Cablevision 2012 Annual Report Download - page 13

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West service area is also a state of the art platform of which 90% of the plant is two-way with a minimum
of 750 MHz capacity.
Programming
Programming is available to the cable television systems from a variety of sources. Program suppliers'
compensation is typically a fixed, per subscriber monthly fee (subject to contractual escalations) based, in
most cases, either on the total number of video subscribers of the cable television systems, or on the
number of subscribers subscribing to the particular service. The programming contracts are generally for
a fixed period of time and are subject to negotiated renewal. Cable programming costs have increased in
recent years and are expected to continue to increase due to additional programming being provided to
most subscribers, increased costs to produce or purchase cable programming and other factors.
Franchises
Our cable television systems are operated in New York, New Jersey, Connecticut, Montana, Wyoming,
Colorado and Utah under non-exclusive franchise agreements, where required by the franchising
authority, with state and/or municipal or county franchising authorities. Although the terms of franchise
agreements differ from jurisdiction to jurisdiction, they typically require payment of franchise fees and
contain regulatory provisions addressing, among other things, service quality, cable service to schools and
other public institutions, insurance and indemnity. The terms and conditions of cable franchises vary
from jurisdiction to jurisdiction. Franchise authorities generally charge a franchise fee of not more than
5% of certain of our cable service revenues that are derived from the operation of the system within such
locality. We generally pass the franchise fee on to our subscribers.
Franchise agreements are usually for a term of 5 to 15 years from the date of grant; most are 10 years.
Franchises usually are terminable only if the cable operator fails to comply with material provisions, and
then only after complying with substantive and procedural protections afforded by the franchise and
federal and state law. We have never lost a franchise for an area in which we operate. When a franchise
agreement reaches expiration, a franchising authority may seek to impose new requirements, including
requirements to upgrade facilities, to increase channel capacity and to provide additional support for local
public, education and government access programming. Negotiations can be protracted, and franchise
agreements sometimes expire before a renewal is negotiated and finalized. New York and New Jersey
state laws provide that pre-existing franchise terms continue in force during the renewal negotiations until
agreement is reached or one or both parties seek to pursue "formal" franchise remedies under federal law.
As of December 31, 2012, our ten largest franchise areas comprised approximately 48% of our total video
customers and of those, one franchise, Newark, New Jersey, comprising approximately 57,000 video
customers, is expired. We are currently lawfully operating in this franchise area under temporary
authority recognized by the State of New Jersey. In our Optimum West service area, our right to operate
following the expiration of a franchise for franchises still in renewal negotiations is protected by federal
law and/or the consent of the municipality. In approximately 40 municipalities in Montana, Wyoming,
and Colorado, we operate our cable television systems without a franchise, pursuant to Section 621(b)(2)
of the Federal Cable Act, which provides that no franchise is required in communities where the cable
operator or its predecessor lawfully provided service as of July 1, 1984 and the municipality has not
requested a franchise. Federal law provides significant substantive and procedural protections for cable
operators seeking renewal of their franchises. See "Regulation - Cable Television." Despite our efforts
and the protections of federal law, it is possible that one or more of our franchises may be subject to
termination or non-renewal or we may be required to make significant additional investments in response
to requirements imposed in the course of the franchise renewal process.
Lightpath holds a franchise from New York City which grants rights of way authority to provide
telecommunications services throughout the five boroughs. The franchise expired on December 20, 2008
and renewal discussions with New York City are ongoing. We believe we will be able to obtain renewal
of the franchise and have received assurance from New York City that the expiration date of the franchise