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Article by DailyStocks_admin    (02-02-09 08:31 AM)

Filed with the SEC from Jan 22 to Jan 28:

Cablevision Systems (CVC)
Hedge fund Harbinger Capital Partners Master Fund I cut its stake in Cablevision to 10,841,958 shares (4.6%), citing "ongoing portfolio management and rebalancing." Harbinger said that it reserves its right to contact the company, its shareholders and others over ways to maximize shareholder value.

BUSINESS OVERVIEW

This combined Annual Report on Form 10-K is separately filed by Cablevision Systems Corporation (“Cablevision”) and CSC Holdings, Inc. (“CSC Holdings” and collectively with Cablevision, the “Company” or the “Registrants”).

Cablevision Systems Corporation

Cablevision Systems Corporation is a Delaware corporation which was organized in 1997. Cablevision owns all of the outstanding common stock of CSC Holdings and its liabilities include $1.5 billion of senior notes issued in April 2004. Cablevision has no operations independent of its CSC Holdings subsidiary.

CSC Holdings

CSC Holdings is a Delaware corporation which was organized in 1985 and is one of the largest cable operators in the United States based on the number of basic video subscribers. We also operate cable programming networks, entertainment businesses and telecommunications companies. As of December 31, 2007, we served approximately 3.1 million basic video subscribers in and around the New York City metropolitan area, making us the fifth largest cable operator in the United States based on the number of basic video subscribers. We believe that our cable television systems comprise the largest metropolitan cluster of cable television systems under common ownership in the United States (measured by number of basic video subscribers). Through our wholly-owned subsidiary, Rainbow Media Holdings LLC (“Rainbow Media Holdings”), we own interests in and manage numerous national and regional programming networks, the Madison Square Garden sports and entertainment businesses and cable television advertising sales companies. Through Cablevision Lightpath, Inc. (“Lightpath”), our wholly-owned subsidiary, we provide telephone services and high-speed Internet access to the business market.

We classify our business interests into three segments: Telecommunications Services; Rainbow; and Madison Square Garden.

Our Telecommunications Services segment includes CSC Holdings’ cable television business, including its video, high-speed data, and Voice over Internet Protocol (“VoIP”) and the operations of the commercial telephone and high-speed data services provided by Lightpath.

Our Rainbow segment consists principally of our interests in national programming services - AMC, WE tv, IFC, fuse and VOOM, regional news programming businesses and through June 30, 2007, regional sports programming businesses and investments held by Rainbow Media Holdings. Rainbow also includes a local advertising sales representation business.

Our Madison Square Garden segment owns and operates the Madison Square Garden Arena and the adjoining WaMu Theater at Madison Square Garden, the New York Knickerbockers professional basketball team, the New York Rangers professional hockey team, the New York Liberty professional women’s basketball team, the Hartford Wolf Pack professional hockey team, the regional sports programming networks Madison Square Garden Network and Fox Sports Net New York (collectively, “MSG Networks”), and MSG Entertainment (which operates Radio City Music Hall and the Beacon Theatre in New York City under long-term leases and, since October 2007, owns and operates the Chicago Theatre in Chicago, Illinois). Madison Square Garden is a wholly-owned subsidiary of Rainbow Media Holdings.

In addition, we own or have interests in the following businesses and assets:



• the motion picture theater business of Clearview Cinemas, which operates 49 movie theaters containing 252 screens,

• PVI Virtual Media Services LLC, which markets a real time video insertion system that places computer generated electronic images into telecasts of sporting events and other programming, and

• the common stock of Comcast Corporation and General Electric Company which we received in connection with asset sales in prior years and which we monetized through the execution of prepaid forward contracts, collateralized by an equivalent amount of the respective stock.

Telecommunications Services

General

Cable television is a service that delivers multiple channels of video programming to subscribers who pay a monthly fee for the services they receive. Video signals are received over-the-air, by fiber optic transport or via satellite delivery by antennas, microwave relay stations and satellite earth stations and are modulated, amplified and distributed over a network of coaxial and fiber optic cable to the subscribers’ television sets. Cable television systems typically are constructed and operated pursuant to non-exclusive franchises awarded by local and state governmental authorities for specified periods of time.

Our cable television systems offer varying packages of service marketed under the Optimum and iO brand names, which may include, among other programming, local broadcast network affiliates and independent television stations, certain other news, information and entertainment channels such as CNN, CNBC, ESPN, and MTV, and certain premium services such as HBO, Showtime, The Movie Channel, Starz!/Encore and Cinemax. We also offer iO-branded digital video service, which enables customers to receive video on demand and subscription video on demand services, as well as additional viewing channels.

Our cable television revenues are derived principally from monthly fees paid by subscribers. In addition to recurring subscriber revenues, we derive revenues from the sales of pay-per-view movies and events, video on demand and subscription video on demand program services, from the sale of advertising time on advertiser supported programming and from installation and equipment charges. Certain services and equipment provided by substantially all of our cable television systems are subject to regulation. See “Regulation - Cable Television.”

We also provide high-speed data services using our cable television broadband network. High-speed data services are provided to customers through a cable modem device. The high-speed data service, marketed as “Optimum Online”, served approximately 2.3 million subscribers at December 31, 2007 for an overall penetration rate of 48.8% of the homes passed by our cable television network. We believe that our high-speed data service penetration has been driven by superior quality and speed and, in part, by a large number of customers installing the necessary equipment without the need for a service call.

In addition, the Company offers VoIP technology services exclusively to our Optimum Online subscribers, marketed as “Optimum Voice.” As of December 31, 2007, we provided Optimum Voice services to approximately 1.6 million customers for an overall penetration rate of 34% of the homes passed by our cable television network.

Through Optimum Lightpath, a business broadband service provider, we provide telecommunications services to the business market in the greater New York City metropolitan area. Lightpath provides converged data, Internet and voice solutions to mid-sized and large businesses, hospital systems, municipalities, and school systems. As of December 31, 2007, Lightpath serviced over 2,550 buildings.

Optimum Lightpath has built an advanced fiber optic network extending more than 2,950 route miles (137,000 fiber miles) throughout the New York Metropolitan area. Optimum Lightpath provides scalable advanced Metro Ethernet services that support a variety of business applications. Metro Ethernet enables organizations to replace older phone line technology with a single IP based solution that satisfies their telecommunications needs, including voice, video, data and Internet. Because Optimum Lightpath builds its wholly owned fiber optic network directly into customers’ office locations, it can deliver its Metro Ethernet services at high speeds (from 10Mbps up to 10Gbps), while offering cost savings over traditional services.

(1) Basic video customers represent each customer account (set up and segregated by customer name and address), weighted equally and counted as one subscriber, regardless of size, revenue generated, or number of boxes, units, or outlets. In calculating the number of customers, the Company counts all customers other than inactive/disconnected customers. Free accounts are included in the customer counts along with all active accounts, but they are limited to a prescribed group such as current and retired Company employees, and free status is not granted to regular customers as a promotion. Such accounts are also not entirely free, as they typically generate revenue through pay-per-view or other services for which they must pay. The Company counts a bulk commercial customer, such as a hotel, as one customer, and does not count individual room units at that hotel. In counting bulk residential customers such as an apartment building, the Company counts each subscribing family unit within the building as one customer, but does not count the master account for the entire building as a customer.

(2) Number of customers who receive at least one of the Company’s services, including business modem only customers.

(3)Homes passed represent the estimated number of single residence homes, apartment and condominium units and commercial establishments passed by the cable distribution network in areas serviceable without further extending the transmission lines.

(4)Average monthly revenue per basic video customer is calculated by dividing the U.S. generally accepted accounting principles (“GAAP”) revenues for the Telecommunications Services segment, less the revenue attributable to Lightpath, for the fourth quarter of each year presented by the average monthly number of basic video customers served by the Company’s cable television systems for the same period. For purposes of this calculation, both revenue and average number of basic video customers exclude the Company’s Lightpath operations because Lightpath’s third-party revenues are unrelated to the Company’s cable television system customers.

