Cablevision 2012 Annual Report Download - page 32

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Our current franchises are non-exclusive and our franchisors need not renew our franchises.
Our cable television systems are operated primarily under non-exclusive franchise agreements with state
or municipal government franchising authorities, with the latter in some states also subject to approval of
state regulatory authorities. Consequently, our business is dependent on our ability to obtain and renew
our franchises. Although we have never lost a franchise as a result of a failure to obtain a renewal, our
franchises are subject to non renewal or termination under some circumstances. In some cases in New
York and New Jersey, franchise agreements have not been renewed by the expiration date, and we operate
under temporary authority routinely granted from the state while negotiating renewal terms with the
franchise authorities. 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 Montana, Wyoming, Colorado
and Utah, franchises must be renewed prior to their expiration date, subject to the protections of federal
law. Neither the Company nor its predecessor in those states, Bresnan Communications, has ever lost a
franchise.
A portion of our workforce is represented by labor unions. Collective bargaining agreements can
increase our expenses. Labor disruptions could adversely affect our operations.
As of December 31, 2012, approximately 547 of our full-time employees were covered by collective
bargaining agreements. In addition, approximately 258 of our technician workforce in Brooklyn, New
York are represented by the Communication Workers of America ("CWA"). Negotiations to reach a
collective bargaining agreement with the CWA are ongoing. On February 7, 2013, a petition was filed by
members of the Brooklyn technician workforce with the National Labor Relations Board, seeking an
election to vote on whether or not to decertify the CWA as their representative. Collective bargaining
agreements with the CWA covering this group of employees or agreements with other unionized
employees may increase our expenses. In addition, any disruptions to our operations due to labor related
problems could have an adverse effect on our business.
Our Newsday business has suffered operating losses historically and such losses are expected to
continue in the future.
Newsday suffered operating losses of $47.0 million, $31.7 million, and $12.6 million for the years ended
December 31, 2012, 2011, and 2010, respectively, which included impairments of indefinite-lived
intangible assets of $13.0 million, $11.0 million, and $7.8 million in 2012, 2011 and 2010, respectively.
Operating losses are expected to continue in the future. In connection with the formation of a company
through which we have an approximate 97.2% interest in Newsday, its subsidiary, Newsday LLC
incurred $650.0 million of indebtedness under a senior secured loan facility and $630.0 million of the
proceeds of these borrowings were paid to Newsday's former owner, Tribune Company. These
borrowings are guaranteed by CSC Holdings. In addition, at December 31, 2012, Newsday Holdings
LLC held $753.7 million aggregate principal amount of senior notes issued by Cablevision. Newsday
LLC has agreed that it will hold Cablevision or CSC Holdings senior notes or cash balances in excess of
the amount of borrowings outstanding under its senior secured credit facility until it matures.
Demand for advertising, increased competition and declines in circulation affect Newsday.
A majority of the revenues of our Newsday business are from advertising. Expenditures by advertisers
generally reflect economic conditions and declines in national and local economic conditions affect
demand for advertising and the levels of advertising revenue for Newsday.
Newsday operates in a highly competitive market which may adversely affect advertising and circulation
revenues. Newsday faces significant competition for advertising revenue from a variety of media sources.
The most direct source of competition is other newspapers that reach a similar audience in the same