Cablevision 2011 Annual Report Download - page 47

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CABLEVISION SYSTEMS CORPORATION
All dollar amounts, except per subscriber, per unit, per share data, and tender prices per note, included in
the following discussion under this Item 7, are presented in thousands.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Summary
Our future performance is dependent, to a large extent, on general economic conditions including capital
and credit market conditions, the impact of direct competition, our ability to manage our businesses
effectively, and our relative strength and leverage in the marketplace, both with suppliers and customers.
Additional capital and credit market disruptions could cause broader economic downturns, which may
lead to lower demand for our products, such as cable television services, as well as lower levels of
television and newspaper advertising, and increased incidence of customer's inability to pay for the
services we provide. We have experienced some of the effects of this economic downturn. Continuation
of events such as these may adversely impact our results of operations, cash flows and financial position.
On February 9, 2010, Cablevision distributed to its stockholders all of the outstanding common stock of
Madison Square Garden, a company which owns the sports, entertainment and media businesses
previously owned and operated by the Company's Madison Square Garden segment.
On June 30, 2011, Cablevision distributed to its stockholders all of the outstanding common stock of
AMC Networks Inc., a company which consists principally of national programming networks, including
AMC, WE tv, IFC and Sundance Channel, previously owned and operated by the Company's Rainbow
segment.
As a result of the AMC Networks Distribution and the MSG Distribution, the Company no longer
consolidates the financial results of AMC Networks or Madison Square Garden for the purpose of its own
financial reporting and the historical financial results of AMC Networks and Madison Square Garden
have been reflected in the Company's consolidated financial statements as discontinued operations for all
periods presented through the AMC Networks Distribution date and the MSG Distribution date.
Telecommunications Services
Our Telecommunications Services segment, which accounted for 94% of our consolidated revenues, net
of inter-segment eliminations, for the year ended December 31, 2011, derives revenues principally
through monthly charges to subscribers of our video, high-speed data and VoIP services and commercial
data and voice services operations. These monthly charges include fees for cable television
programming, high-speed data and voice services, as well as equipment rental, DVR, video-on-demand,
pay-per-view, installation and home shopping commissions. Revenue increases are derived from rate
increases, increases in the number of subscribers to these services, including additional services sold to
our existing subscribers, upgrades by video customers in the level of programming package to which they
subscribe, and acquisition transactions that result in the addition of new subscribers. We have not
implemented a residential rate increase in 2012 and plan to extend the term of certain promotional offers,
which will negatively impact revenue growth and our operating income. In addition, our ability to
increase the number of subscribers to our services is significantly related to our penetration rates (the
number of subscribers to our services as a percentage of serviceable passings, which represent the
estimated number of single residence homes, apartment and condominium units and commercial
establishments passed by the cable network in areas serviceable without further extending the
transmission lines, including our commercial data and voice customers). As penetration rates increase,
the number of available homes to which we can market our services generally decreases. We also derive
revenues from the sale of advertising time available on the programming carried on our cable television