncompleted transactions, if any, are completed on the terms and at the times set forth (if at all);
· other risks and uncertainties inherent in the cable television, programming, entertainment and newspaper publishing businesses, and our other businesses;
1
· financial community and rating agency perceptions of our business, operations, financial condition and the industry 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.
2
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
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September 30, |
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December 31, |
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2008 |
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2007 |
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(unaudited) |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
342,811 |
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$ |
360,662 |
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Restricted cash |
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20,392 |
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58,416 |
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Accounts receivable, trade (less allowance for doubtful accounts of $19,567 and $12,683) |
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557,066 |
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543,151 |
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Prepaid expenses and other current assets |
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249,843 |
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189,306 |
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Program rights, net |
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162,113 |
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133,146 |
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Deferred tax asset |
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281,525 |
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232,984 |
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Investment securities pledged as collateral |
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210,803 |
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196,090 |
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Derivative contracts |
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17,572 |
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30,532 |
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Total current assets |
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1,842,125 |
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1,744,287 |
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Property, plant and equipment, net of accumulated depreciation of $7,580,378 and $6,956,699 |
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3,436,085 |
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3,472,203 |
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Notes and other receivables |
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38,640 |
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40,874 |
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Investment securities pledged as collateral |
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210,803 |
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668,438 |
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Derivative contracts |
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45,149 |
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43,020 |
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Other assets |
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142,036 |
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79,740 |
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Program rights, net |
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465,417 |
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420,923 |
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Deferred carriage fees, net |
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122,451 |
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151,507 |
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Franchises |
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731,848 |
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731,848 |
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Affiliation, broadcast and other agreements, net of accumulated amortization of $499,529 and $448,392 |
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602,677 |
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339,614 |
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Other intangible assets, net of accumulated amortization of $118,773 and $102,487 |
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534,872 |
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316,830 |
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Excess costs over fair value of net assets acquired |
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1,407,685 |
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1,023,480 |
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Deferred financing and other costs, net of accumulated amortization of $88,519 and $88,011 |
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137,197 |
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107,813 |
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$ |
9,716,985 |
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$ |
9,140,577 |
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See accompanying combined notes to condensed consolidated financial statements.
3
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Cont’d)
(Dollars in thousands, except share and per share amounts)
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September 30, |
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December 31, |
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2008 |
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2007 |
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(unaudited) |
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LIABILITIES AND STOCKHOLDERS’ DEFICIENCY |
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Current Liabilities: |
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Accounts payable |
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$ |
391,713 |
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$ |
370,044 |
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Accrued liabilities |
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817,725 |
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834,374 |
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Deferred revenue |
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217,896 |
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198,658 |
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Program rights obligations |
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122,659 |
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110,128 |
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Liabilities under derivative contracts |
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1,243 |
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2,893 |
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Bank debt |
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260,000 |
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110,000 |
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Collateralized indebtedness |
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209,189 |
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219,073 |
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Capital lease obligations |
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5,149 |
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5,351 |
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Notes payable |
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— |
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1,017 |
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Senior notes and debentures |
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1,399,711 |
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500,000 |
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Total current liabilities |
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3,425,285 |
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2,351,538 |
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Deferred revenue |
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13,849 |
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12,691 |
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Program rights obligations |
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318,623 |
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307,185 |
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Liabilities under derivative contracts |
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98,084 |
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132,647 |
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Other liabilities |
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332,519 |
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322,042 |
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Deferred tax liability |
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389,092 |
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326,736 |
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Bank debt |
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5,386,250 |
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4,778,750 |
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Collateralized indebtedness |
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241,468 |
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628,081 |
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Capital lease obligations |
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57,874 |
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60,056 |
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Senior notes and debentures |
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4,096,294 |
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4,995,148 |
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Senior subordinated notes |
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323,501 |
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323,311 |
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Minority interests |
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17,153 |
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1,182 |
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Total liabilities |
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14,699,992 |
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14,239,367 |
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Commitments and contingencies |
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Stockholders’ Deficiency: |
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Preferred Stock, $.01 par value, 50,000,000 shares authorized, none issued |
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— |
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— |
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Cablevision NY Group Class A Common Stock, $.01 par value, 800,000,000 shares authorized, 258,601,632 and 255,648,391 shares issued and 233,807,091 and 231,007,266 shares outstanding |
|
2,586 |
|
2,556 |
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Cablevision NY Group Class B Common Stock, $.01 par value, 320,000,000 shares authorized, 63,265,676 shares issued and outstanding |
|
633 |
|
633 |
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Rainbow Media Group Class A Common Stock, $.01 par value, 600,000,000 shares authorized, none issued |
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— |
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— |
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Rainbow Media Group Class B Common Stock, $.01 par value, 160,000,000 shares authorized, none issued |
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— |
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— |
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Paid-in capital |
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153,670 |
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130,791 |
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Accumulated deficit |
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(4,712,709 |
) |
(4,806,543 |
) |
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(4,555,820 |
) |
(4,672,563 |
) |
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Treasury stock, at cost (24,794,541 and 24,641,125 shares) |
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(429,306 |
) |
(429,084 |
) |
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Accumulated other comprehensive income |
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2,119 |
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2,857 |
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Total stockholders’ deficiency |
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(4,983,007 |
) |
(5,098,790 |
) |
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$ |
9,716,985 |
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$ |
9,140,577 |
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See accompanying combined notes to condensed consolidated financial statements.
4
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Nine Months Ended September 30, 2008 and 2007
(Dollars in thousands, except per share amounts)
(Unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2008 |
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2007 |
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2008 |
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2007 |
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Revenues, net |
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$ |
1,744,981 |
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$ |
1,511,799 |
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$ |
5,178,094 |
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$ |
4,642,416 |
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Operating expenses: |
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Technical and operating (excluding depreciation, amortization and impairments shown below) |
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738,255 |
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637,807 |
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2,240,378 |
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2,053,732 |
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Selling, general and administrative |
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447,480 |
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390,618 |
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1,286,632 |
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1,161,850 |
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Restructuring charges (credits) |
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366 |
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1,107 |
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(1,247 |
) |
2,562 |
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Depreciation and amortization (including impairments) |
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277,541 |
|
280,199 |
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826,155 |
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843,497 |
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1,463,642 |
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1,309,731 |
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4,351,918 |
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4,061,641 |
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Operating income |
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281,339 |
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202,068 |
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826,176 |
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580,775 |
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Other income (expense): |
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Interest expense |
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(196,554 |
) |
(237,487 |
) |
(594,750 |
) |
(714,337 |
) |
|||||||
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Interest income |
|
2,807 |
|
13,353 |
|
12,023 |
|
28,317 |
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|||||||
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Equity in net income of affiliates |
|
— |
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— |
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— |
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4,377 |
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|||||||
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Gain (loss) on sale of programming and affiliate interests |
|
448 |
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(618 |
) |
448 |
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183,270 |
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Gain (loss) on investments, net |
|
13,324 |
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(46,136 |
) |
(75,811 |
) |
(31,505 |
) |
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Gain (loss) on equity derivative contracts, net |
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(4,731 |
) |
52,637 |
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62,490 |
|
61,225 |
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Loss on interest rate swap contracts, net |
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(29,852 |
) |
(51,452 |
) |
(21,942 |
) |
(24,138 |
) |
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Write-off of deferred financing costs |
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— |
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(2,919 |
) |
— |
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(2,919 |
) |
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Loss on extinguishment of debt |
|
— |
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(19,113 |
) |
(2,424 |
) |
(19,113 |
) |
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Minority interests |
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(454 |
) |
(401 |
) |
(963 |
) |
814 |
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Miscellaneous, net |
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28 |
|
457 |
|
1,188 |
|
1,908 |
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|||||||
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|
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(214,984 |
) |
(291,679 |
) |
(619,741 |
) |
(512,101 |
) |
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Income (loss) from continuing operations before income taxes |
|
66,355 |
|
(89,611 |
) |
206,435 |
|
68,674 |
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Income tax benefit (expense) |
|
(39,286 |
) |
10,715 |
|
(111,657 |
) |
(53,586 |
) |
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Income (loss) from continuing operations |
|
27,069 |
|
(78,896 |
) |
94,778 |
|
15,088 |
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Income (loss) from discontinued operations, including gain on sale of Fox Sports Net Bay Area of $187,784, net of taxes, for the nine months ended September 30, 2007 |
|
32 |
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(440 |
) |
(944 |
) |
197,175 |
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Income (loss) before cumulative effect of a change in accounting principle |
|
27,101 |
|
(79,336 |
) |
93,834 |
|
212,263 |
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Cumulative effect of a change in accounting principle, net of taxes |
|
— |
|
— |
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— |
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(443 |
) |
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Net income (loss) |
|
$ |
27,101 |
|
$ |
(79,336 |
) |
$ |
93,834 |
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$ |
211,820 |
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Basic net income per share: |
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Income (loss) from continuing operations |
|
$ |
0.09 |
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$ |
(0.27 |
) |
$ |
0.33 |
|
$ |
0.05 |
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Income (loss) from discontinued operations |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
0.69 |
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Cumulative effect of a change in accounting principle, net of taxes |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
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Net income (loss) |
|
$ |
0.09 |
|
$ |
(0.27 |
) |
$ |
0.32 |
|
$ |
0.74 |
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Basic weighted average common shares (in thousands) |
|
290,365 |
|
289,845 |
|
290,150 |
|
287,719 |
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Diluted net income per share: |
|
|
|
|
|
|
|
|
|
|||||||
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Income (loss) from continuing operations |
|
$ |
0.09 |
|
$ |
(0.27 |
) |
$ |
0.32 |
|
$ |
0.05 |
|
|||
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Income (loss) from discontinued operations |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
0.67 |
|
|||
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Cumulative effect of a change in accounting principle, net of taxes |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|||
|
Net income (loss) |
|
$ |
0.09 |
|
$ |
(0.27 |
) |
$ |
0.32 |
|
$ |
0.72 |
|
|||
|
Diluted weighted average common shares (in thousands) |
|
295,921 |
|
289,845 |
|
294,995 |
|
294,534 |
|
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See accompanying combined notes to condensed consolidated financial statements.
