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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except share and per share amounts)
F-24
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. See Note 11 for a discussion of fair value estimates.
Reclassifications
Certain reclassifications have been made to the 2012 and 2013 financial statements to conform to the 2014 presentation.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Summary of Significant Accounting Policies
Revenue Recognition
The Company recognizes video, high-speed data, and voice services revenues as the services are provided to subscribers.
Installation revenue for the Company's video, consumer high-speed data and VoIP services is recognized as installations are
completed, as direct selling costs have exceeded this revenue in all periods reported. Advertising revenues are recognized when
commercials are aired.
The Company's Newsday business recognizes publication advertising revenue when advertisements are published. Newsday
recognizes circulation revenue for single copy sales as newspapers are distributed, net of returns. Proceeds from advance billings
for home-delivery subscriptions are recorded as deferred revenue and are recognized as revenue on a pro-rata basis over the term
of the subscriptions.
Revenues derived from other sources are recognized when services are provided or events occur.
Multiple-Element Transactions
In the normal course of business, the Company may enter into multiple-element transactions where it is simultaneously both a
customer and a vendor with the same counterparty or in which it purchases multiple products and/or services, or settles outstanding
items contemporaneous with the purchase of a product or service from a single counterparty. The Company's policy for accounting
for each transaction negotiated contemporaneously is to record each deliverable of the transaction based on its best estimate of
selling price in a manner consistent with that used to determine the price to sell each deliverable on a standalone basis. In determining
the fair value of the respective deliverable, the Company will utilize quoted market prices (as available), historical transactions or
comparable cash transactions.
Gross Versus Net Revenue Recognition
In the normal course of business, the Company is assessed non-income related taxes by governmental authorities, including
franchising authorities (generally under multi-year agreements), and collects such taxes from its customers. The Company's policy
is that, in instances where the tax is being assessed directly on the Company, amounts paid to the governmental authorities and
amounts received from the customers are recorded on a gross basis. That is, amounts paid to the governmental authorities are
recorded as technical and operating expenses and amounts received from the customer are recorded as revenues. For the years
ended December 31, 2014, 2013 and 2012, the amount of franchise fees and certain other taxes and fees included as a component
of net revenue aggregated $178,630, $157,818 and $150,695, respectively.
Technical and Operating Expenses
Costs of revenue related to sales of services are classified as "technical and operating" expenses in the accompanying statements
of income.
Programming Costs
Programming expenses related to the Company's video service included in the Cable segment represent fees paid to programming
distributors to license the programming distributed to subscribers. This programming is acquired generally under multi-year
distribution agreements, with rates usually based on the number of subscribers that receive the programming. There have been
periods when an existing distribution 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