Cablevision 2014 Annual Report Download - page 27

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operating business. We urge you to read carefully our consolidated financial statements contained herein, which provide more
detailed information about these intangible assets.
The MSG Distribution and the AMC Networks 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 (whereby
Cablevision distributed to its stockholders all of the outstanding common stock of The Madison Square Garden Company ("Madison
Square Garden"), a company which owns the sports, entertainment and media businesses previously owned and operated by the
Company's Madison Square Garden segment) and the AMC Networks Distribution (whereby Cablevision distributed to its
stockholders all of the outstanding common stock of AMC Networks, a company which consisted principally of national
programming networks, including AMC, WE tv, IFC and Sundance Channel, previously owned and operated by the Company's
Rainbow segment) 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.
We rely on Madison Square Garden's and AMC Networks' performance under various agreements.
In connection with the MSG Distribution and the AMC Networks Distribution, we entered into various agreements with Madison
Square Garden and AMC Networks, respectively, including a distribution agreement, a tax disaffiliation agreement, a transition
services agreement, an employee matters agreement and certain related party arrangements. These agreements govern our
relationship with those entities subsequent to the distributions and provide for the allocation of employee benefits, taxes and certain
other liabilities and obligations attributable to periods prior to the distributions. These agreements also include arrangements with
respect to transition services and a number of on-going commercial relationships. The distribution agreements include agreements
that we and those entities agree to provide each other with indemnities with respect to liabilities arising out of the businesses we
transferred to those entities. We are also party to other arrangements with Madison Square Garden and AMC Networks, such as
affiliation agreements covering the MSG networks and AMC, WE tv, IFC and Sundance Channel. We and these entities will rely
on the other to perform its obligations under these agreements. If Madison Square Garden or AMC Networks were to breach or
to be unable to satisfy its material obligations under these agreements, including a failure to satisfy its indemnification obligations,
we could suffer operational difficulties or significant losses.
We share certain executives and directors with Madison Square Garden and AMC Networks, which means those executives
will not devote their full time and attention to our affairs.
As a result of the AMC Networks Distribution, our Chairman, Charles F. Dolan, serves as Executive Chairman of AMC Networks.
As a result of the MSG Distribution, our Chief Executive Officer, James L. Dolan, also serves as the Executive Chairman of
Madison Square Garden. This arrangement is similar to the historical situation whereby Mr. Dolan had served as a senior officer
of Madison Square Garden and Charles F. Dolan provided senior leadership to our Rainbow segment. In February 2015, our Vice
Chairman and Chief Financial Officer, Gregg G. Seibert, was appointed as Vice Chairman of both Madison Square Garden and
AMC Networks. As a result, three senior executives of the Company are not devoting their full time and attention to the Company's
affairs. In addition, six members of our Board of Directors are also directors of Madison Square Garden and eight members of
our Board of Directors are also directors of AMC Networks.
Our overlapping directors and executives may result in the diversion of corporate opportunities and other potential conflicts.
Our Board of Directors has adopted a policy that acknowledges that directors and officers of the Company may also be serving
as directors, officers, employees or agents of Madison Square Garden or AMC Networks and their respective subsidiaries and that
the Company may engage in material business transactions with such entities. The Company renounced its rights to certain business