5
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 2008 and 2007
(Dollars in thousands)
(Unaudited)
|
|
|
2008 |
|
2007 |
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
||
|
Income from continuing operations |
|
$ |
94,778 |
|
$ |
15,088 |
|
|
Adjustments to reconcile income from continuing operations to net cash provided by operating activities: |
|
|
|
|
|
||
|
Depreciation and amortization (including impairments) |
|
826,155 |
|
843,497 |
|
||
|
Equity in net income of affiliates |
|
— |
|
(4,377 |
) |
||
|
Minority interests |
|
963 |
|
(814 |
) |
||
|
Gain on sale of programming and affiliate interests |
|
(448 |
) |
(183,270 |
) |
||
|
Loss on investments, net |
|
75,811 |
|
31,505 |
|
||
|
Write-off of deferred financing costs |
|
— |
|
2,919 |
|
||
|
Gain on equity derivative contracts, net |
|
(62,490 |
) |
(61,225 |
) |
||
|
Unrealized loss (gain) on interest rate swaps |
|
(13,823 |
) |
17,877 |
|
||
|
Loss on extinguishment of debt |
|
2,424 |
|
19,113 |
|
||
|
Amortization of deferred financing costs and discounts on indebtedness |
|
33,398 |
|
37,713 |
|
||
|
Amortization of other deferred costs |
|
20,509 |
|
20,553 |
|
||
|
Share-based compensation expense related to equity classified awards |
|
47,263 |
|
42,045 |
|
||
|
Deferred income tax |
|
100,509 |
|
34,071 |
|
||
|
Amortization and write-off of program rights |
|
118,225 |
|
100,028 |
|
||
|
Provision for doubtful accounts |
|
42,049 |
|
40,228 |
|
||
|
Changes in other assets and liabilities |
|
(204,680 |
) |
(326,822 |
) |
||
|
Net cash provided by operating activities |
|
1,080,643 |
|
628,129 |
|
||
|
Cash flows from investing activities: |
|
|
|
|
|
||
|
Capital expenditures |
|
(633,579 |
) |
(554,371 |
) |
||
|
Payments for acquisitions, net of cash acquired |
|
(725,357 |
) |
— |
|
||
|
Proceeds from sale of equipment, net of costs of disposal |
|
377 |
|
2,458 |
|
||
|
Decrease (increase) in investment securities and other investments |
|
(37,529 |
) |
269 |
|
||
|
Decrease (increase) in restricted cash |
|
(14,814 |
) |
2,433 |
|
||
|
Additions to other intangible assets |
|
(7,038 |
) |
(3,115 |
) |
||
|
Proceeds from sale of programming and affiliate interests |
|
500 |
|
208,119 |
|
||
|
Distributions from equity method investees, net |
|
— |
|
24,506 |
|
||
|
Net cash used in investing activities |
|
(1,417,440 |
) |
(319,701 |
) |
||
|
Cash flows from financing activities: |
|
|
|
|
|
||
|
Proceeds from bank debt |
|
875,000 |
|
73,000 |
|
||
|
Repayment of bank debt |
|
(117,500 |
) |
(134,250 |
) |
||
|
Issuance of senior notes |
|
500,000 |
|
— |
|
||
|
Redemption of senior notes and senior subordinated notes |
|
(500,000 |
) |
(193,158 |
) |
||
|
Proceeds from stock options |
|
6,645 |
|
30,397 |
|
||
|
Proceeds from collateralized indebtedness |
|
171,401 |
|
— |
|
||
|
Repayment of collateralized indebtedness |
|
(536,061 |
) |
— |
|
||
|
Dividend distribution to common stockholders |
|
(32,021 |
) |
(67,313 |
) |
||
|
Payments on capital lease obligations and other debt |
|
(4,345 |
) |
(5,472 |
) |
||
|
Deemed repurchase of restricted stock |
|
(222 |
) |
(68,978 |
) |
||
|
Additions to deferred financing and other costs |
|
(35,887 |
) |
— |
|
||
|
Distributions to minority partners |
|
(998 |
) |
(13,454 |
) |
||
|
Net cash provided by (used in) financing activities |
|
326,012 |
|
(379,228 |
) |
||
|
Net decrease in cash and cash equivalents from continuing operations |
|
(10,785 |
) |
(70,800 |
) |
||
|
Cash flows of discontinued operations: |
|
|
|
|
|
||
|
Net cash provided by (used in) operating activities |
|
(59,904 |
) |
17,827 |
|
||
|
Net cash provided by investing activities |
|
52,838 |
|
312,358 |
|
||
|
Net change in cash classified in assets held for sale |
|
— |
|
24,461 |
|
||
|
Net effect of discontinued operations on cash and cash equivalents |
|
(7,066 |
) |
354,646 |
|
||
|
Cash and cash equivalents at beginning of year |
|
360,662 |
|
524,401 |
|
||
|
Cash and cash equivalents at end of period |
|
$ |
342,811 |
|
$ |
808,247 |
|
See accompanying combined notes to condensed consolidated financial statements.