Subscriber Rates and Services; Marketing and Sales

Basic Cable

Our cable television systems offer a government mandated broadcast basic level of service which generally includes local over-the-air broadcast stations, such as network affiliates (e.g., ABC, NBC, CBS, FOX), and public, educational or governmental channels.

All of our cable television systems also offer an expanded basic package of services, generally marketed as “Family Cable”, which includes, among other programming, certain news, information, entertainment, and sports channels such as CNN, AMC, CNBC, Discovery, ESPN and MTV. For additional charges, our cable television systems provide certain premium services such as HBO, Showtime, The Movie Channel, Starz!/Encore and Cinemax, which may be purchased either individually or in tiers.

iO, TV

iO, TV, our digital video service, is available to Cablevision’s entire service area. We ended 2007 with approximately 2.6 million iO subscribers.

The digital video programming services currently offered to subscribers include:

•over 360 channels of entertainment,

•over 50 additional movie channels including multiple channels (“multiplexes”) of HBO, Showtime, Cinemax, Starz!/Encore and The Movie Channel,

• access to hundreds of titles each month on demand, featuring hundreds of movies, and subscription video on demand programming including HBO On Demand, Showtime On Demand, Cinemax On Demand, Disney Channel On Demand, Anime On Demand, Howard TV On Demand, Playboy TV on Demand, IFC in Theaters on Demand, WWE 24/7 on Demand, The Jewish Channel on Demand, and here! TV On Demand ,

•over 150 hours of special interest programming on demand including free on demand programming from Thirteen on Demand, Thirteen Kids On Demand, Nick on Demand, MTV Tr3s on Demand, WE tv on Demand, fuse, TV Guide Spot, Sportskool, and Local on demand,

•48 channels of uninterrupted commercial-free digital music from Music Choice,

•iO Sports Pak - 12 sports channels featuring college sports, golf, soccer, extreme sports and recreational activities,

• optional sports packages from the National Basketball Association (“NBA”), National Hockey League (“NHL”), Major League Baseball (“MLB”), Major League Soccer (“MLS”) and college football and basketball,

•iO en espanol- over 35 Spanish language channels including programming from Latin America, the Caribbean, Mexico, and featuring latino video on demand content,

• 19 channels of international programming from around the world, with channels from Korea, Russia, China, Portugal, Italy, Poland, Japan and India/Southeast Asia,

• 45 channels available in high definition, including local channels such as WCBS, WABC, WNBC, WNYW (FOX), the CW, My9 and WNET (PBS), as well as local sports channels, Madison Square Garden Network, YES Network, SportsNet NY and Fox Sports Net New York. Offerings also include high definition channels from HBO, Cinemax, Showtime, The Movie Channel, Starz!, Universal, ESPN, ESPN2, HGTV, CNN, Food Network, Mojo, Versus/Golf Channel, National Geographic Channel, HD Theater, TNT, TBS, as well as 15 HD channels offered by VOOM HD Networks. In addition, high definition movies are available on demand for an additional fee,

The currently priced $10.95 per month iO package (which is included in iO Gold and iO Silver) can be added to any level of cable service and includes an additional 36 digital video channels, 48 digital music channels from Music Choice, and access to video on demand programming, including ‘free’ on demand programming such as fuse on Demand and PBS (Thirteen on Demand) as well as iO’s enhanced television services such as iO Games and interactive news and weather sites. Discount and promotional pricing is available when iO is combined with other service offerings.

Since our network serving our existing cable television systems is substantially upgraded to provide advanced digital video services, our sales efforts are primarily directed toward increasing our penetration to homes passed for all of our existing services. We market our cable television services through in-person selling, as well as telemarketing, direct mail advertising, promotional campaigns and local media and newspaper advertising.
Optimum Online

Optimum Online is our high-speed Internet access for the home. Optimum Online connects customers to the Internet using the same network that delivers our cable television service. It is significantly faster than digital subscriber line (“DSL”) and traditional dial-up services. Optimum Online is available to Cablevision’s entire service area.

Our plant is designed for download speeds to a maximum of 15Mbps downstream and 2Mbps upstream for our Optimum Online level of service and a maximum of 30Mbps downstream and 5Mbps upstream for our Optimum Online Boost level of service. We also provide Optimum Online Ultra (50Mbps/50Mbps) by special order.

CEO BACKGROUND

The Board has nominated the fifteen director candidates named below, all of whom, except Kathleen M. Dolan, currently serve as our directors. Of the fifteen nominees for director, nine are to be elected by the Class B stockholders and six are to be elected by the Class A stockholders. All of the directors are elected for a one-year term.

The persons named in the proxy intend to vote for the election of each of the director nominees below, unless you indicate on your proxy that your vote should be withheld from any or all of the nominees.

If a Class A director nominee becomes unavailable before the election, the persons named in the Class A proxy would be authorized to vote for a replacement Class A director nominee if the Board names one. If a Class B director nominee becomes unavailable before the election, the persons named in the Class B proxy would be authorized to vote for a replacement Class B director nominee if the Board names one.

Information on each of our nominees is given below.

The Board unanimously recommends you vote FOR each of the following candidates:

Directors to be elected by Class A Stockholders




ZACHARY W. CARTER, 58, Director since 2006. Partner at the law firm of Dorsey & Whitney LLP, in New York, New York since 1999. Prior to that time, Mr. Carter’s career in public service included serving as United States Attorney for the Eastern District of New York from 1993 to 1999. Mr. Carter is a director of Marsh & McLennan Companies, Inc.



CHARLES D. FERRIS, 75 , Director since 1985. Mr. Ferris is a non-equity partner in the law firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. Chairman of the Federal Communications Commission from October 1977 to April 1981. Mr. Ferris has been a Trustee Associate/Trustee of Boston College continuously since 1986. Mr. Ferris is also a Director and is presently Vice Chairman of the Board of The Maureen and Mike Mansfield Foundation.

Proxy Statement 2008 - Cablevision




THOMAS V. REIFENHEISER, 72 , Director since 2002. Mr. Reifenheiser retired as a Managing Director of JP Morgan Chase, overseeing the Global Media and Telecommunications Division in September 2000 after 38 years with JP Morgan Chase and its predecessors. Mr. Reifenheiser is a director of Citadel Broadcasting Corporation, Lamar Advertising Company and Mediacom Communications Corporation.



VICE ADMIRAL JOHN R. RYAN USN (RET.), 62 , Director since 2002. President and Chief Executive Officer of the Center for Creative Leadership in Greensboro, North Carolina since June 2007. He was Chancellor of the State University of New York from June 2005 to June 2007. He was President of the State University of New York Maritime College from June 2002 to June 2005. Interim President of State University at Albany from February 2004 to February 2005, and Superintendent of the United States Naval Academy from June 1998 to June 2002. Vice Admiral Ryan’s military career included positions as Commander of the Maritime Surveillance and Reconnaissance Force, US Sixth Fleet/Commander, Fleet Air Mediterranean/Commander, Maritime Air Forces, Mediterranean until his retirement from the U.S. Navy in July 2002. Vice Admiral Ryan is a director of CIT Group Inc.

VINCENT TESE, 65 , Director since 1996. Mr. Tese served as Chairman and Chief Executive Officer of the New York State Urban Development Corporation from 1985 to 1987 and as Director of Economic Development for New York State from 1987 to December 1994. Mr. Tese is a director of The Bear Stearns Companies Inc., Bowne & Co, Inc., Cabrini Mission Society, Catholic Guardian Society, Custodial Trust Co., IntercontinentalExchange, Inc., Mack-Cali Realty Corp., Magfusion, Inc., Municipal Art Society, NRDC Acquisition Corp., Wireless Cable International, Inc. and a trustee of New York Presbyterian Hospital and New York University School of Law.

