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1111 STEWART AVENUE
BETHPAGE, NEW YORK 11714
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SUBJECT TO COMPLETION, DATED MAY 17, 2011
Class A Common Stock
Par Value, $0.01 Per Share
Class B Common Stock
Par Value, $0.01 Per Share
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• | intense competition in the markets in which we operate; | |
• | a limited number of distributors for our programming networks; | |
• | substantially higher debt and leverage than we have historically maintained, as a result of the financing transactions described under “Description of Financing Transactions and Certain Indebtedness”; | |
• | volatility in the market price and trading volume of our common stock; and | |
• | lack of operating history as a public company. |
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Distributing Company | Cablevision Systems Corporation, which is one of the largest cable television operators in the United States. In addition to the business of AMC Networks, Cablevision also provides telecommunication services and operates regional programming networks and other businesses, including a newspaper publishing business and a chain of movie theaters. | |
Distributed Company | AMC Networks Inc., which will own and operate the programming networks and related businesses (other than the regional programming and advertising sales businesses discussed under “— Our Company”) currently owned by RMH, a wholly-owned indirect subsidiary of Cablevision, each of which is described in this Information Statement. | |
Distribution Ratio | Each holder of Cablevision NY Group Class A Common Stock will receive a distribution of one share of our Class A Common Stock for every shares of Cablevision NY Group Class A Common Stock held on the record date and each holder of Cablevision NY Group Class B Common Stock will receive a distribution of one share of our Class B Common Stock for every shares of Cablevision NY Group Class B Common Stock held on the record date. | |
Securities to be Distributed | Based on shares of Cablevision NY Group Class A Common Stock and shares of Cablevision NY Group Class B Common Stock outstanding on , 2011, approximately shares of our Class A Common Stock and shares of our Class B Common Stock will be distributed. We refer to this distribution of securities as the “Distribution.” The shares of our common stock to be distributed will constitute all of the outstanding shares of our common stock immediately after the Distribution. Cablevision stockholders will not be required to pay for the shares of our common stock to be received by them in the Distribution, or to surrender or exchange shares of Cablevision common stock in order to receive our common stock, or to take any other action in connection with the Distribution. | |
Fractional Shares | Fractional shares of our common stock will not be distributed. Fractional shares of our Class A Common Stock will be aggregated and sold in the public market by the distribution agent and stockholders will receive a cash payment in lieu of a fractional share. Similarly, fractional shares of our Class B Common Stock will be aggregated, converted to Class A Common Stock, and sold in the public market by the distribution agent. The aggregate net cash proceeds of these sales will be distributed ratably to the stockholders who would otherwise have received fractional interests. These proceeds generally will be taxable to those stockholders. | |
Distribution Agent, Transfer Agent and Registrar for the Shares | Wells Fargo Shareowner Services will be the distribution agent, transfer agent and registrar for the shares of our common stock. |
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Record Date | The record date is the close of business New York City time, on , 2011. | |
Distribution Date | 11:59 p.m. on , 2011. | |
Material U.S. Federal Income Tax Consequences of the Distribution | Cablevision has received a private letter ruling from the Internal Revenue Service (“IRS”) to the effect that, among other things, the Distribution, and certain related transactions, including (i) the contribution by CSC Holdings, LLC (“CSC Holdings”) of certain assets to the Company, (ii) the receipt by CSC Holdings of Company common stock, a portion of the New AMC Networks Debt (as defined below), and the potential assumption of certain liabilities by the Company and (iii) the expected exchange transaction with whereby Cablevision or CSC Holdings will transfer such portion of the New AMC Networks Debt to in return for the transfer to Cablevision or CSC Holdings of $ of outstanding Cablevision or CSC Holdings debt, will qualify for tax-free treatment under the Internal Revenue Code of 1986, as amended (the “Code”) to Cablevision, the Company, and holders of Cablevision common stock. In addition, Cablevision expects to obtain an opinion from Sullivan & Cromwell LLP substantially to the effect that, among other things, the Distribution and certain related transactions will qualify for tax-free treatment under the Code to Cablevision, the Company, and holders of Cablevision common stock, and that accordingly, for U.S. federal income tax purposes, no gain or loss will be recognized by, and no amount will be included in the income of, a holder of Cablevision common stock upon the receipt of shares of our common stock pursuant to the Distribution, except to the extent such holder receives cash in lieu of fractional shares of our common stock. | |
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 representations by Cablevision that these conditions have been satisfied, and any inaccuracy in such representations could invalidate the ruling. The opinion discussed above addresses all of the requirements necessary for the Distribution and certain related transactions to obtain tax-free treatment under the Code and is based on, among other things, certain assumptions and representations made by Cablevision and us, which if incorrect or inaccurate in any material respect would jeopardize the conclusions reached by counsel in such opinion. The opinion will not be binding on the IRS or the courts. See “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.” | ||
Stock Exchange Listing | There is not currently a public market for our common stock. We will apply to have our Class A Common Stock listed on The NASDAQ Stock Market LLC (“NASDAQ”) under the symbol “AMCX.” It is anticipated that trading will commence on a when- |
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issued basis prior to the Distribution. On the first trading day following the Distribution date, when-issued trading in respect of our Class A Common Stock will end and regular-way trading will begin. Our Class B Common Stock will not be listed on a securities exchange. | ||
Financing Transactions | As part of the Distribution, we will incur approximately $ of new debt (the “New AMC Networks Debt”), consisting of $ aggregate principal amount of senior secured term loans and $ aggregate principal amount of senior unsecured notes. A portion of the proceeds of the New AMC Networks Debt will be used to repay all outstanding Company debt (excluding capital leases) and approximately $1,250,000,000 of the New AMC Networks Debt will be issued to Cablevision or CSC Holdings, which will use such New AMC Networks Debt to satisfy and discharge outstanding Cablevision or CSC Holdings debt. | |
Cablevision or CSC Holdings will accomplish the satisfaction and discharge of its outstanding debt by entering into a transaction with , whereby Cablevision or CSC Holdings will exchange a portion of the New AMC Networks Debt for outstanding Cablevision or CSC Holdings debt, a substantial portion of which will have been acquired from Cablevision’s lenders by for this purpose. Following the exchange, we expect that , in an unrelated transaction, will syndicate our senior secured term loans to several lenders and distribute our senior unsecured notes in an exempt offering. See “Description of Financing Transactions and Certain Indebtedness.” | ||
Relationship between Cablevision and Us after the Distribution | Following the Distribution, we will be a public company and Cablevision will have no continuing stock ownership interest in us. In connection with the Distribution, we and Cablevision will enter into a Distribution Agreement and have or will enter into several ancillary agreements for the purpose of accomplishing the distribution of our common stock to Cablevision’s common stockholders. These agreements also will govern our relationship with Cablevision subsequent to the Distribution and provide for the allocation of employee benefit, tax and some other liabilities and obligations attributable to periods prior to the Distribution. These agreements also will include arrangements with respect to transition services and a number of on-going commercial relationships. The Distribution Agreement includes an agreement that we and Cablevision agree to provide each other with appropriate indemnities with respect to liabilities arising out of the businesses being transferred to us by Cablevision. We are also party to other arrangements with Cablevision and its subsidiaries, such as affiliation agreements covering our programming. See “Certain Relationships and Related Party Transactions.” |
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Following the Distribution, of the members of our Board of Directors will also be directors of Cablevision, and several of our directors will continue to serve as officers and/or employees of Cablevision concurrently with their service on our Board of Directors. | ||