6
CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
|
|
|
September 30, |
|
December 31, |
|
||
|
|
|
(unaudited) |
|
|
|
||
|
ASSETS |
|
|
|
|
|
||
|
Current Assets: |
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
314,987 |
|
$ |
331,901 |
|
|
Restricted cash |
|
20,392 |
|
58,416 |
|
||
|
Accounts receivable, trade (less allowance for doubtful accounts of $19,567 and $12,683) |
|
557,066 |
|
543,151 |
|
||
|
Prepaid expenses and other current assets |
|
249,843 |
|
189,281 |
|
||
|
Program rights, net |
|
162,113 |
|
133,146 |
|
||
|
Deferred tax asset |
|
361,889 |
|
283,483 |
|
||
|
Advances to affiliates |
|
438,154 |
|
361,770 |
|
||
|
Investment securities pledged as collateral |
|
210,803 |
|
196,090 |
|
||
|
Derivative contracts |
|
17,572 |
|
30,532 |
|
||
|
Total current assets |
|
2,332,819 |
|
2,127,770 |
|
||
|
Property, plant and equipment, net of accumulated depreciation of $7,580,378 and $6,956,699 |
|
3,436,085 |
|
3,472,203 |
|
||
|
Notes and other receivables |
|
38,640 |
|
40,874 |
|
||
|
Investment securities pledged as collateral |
|
210,803 |
|
668,438 |
|
||
|
Derivative contracts |
|
45,149 |
|
43,020 |
|
||
|
Other assets |
|
142,036 |
|
79,740 |
|
||
|
Program rights, net |
|
465,417 |
|
420,923 |
|
||
|
Deferred carriage fees, net |
|
122,451 |
|
151,507 |
|
||
|
Franchises |
|
731,848 |
|
731,848 |
|
||
|
Affiliation, broadcast and other agreements, net of accumulated amortization of $499,529 and $448,392 |
|
602,677 |
|
339,614 |
|
||
|
Other intangible assets, net of accumulated amortization of $118,773 and $102,487 |
|
534,872 |
|
316,830 |
|
||
|
Excess costs over fair value of net assets acquired |
|
1,407,685 |
|
1,023,480 |
|
||
|
Deferred financing and other costs, net of accumulated amortization of $66,804 and $69,926 |
|
126,786 |
|
93,782 |
|
||
|
|
|
$ |
10,197,268 |
|
$ |
9,510,029 |
|
See accompanying combined notes to condensed consolidated financial statements.
7
CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONDENSED CONSOLIDATED BALANCE SHEETS (Cont’d)
(Dollars in thousands, except share and per share amounts)
|
|
|
September 30, |
|
December 31, |
|
||
|
|
|
(unaudited) |
|
|
|
||
|
LIABILITIES AND STOCKHOLDER’S DEFICIENCY |
|
|
|
|
|
||
|
Current Liabilities: |
|
|
|
|
|
||
|
Accounts payable |
|
$ |
391,713 |
|
$ |
370,044 |
|
|
Accrued liabilities |
|
757,973 |
|
800,616 |
|
||
|
Deferred revenue |
|
217,896 |
|
198,658 |
|
||
|
Program rights obligations |
|
122,659 |
|
110,128 |
|
||
|
Liabilities under derivative contracts |
|
1,243 |
|
2,893 |
|
||
|
Bank debt |
|
260,000 |
|
110,000 |
|
||
|
Collateralized indebtedness |
|
209,189 |
|
219,073 |
|
||
|
Capital lease obligations |
|
5,149 |
|
5,351 |
|
||
|
Notes payable |
|
— |
|
1,017 |
|
||
|
Senior notes and debentures |
|
899,711 |
|
500,000 |
|
||
|
Total current liabilities |
|
2,865,533 |
|
2,317,780 |
|
||
|
|
|
|
|
|
|
||
|
Deferred revenue |
|
13,849 |
|
12,691 |
|
||
|
Program rights and other contract obligations |
|
318,623 |
|
307,185 |
|
||
|
Liabilities under derivative contracts |
|
98,084 |
|
132,647 |
|
||
|
Other liabilities |
|
328,489 |
|
315,842 |
|
||
|
Deferred tax liability |
|
702,975 |
|
569,613 |
|
||
|
Bank debt |
|
5,386,250 |
|
4,778,750 |
|
||
|
Collateralized indebtedness |
|
241,468 |
|
628,081 |
|
||
|
Capital lease obligations |
|
57,874 |
|
60,056 |
|
||
|
Senior notes and debentures |
|
3,096,294 |
|
3,495,148 |
|
||
|
Senior subordinated notes |
|
323,501 |
|
323,311 |
|
||
|
Minority interests |
|
17,153 |
|
1,182 |
|
||
|
Total liabilities |
|
13,450,093 |
|
12,942,286 |
|
||
|
|
|
|
|
|
|
||
|
Commitments and contingencies |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Stockholder’s deficiency: |
|
|
|
|
|
||
|
Series A Cumulative Convertible Preferred Stock, 200,000 shares authorized, none issued |
|
— |
|
— |
|
||
|
Series B Cumulative Convertible Preferred Stock, 200,000 shares authorized, none issued |
|
— |
|
— |
|
||
|
8% Series D Cumulative Preferred Stock, $.01 par value, 112,500 shares authorized, none issued ($100 per share liquidation preference) |
|
— |
|
— |
|
||
|
Preferred Stock, $.01 par value, 9,487,500 shares authorized, none issued |
|
— |
|
— |
|
||
|
Common Stock, $.01 par value, 20,000,000 shares authorized, 12,825,631 and 11,595,635 shares issued and outstanding |
|
128 |
|
116 |
|
||
|
Note due from Cablevision |
|
(651,266 |
) |
— |
|
||
|
Paid-in capital |
|
859,511 |
|
182,721 |
|
||
|
Accumulated deficit |
|
(3,463,317 |
) |
(3,617,951 |
) |
||
|
|
|
(3,254,944 |
) |
(3,435,114 |
) |
||
|
Accumulated other comprehensive income |
|
2,119 |
|
2,857 |
|
||
|
Total stockholder’s deficiency |
|
(3,252,825 |
) |
(3,432,257 |
) |
||
|
|
|
$ |
10,197,268 |
|
$ |
9,510,029 |
|
See accompanying combined notes to condensed consolidated financial statements.
8
CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Nine Months Ended September 30, 2008 and 2007
(Dollars in thousands)
(Unaudited)
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
||||||||
|
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
||||
|
Revenues, net |
|
$ |
1,744,981 |
|
$ |
1,511,799 |
|
$ |
5,178,094 |
|
$ |
4,642,416 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
||||
|
Technical and operating (excluding depreciation, amortization and impairments shown below) |
|
738,255 |
|
637,807 |
|
2,240,378 |
|
2,053,732 |
|
||||
|
Selling, general and administrative |
|
447,480 |
|
390,618 |
|
1,286,632 |
|
1,161,850 |
|
||||
|
Restructuring charges (credits) |
|
366 |
|
1,107 |
|
(1,247 |
) |
2,562 |
|
||||
|
Depreciation and amortization (including impairments) |
|
277,541 |
|
280,199 |
|
826,155 |
|
843,497 |
|
||||
|
|
|
1,463,642 |
|
1,309,731 |
|
4,351,918 |
|
4,061,641 |
|
||||
|
Operating income |
|
281,339 |
|
202,068 |
|
826,176 |
|
580,775 |
|
||||
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
||||
|
Interest expense |
|
(166,223 |
) |
(203,733 |
) |
(500,802 |
) |
(613,422 |
) |
||||
|
Interest income |
|
13,314 |
|
12,784 |
|
22,158 |
|
25,176 |
|
||||
|
Equity in net income of affiliates |
|
— |
|
— |
|
— |
|
4,377 |
|
||||
|
Gain (loss) on sale of programming and affiliate interests |
|
448 |
|
(618 |
) |
448 |
|
183,270 |
|
||||
|
Gain (loss) on investments, net |
|
13,324 |
|
(46,136 |
) |
(75,811 |
) |
(31,505 |
) |
||||
|
Gain (loss) on equity derivative contracts, net |
|
(4,731 |
) |
52,637 |
|
62,490 |
|
61,225 |
|
||||
|
Loss on interest rate swap contracts, net |
|
(29,852 |
) |
(51,452 |
) |
(21,942 |
) |
(24,138 |
) |
||||
|
Write-off of deferred financing costs |
|
— |
|
(2,919 |
) |
— |
|
(2,919 |
) |
||||
|
Loss on extinguishment of debt |
|
— |
|
(19,113 |
) |
(2,424 |
) |
(19,113 |
) |
||||
|
Minority interests |
|
(454 |
) |
(401 |
) |
(963 |
) |
814 |
|
||||
|
Miscellaneous, net |
|
28 |
|
457 |
|
1,188 |
|
1,908 |
|
||||
|
|
|
(174,146 |
) |
(258,494 |
) |
(515,658 |
) |
(414,327 |
) |
||||
|
Income (loss) from continuing operations before income taxes |
|
107,193 |
|
(56,426 |
) |
310,518 |
|
166,448 |
|
||||
|
Income tax benefit (expense) |
|
(55,633 |
) |
14,759 |
|
(154,940 |
) |
(75,493 |
) |
||||
|
Income (loss) from continuing operations |
|
51,560 |
|
(41,667 |
) |
155,578 |
|
90,955 |
|
||||
|
Income (loss) from discontinued operations, including gain on sale of Fox Sports Net Bay Area of $187,784, net of taxes, for the nine months ended September 30, 2007 |
|
32 |
|
(440 |
) |
(944 |
) |
197,175 |
|
||||
|
Income (loss) before cumulative effect of a change in accounting principle |
|
51,592 |
|
(42,107 |
) |
154,634 |
|
288,130 |
|
||||
|
Cumulative effect of a change in accounting principle, net of taxes |
|
— |
|
— |
|
— |
|
(443 |
) |
||||
|
Net income (loss) |
|
$ |
51,592 |
|
$ |
(42,107 |
) |
$ |
154,634 |
|
$ |
287,687 |
|
See accompanying combined notes to condensed consolidated financial statements.