DR. LEONARD TOW, 79 , Director since 2005. Chief Executive Officer of New Century Holdings LLC, an outdoor advertising company, since January 2005. Director of Citizens Communications Company from 1989 to September 2004. Chairman and Chief Executive Officer of Citizens Communications Company from 1990 to September 2004. Dr. Tow was appointed to the Board by the Class B stockholders in March 2005 and was reelected as a director by the Class B stockholders in 2005, 2006 and 2007. Since Grover C. Brown, Richard H. Hochman and Victor Oristano, each of whom had been elected to the Board by the Class A stockholders, are not standing for reelection at the 2008 annual meeting of stockholders, the directors elected by the Class A stockholders decided to recommend to the Board that Dr. Tow be nominated for election as a director by the Class A stockholders. In making this recommendation, the directors elected by the Class A stockholders took into account Dr. Tow’s industry stature, reputation, his contribution to the Board since 2005 and the determination by the Board that he was an independent member of the Board.

RAND V. ARASKOG, 76 , Director since 2005. Self-employed as a private investor as principal in RVA Investments since March 1998.

FRANK J. BIONDI, 63 , Director since 2005. Senior Managing Director of WaterView Advisors LLC since June 1999. Mr. Biondi is a director of The Bank of New York Mellon Corporation, Hasbro, Inc., Seagate Technology and Amgen, Inc.

CHARLES F. DOLAN, 81 , Director since 1985. Chairman of the Company since 1985. Chief Executive Officer of the Company from 1985 to October 1995. Founded and acted as the General Partner of the Company’s predecessor from 1973 to 1985. Established Manhattan Cable Television in 1961 and Home Box Office in 1971. Charles F. Dolan is the father of James L. Dolan, Patrick F. Dolan, Kathleen M. Dolan, Marianne Dolan Weber and Thomas C. Dolan and father-in-law of Brian G. Sweeney.

JAMES L. DOLAN, 52 , Director since 1991. President of the Company since June 1998. Chief Executive Officer of the Company since October 1995. Chairman of Madison Square Garden since October 1999. Chief Executive Officer of Rainbow Media Holdings, Inc., a subsidiary of the Company, from September 1992 to October 1995. Vice President of the Company from 1987 to September 1992. James L. Dolan is the son of Charles F. Dolan and the brother of Patrick F. Dolan, Kathleen M. Dolan, Marianne Dolan Weber and Thomas C. Dolan and brother-in-law of Brian G. Sweeney.

KATHLEEN M. DOLAN, 45, Director and Founder of Purple Crayon Productions, Inc., a Woodstock, Vermont based community art and music center since September 2004. Kathleen M. Dolan is the daughter of Charles F. Dolan and the sister of James L. Dolan, Patrick F. Dolan, Marianne Dolan Weber and Thomas C. Dolan and sister-in-law of Brian G. Sweeney.

MARIANNE DOLAN WEBER, 50 , Director since 2005. President of Dolan Family Foundation from 1986 to September 1999. Chairman since September 1999. President of Dolan Children’s Foundation from 1997 to September 1999. Chairman since September 1999. Manager of Dolan Family Office, LLC since 1997. Marianne Dolan Weber is the daughter of Charles F. Dolan, the sister of James L. Dolan, Kathleen M. Dolan, Patrick F. Dolan and Thomas C. Dolan and the sister-in-law of Brian G. Sweeney.

PATRICK F. DOLAN, 56 , Director since 1991. President of News 12 Networks of the Company since February 2002. Vice President of News from September 1995 to February 2002. News Director of News 12 Long Island, a subsidiary of the Company, from December 1991 to September 1995. Patrick F. Dolan is the son of Charles F. Dolan and the brother of James L. Dolan, Kathleen M. Dolan, Marianne Dolan Weber and Thomas C. Dolan and brother-in-law of Brian G. Sweeney.


MANAGEMENT DISCUSSION FROM LATEST 10K

This Annual Report on Form 10-K contains statements that constitute forward looking information within the meaning of the Private Securities Litigation Reform Act of 1995, including restructuring charges, availability under credit facilities, levels of capital expenditures, sources of funds and funding requirements, among others. Investors are cautioned that such forward looking statements are not guarantees of future performance or results and involve risks and uncertainties and that actual results or developments may differ materially from the forward looking statements as a result of various factors. Factors that may cause such differences to occur include, but are not limited to:



• the level of our revenues;

• competition from existing competitors (such as DBS operators and telephone companies) and new competitors (such as high-speed wireless providers) entering our franchise areas;

• demand for our basic video, digital video, high-speed data and voice services, which are impacted by competition from other services and the other factors discussed herein;

• the cost of programming and industry conditions;

• changes in the laws or regulations under which we operate;

• developments in the government investigations and litigation related to past practices of the Company in connection with grants of stock options and stock appreciation rights (“SARs”);

• developments in the government investigations relating to improper expense recognition and the timing of recognition of launch support, marketing and other payments under affiliation agreements;

• the outcome of litigation and other proceedings, including the matters described under Item 3. Legal Proceedings in the notes to our consolidated financial statements;

• general economic conditions in the areas in which we operate;

• the state of the market for debt securities and bank loans;

• demand for advertising inventory;

• our ability to obtain or produce content for our programming businesses;

• the level of our capital expenditures;

• the level of our expenses;

• future acquisitions and dispositions of assets;

• the demand for our programming among cable television system and DBS operators and telephone companies and our ability to maintain and renew affiliation agreements with cable television system and DBS operators and telephone companies;

• market demand for new services;

• whether pending uncompleted transactions, if any, are completed on the terms and at the times set forth (if at all);

• other risks and uncertainties inherent in the cable television business, the programming and entertainment businesses and our other businesses;

• financial community and rating agency perceptions of our business, operations, financial condition and the industry in which we operate; and

• the factors described in our filings with the Securities and Exchange Commission, including under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained herein.



We disclaim any obligation to update or revise the forward looking statements contained herein, except as otherwise required by applicable federal securities laws.

CABLEVISION SYSTEMS CORPORATION



All dollar amounts, except per subscriber, per unit and per share data, included in the following discussion under this Item 7 are presented in thousands.



Management’s Discussion and Analysis of Financial Condition and Results of Operations



Summary



Our future performance is dependent, to a large extent, on general economic conditions including capital market conditions, the impact of direct competition, our ability to manage our businesses effectively, and our relative strength and leverage in the marketplace, both with suppliers and customers.



Telecommunications Services



Our Telecommunications Services segment derives revenues principally through monthly charges to subscribers of our video, high-speed data and voice services. These monthly charges include fees for cable television programming, as well as, in many cases, equipment rental, pay-per-view and video-on-demand, high-speed data and voice services. Revenue increases are derived from rate increases, increases in the number of subscribers to these services, including additional services sold to our existing subscribers, and upgrades by video customers in the level of programming package to which they subscribe. We also derive revenues from the sale of advertising time available on the programming carried on our cable television systems. Revenues from advertising vary based upon the number and demographics of our subscribers who view the programming carried on our cable television systems. Because 65% of our basic video customers as of December 31, 2007 are already subscribers to our high-speed data services, our ability to continue to grow our high-speed data services may be limited. Programming costs are the most significant part of our operating expenses and are expected to increase as a result of digital subscriber growth, additional service offerings and contractual rate increases.



