Cablevision 2012 Annual Report Download - page 154

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share amounts)
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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
$170,846, $177,694 and $164,314 for the years ended December 31, 2012, 2011 and 2010, respectively.
Share-Based Compensation
Share-based compensation expense 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. For options not subject to
performance based vesting conditions, Cablevision recognizes the compensation expense using a straight-
line amortization method. For options subject to performance based vesting conditions, Cablevision
recognizes compensation expense based on the probable outcome of the performance criteria and
requisite service period for each tranche of awards subject to performance based vesting conditions. 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, 2012, 2011 and 2010 based on allocations from Cablevision.
Income Taxes
The Company's provision for income taxes is based on current period income, changes in deferred tax
assets and liabilities and changes in estimates with regard to uncertain tax positions. Deferred tax assets
are subject to an ongoing assessment of realizability. The Company provides deferred taxes for the
outside basis difference of its investment in partnerships. Interest and penalties, if any, associated with
uncertain tax positions are included in income tax expense.