9
CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 2008 and 2007
(Dollars in thousands)
(Unaudited)
|
|
|
2008 |
|
2007 |
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
||
|
Income from continuing operations |
|
$ |
155,578 |
|
$ |
90,955 |
|
|
Adjustments to reconcile income from continuing operations to net cash provided by operating activities: |
|
|
|
|
|
||
|
Depreciation and amortization (including impairments) |
|
826,155 |
|
843,497 |
|
||
|
Equity in net income of affiliates |
|
— |
|
(4,377 |
) |
||
|
Minority interests |
|
963 |
|
(814 |
) |
||
|
Gain on sale of programming and affiliate interests |
|
(448 |
) |
(183,270 |
) |
||
|
Loss on investments, net |
|
75,811 |
|
31,505 |
|
||
|
Write-off of deferred financing costs |
|
— |
|
2,919 |
|
||
|
Gain on equity derivative contracts, net |
|
(62,490 |
) |
(61,225 |
) |
||
|
Unrealized loss (gain) on interest rate swaps |
|
(13,823 |
) |
17,877 |
|
||
|
Loss on extinguishment of debt |
|
2,424 |
|
19,113 |
|
||
|
Amortization of deferred financing costs and discounts on indebtedness |
|
29,768 |
|
34,094 |
|
||
|
Accretion of discount on Cablevision senior notes |
|
(1,266 |
) |
— |
|
||
|
Amortization of other deferred costs |
|
20,509 |
|
20,553 |
|
||
|
Share-based compensation expense related to equity classified awards |
|
47,263 |
|
42,045 |
|
||
|
Deferred income tax |
|
141,650 |
|
52,996 |
|
||
|
Amortization and write-off of program rights |
|
118,225 |
|
100,028 |
|
||
|
Provision for doubtful accounts |
|
42,049 |
|
40,228 |
|
||
|
Changes in other assets and liabilities |
|
(305,003 |
) |
(437,341 |
) |
||
|
Net cash provided by operating activities |
|
1,077,365 |
|
608,783 |
|
||
|
Cash flows from investing activities: |
|
|
|
|
|
||
|
Capital expenditures |
|
(633,579 |
) |
(554,371 |
) |
||
|
Payment for acquisitions, net of cash acquired |
|
(725,357 |
) |
— |
|
||
|
Proceeds from sale of equipment, net of costs of disposal |
|
377 |
|
2,458 |
|
||
|
Decrease (increase) in investment securities and other investments |
|
(37,529 |
) |
269 |
|
||
|
Decrease (increase) in restricted cash |
|
(14,814 |
) |
2,433 |
|
||
|
Additions to other intangible assets |
|
(7,038 |
) |
(3,115 |
) |
||
|
Proceeds from sale of programming and affiliate interests |
|
500 |
|
208,119 |
|
||
|
Distributions from equity method investees, net |
|
— |
|
24,506 |
|
||
|
Net cash used in investing activities |
|
(1,417,440 |
) |
(319,701 |
) |
||
|
Cash flows from financing activities: |
|
|
|
|
|
||
|
Proceeds from bank debt |
|
875,000 |
|
73,000 |
|
||
|
Repayment of bank debt |
|
(117,500 |
) |
(134,250 |
) |
||
|
Issuance of senior notes |
|
500,000 |
|
— |
|
||
|
Redemption of senior notes and senior subordinated notes |
|
(500,000 |
) |
(193,158 |
) |
||
|
Proceeds from collateralized indebtedness |
|
171,401 |
|
— |
|
||
|
Repayment of collateralized indebtedness |
|
(536,061 |
) |
— |
|
||
|
Capital contributions from (distributions to) Cablevision |
|
(21,393 |
) |
3,796 |
|
||
|
Payments on capital lease obligations and other debt |
|
(4,345 |
) |
(5,472 |
) |
||
|
Additions to deferred financing and other costs |
|
(35,877 |
) |
— |
|
||
|
Distributions to minority partners |
|
(998 |
) |
(13,454 |
) |
||
|
Net cash provided by (used in) financing activities |
|
330,227 |
|
(269,538 |
) |
||
|
Net increase (decrease) in cash and cash equivalents from continuing operations |
|
(9,848 |
) |
19,544 |
|
||
|
Cash flows of discontinued operations: |
|
|
|
|
|
||
|
Net cash provided by (used in) operating activities |
|
(59,904 |
) |
17,827 |
|
||
|
Net cash provided by investing activities |
|
52,838 |
|
312,358 |
|
||
|
Net change in cash classified in assets held for sale |
|
— |
|
24,461 |
|
||
|
Net effect of discontinued operations on cash and cash equivalents |
|
(7,066 |
) |
354,646 |
|
||
|
Cash and cash equivalents at beginning of year |
|
331,901 |
|
390,143 |
|
||
|
Cash and cash equivalents at end of period |
|
$ |
314,987 |
|
$ |
764,333 |
|
See accompanying combined notes to condensed consolidated financial statements.
10
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
Cablevision Systems Corporation (“Cablevision”) and its wholly-owned subsidiary CSC Holdings, Inc. (“CSC Holdings,” and collectively with Cablevision, the “Company”) own and operate cable television systems and through Rainbow Media Holdings LLC, a wholly-owned subsidiary of CSC Holdings, have ownership interests in companies that produce and distribute national entertainment and regional news programming services, and Madison Square Garden, L.P. 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. As a result of the completion of the series of transactions to form Newsday Holdings LLC and Newsday LLC on July 29, 2008 (see Note 4), the Company now classifies its business interests into four reportable segments: Telecommunications Services, consisting principally of its video, high-speed data, Voice over Internet Protocol and its commercial data and voice services operations; Rainbow, consisting principally of interests in national and regional television programming networks, including AMC, IFC, WE tv, Sundance Channel (as of June 16, 2008), News 12 and the VOOM HD Networks; Madison Square Garden, consisting principally of its professional sports teams, a regional sports programming business and an entertainment business, as well as the operations of Fuse, a national music programming network, effective January 1, 2008, which prior to January 1, 2008 was included in the Rainbow segment (prior period segment information has been reported on a comparable basis); and the Newspaper Publishing Group, consisting of the Newsday daily newspaper, amNew York, Star Community Publishing Group, Island Publications and online websites including newsday.com and exploreLI.com.
NOTE 2. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of Cablevision and CSC Holdings have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all the information and notes required for complete annual financial statements.
The financial statements as of September 30, 2008 and for the three and nine months ended September 30, 2008 and 2007 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.
