Cablevision 2011 Annual Report Download - page 149

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share amounts)
I-25
2010 and 2009, the amount of franchise fees included as a component of net revenue aggregated
$147,498, $134,730, and $127,716, respectively.
Technical and Operating Expenses
Costs of revenue related to sales of services are classified as "technical and operating" expenses in the
accompanying statements of income.
Programming Costs
Programming expenses for the Company's cable television business included in the Telecommunications
Services segment relate to fees paid to programming distributors to license the programming distributed
to subscribers. This programming is acquired generally under multi-year distribution agreements, with
rates usually based on the number of subscribers that receive the programming. There have been periods
when an existing affiliation agreement has expired and the parties have not finalized negotiations of either
a renewal of that agreement or a new agreement for certain periods of time. In substantially all these
instances, the Company continues to carry and pay for these services until execution of definitive
replacement agreements or renewals. The amount of programming expense recorded during this interim
period is based on the Company's estimates of the ultimate contractual agreement expected to be reached,
which is based on several factors, including previous contractual rates, customary rate increases and the
current status of negotiations. Such estimates are adjusted as negotiations progress until new
programming terms are finalized.
In addition, the Company's cable television business has received, or may receive, incentives from
programming distributors for carriage of the distributors' programming. The Company generally
recognizes these incentives as a reduction of programming costs in technical and operating expense,
generally over the term of the programming agreement.
Advertising Expenses
Advertising costs are charged to expense when incurred and are recorded to selling, general and
administrative expenses in the accompanying statements of income. Advertising costs amounted to
$177,694, $164,314 and $157,777 for the years ended December 31, 2011, 2010 and 2009, respectively.
Share-Based Compensation
Share-based compensation expense recognized during the period is based on the fair value of the portion
of share-based payment awards that are ultimately expected to vest.
For options and performance based option awards, Cablevision recognizes compensation expense based
on the estimated grant date fair value using the Black-Scholes valuation model using a straight-line
amortization method. For restricted shares and restricted stock units, Cablevision recognizes
compensation expense using a straight-line amortization method, based on the grant date price of CNYG
Class A common stock over the vesting period, except for restricted stock units granted to non-employee
directors which vest 100% and are expensed at the date of grant. For stock appreciation rights,
Cablevision recognizes compensation expense based on the estimated fair value at each reporting period
using the Black-Scholes valuation model.
For CSC Holdings, share-based compensation expense is recognized in its statements of income for the
years ended December 31, 2011, 2010 and 2009 based on allocations from Cablevision.