Our cable television video services, which accounted for 45% of our consolidated revenues for the year ended December 31, 2007, face competition from the direct broadcast satellite business and the delivery systems of incumbent telephone companies. There are two major providers of DBS service in the United States, each with significantly higher numbers of subscribers than we have. We compete with these DBS competitors by “bundling” our service offerings with products that the DBS companies cannot efficiently provide at this time, such as high-speed data service and voice service carried over the cable distribution plant, as well as by providing interactive services that are currently unavailable to a DBS subscriber. As discussed in greater detail below, we face intense competition from incumbent telephone companies such as Verizon and AT&T, which offer video programming in addition to their voice and high-speed Internet access services, evidencing their commitment to compete across all of the Company’s telecommunications products. Their competitive position has been improved by recent operational, regulatory and legislative advances that they have made. Historically, we have made substantial investments in the development of new and innovative programming options for our customers as a way of differentiating ourselves from our competitors. We likely will continue to do so in order to be a more effective competitor.



Verizon and AT&T offer video programming as well as voice and high-speed Internet access services to residential customers in our service area. AT&T has obtained authorization to provide such service throughout its Connecticut footprint. Verizon has constructed fiber to the home network plant that passes a significant number of households in our service area (currently about a quarter of the households according to our estimates). Verizon has obtained authority to provide video service (it already has or needs no authority to provide phone and data services) for a majority of these homes passed, on a statewide basis in New Jersey and in numerous local franchises in New York. Verizon has so far not sought to obtain authority for video service in Connecticut. See “Item 1. Business - Regulation” for a discussion of regulatory and legislative issues and “Item 1A. Risk Factors - Our business is subject to extensive government regulation and changes in current or future laws or regulations could restrict our ability to operate our business as we currently do”.

The Company has experienced an increased rate of average monthly churn in its basic video subscribers primarily as a result of increasing competition in its service area (2% in the fourth quarter of 2007 compared with 1.8% during the fourth quarter of 2006).



Our high-speed data services business, which accounted for 16% of our consolidated revenues for the year ended December 31, 2007, faces competition from other providers of high-speed Internet access, including DSL and fiber-based services offered by local telephone companies such as Verizon and AT&T. In addition, DBS providers have tested the use of certain spectrum to offer satellite-based high-speed data services and are offering broadband data services via partnerships and marketing arrangements with other providers such as Verizon, AT&T, Earthlink, Wildblue, and Clearwire. This competition, together with our already relatively high penetration, is expected to slow our growth in cable modem penetration from the growth rates we have experienced in the past. The Company had slower growth during 2007 than experienced in prior years in Optimum Online customers (243,000 in 2007 compared with 345,000 during 2006).



Our VoIP offering, which accounted for approximately 8% of our consolidated revenues for the year ended December 31, 2007, is competitive with incumbent offerings primarily on the basis of pricing, where unlimited United States, Canada and Puerto Rico long distance, regional and local calling, together with certain features for which the incumbent providers charge extra, are offered at one low price. To the extent the incumbents, who have financial resources that exceed those of the Company, decide to meet our pricing and/or features or reduce their pricing, future growth and success of this business may be impaired. The regulatory framework for cable modem service and voice service is being developed and changes in how we, and our competitors, are regulated, including increased regulation, may affect our competitive position.



Optimum Lightpath, which accounted for approximately 3% of our consolidated revenues for the year ended December 31, 2007, operates in a highly competitive business telecommunications market and competes against the largest telecommunications companies - incumbent local exchange companies such as Verizon and AT&T, other competitive local exchange companies and long distance companies. To the extent that dominant market leaders decide to reduce their prices, future success of our Optimum Lightpath business may be impaired. The trend in business communications has been shifting from a wired voice medium to a wireless, data medium. Should this trend accelerate dramatically, future growth of Optimum Lightpath may be negatively impacted.



Rainbow



In our Rainbow segment, which accounted for 14% of our consolidated revenues for the year ended December 31, 2007, we earn revenues in two principal ways. First, we receive affiliate fee payments from cable television system operators, DBS operators and telephone companies (collectively referred to as “operators”). These revenues are generally on a per subscriber basis and earned under multi-year contracts with those operators under our affiliation agreements. The specific affiliate fee revenues we earn vary from operator to operator and also vary among our networks, but are generally based upon the number of each operator’s subscribers who receive our programming, referred to as “viewing subscribers.” The second principal source of revenues in this segment is from advertising. Under our agreements with cable television system operators and DBS operators and telephone companies, we have the right to sell a specific amount of national advertising time on our programming networks. Our advertising revenues are more variable than affiliate fee revenues because most of our advertising is sold on a short-term basis, not under long-term contracts. Also, our advertising revenues vary based upon the popularity of our programming as measured by rating services.



We seek to grow our revenues in the Rainbow segment by increasing the number of operators that carry our services and the number of viewing subscribers. We refer to this as our “penetration.” AMC, which is widely distributed, has less ability to increase its penetration than our newer, less penetrated services.

Our revenues may also increase over time through contractual rate increases stipulated in certain of our affiliation agreements. In negotiating for increased or extended carriage, we may be subject to requests by operators to make upfront payments in exchange for additional subscribers or extended carriage, which we record as deferred carriage fees and which are amortized as a reduction to revenue over the period of the related subscriber guarantee, or to waive for a specified period or accept lower per subscriber fees if certain additional subscribers are provided. We also may help fund the operators’ efforts to market our channels or we may permit operators to offer limited promotional periods without payment of subscriber fees. As we continue our efforts to add subscribers, our subscriber revenue may be negatively affected by subscriber acquisition fees (deferred carriage), discounted subscriber fees and other payments; however, we believe that these transactions generate a positive return on investment over the contract period. We seek to increase our advertising revenues by increasing the number of minutes of national advertising sold per hour and by increasing rates for such advertising, but ultimately, the level of our advertising revenues is directly related to the overall distribution of our programming, penetration of our services, and the popularity (including within desirable demographic groups) of our services as measured by rating services.



The principal goals in this segment are to increase our affiliate fee revenues and our advertising revenues by increasing distribution and penetration of our national services. To do this we must continue to contract for and produce high-quality, attractive programming. Our greatest challenge arises from the increasing concentration of subscribers in the hands of a few operators, creating disparate bargaining power between us and the largest operators. This increased concentration could adversely affect our ability to increase the penetration of our services or even result in decreased penetration. In addition, this concentration gives those operators greater leverage in negotiating the pricing and other terms of affiliation agreements. Moreover, as a result of this concentration, the potential impact of a loss of any one of our major affiliate relationships would have a significant impact on this segment.

Madison Square Garden

Madison Square Garden, which accounted for 15% of our consolidated revenues for the year ended December 31, 2007, consists of our professional sports teams (principally the New York Knicks of the National Basketball Association (“NBA”) and the New York Rangers of the National Hockey League (“NHL”), along with the Hartford Wolf Pack of the American Hockey League and the New York Liberty of the Women’s National Basketball Association), the MSG Networks sports programming business, and an entertainment business. It also operates the Madison Square Garden Arena, Radio City Music Hall, the WaMu Theater and, effective January 1, 2007, the Beacon Theatre in New York City. In October 2007, Madison Square Garden purchased and assumed the operation of the Chicago Theatre in Chicago, Illinois. Through June 30, 2007, it also operated the Hartford Civic Center and Rentschler Field (sports and entertainment venues in Connecticut). Madison Square Garden faces competitive challenges unique to these activities. We derive revenues in this segment primarily from the MSG Networks (see below), the sale of tickets, including luxury box rentals, to sporting and entertainment events, from rental rights fees paid to this segment by promoters that present events at our entertainment venues and the sports teams’ share of league-wide distributions of national television rights fees and royalties. We also derive revenue from the sale of advertising at our owned and operated venues, from food, beverage and merchandise sales at these venues and from the licensing of our trademarks. MSG Networks derives its revenues from affiliate fees paid by cable television operators (including our cable television systems), satellite operators that provide video service and sales of advertising. This segment’s financial performance is related to the performance of all the teams presented and the attractiveness of its entertainment events.