11
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
(Dollars in thousands, except per share amounts)
(Unaudited)
The accompanying condensed consolidated financial statements of Cablevision include the accounts of Cablevision and its majority-owned subsidiaries and the accompanying condensed consolidated financial statements of CSC Holdings include the accounts of CSC Holdings and its majority-owned subsidiaries. Cablevision has no operations independent of its CSC Holdings subsidiary, whose operating results and financial position are consolidated into Cablevision. The condensed consolidated balance sheets and condensed statements of operations for Cablevision are essentially identical to the condensed consolidated balance sheets and condensed consolidated statements of operations for CSC Holdings, with the following significant exceptions: Cablevision has $1.5 billion of senior notes issued in April 2004 to third party investors, cash, deferred financing costs and accrued interest related to its senior notes, certain intercompany payables to CSC Holdings and other subsidiaries, deferred taxes and accrued dividends on its balance sheet. In July 2008, CSC Holdings received a capital contribution in the form of a note receivable from Cablevision (reflected as an offset in equity on its condensed consolidated balance sheet) of $650,000 ($682,000 face amount) relating to 8% senior notes due 2012 issued by Cablevision. At September 30, 2008, the accreted value of the note receivable was $651,266. CSC Holdings in turn contributed such notes to Newsday Holdings LLC in connection with the Newsday transaction (see Note 4). The contribution of Cablevision notes to CSC Holdings has no impact on CSC Holdings’ total stockholder’s equity and the Cablevision notes eliminate in the condensed consolidated balance sheet of Cablevision. Differences between Cablevision’s results of operations from those of CSC Holdings primarily include incremental interest expense, interest income and income tax expense or benefit and CSC Holdings’ results of operations include incremental interest income from the 8% senior notes and the accretion of the discount on the notes issued by Cablevision in connection with the Newsday transaction discussed above, which eliminates in the condensed consolidated statements of operations of Cablevision. The combined notes to the condensed consolidated financial statements relate to the Company, which, except as noted, are identical for Cablevision and CSC Holdings. All significant intercompany transactions and balances are eliminated in both sets of 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, 2008.
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, 2007 as modified by the Company’s Current Report on Form 8-K dated May 22, 2008.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Certain reclassifications have been made to the 2007 financial statements to conform to the 2008 presentation.
12
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
(Dollars in thousands, except per share amounts)
(Unaudited)
NOTE 3. RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
Recently Adopted Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“Statement No. 157”). Statement No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Under Statement No. 157, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. It also clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. This Statement applies under other accounting pronouncements that require or permit fair value measurements. Accordingly, this Statement does not require any new fair value measurements. Statement No. 157 became effective for the Company on January 1, 2008 with respect to financial assets and financial liabilities. The FASB has deferred the adoption of Statement No. 157 for nonfinancial assets and nonfinancial liabilities to be effective for the Company on January 1, 2009. See Note 14 for a discussion of the impact of the adoption of Statement No. 157 for certain financial assets and financial liabilities. The Company has not yet determined the impact of Statement No. 157 as it relates to nonfinancial assets and nonfinancial liabilities on its consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115 (“Statement No. 159”). Statement No. 159 permits entities to elect, at specified election dates, to measure eligible financial instruments and certain other items at fair value. An entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date, and recognize upfront costs and fees related to those items in earnings as incurred. Statement No. 159 became effective as of January 1, 2008 for the Company. The adoption of Statement No. 159 did not have any impact on the Company’s financial position or results of operations as of and for the three and nine months ended September 30, 2008 as the Company did not elect to measure any eligible financial instruments or certain other items at fair value.
Recently Issued Accounting Pronouncements Not Yet Adopted
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (“Statement No. 161”). Statement No. 161 requires specific disclosures regarding the location and amounts of derivative instruments in the Company’s financial statements; how derivative instruments and related hedged items are accounted for; and how derivative instruments and related hedged items affect the Company’s financial position, financial performance, and cash flows. Statement No. 161 is effective for the Company on January 1, 2009. The impact of this standard will be to expand disclosures regarding the Company’s derivative instruments.
In April 2008, the FASB issued FASB Staff Position (“FSP”) No. FAS 142-3, Determination of the Useful Life of Intangible Assets. FSP No. FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142, Goodwill and Other Intangible Assets. FSP No. FAS 142-3 is effective for the Company on January 1, 2009. The Company has not yet determined the impact FSP No. FAS 142-3 will have on its consolidated financial statements.
13
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
(Dollars in thousands, except per share amounts)
(Unaudited)
NOTE 4. TRANSACTIONS
Newsday
On July 29, 2008, CSC Holdings and Tribune Company completed a series of transactions contemplated by the Formation Agreement, dated May 11, 2008, to form Newsday Holdings LLC and Newsday LLC, new limited liability companies that operate the Company’s newspaper publishing business. The newspaper publishing business (“Newsday Media Group”) includes the Newsday daily newspaper which is primarily distributed on Long Island, New York and in the New York metropolitan area. The Newsday Media Group also includes (i) amNew York, a free daily newspaper distributed in New York City, (ii) Star Community Publishing Group which is the Northeast’s largest shopper group, (iii) Island Publications which produces targeted lifestyle magazines and selected tourism and business to business publications, and (iv) online websites including newsday.com and exploreLI.com.
On the closing date, Tribune Company, through its subsidiaries, contributed substantially all of the assets and liabilities of the Newsday Media Group to Newsday Holdings LLC, which in turn contributed such assets to Newsday LLC, its wholly-owned subsidiary, and CSC Holdings, through its subsidiary NMG Holdings, Inc., contributed approximately $682,000 aggregate principal amount of newly-issued 8% senior notes due 2012 of Cablevision with an approximate fair value of $650,000 to Newsday Holdings LLC (the “Newsday Transaction”). CSC Holdings issued approximately 1.2 million shares of common stock to Cablevision in consideration for its contribution of the newly-issued 8% senior notes due 2012. Also, on July 29, 2008, Newsday LLC borrowed $650,000 under its new senior secured credit facility described below, and distributed cash of $612,000 on behalf of Newsday Holdings LLC to Tribune Company in connection with Tribune’s contribution of the net assets of the Newsday Media Group and $18,000 for prepaid rent from the proceeds of that financing. The remaining $20,000 will be used by Newsday LLC for working capital purposes. In addition, CSC Holdings provided $35,000 in additional funds to Newsday LLC, through a contribution to Newsday Holdings LLC, to pay certain transaction costs. As a result of these transactions, CSC Holdings, through its subsidiary NMG Holdings, Inc. owns approximately 97.2% of the equity in Newsday Holdings LLC and Tribune Company, through a wholly-owned subsidiary, owns approximately 2.8% of the equity in Newsday Holdings LLC, which owns the Cablevision senior notes with an aggregate principal amount of approximately $682,000 and the Newsday Media Group business through its 100% ownership of Newsday LLC.
Newsday LLC’s new senior secured credit facility is comprised of two components: a $525,000 9.75% fixed rate term loan facility and a $125,000 floating rate term loan facility. The interest rate on the floating rate term loan facility is the Eurodollar Rate (as defined) plus 5.50%. The rate for borrowings under the floating rate term loan facility was approximately 7.96% as of July 29, 2008 and September 30, 2008. Borrowings by Newsday LLC under its senior secured credit facility are guaranteed by Newsday Holdings LLC, NMG Holdings, Inc. and CSC Holdings on a senior unsecured basis and secured by a lien on the assets of Newsday LLC, and the Cablevision senior notes held by Newsday Holdings LLC. The senior secured credit facility matures on August 1, 2013 and, subject to certain exceptions, requires mandatory prepayments out of the proceeds of certain sales of property or assets, insurance proceeds and debt and equity issuances. No mandatory prepayments are required prior to July 29, 2011, and the amount of prepayments thereafter are limited to $105,000 in the aggregate prior to July 29, 2012 and $140,000 in the aggregate prior to the maturity date. Optional prepayments are also permitted, subject to specified prepayment premiums. The principal financial covenant for the senior secured credit facility is an interest coverage ratio of 1.1 to 1.0. The senior secured credit facility also contains customary affirmative and negative covenants, subject to certain exceptions, including limitations on indebtedness (other than permitted senior indebtedness (as defined) not exceeding $50,000 and permitted subordinated
14
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
(Dollars in thousands, except per share amounts)
(Unaudited)
indebtedness (as defined) to be used for investments not to exceed $100,000), investments (other than investments out of excess cash flow and out of the proceeds of the Cablevision senior notes in excess of the outstanding borrowings and out of a $40,000 basket), and dividends and other restricted payments (other than in respect of management and guarantee fees and restricted payments out of excess cash flow and out of the proceeds of the Cablevision senior notes in excess of the outstanding borrowings). Certain of the covenants applicable to CSC Holdings under the Newsday LLC senior secured credit facility are similar to the covenants applicable to CSC Holdings under its outstanding senior notes.