See “Certain Relationships and Related Party Transactions — Relationship Between Cablevision and Us After the Distribution” for a discussion of the policy that will be in place for dealing with potential conflicts of interest that may arise from our ongoing relationship with Cablevision. | ||
Control by Dolan Family | Following the Distribution, we will be controlled by Charles F. Dolan, members of his family and certain related family entities. We have been informed that Charles F. Dolan, these family members and the related entities will enter into a stockholders agreement relating, among other things, to the voting of their shares of our Class B Common Stock. | |
See “Risk Factors — Risks Related to the Distribution and the Financing Transactions — We are controlled by the Dolan family, which may create certain conflicts of interest and which means certain stockholder decisions can be taken without the consent of the majority of the holders of our Class A Common Stock.” Immediately following the Distribution, of the members of our Board of Directors will be members of the Dolan family. | ||
Post-Distribution Dividend Policy | We do not anticipate paying any cash dividends on our common stock in the foreseeable future. | |
Risk Factors | Stockholders should carefully consider the matters discussed under “Risk Factors.” |
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Three Months | Year Ended | |||||||||||||||||||||||||||
Ended March 31, | December 31, | |||||||||||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Operating Data(1): | ||||||||||||||||||||||||||||
Revenues, net | $ | 272,903 | $ | 248,372 | $ | 1,078,300 | $ | 973,644 | $ | 893,557 | $ | 754,447 | $ | 646,476 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Technical and operating (excluding depreciation, amortization and impairments shown below) | 90,411 | 82,425 | 366,093 | 310,365 | 314,960 | 276,144 | 246,166 | |||||||||||||||||||||
Selling, general and administrative | 86,921 | 78,444 | 328,134 | 313,904 | 302,474 | 256,995 | 242,674 | |||||||||||||||||||||
Restructuring (credit) expense | (34 | ) | (212 | ) | (2,218 | ) | 5,162 | 46,877 | 2,245 | — | ||||||||||||||||||
Depreciation and amortization (including impairments) | 24,926 | 26,690 | 106,455 | 106,504 | 108,349 | 81,101 | 83,984 | |||||||||||||||||||||
202,224 | 187,347 | 798,464 | 735,935 | 772,660 | 616,485 | 572,824 | ||||||||||||||||||||||
Operating income | 70,679 | 61,025 | 279,836 | 237,709 | 120,897 | 137,962 | 73,652 | |||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||||
Interest expense, net | (17,893 | ) | (19,116 | ) | (73,412 | ) | (75,705 | ) | (97,062 | ) | (113,841 | ) | (133,202 | ) | ||||||||||||||
(Loss) gain on investments, net | — | — | — | — | (103,238 | ) | (1,812 | ) | 27,417 | |||||||||||||||||||
Gain (loss) on equity derivative contracts | — | — | — | — | 66,447 | 24,183 | (15,708 | ) | ||||||||||||||||||||
Loss on interest rate swap contracts, net | — | — | — | (3,237 | ) | (2,843 | ) | — | — | |||||||||||||||||||
Loss on extinguishment of debt and write-off of deferred financing costs | — | — | — | — | (2,424 | ) | (22,032 | ) | (6,084 | ) | ||||||||||||||||||
Miscellaneous, net | 72 | 26 | (162 | ) | 187 | 379 | 3,140 | 1,998 | ||||||||||||||||||||
(17,821 | ) | (19,090 | ) | (73,574 | ) | (78,755 | ) | (138,741 | ) | (110,362 | ) | (125,579 | ) | |||||||||||||||
Income (loss) from continuing operations before income taxes | 52,858 | 41,935 | 206,262 | 158,954 | (17,844 | ) | 27,600 | (51,927 | ) | |||||||||||||||||||
Income tax (expense) benefit | (23,136 | ) | (17,906 | ) | (88,073 | ) | (70,407 | ) | (2,732 | ) | (12,227 | ) | 21,043 | |||||||||||||||
Income (loss) from continuing operations | 29,722 | 24,029 | 118,189 | 88,547 | (20,576 | ) | 15,373 | (30,884 | ) | |||||||||||||||||||
Income (loss) from discontinued operations, net of income taxes | 96 | (10,596 | ) | (38,090 | ) | (34,791 | ) | (26,866 | ) | (25,867 | ) | (62,808 | ) | |||||||||||||||
29,818 | 13,433 | 80,099 | 53,756 | (47,442 | ) | (10,494 | ) | (93,692 | ) | |||||||||||||||||||
Cumulative effect of a change in accounting principle, net of income taxes | — | — | — | — | — | — | (155 | ) | ||||||||||||||||||||
Net income (loss) | $ | 29,818 | $ | 13,433 | $ | 80,099 | $ | 53,756 | $ | (47,442 | ) | $ | (10,494 | ) | $ | (93,847 | ) | |||||||||||
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March 31, | December 31, | |||||||||||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Balance Sheet Data(1): | ||||||||||||||||||||||||||||
Program rights, net | $ | 895,690 | $ | 734,182 | $ | 783,830 | $ | 683,306 | $ | 649,020 | $ | 553,555 | $ | 495,449 | ||||||||||||||
Investment securities pledged as collateral | — | — | — | — | — | 472,347 | 474,131 | |||||||||||||||||||||
Total assets | 1,924,312 | 1,950,263 | 1,853,896 | 1,934,362 | 1,987,917 | 2,423,442 | 2,474,883 | |||||||||||||||||||||
Program rights obligations | 557,511 | 471,792 | 454,825 | 435,638 | 465,588 | 416,960 | 432,429 | |||||||||||||||||||||
Note payable/advances to affiliate | — | — | — | 190,000 | 190,000 | 130,000 | — | |||||||||||||||||||||
Credit facility debt(2) | 412,500 | 563,750 | 475,000 | 580,000 | 700,000 | 500,000 | 510,000 | |||||||||||||||||||||
Collateralized indebtedness | — | — | — | — | — | 402,965 | 388,183 | |||||||||||||||||||||
Senior notes(2) | 299,619 | 299,350 | 299,552 | 299,283 | 299,014 | 298,745 | 298,476 | |||||||||||||||||||||
Senior subordinated notes(2) | 324,134 | 323,881 | 324,071 | 323,817 | 323,564 | 323,311 | 497,011 | |||||||||||||||||||||
Capital lease obligations | 19,198 | 23,572 | 20,252 | 24,611 | 21,106 | 24,432 | 18,905 | |||||||||||||||||||||
Total debt | 1,055,451 | 1,210,553 | 1,118,875 | 1,227,711 | 1,343,684 | 1,549,453 | 1,712,575 | |||||||||||||||||||||
Stockholder’s equity (deficiency) | 81,374 | (27,458 | ) | 24,831 | (236,992 | ) | (278,502 | ) | (570,665 | ) | (996,541 | ) |
(1) | The Company acquired Sundance Channel in June 2008. The results of Sundance Channel’s operations have been included in the consolidated financial statements from the date of acquisition. See Note 3 in the accompanying annual consolidated financial statements. | |
(2) | As part of the Distribution, we will incur approximately $ of New AMC Networks Debt, consisting of $ aggregate principal amount of senior secured term loans and $ aggregate principal amount of senior unsecured notes. A portion of the proceeds of the New AMC Networks Debt will be used to repay all outstanding Company debt (excluding capital leases) and approximately $1,250,000 of the New AMC Networks Debt will be issued to Cablevision or CSC Holdings, which will use such New AMC Networks Debt to satisfy and discharge outstanding Cablevision or CSC Holdings debt. See “Description of Financing Transactions and Certain Indebtedness — Financing Transactions in Connection with the Distribution.” |
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Q: | What is the Distribution? | |
A: | The Distribution is the method by which Cablevision will separate the business of our Company from Cablevision’s other businesses, creating two separate, publicly-traded companies. In the Distribution, Cablevision will distribute to its stockholders all of the shares of our Class A Common Stock and Class B Common Stock that it owns. Following the Distribution, we will be a separate company from Cablevision, and Cablevision will not retain any ownership interest in us. The number of shares of Cablevision common stock you own will not change as a result of the Distribution. | |
Q: | What is being distributed in the Distribution? | |
A: | Approximately million shares of our Class A Common Stock and million shares of our Class B Common Stock will be distributed in the Distribution, based upon the number of shares of Cablevision NY Group Class A Common Stock and Cablevision NY Group Class B Common Stock outstanding on the record date. The shares of our Class A Common Stock and Class B Common Stock to be distributed by Cablevision will constitute all of the issued and outstanding shares of our Class A Common Stock and Class B Common Stock immediately after the Distribution. For more information on the shares being distributed in the Distribution, see “Description of Capital Stock — Class A Common Stock and Class B Common Stock.” | |
Q: | What will I receive in the Distribution? | |
A: | Holders of Cablevision NY Group Class A Common Stock will receive a distribution of one share of our Class A Common Stock for every shares of Cablevision NY Group Class A Common Stock held by them on the record date, and holders of Cablevision NY Group Class B Common Stock will receive a distribution of one share of our Class B Common Stock for every shares of Cablevision NY Group Class B Common Stock held by them on the record date. As a result of the Distribution, your proportionate interest in Cablevision will not change and you will own the same percentage of equity securities and voting power in AMC Networks as you did in Cablevision on the record date. For a more detailed description, see “The Distribution.” | |
Q: | What is the record date for the Distribution? | |
A: | Record ownership will be determined as the close of business New York City time, on , 2011, which we refer to as the record date. The person in whose name shares of Cablevision common stock are registered at the close of business on the record date is the person to whom shares of the Company’s common stock will be issued in the Distribution. As described below, the Cablevision NY Group Class A Common Stock will not trade on an ex-dividend basis with respect to our common stock and, as a result, if a record holder of Cablevision NY Group Class A Common Stock sells those shares after the record date and on or prior to the Distribution date, the seller will be obligated to deliver to the purchaser the shares of our common stock that are issued in respect of the transferred Cablevision NY Group Class A Common Stock. | |