Our sports teams’ financial success is dependent on their ability to generate advertising sales, paid attendance, luxury box rentals, and food, beverage and merchandise sales. To a large extent, the ability of the teams to build excitement among fans, and therefore produce higher revenue streams, depends on the teams’ winning performance, which generates regular season and playoff attendance and luxury box rentals, and which also supports increases in prices charged for tickets, luxury box rentals, and advertising placement. Each team’s success is dependent on its ability to acquire highly competitive personnel. The governing bodies of the NBA and the NHL have the power and authority to take certain actions that they deem to be in the best interest of their respective leagues, which may not necessarily be consistent with maximizing our professional sports teams’ results of operations.

MSG Networks sports programming business is affected by our ability to secure desired programming of professional sports teams, in addition to our proprietary programming. The continued carriage and success of the teams that are telecast by us will impact our revenues from distribution and from the rates charged for affiliation and advertising, as well as the ability to attract advertisers.

Madison Square Garden’s entertainment business is largely dependent on the continued success of our Radio City Christmas Spectacular and our touring Christmas shows, as well as the availability of, and our venues’ ability to attract concerts, family shows and events.

The dependence of this segment’s revenues on its sports teams and Christmas shows generally make it seasonal with a disproportionate share of its revenues and operating income being derived in the fourth quarter of each year.

Stock Option Related Matters

We have continued to incur substantial expenses for legal services in connection with the Company’s stock option related litigation, and the investigations by the Securities and Exchange Commission and the U.S. Attorney’s Office for the Eastern District of New York. We expect to continue to incur substantial expenses in connection with these matters. See Item 3. Legal Proceedings.

Critical Accounting Policies

In preparing its financial statements, the Company is required to make certain estimates, judgments and assumptions that it believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The significant accounting policies which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

Impairment of Long-Lived and Indefinite-Lived Assets:

The Company’s long-lived and indefinite lived assets at December 31, 2007 include excess costs over fair value of net assets acquired (“goodwill”) of $1,023,480, other intangible assets of $1,388,292 ($893,879 of which are indefinite-lived intangibles) and $3,472,203 of property, plant and equipment. Such assets accounted for approximately 64% of the Company’s consolidated total assets.

In accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, the Company is required to determine goodwill impairment using a two-step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill that would be recognized in a business combination.

The impairment test for other indefinite-lived intangible assets consists of a comparison of the fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. For other long-lived assets, including intangibles that are amortized, the Company evaluates assets for recoverability when there is an indicator of potential impairment. If the undiscounted cash flows from a group of assets being evaluated is less than the carrying value of that group of assets, the fair value of the asset group is determined and the carrying value of the asset group is written down to fair value.

In assessing the recoverability of the Company’s goodwill and other long-lived assets, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and also the magnitude of any such charge. Estimates of fair value are primarily determined using discounted cash flows and comparable market transactions. These valuations are based on estimates and assumptions including projected future cash flows, discount rate, determination of appropriate market comparables and the determination of whether a premium or discount should be applied to comparables. For the Telecommunications Services segment, these valuations also include assumptions for average annual revenue per customer, number of homes passed, operating margin and market penetration as a percentage of homes passed, among other assumptions. For the Madison Square Garden and Rainbow segments, these valuations also include assumptions for projected average rates per basic and viewing subscribers, number of events (MSG segment only), access to sports programming and feature film rights and the cost of such sports programming and feature film rights, amount of programming time that is advertiser supported, number of advertising spots available and the sell through rates for those spots, average fee per advertising spot, and operating margins, among other assumptions. If these estimates or material related assumptions change in the future, we may be required to record additional impairment charges related to our long-lived assets.

In order to evaluate the sensitivity of the fair value calculations of the Company’s reporting units on the impairment calculation for indefinite-lived intangibles, the Company applied a hypothetical 10% decrease to the fair values of each reporting unit. This hypothetical decrease would have no impact on the impairment analysis for any of the Company’s reporting units, except for our theater operations which has goodwill of $10,347 at December 31, 2007.

Rights to programming, including feature films and episodic series, acquired under license agreements along with the related obligations are recorded at the contract value when a license agreement is executed or the license period has begun, unless there is uncertainty with respect to either cost, acceptability or availability, then when the uncertainty is resolved. Costs are amortized to technical and operating expense on a straight-line basis over the respective license periods. We periodically review the programming usefulness of our program rights based on a series of factors, including ratings, type and quality of program material, standards and practices, and fitness of exhibition. If it is determined that substantially all of the films in a film license agreement have no future programming usefulness and will no longer be exploited, a write-off for the portion of the unamortized cost of the film license agreement that was attributed to those films is recorded in technical and operating expense.

Owned original programming is produced for us by independent production companies. Any owned original programming costs qualifying for capitalization are amortized to technical and operating expense over their estimated useful lives, commencing upon the first airing, based on attributable revenue for airings to date as a percentage of total projected attributable revenue. Projected program usage is based on the historical performance of similar content. Estimated cash flows can change based upon programming market acceptance, levels of affiliate fee revenue and advertising revenue, and program usage. Accordingly, we periodically review revenue estimates and planned usage and revise our assumptions if necessary which could impact the timing of amortization expenses.

We have recorded impairment losses of approximately $3,160, $1,640 and $663 for the years ended December 31, 2007, 2006 and 2005, respectively, included in technical and operating expense, representing primarily the impairment of certain film and programming contracts. In addition, we recorded impairment charges of $1,804, $2,104 and $7,697 in 2007, 2006 and 2005, respectively,

MANAGEMENT DISCUSSION FOR LATEST QUARTER

All dollar amounts, except per subscriber, per unit and per share data, included in the following discussion under this Item 2 are presented in thousands.



Summary



Our future performance is dependent, to a large extent, on general economic conditions including capital market conditions, the impact of direct competition, our ability to manage our businesses effectively, and our relative strength and leverage in the marketplace, both with suppliers and customers.



Telecommunications Services



Our Telecommunications Services segment derives revenues principally through monthly charges to subscribers of our video, high-speed data and Voice over Internet Protocol (“VoIP”) services and its commercial data and voice services operations. These monthly charges include fees for cable television programming, as well as, in many cases, equipment rental, pay-per-view and video-on-demand, high-speed data and voice services. Revenue increases are derived from rate increases, increases in the number of subscribers to these services, including additional services sold to our existing subscribers, acquisition transactions that result in the addition of new subscribers, and upgrades by video customers in the level of programming package to which they subscribe. We also derive revenues from the sale of advertising time available on the programming carried on our cable television systems. Revenues from advertising vary based upon the number and demographics of our subscribers who view the programming carried on our cable television systems. Programming costs are the most significant part of our operating expenses and are expected to increase as a result of subscriber growth, additional service offerings and contractual rate increases.



Our cable television video services, which accounted for 45% of our consolidated revenues for the nine months ended September 30, 2008, face competition from the direct broadcast satellite (“DBS”) business and the delivery systems of incumbent telephone companies. There are two major providers of DBS service in the United States, each with significantly higher numbers of subscribers than we have. We compete with these DBS competitors by “bundling” our service offerings with products that the DBS companies cannot efficiently provide at this time, such as high-speed data service and voice service carried over the cable distribution plant, as well as by providing interactive services that are currently unavailable to a DBS subscriber. As discussed in greater detail below, we face intense competition from incumbent telephone companies, Verizon and AT&T, which offer video programming in addition to their voice and high-speed Internet access services, evidencing their commitment to compete across all of the Company’s telecommunications products. Their competitive position has been improved by recent operational, regulatory and legislative advances that they have made. Historically, we have made substantial investments in the development of new and innovative programming options and other product enhancements for our customers as a way of differentiating ourselves from our competitors. We likely will continue to do so in order to be a more effective competitor.