Tribune Company has agreed to indemnify CSC Holdings with respect to any payments that CSC Holdings makes under its guarantee of the Newsday LLC senior secured credit facility. Newsday LLC will generally be prohibited from using the proceeds received from any repayment of the Cablevision senior notes contributed to Newsday Holdings LLC by CSC Holdings to acquire non-publicly traded notes or debt instruments of Cablevision or CSC Holdings, and Newsday LLC will be required under its senior secured credit facility to maintain cash or cash equivalents or publicly traded notes or debt instruments of Cablevision or CSC Holdings with an aggregate principal amount that exceeds the then-outstanding borrowings by Newsday LLC under its senior secured credit facility.
In connection with the formation of Newsday Holdings LLC and Newsday LLC, CSC Holdings and Tribune Company entered into a Tax Matters Agreement pursuant to which, among other things, CSC Holdings has agreed that it will indemnify Tribune Company for certain taxes incurred by Tribune Company if, prior to January 1, 2018, Newsday Holdings LLC and Newsday LLC sells or otherwise disposes of the Newsday Media Group business contributed by Tribune Company or fails to maintain outstanding indebtedness in specified minimum amounts over time (reducing to $320,000 from the ninth anniversary of closing through January 1, 2018).
At any time after the tenth anniversary of the closing of the transaction and prior to the thirteenth anniversary of the closing, CSC Holdings will have the right to purchase Tribune Company’s entire interest in Newsday Holdings LLC. At any time after the thirteenth anniversary of the closing and on or prior to the date that is six months after such anniversary, Tribune Company will have the right to require CSC Holdings to purchase Tribune Company’s entire interest in Newsday Holdings LLC. In either case, the purchase price will be the fair value of the interest at that time.
Newsday Holdings LLC and Newsday LLC are part of the Company’s Unrestricted Group and comprise the Company’s newspaper publishing business, which is a separate segment for financial reporting purposes.
The Company accounted for the Newsday Transaction under the purchase method of accounting in accordance with SFAS No. 141, Business Combinations. Under the purchase method of accounting, the total estimated purchase price has been allocated to the identifiable tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values. The excess of the estimated purchase price over those fair values was recorded as excess cost over fair value of net assets acquired. The fair value assigned to the identifiable tangible and intangible assets acquired and liabilities assumed is based upon preliminary estimates and assumptions developed by management and other information compiled by management, including a preliminary purchase price allocation analysis. The preliminary purchase price allocation set forth below was based on preliminary valuations based on information currently available and, accordingly, is subject to future adjustment as more definitive information becomes available. In addition, the finalization of the working capital adjustment may also result in adjustments to the estimated purchase price and resulting allocation. The results of Newsday’s operations have been
15
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
(Dollars in thousands, except per share amounts)
(Unaudited)
included in the condensed consolidated financial statements from the date of the transaction and comprise the Company’s Newspaper Publishing Group segment.
For income tax purposes, Newsday Holdings LLC is treated as a partnership. The Company determines deferred taxes with regard to investments in partnerships based on the difference between the outside tax basis and the investment account balance; this is commonly referred to as the outside basis difference. Upon consummation of the transaction, the Company received a 97.2% interest in Newsday Holdings LLC. At the time of this transaction there was no outside basis difference and therefore no corresponding deferred tax asset or liability was recognized as an adjustment to the purchase price. Although the Newsday Transaction did not result in a step up of the tax basis of Newsday assets, through special partnership allocations, the Company will receive tax deductions generally equivalent in amount to the deductions that would have resulted from a step up in tax basis.
The following table provides the preliminary allocation of the estimated purchase price (including estimated transaction costs of $10,316) of the assets acquired and liabilities assumed based on preliminary fair value information currently available, which is subject to change upon finalization:
|
|
|
Estimated |
|
|
|
|
|
Accounts receivable, net |
|
|
|
$ |
43,416 |
|
|
Prepaid expenses and other assets |
|
|
|
13,210 |
|
|
|
Property and equipment, net |
|
2 to 9 years |
|
71,472 |
|
|
|
Advertiser relationships |
|
3 to 10 years |
|
41,197 |
|
|
|
Other amortizable intangibles |
|
5 to 17 years |
|
20,899 |
|
|
|
Trademarks |
|
Indefinite-lived |
|
125,622 |
|
|
|
Excess costs over fair value of net assets acquired |
|
Indefinite-lived |
|
352,709 |
|
|
|
Accounts payable and other liabilities |
|
|
|
(28,242 |
) |
|
|
Capital lease obligations |
|
|
|
(1,961 |
) |
|
|
Carryover basis of net assets acquired attributable to residual minority interest |
|
|
|
(16,006 |
) |
|
|
Net assets acquired |
|
|
|
$ |
622,316 |
|
16
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
(Dollars in thousands, except per share amounts)
(Unaudited)
The unaudited pro forma revenues, income (loss) from continuing operations, net income (loss), income (loss) per share from continuing operations and net income (loss) per share for the three and nine months ended September 30, 2008 and 2007, as if the Newsday Transaction had occurred on January 1, 2007, are as follows:
|
|
|
Cablevision |
|
CSC Holdings |
|
||||||||
|
|
|
Three Months Ended September 30, |
|
||||||||||
|
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
||||
|
Revenues |
|
$ |
1,776,836 |
|
$ |
1,630,207 |
|
$ |
1,776,836 |
|
$ |
1,630,207 |
|
|
Income (loss) from continuing operations |
|
$ |
24,448 |
|
$ |
(80,594 |
) |
$ |
51,893 |
|
$ |
(34,523 |
) |
|
Net income (loss) |
|
$ |
24,480 |
|
$ |
(81,034 |
) |
$ |
51,925 |
|
$ |
(34,963 |
) |
|
Basic income (loss) per share from continuing operations |
|
$ |
0.08 |
|
$ |
(0.28 |
) |
|
|
|
|
||
|
Diluted income (loss) per share from continuing operations |
|
$ |
0.08 |
|
$ |
(0.28 |
) |
|
|
|
|
||
|
Basic net income (loss) per share |
|
$ |
0.08 |
|
$ |
(0.28 |
) |
|
|
|
|
||
|
Diluted net income (loss) per share |
|
$ |
0.08 |
|
$ |
(0.28 |
) |
|
|
|
|
||
|
|
|
Cablevision |
|
CSC Holdings |
|
||||||||
|
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
||||
|
Revenues |
|
$ |
5,434,058 |
|
$ |
5,012,258 |
|
$ |
5,434,058 |
|
$ |
5,012,258 |
|
|
Income from continuing operations |
|
$ |
77,803 |
|
$ |
8,988 |
|
$ |
159,420 |
|
$ |
111,351 |
|
|
Net income |
|
$ |
76,859 |
|
$ |
205,720 |
|
$ |
158,476 |
|
$ |
308,083 |
|
|
Basic income per share from continuing operations |
|
$ |
0.27 |
|
$ |
0.03 |
|
|
|
|
|
||
|
Diluted income per share from continuing operations |
|
$ |
0.26 |
|
$ |
0.03 |
|
|
|
|
|
||
|
Basic net income per share |
|
$ |
0.26 |
|
$ |
0.72 |
|
|
|
|
|
||
|
Diluted net income per share |
|
$ |
0.26 |
|
$ |
0.70 |
|
|
|
|
|
||
Sundance Channel L.L.C.
On June 16, 2008, certain wholly-owned subsidiaries of Rainbow Media Holdings LLC (“RMH”) completed transactions which resulted in the 100% acquisition of Sundance Channel L.L.C. (“Sundance”) from General Electric Company’s NBC Universal, CBS Corporation’s Showtime Networks (“CBS”), an entity controlled by Robert Redford and an entity controlled by another individual. The purchase price of $472,464 was paid through an exchange of 12,742,033 shares of common stock of General Electric Company (“GE”) held by certain subsidiaries of RMH valued, based on the closing price at the acquisition date, at $369,137, and a net cash payment of $103,327. The aggregate purchase price for financial statement purposes including the effect of working capital adjustments and closing costs, and excluding $86,945 of net deferred tax adjustments as described below, of $481,893, is lower than the contractual purchase price of $496,000, (prior to customary working capital adjustments, closing costs, and deferred tax adjustments) because the GE common stock was valued in accordance with the acquisition agreement
17
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
(Dollars in thousands, except per share amounts)
(Unaudited)
on the basis of a trailing average price, which was higher than the closing price of the GE common stock at the acquisition date. In the first transaction, GE received all of the GE common stock held by certain subsidiaries of RMH, and the RMH subsidiaries received a 100% interest in a newly formed subsidiary of GE, which held cash and GE’s ownership interest in Sundance. In subsequent transactions, this newly formed subsidiary used the cash contributed to it by GE and additional cash contributions by the Company to purchase the remaining interests in Sundance.