Q: | When will the Distribution occur? | |
A: | We expect that shares of our Class A Common Stock and Class B Common Stock will be distributed by the Distribution agent, on behalf of Cablevision, at 11:59 p.m. on , 2011, which we refer to as the Distribution date. | |
Q: | What will the relationship between Cablevision and us be following the Distribution? | |
A: | Following the Distribution, we will be a public company and Cablevision will have no continuing stock ownership interest in us. In connection with the Distribution, we and Cablevision will enter into a Distribution Agreement and have entered or will enter into several other agreements for the purpose of |
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accomplishing the distribution of our common stock to Cablevision’s common stockholders. These agreements also will govern our relationship with Cablevision subsequent to the Distribution and provide for the allocation of employee benefit, tax and some other liabilities and obligations attributable to periods prior to the Distribution. These agreements will also include arrangements with respect to transition services and a number of ongoing commercial relationships. The Distribution Agreement will provide that we and Cablevision agree to provide each other with appropriate indemnities with respect to liabilities arising out of the businesses being transferred to us by Cablevision. We are also party to other arrangements with Cablevision and its subsidiaries, such as affiliation agreements covering our programming networks. See “Certain Relationships and Related Party Transactions.” Following the Distribution, both we and Cablevision will both be controlled by Charles F. Dolan, members of his family and certain related family entities. | ||
Following the Distribution, of the members of our Board of Directors will also be directors of Cablevision, and several of our directors will continue to serve as officers or employees of Cablevision concurrently with their service on our Board of Directors. | ||
See “Certain Relationships and Related Party Transactions — Relationship Between Cablevision and Us After the Distribution” for a discussion of the policy that will be in place for dealing with potential conflicts of interest that may arise from our ongoing relationship with Cablevision. | ||
Q: | What do I have to do to participate in the Distribution? | |
A: | No action is required on your part. Shareholders of Cablevision on the record date for the Distribution are not required to pay any cash or deliver any other consideration, including any shares of Cablevision common stock, for the shares of our common stock distributable to them in the Distribution. | |
Q: | If I sell, on or before the Distribution date, shares of Cablevision NY Group Class A Common Stock that I held on the record date, am I still entitled to receive shares of AMC Networks Inc. Class A Common Stock distributable with respect to the shares of Cablevision NY Group Class A Common Stock I sold? | |
A: | No. No ex-dividend market will be established for our Class A Common Stock until the first trading day following the Distribution date. Therefore, if you own shares of Cablevision NY Group Class A Common Stock on the record date and thereafter sell those shares on or prior to the Distribution date, you will also be selling the shares of our Class A Common Stock that would have been distributed to you in the Distribution with respect to the shares of Cablevision NY Group Class A Common Stock you sell. Conversely, a person who purchases shares of Cablevision NY Group Class A Common Stock after the record date and on or prior to the Distribution date will be entitled to receive, from the seller of those shares, the shares of our Class A Common Stock issued in the Distribution with respect to the transferred Cablevision NY Group Class A Common Stock. | |
Q: | How will fractional shares be treated in the Distribution? | |
A: | If you would be entitled to receive a fractional share of our Class A Common Stock in the Distribution, you will instead receive a cash payment. See “The Distribution — Manner of Effecting the Distribution” for an explanation of how the cash payments will be determined. | |
Q: | How will Cablevision distribute shares of AMC Networks Inc. common stock to me? | |
A: | Holders of shares of Cablevision’s NY Group Class A Common Stock or NY Group Class B Common Stock on the record date will receive shares of the same class of our common stock, in book-entry form. See “The Distribution — Manner of Effecting the Distribution” for a more detailed explanation. | |
Q: | What is the reason for the Distribution? | |
A: | The potential benefits considered by Cablevision’s board of directors in making the determination to consummate the Distribution included the following: |
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• | to enhance the credit profile of Cablevision by accessing its RMH subsidiary’s additional debt capacity to effectuate a reduction of Cablevision’s indebtedness, thereby providing Cablevision with greater financial and strategic flexibility to pursue acquisitions following the Distribution; and | |
• | to increase the aggregate stock price of Cablevision and the Company relative to the pre-Distribution value of outstanding Cablevision stock, so as to allow each company to (i) issue equity in connection with acquisitions on more favorable terms and (ii) increase the long term attractiveness of equity compensation programs, in both cases with less relative dilution to existing equityholders. |
Cablevision’s board of directors believes that the aggregate stock price of Cablevision and the Company could potentially increase relative to the pre-Distribution value of outstanding Cablevision stock because the Distribution will permit investors to invest separately in AMC Networks and in the remaining businesses of Cablevision. This may make AMC Networks and Cablevision common stock more attractive to investors, as compared to Cablevision common stock before the Distribution, because the common stock of each of AMC Networks and Cablevision will become available to classes of investors who seek an investment that offers the growth, risk and sector exposure of either AMC Networks or Cablevision, but not that of the combined company. There can be no assurance, however, as to the future market price of AMC Networks or Cablevision common stock. See “Risk Factors — The combined post-Distribution value of Cablevision and AMC Networks shares may not equal or exceed the pre-Distribution value of Cablevision shares.” | ||
Cablevision’s board of directors also considered several factors that might have a negative effect on Cablevision as a result of the Distribution. Cablevision’s board of directors considered that the Distribution would result in substantial reductions to the restricted payments baskets under various debt instruments of Cablevision and its subsidiary, CSC Holdings. Moreover, the Distribution would separate from Cablevision the businesses of the Company, which represent significant value, in a transaction that produces no direct economic consideration for Cablevision, other than the debt reduction noted above. Because the Company will no longer be a wholly-owned subsidiary of Cablevision, the Distribution also will affect the terms of, or limit the incentive for, or the ability of Cablevision to pursue, cross-company business transactions and initiatives with AMC Networks since, as separate public companies, such transactions and initiatives will need to be assessed by each company from its own business perspective. Finally, following the Distribution, Cablevision and its remaining businesses will need to absorb corporate and administrative costs previously allocated to its Rainbow reportable segment. | ||
Cablevision’s board of directors considered certain aspects of the Distribution that may be adverse to the Company. The Company’s common stock may come under initial selling pressure as certain Cablevision stockholders sell their shares in the Company because they are not interested in holding an investment in the Company’s businesses. Moreover, certain factors such as a lack of historical financial and performance data as an independent company may limit investors’ ability to appropriately value the Company’s common stock. Furthermore, because the Company will no longer be a wholly-owned subsidiary of Cablevision, the Distribution also will limit the ability of the Company to pursue cross-company business transactions and initiatives with other businesses of Cablevision. | ||
Q: | What are the U.S. federal income tax consequences to me of the Distribution? | |
A: | Cablevision has received a private letter ruling from the IRS and expects to obtain an opinion from Sullivan & Cromwell LLP to the effect that, among other things, the Distribution and certain related transactions will qualify as tax-free under the Code. See “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution,” and “Risk Factors — Risks Related to the Distribution and the Financing Transactions — The Distribution could result in significant tax liability” and “Risk Factors — Risks Related to the Distribution and the Financing Transactions — The tax rules applicable to the 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 Distribution.” | |
Q: | Does AMC Networks intend to pay cash dividends? | |
A: | No. We currently intend to retain future earnings, if any, to finance the expansion of our businesses, repay indebtedness and fund ongoing operations. As a result, we do not expect to pay any cash dividends for the |