Verizon and AT&T offer video programming as well as voice and high-speed Internet access services to residential customers in our service area. AT&T has obtained authorization to provide such service throughout its Connecticut footprint. Verizon has constructed fiber to the home network plant that passes a significant number of households in our service area (currently about a third of the households according to our estimates). Verizon has obtained authority to provide video service (it already has or needs no authority to provide phone and data services) for a majority of these homes passed, on a statewide basis in New Jersey and in numerous local franchises in New York. In July 2008, the New York Public Service Commission granted regulatory approval for Verizon to provide cable television service to all of New York City. Verizon has so far not sought to obtain authority for video service in Connecticut.



Our high-speed data services business, which accounted for 16% of our consolidated revenues for the nine months ended September 30, 2008, faces competition from other providers of high-speed Internet access, including DSL and fiber-based services offered by local telephone companies such as Verizon and AT&T. In addition, DBS providers have tested the use of certain spectrum to offer satellite-based high-speed data services and are offering broadband data services via partnerships and marketing arrangements with other providers such as Verizon, AT&T and Earthlink. Our growth rate in cable modem customers has slowed from the growth rates we have experienced in the past due to our already high penetration and, to a lesser extent, intensifying competition.



Our VoIP offering, which accounted for approximately 9% of our consolidated revenues for the nine months ended September 30, 2008, is competitive with incumbent offerings primarily on the basis of pricing, where unlimited United States, Canada and Puerto Rico long distance, regional and local calling, together with certain features for which the incumbent providers charge extra, are offered at one low price. To the extent the incumbents, who have financial resources that exceed those of the Company, decide to meet our pricing and/or features or reduce their pricing, future growth and success of this business may be impaired. Our growth rate in VoIP customers has slowed from the growth rates we have experienced in the past due to our increasing penetration and, to a lesser extent, intensifying competition.



The regulatory framework for cable modem service and voice service is being developed and changes in how we, and our competitors, are regulated, including increased regulation, may affect our competitive position.



Optimum Lightpath, which accounted for approximately 3% of our consolidated revenues for the nine months ended September 30, 2008, operates in the most competitive business telecommunications market in the country and competes against the very largest telecommunications companies - incumbent local exchange companies such as Verizon and AT&T, other competitive local exchange companies and long distance companies. To the extent that dominant market leaders decide to reduce their prices, future success of our Optimum Lightpath business may be impaired. The trend in business communications has been shifting from a wired voice medium to a wireless data medium. Should this trend accelerate dramatically, future growth of Optimum Lightpath may be negatively impacted. In October 2008, Optimum Lightpath completed the acquisition of 4Connections LLC which allows Optimum Lightpath to expand its ability to offer advanced Ethernet-based data and Internet voice products to businesses in the New Jersey region.



Optimum Lightpath holds a franchise from the City of New York which grants rights of way authority to provide telecommunications services throughout the five boroughs. The franchise is due to expire on December 20, 2008 and renewal discussions with the City are ongoing. The Company believes it will be able to obtain renewal of the franchise and has received assurance from the City that the expiration date of the franchise will be extended until a determination on renewal is made. Failure to ultimately obtain renewal of the franchise could negatively affect Optimum Lightpath's revenues.



Rainbow



On June 16, 2008, the Company acquired Sundance Channel L.L.C. Sundance’s results of operations and net assets are included in the Rainbow segment for the period subsequent to June 16, 2008 (see Note 4 to the Company’s condensed consolidated financial statements).



In our Rainbow segment, which accounted for 14% of our consolidated revenues for the nine months ended September 30, 2008, we earn revenues in two principal ways. First, we receive affiliate fee payments from cable television system operators, DBS operators and telephone companies (collectively referred to as “operators”). These revenues are generally on a per subscriber basis and earned under multi-year contracts with those operators referred to as “affiliation agreements”. The specific affiliate fee revenues we earn vary from operator to operator and also vary among our networks, but are generally based upon the number of each operator’s subscribers who receive our programming, referred to as “viewing subscribers.” The second principal source of revenues in this segment is from advertising.

Under our affiliation agreements, we have the right to sell a specific amount of national advertising time on our programming networks. Our advertising revenues are more variable than affiliate fee revenues because most of our advertising is sold on a short-term basis, not under long-term contracts. Also, most of our advertising revenues vary based upon the popularity of our programming as measured by rating services.



We seek to grow our revenues in the Rainbow segment by increasing the number of operators that carry our services and the number of viewing subscribers. We refer to this as our “penetration.” AMC, which is widely distributed, has less ability to increase its penetration than our newer, less penetrated services. Our revenues may also increase over time through contractual rate increases stipulated in certain of our affiliation agreements. In negotiating for increased or extended carriage, we may be subject to requests by operators to make upfront payments in exchange for additional subscribers or extended carriage, which we record as deferred carriage fees and which are amortized as a reduction to revenue over the period of the related affiliation agreements, or to waive for a specified period or accept lower per subscriber fees if certain additional subscribers are provided. We also may help fund the operators’ efforts to market our channels. As we continue our efforts to add subscribers, our subscriber revenue may be negatively affected by subscriber acquisition fees (deferred carriage), discounted subscriber fees and other payments; however, we believe that these transactions generate a positive return on investment over the contract period. We seek to increase our advertising revenues by increasing the number of minutes of national advertising sold and by increasing rates for such advertising, but, ultimately, the level of our advertising revenues in most cases is directly related to the overall distribution of our programming, penetration of our services, and the popularity (including within desirable demographic groups) of our services as measured by rating services.



Our principal goals in this segment are to increase our affiliate fee revenues and our advertising revenues by increasing distribution and penetration of our national services. To do this we must continue to contract for and produce high-quality, attractive programming. One of our greatest challenges arises from the increasing concentration of subscribers in the hands of a few operators, creating disparate bargaining power between us and the largest operators. This increased concentration could adversely affect our ability to increase the penetration of our services or even result in decreased penetration. In addition, this concentration gives those operators greater leverage in negotiating the pricing and other terms of affiliation agreements. Moreover, as a result of this concentration, the potential impact of a loss of any one of our major affiliate relationships would have a significant adverse impact on this segment.



Madison Square Garden



Madison Square Garden, which accounted for 12% of our consolidated revenues for the nine months ended September 30, 2008, consists of our professional sports teams (principally the New York Knicks of the National Basketball Association (“NBA”) and the New York Rangers of the National Hockey League (“NHL”), along with the Hartford Wolf Pack of the American Hockey League and the New York Liberty of the Women’s National Basketball Association), a regional sports programming business, and an entertainment business, as well as the operations of Fuse, a national music programming network. It also operates the Madison Square Garden Arena, Radio City Music Hall, the WaMu Theater and the Beacon Theatre in New York City, and the Chicago Theatre in Chicago, Illinois, which was acquired in October 2007. Through June 30, 2007, it also operated the Hartford Civic Center and Rentschler Field (sports and entertainment venues in Connecticut). In addition, in June 2008, Madison Square Garden purchased a minority ownership interest in Front Line Management Group Inc., a musical artist management company.

Madison Square Garden faces competitive challenges unique to these business activities. We derive revenues in this segment primarily from our programming businesses (see below), the sale of tickets, including luxury box rentals, to sporting and entertainment events, from rental rights fees paid to this segment by promoters that present events at our entertainment venues and the sports teams’ share of league-wide distributions of national television rights fees and royalties. We also derive revenue from the sale of advertising at our owned and operated venues, from food, beverage and merchandise sales at these venues and from the licensing of our trademarks. Madison Square Garden’s regional sports programming business and Fuse derive their revenues from affiliate fees paid by cable television operators (including our cable television systems), DBS operators and telephone companies that provide video service and sales of advertising. This segment’s financial performance is affected by the performance of all the teams presented and the attractiveness of its entertainment events and programming content.