Prior to the Sundance acquisition, the outstanding monetization contracts held by subsidiaries of RMH covering the GE common stock exchanged in the transaction were terminated, the associated collateralized indebtedness was settled and, accordingly, the GE common stock was no longer pledged to support that indebtedness. The subsidiaries of RMH that were parties to these contracts paid the counterparties an aggregate of $368,097 to settle the monetization contracts. To fund the $368,097 of cash payments required to settle the monetization contracts and to fund the $103,327 net cash acquisition payment, the Company borrowed $210,000 under its Rainbow National Services (“RNS”) bank revolving credit facility and used cash on hand for the remaining amount.
The Company accounted for the acquisition of Sundance under the purchase method of accounting in accordance with SFAS No. 141, Business Combinations. Under the purchase method of accounting, the total estimated purchase price has been allocated to the identifiable tangible and intangible assets acquired and the liabilities assumed based on their fair values. The excess of the estimated purchase price over those fair values was recorded as excess cost over fair value of net assets acquired. The fair value assigned to the identifiable tangible and intangible assets acquired and liabilities assumed are based upon assumptions developed by management and other information compiled by management, including a preliminary purchase price allocation analysis. As a result of the non-taxable transfer of the GE common stock and the settlement of the related monetization contracts in connection with the acquisition, the estimated purchase price and resulting preliminary purchase price allocation were reduced by the related net deferred tax effects totaling $86,945 to approximately $394,948. In addition, the working capital adjustment has not yet been finalized. The finalization of the working capital adjustment may result in adjustments to the estimated purchase price and resulting allocation. The results of Sundance’s operations have been included in the condensed consolidated financial statements from the date of acquisition and are included in the Company’s Rainbow segment.
18
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
(Dollars in thousands, except per share amounts)
(Unaudited)
The following table provides the preliminary allocation of the estimated purchase price to the assets acquired and liabilities assumed:
|
|
|
Estimated |
|
|
|
|
|
Cash |
|
|
|
$ |
3,056 |
|
|
Accounts receivable |
|
|
|
13,394 |
|
|
|
Prepaid expenses and other assets |
|
|
|
26,918 |
|
|
|
Affiliation relationships and affiliation agreements |
|
4 to 25 years |
|
314,200 |
|
|
|
Advertiser relationships |
|
5 years |
|
12,700 |
|
|
|
Trademarks |
|
Indefinite-lived |
|
19,900 |
|
|
|
Excess costs over fair value of net assets acquired |
|
Indefinite-lived |
|
31,267 |
|
|
|
Accounts payable |
|
|
|
(11,553 |
) |
|
|
Other liabilities |
|
|
|
(14,934 |
) |
|
|
|
|
|
|
|
|
|
|
Net assets acquired (1) |
|
|
|
$ |
394,948 |
|
(1) Net of $86,945 of deferred tax effects which were recorded as a result of the expected tax free disposition of the GE common stock and the settlement of the related monetization contracts thereon described above. The deferred tax impact was comprised of (i) the reversal of a deferred tax liability on the investment in GE common stock of $136,581, (ii) a FIN 48 reserve of $53,742 that was primarily related to certain previously recognized deferred tax assets and (iii) $4,106 of deferred tax assets relating to future deductible temporary differences.
The allocation of the estimated purchase price summarized above was revised from that reported as of June 30, 2008. As additional information became available and a detailed valuation was completed during the third quarter of 2008, the allocated purchase price was revised which resulted in an increase in affiliation relationships and affiliation agreements of $53,200, a decrease in trademarks of $7,100, and a decrease in goodwill of $45,900.
NOTE 5. DIVIDENDS
On August 15, 2008, the Board of Directors of Cablevision declared a quarterly cash dividend of $0.10 per share paid on September 18, 2008 to stockholders of record on both its Cablevision NY Group (“CNYG”) Class A common stock and CNYG Class B common stock as of August 26, 2008. The dividend of approximately $29,000 was paid primarily from the proceeds of a distribution to Cablevision from CSC Holdings. The CSC Holdings distribution was funded from cash on hand. In addition, up to approximately $925, will be paid when, and if, restrictions lapse on restricted shares outstanding and when, and if, certain stock appreciation rights and stock options are exercised.
NOTE 6. INCOME PER COMMON SHARE
Cablevision
Basic net income per common share for Cablevision is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share for Cablevision reflects the dilutive effects of stock options, restricted stock, restricted stock units and other potentially dilutive financial instruments.
19
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
(Dollars in thousands, except per share amounts)
(Unaudited)
A reconciliation of the denominator of the basic and diluted net income per share calculation for Cablevision for the three and nine months ended September 30, 2008 and 2007 is as follows:
|
|
|
Three Months |
|
Nine Months |
|
Three Months |
|
Nine Months |
|
|
|
|
Ended September 30, 2008 |
|
Ended September 30, 2007 |
|
||||
|
Basic weighted average shares outstanding |
|
290,365 |
|
290,150 |
|
289,845 |
|
287,719 |
|
|
Effect of dilution: |
|
|
|
|
|
|
|
|
|
|
Stock options |
|
2,402 |
|
2,312 |
|
— |
|
3,003 |
|
|
Restricted stock awards |
|
3,154 |
|
2,533 |
|
— |
|
3,812 |
|
|
Diluted weighted average shares outstanding |
|
295,921 |
|
294,995 |
|
289,845 |
|
294,534 |
|
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 391 and 939 for the three and nine months ended September 30, 2008, respectively, and 421 and 475 for the three and nine months ended September 30, 2007, respectively, have been excluded from diluted weighted average shares outstanding.
CSC Holdings
Net income per common share for CSC Holdings is not presented since it is a wholly-owned subsidiary of Cablevision.
NOTE 7. COMPREHENSIVE INCOME (LOSS)
The following table is a reconciliation of Cablevision’s and CSC Holdings’ net income (loss) to comprehensive income (loss) for the three and nine months ended September 30, 2008 and 2007:
|
|
|
Three Months Ended September 30, |
|
||||||||||
|
|
|
2008 |
|
2007 |
|
||||||||
|
|
|
Cablevision |
|
CSC |
|
Cablevision |
|
CSC |
|
||||
|
Net income (loss) |
|
$ |
27,101 |
|
$ |
51,592 |
|
$ |
(79,336 |
) |
$ |
(42,107 |
) |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
||||
|
Amortization of prior service cost and gains and losses included in net periodic benefit cost, net of taxes |
|
(246 |
) |
(246 |
) |
4 |
|
4 |
|
||||
|
Comprehensive income (loss) |
|
$ |
26,855 |
|
$ |
51,346 |
|
$ |
(79,332 |
) |
$ |
(42,103 |
) |
20
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
(Dollars in thousands, except per share amounts)
(Unaudited)
|
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
|
2008 |
|
2007 |
|
||||||||
|
|
|
Cablevision |
|
CSC |
|
Cablevision |
|
CSC |
|
||||
|
Net income |
|
$ |
93,834 |
|
$ |
154,634 |
|
$ |
211,820 |
|
$ |
287,687 |
|
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
||||
|
Amortization of prior service cost and gains and losses included in net periodic benefit cost, net of taxes |
|
(738 |
) |
(738 |
) |
(4 |
) |
(4 |
) |
||||
|
Comprehensive income |
|
$ |
93,096 |
|
$ |
153,896 |
|
$ |
211,816 |
|
$ |
287,683 |
|
NOTE 8. 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 nine months ended September 30, 2008 and 2007, the amount of franchise fees included as a component of net revenue aggregated $30,456 and $90,967, and $27,752 and $82,932, respectively. Taxes and fees assessed directly on the customer, but collected and remitted to governmental authorities by the Company, are recorded on a net basis.