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foreseeable future. All decisions regarding the payment of dividends will be made by our Board of Directors from time to time in accordance with applicable law. | ||
Q: | How will AMC Networks Inc. common stock trade? | |
A: | There is not currently a public market for our common stock. We will apply to list our Class A Common Stock on NASDAQ under the symbol “AMCX.” It is anticipated that trading will commence on a when-issued basis prior to the Distribution. On the first trading day following the Distribution date, when-issued trading in respect of our Class A Common Stock will end and regular-way trading will begin. Our Class B Common Stock will not be listed on a securities exchange. | |
Q: | Will the Distribution affect the trading price of my Cablevision NY Group Class A Common Stock? | |
A: | Yes. After the distribution of our Class A Common Stock, the trading price of Cablevision NY Group Class A Common Stock may be lower than the trading price of the Cablevision NY Group Class A Common Stock immediately prior to the Distribution. Moreover, until the market has evaluated the operations of Cablevision without the operations of AMC Networks, the trading price of Cablevision NY Group Class A Common Stock may fluctuate significantly. Cablevision believes the separation of AMC Networks from Cablevision offers its stockholders the greatest long-term value. However, the combined trading prices of Cablevision NY Group Class A Common Stock and AMC Networks Inc. Class A Common Stock after the Distribution may be lower than the trading price of Cablevision NY Group Class A Common Stock prior to the Distribution. See “Risk Factors” beginning on page 22. | |
Q: | What financing transactions will AMC Networks undertake in connection with the Distribution? | |
A: | As part of the Distribution, we will incur approximately $ of New AMC Networks Debt, consisting of $ aggregate principal amount of senior secured term loans and $ aggregate principal amount of senior unsecured notes. A portion of the proceeds of the New AMC Networks Debt will be used to repay all outstanding Company debt (excluding capital leases) and approximately $1,250,000,000 of the New AMC Networks Debt will be issued to Cablevision or CSC Holdings, which will use such New AMC Networks Debt to satisfy and discharge outstanding Cablevision or CSC Holdings debt. | |
Cablevision or CSC Holdings will accomplish the satisfaction and discharge of its outstanding debt by entering into a transaction with , whereby Cablevision or CSC Holdings will exchange a portion of the New AMC Networks Debt for outstanding Cablevision or CSC Holdings debt, a substantial portion of which will have been acquired from Cablevision’s lenders by for this purpose. Following the exchange, we expect that , in an unrelated transaction, will syndicate our senior secured term loans to several lenders and distribute our senior unsecured notes in an exempt offering. See “Description of Financing Transactions and Certain Indebtedness.” | ||
Q: | Do I have appraisal rights? | |
A: | No. Holders of Cablevision common stock are not entitled to appraisal rights in connection with the Distribution. | |
Q: | Who is the transfer agent for AMC Networks Inc. common stock? | |
A: | Wells Fargo Shareowner Services, 161 North Concord Exchange, South St. Paul, Minnesota55075-1139. | |
Q: | Where can I get more information? | |
A: | If you have questions relating to the mechanics of the Distribution of shares of AMC Networks Inc. common stock, you should contact the distribution agent: | |
Wells Fargo Shareowner Services | ||
161 North Concord Exchange | ||
South St. Paul, Minnesota55075-1139 | ||
Telephone:1-800-468-9716 |
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Before the Distribution, if you have questions relating to the Distribution, you should contact: | ||
Cablevision Systems Corporation | ||
Investor Relations Dept. | ||
1111 Stewart Ave. | ||
Bethpage, NY11714-3581 | ||
Telephone: 1-516-803-2300 | ||
After the Distribution, if you have questions relating to AMC Networks Inc., you should contact: | ||
AMC Networks Inc. | ||
Investor Relations Dept. | ||
11 Penn Plaza | ||
New York, NY 10001 | ||
Telephone: 1-212-324-8500 |
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• | to enhance the credit profile of Cablevision by accessing its RMH subsidiary’s additional debt capacity to effectuate a reduction of Cablevision’s indebtedness, thereby providing Cablevision with greater financial and strategic flexibility to pursue acquisitions following the Distribution; and | |
• | to increase the aggregate stock price of Cablevision and the Company relative to the pre-Distribution value of outstanding Cablevision stock, so as to allow each company to (i) issue equity in connection with acquisitions on more favorable terms and (ii) increase the long term attractiveness of equity compensation programs, in both cases with less relative dilution to existing equityholders. |
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• | an individual who is a citizen or a resident of the United States; | |
• | a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States or any state or political subdivision thereof; | |
• | an estate, the income of which is subject to United States federal income taxation regardless of its source; or | |
• | a trust, if (i) a court within the United States is able to exercise primary jurisdiction over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or (ii) it has a valid election in place under applicable Treasury regulations to be treated as a U.S. person. |
• | Except for any cash received in lieu of a fractional share of our common stock, a Cablevision stockholder will not recognize any income, gain or loss as a result of the receipt of our common stock in the Distribution. | |
• | A Cablevision stockholder’s holding period for our common stock received in the Distribution will include the period for which that stockholder’s Cablevision common stock was held. |
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• | A Cablevision stockholder’s tax basis for our common stock received in the Distribution will be determined by allocating to that common stock, on the basis of the relative fair market values of Cablevision common stock and our common stock at the time of the Distribution, a portion of the stockholder’s basis in his or her Cablevision common stock. A Cablevision stockholder’s basis in his or her Cablevision common stock will be decreased by the portion allocated to our common stock. Within a reasonable period of time after the Distribution, Cablevision will provide its stockholders who receive our common stock pursuant to the Distribution a worksheet for calculating their tax bases in our common stock and their Cablevision common stock. | |
• | The receipt of cash in lieu of a fractional share of our common stock generally will be treated as a sale of the fractional share of our common stock, and a Cablevision stockholder will recognize gain or loss equal to the difference between the amount of cash received and the stockholder’s basis in the fractional share of our common stock, as determined above. The gain or loss will be long-term capital gain or loss if the holding period for the fractional share of our common stock, as determined above, is greater than one year. | |
• | Neither we nor Cablevision will recognize a taxable gain or loss as a result of the Distribution. |
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• | increase our vulnerability to general adverse economic and industry conditions; | |
• | require us to dedicate a substantial portion of our cash flow from operations to make interest and principal payments on our debt, thereby limiting the availability of our cash flow to fund future programming investments, capital expenditures, working capital, business activities and other general corporate requirements; | |
• | limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; | |
• | place us at a competitive disadvantage compared with our competitors; and | |
• | limit our ability to borrow additional funds, even when necessary to maintain adequate liquidity. |
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• | borrow money or guarantee debt; | |
• | create liens; | |
• | pay dividends on or redeem or repurchase stock; | |
• | make specified types of investments; | |
• | enter into transactions with affiliates; and | |
• | sell assets or merge with other companies. |
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• | entering into any transaction pursuant to which 50% or more of our equity securities or assets would be acquired, whether by merger or otherwise, unless certain tests are met; | |
• | issuing equity securities, if any such issuances would, in the aggregate, constitute 50% or more of the voting power or value of our capital stock; | |
• | certain repurchases of our common shares; | |
• | ceasing to actively conduct our business; | |
• | amendments to our organizational documents (i) affecting the relative voting rights of our stock or (ii) converting one class of our stock to another; | |
• | liquidating or partially liquidating; and | |
• | taking any other action that prevents the Distribution and related transactions from being tax-free. |
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• | Class B Common Stock, which is generally entitled to ten votes per share and is entitled collectively to elect 75% of our Board of Directors, and | |
• | Class A Common Stock, which is entitled to one vote per share and is entitled collectively to elect the remaining 25% of our Board of Directors. |
