Cablevision 2014 Annual Report Download - page 59

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53
Verizon, and continued weak economic conditions. These factors are expected to impact our ability to increase our existing
customers and revenue in the future.
Technical and operating expenses (excluding depreciation and amortization shown below) for 2013 increased $96,874 (4%) as
compared to 2012. The net increase is attributable to the following:
Increase in programming costs due primarily to contractual rate increases, partially offset by lower subscribers
(see discussion below).............................................................................................................................................. $ 140,070
Increase in employee related costs, primarily merit increases, benefits, certain other compensation increases (see
discussion below) and an increase in the number of employees.............................................................................. 61,282
Increase in other net repairs and maintenance costs................................................................................................... 11,427
Decreases in expenses, net of programming and other credits, incurred as a result of Superstorm Sandy, including
expenses of $7,484 incurred in the first quarter of 2013.......................................................................................... (49,768)
Decrease in contractor costs due primarily to lower truck rolls .................................................................................. (37,339)
Decrease in voice related fees, net due primarily to reduction in rate and volume..................................................... (11,568)
Contract termination cost related to equipment purchase commitments in the fourth quarter of 2012....................... (9,356)
Decrease in taxes and fees due primarily to the favorable resolution of certain voice related tax matters in 2013.... (6,931)
Other net decreases ...................................................................................................................................................... (943)
$ 96,874
Technical and operating expenses, which are generally impacted by the number of customers that subscribe to our services, consist
primarily of (i) programming costs (including costs of video-on-demand and pay-per-view), which typically rise due to increases
in contractual rates and new channel launches and are also impacted by changes in the number of customers receiving certain
programming services, (ii) interconnection, call completion, circuit and transport fees paid to other telecommunication companies
for the transport and termination of voice and data services, which typically vary based on rate changes and the level of usage by
our customers, and (iii) other direct costs associated with providing and maintaining services to our customers which are impacted
by general inflationary cost increases for employees, contractors, insurance and other various expenses. Our programming costs
increased 10% in 2013.
Technical and operating expenses also include franchise fees, which are payable to the state governments and local municipalities
where we operate and are primarily based on a percentage of certain categories of revenue derived from the provision of cable
television service over our cable systems, which vary by state and municipality. These costs change in relation to changes in such
categories of revenues or rate changes.
Costs of field operations, which consist primarily of employee related, customer installation and repair and maintenance costs,
may fluctuate as a result of changes in level of activities and the utilization of contractors as compared to employees. Also,
employee related and customer installation costs increase as the portion of our expenses that we are able to capitalize decrease
due to lower new customer installations and lower new service upgrades. Network related costs, which consist primarily of
employee related, repair and maintenance and utility costs, also fluctuate as capitalizable network upgrade and enhancement
activity changes.
As a result of a comprehensive study of its non-executive compensation practices with a focus on individual competitive pay and
career advancement, certain compensation changes were implemented during the second quarter of 2012. The increase in certain
employee costs reflects the full year impact of these changes compared to 2012.