Cablevision 2011 Annual Report Download - page 27

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distributed to Cablevision to fund a $10 per share dividend on its common stock and approximately
$414 million of which was used to repay existing indebtedness, including interest, fees and expenses. In
December 2010, we incurred approximately $1.4 billion of indebtedness to finance our acquisition of
Bresnan Cable. We may continue to incur substantial amounts of debt in the future. At December 31,
2011, our total indebtedness aggregated approximately $11.2 billion. Because of our substantial
indebtedness, we are highly leveraged and we will continue to be highly leveraged. This means that our
payments on our borrowings are significant in relation to our revenues and cash flow. This leverage
exposes us to significant risk in the event of downturns in our businesses (whether through competitive
pressures or otherwise), in our industries or in the economy generally, because although our cash flows
would decrease in this scenario, our required payments in respect of indebtedness would not.
We have in past periods incurred substantial losses from continuing operations, we have a significant
stockholders' deficiency, and we may in the future incur net losses which could be substantial, which
may reduce our ability to raise needed capital.
We have in the past reported losses from continuing operations and we may in the future incur significant
operating losses. Significant operating losses may limit our ability to raise needed financing, or to do so
on favorable terms, as such losses could be taken into account by potential investors, lenders and the
organizations that issue investment ratings on our indebtedness.
A lowering or withdrawal of the ratings assigned to our debt securities by ratings agencies may further
increase our future borrowing costs and reduce our access to capital.
The debt ratings for our debt securities are below the "investment grade" category, which results in higher
borrowing costs as well as a reduced pool of potential purchasers of our debt as some investors will not
purchase debt securities that are not rated in an investment grade rating category. In addition, there can
be no assurance that any rating assigned will remain for any given period of time or that a rating will not
be lowered or withdrawn entirely by a rating agency, if in that rating agency's judgment, future
circumstances relating to the basis of the rating, such as adverse changes, so warrant. A lowering or
withdrawal of a rating may further increase our future borrowing costs and reduce our access to capital.
Our ability to meet our obligations under our indebtedness may be restricted by limitations on our
subsidiaries' ability to send us funds.
Cablevision's sole subsidiary is CSC Holdings. CSC Holdings' principal subsidiaries include various
entities that own cable television systems and other businesses. Cablevision's ability to pay interest on
and repay principal of its outstanding indebtedness is dependent upon the operations of CSC Holdings
and its subsidiaries and the distributions or other payments of the cash they generate to Cablevision in the
form of distributions, loans or advances. Similarly, CSC Holdings' ability to pay interest and principal on
its indebtedness is dependent in part on distributions from its subsidiaries. The Company's subsidiaries
are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any
amounts due on the Company's indebtedness or to make any funds available to the Company to do so.
Bresnan Cable is a party to a credit agreement and indenture that contain various financial and operating
covenants that restrict the payment of dividends or other distributions. In addition, Newsday LLC is a
party to a credit agreement that contains various financial and operating covenants that restrict the
payment of dividends or other distributions. In addition, our subsidiaries' creditors, including trade
creditors, in the event of a liquidation or reorganization of any subsidiary, would be entitled to a claim on
the assets of such subsidiaries, including any assets transferred to those subsidiaries, prior to any of our
claims as a stockholder and those creditors are likely to be paid in full before any distribution is made to
us. To the extent that we are a creditor of a subsidiary, our claims could be subordinated to any security
interest in the assets of that subsidiary and/or any indebtedness of that subsidiary senior to that held by us.