21
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
(Dollars in thousands, except per share amounts)
(Unaudited)
NOTE 9. CASH FLOWS
For purposes of the condensed consolidated statements of cash flows, the Company considers short-term investments with a maturity at date of purchase of three months or less to be cash equivalents.
During the nine months ended September 30, 2008 and 2007, the Company’s non-cash investing and financing activities and other supplemental data were as follows:
|
|
|
Nine Months Ended |
|
||||
|
|
|
2008 |
|
2007 |
|
||
|
Non-Cash Investing and Financing Activities of Cablevision and CSC Holdings: |
|
|
|
|
|
||
|
Continuing Operations: |
|
|
|
|
|
||
|
Value of GE common stock exchanged in the acquisition of Sundance |
|
$ |
369,137 |
|
$ |
— |
|
|
Redemption of collateralized indebtedness with related equity derivative contracts |
|
50,931 |
|
— |
|
||
|
Redemption of collateralized indebtedness with related equity derivative contracts and stock |
|
— |
|
102,469 |
|
||
|
Asset retirement obligations |
|
9,243 |
|
— |
|
||
|
Capital lease obligations |
|
— |
|
2,276 |
|
||
|
Receivable related to sale of affiliate interest |
|
— |
|
4,767 |
|
||
|
Discontinued Operations: |
|
|
|
|
|
||
|
Receivable related to sale of affiliate interest |
|
— |
|
15,800 |
|
||
|
|
|
|
|
|
|
||
|
Non-Cash Investing Activity of CSC Holdings: |
|
|
|
|
|
||
|
Continuing Operations: |
|
|
|
|
|
||
|
Contribution of 8% senior notes due 2012 from Cablevision |
|
650,000 |
|
— |
|
||
|
Supplemental Data: |
|
|
|
|
|
||
|
Cash interest paid (Cablevision) |
|
558,337 |
|
710,629 |
|
||
|
Cash interest paid (CSC Holdings) |
|
493,824 |
|
645,679 |
|
||
|
Income taxes paid, net (Cablevision) |
|
10,622 |
|
24,456 |
|
||
22
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
(Dollars in thousands, except per share amounts)
(Unaudited)
NOTE 10. DISCONTINUED OPERATIONS
In June 2007, the Company completed the sale of its 60% interest in Fox Sports Net Bay Area, to Comcast Corporation (“Comcast”). In addition, in April 2005, the operations of the Rainbow DBS satellite distribution business were shut down. As a result, the operating results of these businesses, net of taxes, have been classified in the condensed consolidated statements of operations as discontinued operations for all periods presented. Operating results of discontinued operations for the three and nine months ended September 30, 2008 and 2007 are summarized below:
|
|
|
Three Months Ended September 30, 2008 |
|
|||||||
|
|
|
Fox Sports |
|
Rainbow |
|
Total |
|
|||
|
Revenues, net |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Income (loss) before income taxes |
|
$ |
76 |
|
$ |
(19 |
) |
$ |
57 |
|
|
Income tax benefit (expense) |
|
(32 |
) |
7 |
|
(25 |
) |
|||
|
Income (loss) from discontinued operations, net of taxes |
|
$ |
44 |
|
$ |
(12 |
) |
$ |
32 |
|
|
|
|
Three Months Ended September 30, 2007 |
|
|||||||
|
|
|
Fox Sports |
|
Rainbow |
|
Total |
|
|||
|
Revenues, net |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Loss before income taxes |
|
$ |
(118 |
) |
$ |
(628 |
) |
$ |
(746 |
) |
|
Income tax benefit |
|
49 |
|
257 |
|
306 |
|
|||
|
Loss from discontinued operations, net of taxes |
|
$ |
(69 |
) |
$ |
(371 |
) |
$ |
(440 |
) |
|
|
|
Nine Months Ended September 30, 2008 |
|
|||||||
|
|
|
Fox Sports |
|
Rainbow |
|
Total |
|
|||
|
Revenues, net |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Loss before income taxes |
|
$ |
(5 |
) |
$ |
(1,606 |
) |
$ |
(1,611 |
) |
|
Income tax benefit |
|
2 |
|
665 |
|
667 |
|
|||
|
Loss from discontinued operations, net of taxes |
|
$ |
(3 |
) |
$ |
(941 |
) |
$ |
(944 |
) |
23
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
(Dollars in thousands, except per share amounts)
(Unaudited)
|
|
|
Nine Months Ended September 30, 2007 |
|
|||||||
|
|
|
Fox Sports |
|
Rainbow |
|
Total |
|
|||
|
Revenues, net |
|
$ |
53,894 |
|
$ |
— |
|
$ |
53,894 |
|
|
Income before income taxes, including gain on sale of Fox Sports Net Bay Area of $317,846 |
|
$ |
326,017 |
|
$ |
7,725 |
|
$ |
333,742 |
|
|
Income tax expense |
|
(133,406 |
) |
(3,161 |
) |
(136,567 |
) |
|||
|
Income from discontinued operations, including gain on sale of Fox Sports Net Bay Area of $187,784, net of taxes |
|
$ |
192,611 |
|
$ |
4,564 |
|
$ |
197,175 |
|
In March 2007, the Federal Communications Commission (“FCC”) waived the bond requirement previously submitted by Rainbow DBS Company LLC with respect to five Ka-band licenses. These bonds were originally cash collateralized by the Company. In connection with the shut down of the Rainbow DBS satellite distribution business in 2005, the Company recorded a loss related to the outstanding bonds since the Company believed it was not probable that Rainbow DBS would meet the required FCC milestones. As a result of the waiver from the FCC, the Company recorded a gain of $6,638, net of taxes, in the quarter ended March 31, 2007. The Company received the cash collateral of $11,250 in the quarter ended June 30, 2007.
24
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
(Dollars in thousands, except per share amounts)
(Unaudited)
NOTE 11. INTANGIBLE ASSETS
The following table summarizes information relating to the Company’s acquired intangible assets at September 30, 2008 and December 31, 2007:
|
|
|
September 30, |
|
December 31, |
|
||
|
Gross carrying amount of affiliation, broadcast and other agreements |
|
|
|
|
|
||
|
Affiliation relationships and affiliate agreements |
|
$ |
1,056,616 |
|
$ |
742,416 |
|
|
Broadcast rights and other agreements |
|
45,590 |
|
45,590 |
|
||
|
|
|
1,102,206 |
|
788,006 |
|
||
|
Accumulated amortization |
|
|
|
|
|
||
|
Affiliation relationships and affiliate agreements |
|
(459,867 |
) |
(409,870 |
) |
||
|
Broadcast rights and other agreements |
|
(39,662 |
) |
(38,522 |
) |
||
|
|
|
(499,529 |
) |
(448,392 |
) |
||
|
Affiliation, broadcast and other agreements, net of accumulated amortization |
|
$ |
602,677 |
|
$ |
339,614 |
|
|
Gross carrying amount of other intangible assets |
|
|
|
|
|
||
|
Season ticket holder relationships |
|
$ |
75,005 |
|
$ |
75,005 |
|
|
Suite holder contracts and relationships |
|
15,394 |
|
21,167 |
|
||
|
Advertiser relationships |
|
157,581 |
|
103,524 |
|
||
|
Other intangibles (a) |
|
90,112 |
|
57,590 |
|
||
|
|
|
338,092 |
|
257,286 |
|
||
|
Accumulated amortization |
|
|
|
|
|
||
|
Season ticket holder relationships |
|
(19,564 |
) |
(15,476 |
) |
||
|
Suite holder contracts and relationships |
|
(4,896 |
) |
(9,136 |
) |
||
|
Advertiser relationships |
|
(64,134 |
) |
(53,745 |
) |
||
|
Other intangibles |
|
(30,179 |
) |
(24,130 |
) |
||
|
|
|
(118,773 |
) |
(102,487 |
) |
||
|
Indefinite-lived intangible assets |
|
|
|
|
|||