Our sports teams’ financial success is dependent on their ability to generate advertising sales, paid attendance, luxury box rentals, and food, beverage and merchandise sales. To a large extent, the ability of the teams to build excitement among fans, and therefore produce higher revenue streams, depends on the teams’ winning performance, which generates regular season and playoff attendance and luxury box rentals, and which also supports increases in prices charged for tickets, luxury box rentals, and advertising placement. Each team’s success is dependent on its ability to acquire highly competitive personnel. The governing bodies of the NBA and the NHL have the power and authority to take certain actions that they deem to be in the best interest of their respective leagues, which may not necessarily be consistent with maximizing our professional sports teams’ results of operations. See “Part II, Item I. Legal Proceedings - NHL Litigation” for a discussion of a pending dispute between Madison Square Garden, L.P. and the NHL.



Madison Square Garden’s regional sports programming business is affected by our ability to secure desired programming of professional sports teams and other sports-related programming, in addition to our proprietary programming. The continued carriage and success of the teams that are telecast by us will impact our revenues from distribution and from the rates charged for affiliation and advertising, as well as the ability to attract advertisers. Fuse’s business is affected by its ability to acquire or develop desired music related content for the network. While Madison Square Garden’s regional sports programming business is widely distributed in the New York metropolitan area, it, along with Fuse, faces the same challenges in increasing affiliate fee and advertising revenues as the Rainbow segment’s programming businesses discussed above.



Madison Square Garden’s entertainment business is largely dependent on the continued success of our Radio City Christmas Spectacular and our touring Christmas shows, as well as the availability of, and our venues’ ability to attract, concerts, family shows and other events.



The dependence of this segment’s revenues on its sports teams and Christmas shows generally make it seasonal with a disproportionate share of its revenues and operating income being derived in the fourth quarter of each year.



Newspaper Publishing Group



The Newspaper Publishing Group, which accounted for approximately 1% of our consolidated revenues for the nine months ended September 30, 2008, consists of the Newsday daily newspaper, amNew York, Star Community Publishing Group, Island Publications and online websites including newsday.com and exploreLI.com. See Note 4 of the condensed consolidated financial statements for a discussion of the Newsday Transaction which was completed on July 29, 2008. The Company’s consolidated results of operations for the three and nine months ended September 30, 2008 include the operating results of the Newspaper Publishing Group subsequent to the closing date of the transaction.

The Newspaper Publishing Group’s revenue is derived primarily from the sale of advertising and the sale of newspapers (“circulation revenue”). Our advertising revenue, which represented 81% of the segment’s total revenue for the period subsequent to July 29, 2008, is derived from printed ads that run in the newspaper and niche publications, preprinted advertisements that are inserted into the newspaper and preprinted sticky notes that are applied to the front of the paper. In addition, advertising revenue also includes newspaper online advertising consisting of banner ads, video ads, floating ads, expanding ads, search engine advertising and online classified advertising for auto, recruitment and real estate. The Newspaper Publishing Group’s financial success is largely dependent on advertising revenue. Local economic conditions can affect the levels of retail and classified newspaper advertising revenue. General economic conditions, changes in consumer spending, auto sales, housing sales, unemployment rates, job creation, readership and circulation levels and rates all impact demand for advertising. Competition from other media, including internet distribution of content, other paid and free metropolitan and suburban newspapers, television, cable television, and radio broadcasters, websites, magazines, direct marketing and solo and shared mail programs, affects our ability to retain advertising clients and raise rates. Seasonal variations in consumer spending can cause quarterly advertising revenues to fluctuate. Second and fourth quarter advertising revenues are typically higher than first and third quarter advertising revenues, reflecting the historically slower economic activity in the winter and summer and the stronger fourth quarter holiday season. All of these factors contribute to a challenging advertising sales environment and may adversely impact our ability to grow or maintain our revenues.



The Newspaper Publishing Group’s circulation revenue, which represented 17% of the segment’s total revenue for the period subsequent to July 29, 2008, is derived primarily from home delivery subscriptions, and single copy sales of newspapers at the newsstand or through local retail outlets. A decrease in home delivery subscriptions and single copy sales of newspapers could adversely impact circulation revenue as well as advertising revenue.

CONF CALL

Patricia Armstrong

Welcome to Cablevision’s third quarter 2008 earnings conference call. Joining us this morning are members of the Cablevision executive team including Jim Dolan, our President and CEO, Hank Ratner, Vice Chairman, Tom Rutledge, Chief Operating Officer, Mike Huseby, Chief Financial Officer, Josh Sapan, President and CEO of Rainbow Media and John Bickham, President of Cable and Communications.

Following a discussion of the company’s third quarter 2008 results, we will open the call for questions. If you don’t have a copy of today’s earnings release, it is available on our website at www.Cablevision.com. This call can also be accessed via our website.

Please take note of the following: this discussion of Cablevision’s results may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ.

Please refer to the company’s filings with the Securities & Exchange Commission for a discussion of risks and uncertainties. The company disclaims any obligation to update the forward looking statements that may be discussed during this call. Let me point out that on page 5 of today’s earnings release we provided consolidated operations data and a reconciliation of adjusted operating cash flow or AOCF to operating income.

I will now turn the call over to Cablevision’s President and CEO, Jim Dolan.

James L. Dolan

For the third quarter Cablevision’s consolidated revenue increased more than 15% to $1.7 billion as compared to the prior year period. This was driven by strong revenue growth in all three of our major business segments, cable, Rainbow and Madison Square Garden and includes the incremental impact of the Sundance and Newsday business.

Cablevision’s AOCF for the third quarter increased 16% over the prior period to $575 million. These results for the combined businesses are very encouraging especially in light of the current economic environment. During our second quarter earnings call at the end of July we talked about our desire to better align the market value of Cablevision’s common stock with the company’s underlying operating performance.

Shortly thereafter Cablevision’s board of directors authorized the company’s management to begin exploring potential strategic alternatives for achieving this goal. Since then we have spent substantial time and resources looking at various alternatives that could unlock this value. In August we declared a quarterly dividend of $0.10 per share and yesterday our board of directors approved another $0.10 per share dividend payable in December.

As you are all aware, since we began this process the capital market conditions and the overall economy have deteriorated. In light of these adverse changes in market conditions we are not actively pursuing any further strategic alternatives at this time and we are focusing on maintaining strong operating performance. Of course, we remain open to considering any compelling opportunities that may arise such as asset sales and stock repurchases.

We will also consider ways to preserve our liquidity without impeding the growth of our core businesses. Lastly, I want to mention that over the past three months we’ve received valuable feedback from our shareholders, we appreciate your support and look forward to actively continuing the dialog. I would now like to turn the call over to our chief operating officer Tom Rutledge.

Thomas M. Rutledge

Overall our cable television business continues to have solid results in the third quarter of 2008. The company gained approximately 96,000 RGUs in the quarter contributing to cable revenue growth of 9.8% and AOCF growth of 13.6% compared to the prior year period. Our average monthly revenue per subscriber was $133.11 for the third quarter, up $0.82 over the second quarter of ’08 and up $12.20 over the last year’s third quarter.

Cable capital spending totaled $208 million for the third quarter. Customer premises equipment was lower than the prior year reflecting fewer RGU adds while capital dedicated to the WiFi and wideband projects was approximately $22 million. Year-to-date we spent $521 million in capital, an increase of 11% over last year’s comparable period. Adjusted for the WiFi and wideband spend year-to-date capital spending was essentially flat with last year’s spending levels and, as a percentage of revenue, even including WiFi and wideband capital spending is flat as well.

As for our telco competition, we estimate that Verizon has built out [inaudible] is approximately 1.450 million homes as of September 30th. Of this total we believe they have approval to offer video services in about 1.3 million of these homes. Turning to the specific results of each of our services, we ended the third quarter with 3.11 million basic video subscribers reflecting the loss of 19,000 customers in the quarter.

