Cablevision 2011 Annual Report Download - page 33

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customer data or intellectual property. Operational or business delays may result from the disruption of
network or information systems and the subsequent remediation activities. Moreover, these events may
create negative publicity resulting in reputation or brand damage with customers.
We have expended, and expect to continue to spend in the future, significant amounts to protect our
network and information systems; however, there can be no assurance that these efforts will prevent any
of the problems identified above.
The MSG Distribution and the AMC Network Distribution could result in significant tax liability.
We have received private letter rulings from the IRS to the effect that, among other things, the MSG
Distribution and the AMC Networks Distribution and certain related transactions, will qualify for tax-free
treatment under the Internal Revenue Code of 1986, as amended (the "Code").
Although a private letter ruling from the IRS generally is binding on the IRS, if the factual representations
or assumptions made in the letter ruling request are untrue or incomplete in any material respect, we will
not be able to rely on the ruling. Furthermore, the IRS will not rule on whether a distribution satisfies
certain requirements necessary to obtain tax-free treatment under the Code. Rather, the ruling is based
upon our representations that these conditions have been satisfied, and any inaccuracy in such
representations could invalidate the ruling.
If the MSG Distribution or the AMC Networks Distribution does not qualify for tax-free treatment for
U.S. federal income tax purposes, then, in general, we would be subject to tax as if we had sold the
Madison Square Garden common stock or AMC Networks common stock, as the case may be, in a
taxable sale for its fair value. Cablevision stockholders would be subject to tax as if they had received a
distribution equal to the fair value of Madison Square Garden common stock or AMC Networks common
stock, as the case may be, that was distributed to them, which generally would be treated as a taxable
dividend. It is expected that the amount of any such taxes to Cablevision's stockholders and us would be
substantial.
The tax rules applicable to the AMC Networks Distribution may restrict us from engaging in certain
corporate transactions or from raising equity capital beyond certain thresholds for a period of time
after the AMC Networks Distribution, as applicable.
To preserve the tax-free treatment of the AMC Networks Distribution to AMC Network's and
Cablevision's stockholders, under a tax disaffiliation agreement between Cablevision and AMC
Networks, for the two-year period following the AMC Networks Distribution, we will be subject to
restrictions with respect to our activities, including restrictions relating to certain issuances or repurchases
of Cablevision's common stock, asset sales, mergers and liquidations.
These restrictions may limit Cablevision's ability during that two-year period to pursue strategic
transactions of a certain magnitude that involve the issuance or acquisition of Cablevision's stock or
engage in new businesses or other transactions that might increase the value of our business. These
restrictions may also limit our ability to raise significant amounts of cash through the issuance of stock,
especially if Cablevision's stock price were to suffer substantial declines, or through the sale of certain of
our assets.
We may not enjoy all of the benefits of scale that we achieved prior to the MSG Distribution and the
AMC Networks Distribution.
Prior to the MSG Distribution and the AMC Networks Distribution, we shared benefits of scope and scale
in costs and expenses resulting from various factors including financial reporting, costs associated with
complying with federal securities laws (including compliance with the Sarbanes-Oxley Act of 2002), tax
administration, legal and human resources related functions. While we entered into agreements with