• | the authorization or issuance of any additional shares of Class B Common Stock, and | |
• | any amendment, alteration or repeal of any of the provisions of our certificate of incorporation that adversely affects the powers, preferences or rights of the Class B Common Stock. |
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2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Nielsen Subscribers (at year-end) | 96.4 | 95.2 | 94.5 | |||||||||
Growth from Prior Year-end | 1.3 | % | 0.7 | % | 0.6 | % |
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Nielsen Subscribers (at year-end) | 76.8 | 74.9 | 72.0 | |||||||||
Growth from Prior Year-end | 2.5 | % | 4.0 | % | 5.9 | % |
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2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Nielsen Subscribers (at year-end) | 62.7 | 60.4 | 58.7 | |||||||||
Growth from Prior Year-end | 3.8 | % | 2.9 | % | 7.6 | % |
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Viewing Subscribers* (at year-end) | 39.9 | 37.9 | 30.8 | |||||||||
Growth from Prior Year-end | 5.3 | % | 23.1 | % | 9.8 | % |
* | Subscriber counts are based on internal management reports and represent viewing subscribers. For a discussion of the differences between Nielsen subscribers and viewing subscribers, see “— Subscriber and Viewer Measurement.” |
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• | additional personnel including human resources, finance, accounting, compliance, tax, treasury, internal audit and legal; | |
• | additional professional fees associated with audits, tax, legal and other services; | |
• | insurance premiums; | |
• | board of directors’ fees; | |
• | stock market listing fees, investor relations costs and fees for preparing and distributing periodic filings with the Securities and Exchange Commission (“SEC”); and | |
• | other administrative costs and fees, including anticipated incremental executive compensation costs related to existing and new executive management. |
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 2011
(Dollars in thousands)
Pro Forma | ||||||||||||
Historical | Adjustments | Pro Forma | ||||||||||
ASSETS | ||||||||||||
Current Assets: | ||||||||||||
Cash and cash equivalents | $ | 84,073 | (1) | |||||||||
Accounts receivable, trade (less allowance for doubtful accounts) | 223,908 | |||||||||||
Amounts due from affiliates, net | 23,755 | |||||||||||
Program rights, net | 199,660 | |||||||||||
Prepaid expenses and other current assets | 44,702 | |||||||||||
Deferred tax asset | 6,301 | (7) | ||||||||||
Total current assets | 582,399 | |||||||||||
Property and equipment, net of accumulated depreciation | 65,453 | |||||||||||
Program rights, net | 696,030 | |||||||||||
Amounts due from affiliates | 3,433 | |||||||||||
Deferred tax asset, net | 43,123 | (7) | ||||||||||
Deferred carriage fees, net | 65,106 | |||||||||||
Amortizable intangible assets, net of accumulated amortization | 345,104 | |||||||||||
Indefinite-lived intangible assets | 19,900 | |||||||||||
Goodwill | 83,173 | |||||||||||
Other assets | 14,204 | |||||||||||
Deferred financing costs, net of accumulated amortization | 6,387 | (2) | ||||||||||
$ | 1,924,312 | |||||||||||
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIENCY) | ||||||||||||
Current Liabilities: | ||||||||||||
Accounts payable | $ | 54,009 | ||||||||||
Accrued liabilities | 56,745 | (3) | ||||||||||
(4) | ||||||||||||
Amounts due to affiliates, net | 15,192 | |||||||||||
Program rights obligations | 127,110 | |||||||||||
Deferred revenue | 15,191 | |||||||||||
Credit facility debt | 50,000 | (3) | ||||||||||
Capital lease obligations | 3,838 | |||||||||||
Total current liabilities | 322,085 | |||||||||||
Program rights obligations | 430,401 | |||||||||||
Senior notes | 299,619 | (3) | ||||||||||
Senior subordinated notes | 324,134 | (3) | ||||||||||
Credit facility debt | 362,500 | (3) | ||||||||||
Capital lease obligations | 15,360 | |||||||||||
Deferred tax liability | — | (7) | ||||||||||
Other liabilities | 88,839 | (4) | ||||||||||
(5) | ||||||||||||
Total liabilities | 1,842,938 | |||||||||||
Commitments and contingencies | ||||||||||||
Stockholder’s equity (deficiency) | 81,374 | (6) | ||||||||||
$ | 1,924,312 | |||||||||||
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For the Three Months Ended March 31, 2011
(Dollars in thousands)
Pro Forma | ||||||||||||
Historical | Adjustments | Pro Forma | ||||||||||
Revenues, net | $ | 272,903 | $ | $ | ||||||||
Operating expenses: | ||||||||||||
Technical and operating (excluding depreciation and amortization) | 90,411 | |||||||||||
Selling, general and administrative | 86,921 | |||||||||||
Restructuring credit | (34 | ) | ||||||||||
Depreciation and amortization | 24,926 | |||||||||||
202,224 | ||||||||||||
Operating income | 70,679 | |||||||||||
Other income (expense): | ||||||||||||
Interest expense | (18,350 | ) | (8) | |||||||||
Interest income | 457 | |||||||||||
Miscellaneous, net | 72 | |||||||||||
(17,821 | ) | |||||||||||
Income from continuing operations before income taxes | 52,858 | |||||||||||
Income tax expense | (23,136 | ) | (9) | |||||||||
Income from continuing operations | 29,722 | |||||||||||
Income from discontinued operations, net of income taxes | 96 | |||||||||||
Net income | $ | 29,818 | ||||||||||
Pro forma basic and diluted net income per share | ||||||||||||
Pro forma basic and diluted common stock (in thousands) | (10) | |||||||||||
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UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2010
(Dollars in thousands)
Pro Forma | ||||||||||||
Historical | Adjustments | Pro Forma | ||||||||||
Revenues, net | $ | 1,078,300 | $ | $ | ||||||||
Operating expenses: | ||||||||||||
Technical and operating (excluding depreciation and amortization shown below) | 366,093 | |||||||||||
Selling, general and administrative | 328,134 | |||||||||||
Restructuring credits | (2,218 | ) | ||||||||||
Depreciation and amortization | 106,455 | |||||||||||
798,464 | ||||||||||||
Operating income | 279,836 | |||||||||||
Other income (expense): | ||||||||||||
Interest expense | (75,800 | ) | (8) | |||||||||
Interest income | 2,388 | |||||||||||
Miscellaneous, net | (162 | ) | ||||||||||
(73,574 | ) | |||||||||||
Income from continuing operations before income taxes | 206,262 | |||||||||||
Income tax expense | (88,073 | ) | (9) | |||||||||
Income from continuing operations | 118,189 | |||||||||||
Loss from discontinued operations, net of income taxes | (38,090 | ) | ||||||||||
Net income | $ | 80,099 | ||||||||||
Pro forma basic and diluted net income per share | ||||||||||||
Pro forma basic and diluted common stock (in thousands) | ||||||||||||
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Three Months | Year Ended | |||||||||||||||||||||||||||
Ended March 31, | December 31, | |||||||||||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Operating Data(1): | ||||||||||||||||||||||||||||
Revenues, net | $ | 272,903 | $ | 248,372 | $ | 1,078,300 | $ | 973,644 | $ | 893,557 | $ | 754,447 | $ | 646,476 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Technical and operating (excluding depreciation, amortization and impairments shown below) | 90,411 | 82,425 | 366,093 | 310,365 | 314,960 | 276,144 | 246,166 | |||||||||||||||||||||
Selling, general and administrative | 86,921 | 78,444 | 328,134 | 313,904 | 302,474 | 256,995 | 242,674 | |||||||||||||||||||||
Restructuring (credit) expense | (34 | ) | (212 | ) | (2,218 | ) | 5,162 | 46,877 | 2,245 | — | ||||||||||||||||||
Depreciation and amortization (including impairments) | 24,926 | 26,690 | 106,455 | 106,504 | 108,349 | 81,101 | 83,984 | |||||||||||||||||||||
202,224 | 187,347 | 798,464 | 735,935 | 772,660 | 616,485 | 572,824 | ||||||||||||||||||||||
Operating income | 70,679 | 61,025 | 279,836 | 237,709 | 120,897 | 137,962 | 73,652 | |||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||||
Interest expense, net | (17,893 | ) | (19,116 | ) | (73,412 | ) | (75,705 | ) | (97,062 | ) | (113,841 | ) | (133,202 | ) | ||||||||||||||
(Loss) gain on investments, net | — | — | — | — | (103,238 | ) | (1,812 | ) | 27,417 | |||||||||||||||||||
Gain (loss) on equity derivative contracts | — | — | — | — | 66,447 | 24,183 | (15,708 | ) | ||||||||||||||||||||
Loss on interest rate swap contracts, net | — | — | — | (3,237 | ) | (2,843 | ) | — | — | |||||||||||||||||||
Loss on extinguishment of debt and write-off of deferred financing costs | — | — | — | — | (2,424 | ) | (22,032 | ) | (6,084 | ) | ||||||||||||||||||
Miscellaneous, net | 72 | 26 | (162 | ) | 187 | 379 | 3,140 | 1,998 | ||||||||||||||||||||
(17,821 | ) | (19,090 | ) | (73,574 | ) | (78,755 | ) | (138,741 | ) | (110,362 | ) | (125,579 | ) | |||||||||||||||
Income (loss) from continuing operations before income taxes | 52,858 | 41,935 | 206,262 | 158,954 | (17,844 | ) | 27,600 | (51,927 | ) | |||||||||||||||||||
Income tax (expense) benefit | (23,136 | ) | (17,906 | ) | (88,073 | ) | (70,407 | ) | (2,732 | ) | (12,227 | ) | 21,043 | |||||||||||||||
Income (loss) from continuing operations | 29,722 | 24,029 | 118,189 | 88,547 | (20,576 | ) | 15,373 | (30,884 | ) | |||||||||||||||||||
Income (loss) from discontinued operations, net of income taxes | 96 | (10,596 | ) | (38,090 | ) | (34,791 | ) | (26,866 | ) | (25,867 | ) | (62,808 | ) | |||||||||||||||
29,818 | 13,433 | 80,099 | 53,756 | (47,442 | ) | (10,494 | ) | (93,692 | ) | |||||||||||||||||||
Cumulative effect of a change in accounting principle, net of income taxes | — | — | — | — | — | — | (155 | ) | ||||||||||||||||||||
Net income (loss) | $ | 29,818 | $ | 13,433 | $ | 80,099 | $ | 53,756 | $ | (47,442 | ) | $ | (10,494 | ) | $ | (93,847 | ) | |||||||||||