Our basic penetration at the end of the quarter was 66.1%. Because we serve the Hamptons and Jersey Shore the third quarter is traditionally our weakest as customers [inaudible] properties for the season. The digital video service IO added 25,000 customers for the quarter, now past 90% digital video penetration. Our high definition video subscribers totaled 1.3 million at the end of the quarter, this is an increase of 50% over the past year reflecting the continued strong demand for our high definition product.

Today Cablevision provides 65 high definition programming services to our customer base and we expect the addition of HD channels to continue in the coming month. Turning to Optimum Online, our high speed data service, we had a net gain of 32,000 customers in the quarter. Our penetration of homes passed at the end of September reached 52% and now our high speed data customers as a percentage of our basic video customer base is 78%.

Optimum voice service had a quarterly subscriber gain of 58,000. At the end of the third quarter 75% of Optimum Online customers also subscribed to Optimum voice. JD Powers and associates recently ranked Optimum voice the best residential phone service and Cablevision service area for the second year in a row and ranked Optimum Online the high speed data service provider top award in the east region over all other providers including Verizon and AT&T.

During the third quarter 65% of new video sales were three product sales. The triple play is becoming the norm for our customers with more than 56% of our video customers now subscribing to all three services. As for our WiFi wireless project, we’ve made real progress to date. We’ve activated our WiFi network throughout commercial and high traffic areas of Nassau and Suffolk county on the island and Connecticut, Westchester and [inaudible] County service areas.

Customer response has been positive with the average customers utilizing the network multiple times a month. We remain convinced that providing our residential and business customers mobile internet access for a single price is a point of differentiation for Cablevision and a strong value add for our high speed data customer base. Optimum Business, our small business services provided through the cable company. While it’s still a small part of Cablevision’s financial results today, it’s growing nicely.

Revenue in the quarter from our business services grew 48% over last year’s third quarter. We are experiencing steady growth in both our data and voice each quarter and these business customers generate an attractive return. On average, a business customers taking both data and voice service has an RPS of $130 per month. They typically have lower churn than the average residential customer yielding a higher and solid margins. We’re still in the early stages of reaching this business market but we’ve surpassed the 20% milestone in penetration of the estimated 640,000 small businesses in our footprint.

In serving our larger commercial customers Optimum Lightpath continues to generate strong financial results. With the revenue growth of 13% and AOCF growth of 37% in the quarter as compared to the prior year period. We recently announced that Optimum Lightpath had activated it’s 3,000th building. Together with our recent acquisition of 4Connections based in New Jersey our reach in the residential marketplace continues to expand.

Wrapping up I’ll say that telecommunication segment is growing well in this tough economic environment. Our AOCF continues to grow at double digit rates as it has for 17 of the last 19 quarters despite some softness in advertising currently. We have products which to most consumers are highly valuable and we will continue to develop new services which will make Optimum products even more compelling.

Shifting to Newsday which we acquired on July 29th, we are reflecting results from that date. Total revenue for the two month period since acquisition was $73 million and AOCF was $8.5 million. I would now like to turn the call over to Josh Sapan who will discuss Rainbow’s results.

Josh Sapan

The third quarter revenue at AMC, WE TV and IFC increased 12.6% to $185 million and AOCF for the quarter was $81.8 million an increase of 5.1% as compared to the prior year. The revenue growth for the quarter includes a 17% increase in ad revenue driven by higher CPNs, cost per [thousands] and unit solds at AMC and WE TV in a soft ad market and a 9% increase in affiliate revenue compared to the prior year period.

The increase in AOCF was primarily driven by this higher revenue partially offset by higher marketing and programming costs versus the third quarter 2007. This investment represents our ongoing commitment to deliver quality programming to our viewers. As a result we’ve seen higher ratings at AMC and WE TV. WE TV saw 29% growth for the network and primetime ratings among woman 25 to 54 as well as total viewers for the third quarter.

Consistent with AMC’s strategy at having quality original programming that builds our brand and audience, AMC’s Mad Men became the first basic cable network to win an Emmy for best drama series as well as an Emmy for outstanding writing for a drama series awarded to Matthew Weiner and Bryan Cranston was awarded the Emmy for outstanding lead actor in a drama series for his role in AMC’s original series Breaking Bad.

Importantly Mad Men season two has just concluded had ratings that were up 57% over season one ratings. Turning now to Rainbow’s other programming businesses which primarily include Sundance Channel, News 12, the Voom HD networks and IFC Entertainment. With the inclusion of the Sundance Channel in the other programming category for the full quarter, revenue increased 47% to $73 million and the AOCF deficit improved by 29% to a loss of $19 million as compared with the same quarter last year. These variances were primarily driven by the addition of Sundance Channel results for the full period.

I’d now like to turn it over to Hank Ratner who will discuss the results for Madison Square Garden.

Hank J. Ratner

Turning to MSG’s operating results third quarter revenue was up 10% over the third quarter of 2007 totaling $158 million. AOCF for the quarter was $5 million compared to $12 million in last year’s third quarter. The third quarter results were principally driven by higher revenue at the networks of $10 million which was principally increased affiliate revenue and higher operating costs of $8.2 million.

This increase in costs was primarily attributable to programming costs of Fuse. Higher revenues in our payment division of $5.3 million offset by costs related to the events of $4.4 million. Higher marketing costs of $4.5 million largely due to Fuse’s rebranding efforts including launches a new music is campaign and higher administrative costs primarily related to compensation.

In addition we are pleased with the [inaudible] of our WNBA franchise the New York Liberty who advanced to the Eastern Conference Finals. The Rangers are off to one of their best starts in team history as one of the youngest teams we’ve ever had. The Knicks have begun their season with strong new leadership in Donnie Walsh and Mike D’Antoni. A new fast pace tempo and renewed excited on and off the court.

Our entertainment group had a very strong quarter with successful family shows and concerts including Walking With Dinosaurs, the Police, Jonas Brothers, Neil Diamond, Bon Jovi and Celine Dion. We’re looking forward to the excitement of the holiday season as we present our reimagined Wintuk, our joint venture with the Cirque du Soleil at the WaMu Theater at Madison Square Garden.

Our perennial holiday powerhouse, the Radio City Christmas Spectacular which will feature new elements and the first ever [inaudible] tour of the Christmas Spectacular which will capture the holiday spirit in 18 different cities across America. I’ll now turn the call over to Mike Huseby who will cover the company’s overall financial position.

Michael P. Huseby

During the nine months ended September 30th the company generated free cash flow of approximately $447 million compared to $74 million in the same period a year ago. For the third quarter our overall strong operating performance generated free cash flow of $130 million. Total company capital expenditures for the quarter were $250 million compared to $221 million for the same period of 2007. As Tom mentioned, this increase was principally due for our WiFi investment.

With respect to leverage and liquidity the company’s consolidated cash position at the end of the third quarter was $343 million and net [best] was $11.2 billion. At September 30th CSC Holdings $1 billion revolving credit facility was undrawn except for approximately $55 million restricted for outstanding letters of credit. Also at September 30th the Company’s consolidated leverage ratio was 4.7 times and the CSC Holdings restricted group leverage ratio was 4.3 times.

RNS, Rainbow National Services had approximately $1.3 billion of debt and $390 million undrawn on its revolving credit facilities at September 30th. The ratio under the RNS bond leverage test at the end of the quarter was 3.6 times. Looking forward in the near term we’re focused on managing our liquidity in recognition of the current capital markets and our capital structure.

In 2009 we have scheduled debt principal maturities of approximately $1.7 billion comprised of $1.4 billion of senior notes and approximately $300 million of term debt coming due. We believe that a combination of cash on hand, cash generated from operating activities and availability under revolving credit facilities should provide us with sufficient liquidities to repay our 2009 debt maturities.

We will continue to monitor the markets closely for opportunities to obtain external sources of financing at acceptable terms to satisfy such maturities. Operator we would now like to open the call for questions.

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