Cablevision 2012 Annual Report Download - page 30

(24)
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be lowered or withdrawn entirely by a rating agency, if in that rating agency's judgment, future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. Also, 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.
Our ability to incur debt and the use of our funds are limited by significant restrictive covenants in
financing agreements.
Our credit facilities and debt instruments contain various financial and operating covenants that, among
other things, require the maintenance of financial ratios and restrict the relevant borrower's ability to incur
debt from other sources and to use funds for various purposes, including investments in some
subsidiaries. Violation of these covenants could result in a default that would permit the parties who have
lent money under such credit facilities and such other debt instruments to:
xrestrict the ability to borrow undrawn funds under such credit facilities, and
xrequire the immediate repayment of the borrowings thereunder.
These events would be likely to have a material adverse effect on the value of our debt and equity
securities.
We will need to raise significant amounts of funding over the next several years to fund capital
expenditures, repay existing obligations and meet other obligations and the failure to do so successfully
could adversely affect our business. We may also engage in extraordinary transactions that involve the
incurrence of large amounts of debt.
Our business is very capital intensive. Operating and maintaining our cable television plant requires
significant amounts of cash payments to third parties. Capital expenditures for our businesses were