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March 31, | December 31, | |||||||||||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Balance Sheet Data(1): | ||||||||||||||||||||||||||||
Program rights, net | $ | 895,690 | $ | 734,182 | $ | 783,830 | $ | 683,306 | $ | 649,020 | $ | 553,555 | $ | 495,449 | ||||||||||||||
Investment securities pledged as collateral | — | — | — | — | — | 472,347 | 474,131 | |||||||||||||||||||||
Total assets | 1,924,312 | 1,950,263 | 1,853,896 | 1,934,362 | 1,987,917 | 2,423,442 | 2,474,883 | |||||||||||||||||||||
Program rights obligations | 557,511 | 471,792 | 454,825 | 435,638 | 465,588 | 416,960 | 432,429 | |||||||||||||||||||||
Note payable/advances to affiliate | — | — | — | 190,000 | 190,000 | 130,000 | — | |||||||||||||||||||||
Credit facility debt(2) | 412,500 | 563,750 | 475,000 | 580,000 | 700,000 | 500,000 | 510,000 | |||||||||||||||||||||
Collateralized indebtedness | — | — | — | — | — | 402,965 | 388,183 | |||||||||||||||||||||
Senior notes(2) | 299,619 | 299,350 | 299,552 | 299,283 | 299,014 | 298,745 | 298,476 | |||||||||||||||||||||
Senior subordinated notes(2) | 324,134 | 323,881 | 324,071 | 323,817 | 323,564 | 323,311 | 497,011 | |||||||||||||||||||||
Capital lease obligations | 19,198 | 23,572 | 20,252 | 24,611 | 21,106 | 24,432 | 18,905 | |||||||||||||||||||||
Total debt | 1,055,451 | 1,210,553 | 1,118,875 | 1,227,711 | 1,343,684 | 1,549,453 | 1,712,575 | |||||||||||||||||||||
Stockholder’s equity (deficiency) | 81,374 | (27,458 | ) | 24,831 | (236,992 | ) | (278,502 | ) | (570,665 | ) | (996,541 | ) |
(1) | The Company acquired Sundance Channel in June 2008. The results of Sundance Channel’s operations have been included in the consolidated financial statements from the date of acquisition. See Note 3 in the accompanying annual consolidated financial statements. | |
(2) | As part of the Distribution, we will incur approximately $ of New AMC Networks Debt, consisting of $ aggregate principal amount of senior secured term loans and $ aggregate principal amount of senior unsecured notes. A portion of the proceeds of the New AMC Networks Debt will be used to repay all outstanding Company debt (excluding capital leases) and approximately $1,250,000 of the New AMC Networks Debt will be issued to Cablevision or CSC Holdings, which will use such New AMC Networks Debt to satisfy and discharge outstanding Cablevision or CSC Holdings debt. See “Description of Financing Transactions and Certain Indebtedness — Financing Transactions in Connection with the Distribution.” |
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
• | the level of our revenues; | |
• | demand for advertising inventory; | |
• | the cost of, and our ability to obtain or produce, desirable programming content for our networks and film distribution businesses; | |
• | changes in the laws or regulations under which we operate; | |
• | the outcome of litigation and other proceedings, including the matters described 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; | |
• | the level of our expenses; | |
• | the level of our capital expenditures; | |
• | future acquisitions and dispositions of assets; | |
• | the demand for our programming among multichannel video distributors and our ability to maintain and renew affiliation agreements with multichannel video distributors; | |
• | market demand for new programming 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 our programming businesses; | |
• | financial community and rating agency perceptions of our business, operations, financial condition and the industry in which we operate, and the additional factors described herein. |
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Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Revenues, net from continuing operations | ||||||||
National Networks | $ | 251,845 | $ | 232,036 | ||||
International and Other | 25,381 | 19,882 | ||||||
Inter-segment eliminations | (4,323 | ) | (3,546 | ) | ||||
$ | 272,903 | $ | 248,372 | |||||
Operating income (loss) from continuing operations | ||||||||
National Networks | $ | 81,895 | $ | 74,004 | ||||
International and Other | (11,512 | ) | (13,593 | ) | ||||
Inter-segment eliminations | 296 | 614 | ||||||
$ | 70,679 | $ | 61,025 | |||||
Adjusted operating cash flow (deficit) from continuing operations | ||||||||
National Networks | $ | 106,356 | $ | 100,272 | ||||
International and Other | (7,104 | ) | (9,539 | ) | ||||
Inter-segment eliminations | 296 | 614 | ||||||
$ | 99,548 | $ | 91,347 | |||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenues, net from continuing operations | ||||||||||||
National Networks | $ | 994,573 | $ | 896,493 | $ | 776,462 | ||||||
International and Other | 104,499 | 95,921 | 131,028 | |||||||||
Inter-segment eliminations | (20,772 | ) | (18,770 | ) | (13,933 | ) | ||||||
$ | 1,078,300 | $ | 973,644 | $ | 893,557 | |||||||
Operating income (loss) from continuing operations | ||||||||||||
National Networks | $ | 312,525 | $ | 278,816 | $ | 245,039 | ||||||
International and Other | (29,603 | ) | (37,934 | ) | (123,815 | ) | ||||||
Inter-segment eliminations | ( 3,086 | ) | (3,173 | ) | (327 | ) | ||||||
$ | 279,836 | $ | 237,709 | $ | 120,897 | |||||||
Adjusted operating cash flow (deficit) from continuing operations | ||||||||||||
National Networks | $ | 419,051 | $ | 380,824 | $ | 328,992 | ||||||
International and Other | (14,686 | ) | (13,553 | ) | (42,283 | ) | ||||||
Inter-segment eliminations | (3,086 | ) | (3,173 | ) | (327 | ) | ||||||
$ | 401,279 | $ | 364,098 | $ | 286,382 | |||||||
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Reporting Unit | ||||
AMC | $ | 34,251 | ||
WE tv | 5,214 | |||
IFC | 13,582 | |||
Sundance Channel | 28,930 | |||
AMC Network Communications | 1,196 | |||
$ | 83,173 | |||
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Net Carrying | ||||||||
Value at | ||||||||
March 31, | Estimated | |||||||
2011 | Useful Lives | |||||||
Affiliation agreements and affiliate relationships | $ | 327,589 | 4 to 25 years | |||||
Advertiser relationships | $ | 17,168 | 3 to 10 years | |||||
Other intangible assets | $ | 347 | 4 to 10 years |
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Three Months Ended March 31, | ||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||
% of Net | % of Net | Favorable | ||||||||||||||||||
Amount | Revenues | Amount | Revenues | (Unfavorable) | ||||||||||||||||
Revenues, net | $ | 272,903 | 100 | % | $ | 248,372 | 100 | % | $ | 24,531 | ||||||||||
Operating expenses: | ||||||||||||||||||||
Technical and operating (excluding depreciation and amortization shown below) | 90,411 | 33 | 82,425 | 33 | (7,986 | ) | ||||||||||||||
Selling, general and administrative | 86,921 | 32 | 78,444 | 32 | (8,477 | ) | ||||||||||||||
Restructuring credit | (34 | ) | — | (212 | ) | — | (178 | ) | ||||||||||||
Depreciation and amortization | 24,926 | 9 | 26,690 | 11 | 1,764 | |||||||||||||||
Operating income | 70,679 | 26 | 61,025 | 25 | 9,654 | |||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense, net | (17,893 | ) | (7 | ) | (19,116 | ) | (8 | ) | 1,223 | |||||||||||
Miscellaneous, net | 72 | — | 26 | — | 46 | |||||||||||||||
Income from continuing operations before income taxes | 52,858 | 19 | 41,935 | 17 | 10,923 | |||||||||||||||
Income tax expense | (23,136 | ) | (8 | ) | (17,906 | ) | (7 | ) | (5,230 | ) | ||||||||||
Income from continuing operations | 29,722 | 11 | 24,029 | 10 | 5,693 | |||||||||||||||
Income (loss) from discontinued operations, net of income taxes | 96 | — | (10,596 | ) | (4 | ) | 10,692 | |||||||||||||
Net income | $ | 29,818 | 11 | % | $ | 13,433 | 5 | % | $ | 16,385 | ||||||||||
Three Months Ended March 31, | ||||||||||||
2011 | 2010 | Favorable | ||||||||||
Amount | Amount | (Unfavorable) | ||||||||||
Operating income | $ | 70,679 | $ | 61,025 | $ | 9,654 | ||||||
Share-based compensation | 3,977 | 3,844 | 133 | |||||||||
Restructuring credit | (34 | ) | (212 | ) | 178 | |||||||
Depreciation and amortization | 24,926 | 26,690 | (1,764 | ) | ||||||||
AOCF | $ | 99,548 | $ | 91,347 | $ | 8,201 | ||||||
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Years Ended December 31, | ||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||
% of Net | % of Net | Favorable | ||||||||||||||||||
Amount | Revenues | Amount | Revenues | (Unfavorable) | ||||||||||||||||
Revenues, net | $ | 1,078,300 | 100 | % | $ | 973,644 | 100 | % | $ | 104,656 | ||||||||||
Operating expenses: | ||||||||||||||||||||
Technical and operating (excluding depreciation and amortization shown below) | 366,093 | 34 | 310,365 | 32 | (55,728 | ) | ||||||||||||||
Selling, general and administrative | 328,134 | 30 | 313,904 | 32 | (14,230 | ) | ||||||||||||||
Restructuring (credit) expense | (2,218 | ) | — | 5,162 | 1 | 7,380 | ||||||||||||||
Depreciation and amortization | 106,455 | 10 | 106,504 | 11 | 49 | |||||||||||||||
Operating income | 279,836 | 26 | 237,709 | 24 | 42,127 | |||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense, net | (73,412 | ) | (7 | ) | (75,705 | ) | (8 | ) | 2,293 | |||||||||||
Loss on interest rate swap contracts, net | — | — | (3,237 | ) | — | 3,237 | ||||||||||||||
Miscellaneous, net | (162 | ) | — | 187 | — | (349 | ) | |||||||||||||
Income from continuing operations before income taxes | 206,262 | 19 | 158,954 | 16 | 47,308 | |||||||||||||||
Income tax expense | (88,073 | ) | (8 | ) | (70,407 | ) | (7 | ) | (17,666 | ) | ||||||||||
Income from continuing operations | 118,189 | 11 | 88,547 | 9 | 29,642 | |||||||||||||||
Loss from discontinued operations, net of income taxes | (38,090 | ) | 4 | (34,791 | ) | (4 | ) | (3,299 | ) | |||||||||||
Net income | $ | 80,099 | 7 | % | $ | 53,756 | 6 | % | $ | 26,343 | ||||||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | Favorable | ||||||||||
