Cablevision 2011 Annual Report Download - page 34

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Madison Square Garden and AMC Networks that govern a number of our commercial and other
relationships after the MSG Distribution and AMC Networks Distribution, those arrangements do not
fully capture the benefits we enjoyed as a result of common ownership prior thereto. In addition, in
connection with the AMC Networks Distribution, we terminated an agreement pursuant to which we
received a management fee that was based upon revenues of the AMC and WE tv networks. This fee,
which amounted to approximately $14.0 million for the six months ended June 30, 2011, was previously
included in the operating income of our Telecommunications Services segment and has been reclassified
to discontinued operations. As a result of the MSG Distribution and the AMC Networks Distribution, we
now carry a relatively larger share of our administrative and other overhead expenses. The loss of these
benefits as a consequence of the MSG Distribution and AMC Networks Distribution could have an
adverse effect on our results of operations and financial condition.
In connection with the MSG Distribution and AMC Networks Distribution, we will rely on Madison
Square Garden's and AMC Networks' performance under various agreements.
In connection with the MSG Distribution and the AMC Networks Distribution, we entered into various
agreements with Madison Square Garden and AMC Networks, respectively, including a distribution
agreement, a tax disaffiliation agreement, a transition services agreement, an employee matters agreement
and certain related party arrangements. These agreements govern our relationship with those entities
subsequent to the distributions and provide for the allocation of employee benefits, taxes and certain other
liabilities and obligations attributable to periods prior to the distributions. These agreements also include
arrangements with respect to transition services and a number of on-going commercial relationships. The
distribution agreements include agreements that we and those entities agree to provide each other with
indemnities with respect to liabilities arising out of the businesses we transferred to those entities. We are
also party to other arrangements with Madison Square Garden and AMC Networks, such as affiliation
agreements covering the MSG networks and Fuse, AMC, WE tv, IFC and Sundance Channel. We and
these entities will rely on the other to perform its obligations under these agreements. If Madison Square
Garden or AMC Networks were to breach or to be unable to satisfy its material obligations under these
agreements, including a failure to satisfy its indemnification obligations, we could suffer operational
difficulties or significant losses.
We share certain key executives and directors with Madison Square Garden and AMC Networks,
which means those executives will not devote their full time and attention to our affairs.
As a result of the AMC Networks Distribution, our Chairman, Charles F. Dolan, serves as Executive
Chairman of AMC Networks. As a result of the MSG Distribution, our President and Chief Executive
Officer, James L. Dolan, also serves as the Executive Chairman of Madison Square Garden and our Vice
Chairman, Hank J. Ratner, serves as President and Chief Executive Officer of Madison Square Garden.
This arrangement is similar to the historical situation whereby Messrs. Dolan and Ratner have served as
senior officers of Madison Square Garden and Charles F. Dolan provided senior leadership to our
Rainbow segment. As a result, since the MSG Distribution and AMC Networks Distribution, three senior
officers of the Company are not devoting their full time and attention to the Company's affairs. In
addition, eight members of our Board of Directors are also directors of Madison Square Garden and eight
members of our Board of Directors are also directors of AMC Networks.
Our overlapping directors and executive officers may result in the diversion of corporate opportunities
and other potential conflicts.
Our Board of Directors has adopted a policy that acknowledges that directors and officers of the
Company may also be serving as directors, officers, employees or agents of Madison Square Garden or
AMC Networks and their respective subsidiaries and that the Company may engage in material business
transactions with such entities. The Company renounced its rights to certain business opportunities and
the new policy provides that no director or officer of the Company who is also serving as a director,
officer, employee or agent of Madison Square Garden or AMC Networks and their respective subsidiaries