Amount | Amount | (Unfavorable) | ||||||||||
Operating income | $ | 279,836 | $ | 237,709 | $ | 42,127 | ||||||
Share-based compensation | 17,206 | 14,723 | 2,483 | |||||||||
Restructuring (credit) expense | (2,218 | ) | 5,162 | (7,380 | ) | |||||||
Depreciation and amortization | 106,455 | 106,504 | (49 | ) | ||||||||
AOCF | $ | 401,279 | $ | 364,098 | $ | 37,181 | ||||||
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Years Ended December 31, | ||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||
% of Net | % of Net | Favorable | ||||||||||||||||||
Amount | Revenues | Amount | Revenues | (Unfavorable) | ||||||||||||||||
Revenues, net | $ | 973,644 | 100 | % | $ | 893,557 | 100 | % | $ | 80,087 | ||||||||||
Operating expenses: | ||||||||||||||||||||
Technical and operating (excluding depreciation, amortization and impairments shown below) | 310,365 | 32 | 314,960 | 35 | 4,595 | |||||||||||||||
Selling, general and administrative | 313,904 | 32 | 302,474 | 34 | (11,430 | ) | ||||||||||||||
Restructuring expense | 5,162 | 1 | 46,877 | 5 | 41,715 | |||||||||||||||
Depreciation and amortization (including impairments) | 106,504 | 11 | 108,349 | 12 | 1,845 | |||||||||||||||
Operating income | 237,709 | 24 | 120,897 | 14 | 116,812 | |||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense, net | (75,705 | ) | (8 | ) | (97,062 | ) | (11 | ) | 21,357 | |||||||||||
Loss on investments, net | — | — | (103,238 | ) | (12 | ) | 103,238 | |||||||||||||
Gain on equity derivative contracts | — | — | 66,447 | 7 | (66,447 | ) | ||||||||||||||
Loss on interest rate swap contracts, net | (3,237 | ) | — | (2,843 | ) | — | (394 | ) | ||||||||||||
Loss on extinguishment of debt | — | — | (2,424 | ) | — | 2,424 | ||||||||||||||
Miscellaneous, net | 187 | — | 379 | — | (192 | ) | ||||||||||||||
Income (loss) from continuing operations before income taxes | 158,954 | 16 | (17,844 | ) | (2 | ) | 176,798 | |||||||||||||
Income tax expense | (70,407 | ) | (7 | ) | (2,732 | ) | — | (67,675 | ) | |||||||||||
Income (loss) from continuing operations | 88,547 | 9 | (20,576 | ) | (2 | ) | 109,123 | |||||||||||||
Loss from discontinued operations, net of income taxes | (34,791 | ) | (4 | ) | (26,866 | ) | (3 | ) | (7,925 | ) | ||||||||||
Net income (loss) | $ | 53,756 | 6 | % | $ | (47,442 | ) | (5 | )% | $ | 101,198 | |||||||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | Favorable | ||||||||||
Amount | Amount | (Unfavorable) | ||||||||||
Operating income | $ | 237,709 | $ | 120,897 | $ | 116,812 | ||||||
Share-based compensation | 14,723 | 10,259 | 4,464 | |||||||||
Restructuring expense | 5,162 | 46,877 | (41,715 | ) | ||||||||
Depreciation and amortization (including impairments) | 106,504 | 108,349 | (1,845 | ) | ||||||||
AOCF | $ | 364,098 | $ | 286,382 | $ | 77,716 | ||||||
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• | National Networks, consisting of our four nationally distributed programming networks, AMC, WE tv, IFC and Sundance Channel, which are distributed throughout the United States by multichannel video distributors; and | |
• | International and Other,consisting of AMC/Sundance Channel Global, our international programming business; IFC Entertainment, our independent film distribution business, and AMC Network Communications, our network technical services business, which supplies an array of services to the network programming industry, primarily on behalf of the programming networks of the Company. AMC and Sundance Channel are available in Canada and Sundance Channel and WE tv are available in other countries throughout Europe and Asia. The International and Other reportable segment also includes VOOM HD. |
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Increase (decrease) in: | ||||
Revenues of the National Networks segment | $ | 19,809 | ||
Revenues of the International and Other segment | 5,499 | |||
Inter-segment eliminations | (777 | ) | ||
$ | 24,531 | |||
• | amortization of program rights, including those for feature films and non-film programming, participation and residual costs, and distribution and production related costs; and | |
• | origination, transmission, uplinking, encryption and other operating costs. |
Increase (decrease) in: | ||||
Expenses of the National Networks segment | $ | 3,996 | ||
Expenses of the International and Other segment | 4,376 | |||
Inter-segment eliminations | (386 | ) | ||
$ | 7,986 | |||
Increase (decrease) in: | ||||
Expenses of the National Networks segment | $ | 9,794 | ||
Expenses of the International and Other segment | (1,244 | ) | ||
Inter-segment eliminations | (73 | ) | ||
$ | 8,477 | |||
Increase (decrease) in: | ||||
Expenses of the National Networks segment | $ | (1,872 | ) | |
Expenses of the International and Other segment | 108 | |||
$ | (1,764 | ) | ||
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Increase (decrease) in: | ||||
AOCF of the National Networks segment | $ | 6,084 | ||
AOCF of the International and Other segment | 2,435 | |||
Inter-segment eliminations | (318 | ) | ||
$ | 8,201 | |||
Increase (decrease): | ||||
Due to the repayment of the promissory note to MSG in March 2010 | $ | (914 | ) | |
Due to lower average debt balances | (481 | ) | ||
Due to higher average interest rates on our indebtedness | 190 | |||
Due to a decrease in interest income | 93 | |||
Other | (111 | ) | ||
$ | (1,223 | ) | ||
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Net operating results of News 12, RASCO and other entities transferred to Cablevision on December 31, 2010, net of income taxes | $ | — | $ | (10,698 | ) | |||
Other, net of income taxes | 96 | 102 | ||||||
$ | 96 | $ | (10,596 | ) | ||||
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Three Months Ended March 31, | ||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||
% of | % of | |||||||||||||||||||
Net | Net | Favorable | ||||||||||||||||||
Amount | Revenues | Amount | Revenues | (Unfavorable) | ||||||||||||||||
Revenues, net | $ | 251,845 | 100 | % | $ | 232,036 | 100 | % | $ | 19,809 | ||||||||||
Technical and operating expenses (excluding depreciation and amortization) | 75,894 | 30 | 71,898 | 31 | (3,996 | ) | ||||||||||||||
Selling, general and administrative expenses | 72,745 | 29 | 62,951 | 27 | (9,794 | ) | ||||||||||||||
Depreciation and amortization | 21,311 | 8 | 23,183 | 10 | 1,872 | |||||||||||||||
Operating income | $ | 81,895 | 33 | % | $ | 74,004 | 32 | % | $ | 7,891 | ||||||||||
Three Months Ended March 31, | ||||||||||||
2011 | 2010 | Favorable | ||||||||||
Amount | Amount | (Unfavorable) | ||||||||||
Operating income | $ | 81,895 | $ | 74,004 | $ | 7,891 | ||||||
Share-based compensation | 3,150 | 3,085 | 65 | |||||||||
Depreciation and amortization | 21,311 | 23,183 | (1,872 | ) | ||||||||
AOCF | $ | 106,356 | $ | 100,272 | $ | 6,084 | ||||||
Increase (decrease) in: | ||||
Advertising revenues primarily at AMC and WE tv resulting from higher pricing per unit sold due to an increased demand for our programming by advertisers, and to a lesser extent increases in advertising and sponsorship revenue at IFC and Sundance. Prior to December 2010, IFC principally sold sponsorships, but since then it migrated to a traditional advertising sales model | $ | 12,961 | ||
Affiliation fee revenues primarily at AMC and WE tv resulting from increases in affiliation rates and subscribers (see below) | 5,854 | |||
Other revenues primarily at AMC resulting from increased licensing revenues and digital download revenues derived from sales of our programming | 1,332 | |||
Intra-segment eliminations | (338 | ) | ||
$ | 19,809 | |||
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Estimated Domestic Subscribers | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
2011 | 2010 | 2010 | ||||||||||
National Programming Networks: | ||||||||||||
AMC(1) | 96,800 | 96,400 | 95,500 | |||||||||
WE tv(1) | 77,000 | 76,800 | 76,000 | |||||||||
IFC(1) | 62,200 | 62,700 | 61,800 | |||||||||
Sundance Channel(2) | 40,100 | 39,900 | 39,000 |
(1) | Estimated U.S. subscribers as measured by Nielsen. | |
(2) | Subscriber counts are based on internal management reports and represent viewing subscribers. |
Increase (decrease) in: | ||||
Amortization of program rights and series development/original programming costs | $ | 2,439 | ||
Programming related costs | 1,645 | |||
Intra-segment eliminations | (88 | ) | ||
$ | 3,996 | |||
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Increase in: | ||||
Sales and marketing expenses primarily at IFC and WE tv, partially offset by a decrease at AMC. The net increase in marketing expense resulted from the timing of promotion and marketing of original programming and the number of premieres that occurred during the quarter. Additionally, advertising sales related costs increased at IFC following the migration to an advertising sales model in December 2010 | $ | 8,179 | ||
Other general and administrative costs | 1,498 | |||
Management fees | 522 | |||
Share-based compensation expense and expenses relating to Cablevision’s long-term incentive plans | (405 | ) | ||
$ | 9,794 | |||
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Three Months Ended March 31, | ||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||
% of Net | % of Net | Favorable | ||||||||||||||||||
Amount | Revenues | Amount | Revenues | (Unfavorable) | ||||||||||||||||
Revenues, net | $ | 25,381 | 100 | % | $ | 19,882 | 100 | % | $ | 5,499 | ||||||||||
Technical and operating expenses (excluding depreciation and amortization) | 18,965 | 75 | 14,589 | 73 | (4,376 | ) | ||||||||||||||
Selling, general and administrative expenses | 14,347 | 57 | 15,591 | 78 | 1,244 | |||||||||||||||
Restructuring credit | (34 | ) | — | (212 | ) | 1 | (178 | ) | ||||||||||||
Depreciation and amortization | 3,615 | 14 | 3,507 | 18 | (108 | ) | ||||||||||||||
Operating loss | $ | (11,512 | ) | (45 | )% | $ | (13,593 | ) | (68 | )% | $ | 2,081 | ||||||||
Three Months Ended March 31, | ||||||||||||
2011 | 2010 | Favorable | ||||||||||
Amount | Amount | (Unfavorable) | ||||||||||
Operating loss | $ | (11,512 | ) | $ | (13,593 | ) | $ | 2,081 | ||||
Share-based compensation | 827 | 759 | 68 | |||||||||
Restructuring credit | (34 | ) | (212 | ) | 178 | |||||||
Depreciation and amortization | 3,615 | 3,507 | 108 | |||||||||
AOCF deficit | $ | (7,104 | ) | $ | (9,539 | ) | $ | 2,435 | ||||
Increase (decrease) in: | ||||
Other revenues due primarily to increased origination fee revenue at AMC Network Communications and electronic streaming revenue at IFC Entertainment | $ | 3,178 | ||
Affiliation fee revenues principally from an increase in foreign affiliation fee revenues from the AMC Canadian distribution channel due to an increase in the number of Canadian distributors that carry the service and subscribers, as well as the strengthening of the Canadian dollar (affiliation agreements with Canadian distributors are primarily denominated in Canadian dollars) and, to a lesser extent, increased affiliation fee revenues of our other international distribution channels | 2,726 | |||
Revenues, net at VOOM HD due to lower foreign distribution revenue | (514 | ) | ||
Intra-segment eliminations | 109 | |||
$ | 5,499 | |||
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Increase (decrease) in: | ||||
Costs at our international and other services (excluding VOOM) resulting primarily from increased content acquisition costs at IFC Entertainment and increased programming costs of certain AMC/Sundance Channel Global services | $ | 2,703 | ||
Programming costs at VOOM HD resulting primarily from a reduction in the estimated useful life of program rights related to ceasing distribution of the Rush HD channel in Europe in April 2011 | 1,215 | |||
Transmission and programming related expenses primarily at AMC/Sundance Channel Global | 626 | |||
Intra-segment eliminations | (168 | ) | ||
$ | 4,376 | |||
Increase (decrease) in: | ||||
Selling, general and administrative expenses at VOOM HD due primarily to lower legal fees, costs and related expenses in connection with the DISH Network contract dispute | $ | (2,906 | ) | |
Selling, marketing and advertising costs at AMC/Sundance Channel Global due to increased distribution of our foreign services and at IFC Entertainment due to an increased number of titles distributed | 877 | |||
General and administrative costs primarily at AMC/Sundance Channel Global and at IFC Entertainment primarily due to an increase in employee related costs | 681 | |||
Share-based compensation expense and expenses relating to Cablevision’s long-term incentive plans | 99 | |||
Intra-segment eliminations | 5 | |||
$ | (1,244 | ) | ||
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Increase (decrease) in: | ||||
Revenues of the National Networks segment | $ | 98,080 | ||
Revenues of the International and Other segment | 8,578 | |||
Inter-segment eliminations | (2,002 | ) | ||
$ | 104,656 | |||
• | amortization of program rights, including those for feature films and non-film programming, participation and residual costs, and distribution and production related costs; and | |
• | origination, transmission, uplinking, encryption and other operating costs. |
Increase (decrease) in: | ||||
Expenses of the National Networks segment | $ | 45,490 | ||
Expenses of the International and Other segment | 11,910 | |||
Inter-segment eliminations | (1,672 | ) | ||
$ | 55,728 | |||
Increase (decrease) in: | ||||
Expenses of the National Networks segment | $ | 15,749 | ||
Expenses of the International and Other segment | (1,102 | ) | ||
Inter-segment eliminations | (417 | ) | ||
$ | 14,230 | |||
Increase (decrease) in: | ||||
Expenses of the National Networks segment | $ | 3,132 | ||
Expenses of the International and Other segment | (3,181 | ) | ||
$ | (49 | ) | ||
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Increase (decrease) in: | ||||
AOCF of the National Networks segment | $ | 38,227 | ||
AOCF of the International and Other segment | (1,133 | ) | ||
Inter-segment eliminations | 87 | |||
$ | 37,181 | |||
Increase (decrease): | ||||
Due to higher average interest rates on our indebtedness | $ | 21 | ||
Due to interest on the promissory note with MSG repaid in March 2010 | 914 | |||
Due to lower average debt balances | (1,698 | ) | ||
Due to an increase in interest income | (1,552 | ) | ||
Other | 22 | |||
$ | (2,293 | ) | ||
Years Ended December 31, | ||||||||
2010 | 2009 | |||||||
Net operating results of News 12, RASCO and other transferred entities, net of income taxes | $ | (38,555 | ) | $ | (36,960 | ) | ||
Other, net of income taxes | 465 | 2,169 | ||||||
$ | (38,090 | ) | $ | (34,791 | ) | |||
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Years Ended December 31, | ||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||
% of Net | % of Net | Favorable | ||||||||||||||||||
Amount | Revenues | Amount | Revenues | (Unfavorable) | ||||||||||||||||
Revenues, net | $ | 994,573 | 100 | % | $ | 896,493 | 100 | % | $ | 98,080 | ||||||||||
Technical and operating expenses (excluding depreciation and amortization) | 317,819 | 32 | 272,329 | 30 | (45,490 | ) | ||||||||||||||
Selling, general and administrative expenses | 271,494 | 27 | 255,745 | 29 | (15,749 | ) | ||||||||||||||
Depreciation and amortization | 92,735 | 9 | 89,603 | 10 | (3,132 | ) | ||||||||||||||
Operating income | $ | 312,525 | 31 | % | $ | 278,816 | 31 | % | $ | 33,709 | ||||||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | Favorable | ||||||||||
Amount | Amount | (Unfavorable) | ||||||||||
Operating income | $ | 312,525 | $ | 278,816 | $ | 33,709 | ||||||
Share-based compensation | 13,791 | 12,405 | 1,386 | |||||||||
Depreciation and amortization | 92,735 | 89,603 | 3,132 | |||||||||
AOCF | $ | 419,051 | $ | 380,824 | $ | 38,227 | ||||||
Increase (decrease) in: | ||||
Advertising revenues primarily at AMC and WE tv resulting from higher pricing per unit sold due to an increased demand for our programming by advertisers, and to a lesser extent sponsorship increases at IFC and Sundance due to an increased demand for our programming by sponsors | $ | 56,333 | ||
Affiliation fee revenues primarily at AMC and WE tv and, to a lesser extent IFC and Sundance, resulting from increases in affiliation rates and subscribers (see below). | 31,978 | |||
Other revenues primarily at AMC resulting from increased foreign licensing revenues and digital download revenues derived from sales of our programming. | 10,097 | |||
Intra-segment eliminations | (328 | ) | ||
$ | 98,080 | |||
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Estimated Domestic Subscribers | ||||||||
2010 | 2009 | |||||||
National Programming Networks: | ||||||||
AMC(1) | 96,400 | 95,200 | ||||||
WE tv(1) | 76,800 | 74,900 | ||||||
IFC(1) | 62,700 | 60,400 | ||||||
Sundance Channel(2) | 39,900 | 37,900 |
(1) | Estimated U.S. subscribers as measured by Nielsen. | |
(2) | Subscriber counts are based on internal management reports and represent viewing subscribers. |
Increase (decrease) in: | ||||
Amortization of program rights and series development/original programming costs | $ | 40,380 | ||
Programming related costs | 5,438 | |||
Intra-segment eliminations | (328 | ) | ||
$ | 45,490 | |||
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Increase in: | ||||
Sales and marketing primarily at AMC due to an increase in marketing expense related to an increase in the number of original programming premieres, partially offset by a decrease in such costs at IFC | $ | 8,540 | ||
Other general and administrative costs | 752 | |||
Management fees | 2,738 | |||
Share-based compensation expense and expenses relating to Cablevision’s long-term incentive plans | 3,719 | |||
$ | 15,749 | |||
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Years Ended December 31, | ||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||
% of Net | % of Net | Favorable | ||||||||||||||||||
Amount | Revenues | Amount | Revenues | (Unfavorable) | ||||||||||||||||
Revenues, net | $ | 104,499 | 100 | % | $ | 95,921 | 100 | % | $ | 8,578 | ||||||||||
Technical and operating expenses (excluding depreciation, amortization and impairments) | 65,635 | 63 | 53,725 | 56 | (11,910 | ) | ||||||||||||||
Selling, general and administrative expenses | 56,965 | 55 | 58,067 | 61 | 1,102 | |||||||||||||||
Restructuring (credit) expense | (2,218 | ) | (2 | ) | 5,162 | 5 | 7,380 | |||||||||||||
Depreciation and amortization (including impairments) | 13,720 | 13 | 16,901 | 18 | 3,181 | |||||||||||||||
Operating loss | $ | (29,603 | ) | (28 | )% | $ | (37,934 | ) | (40 | )% | $ | 8,331 | ||||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | Favorable | ||||||||||
Amount | Amount | (Unfavorable) | ||||||||||
Operating loss | $ | (29,603 | ) | $ | (37,934 | ) | $ | 8,331 | ||||
Share-based compensation | 3,415 | 2,318 | 1,097 | |||||||||
Restructuring (credit) expense | (2,218 | ) | 5,162 | (7,380 | ) | |||||||
Depreciation and amortization (including impairments) | 13,720 | 16,901 | (3,181 | ) | ||||||||
AOCF deficit | $ | (14,686 | ) | $ | (13,553 | ) | $ | (1,133 | ) | |||
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Increase (decrease) in: | ||||
Affiliation fee revenues principally from an increase in foreign affiliation fee revenues from the AMC Canadian distribution channel due to strengthening of the Canadian dollar (affiliation agreements with Canadian distributors are primarily denominated in Canadian dollars) as well as an increase in subscribers and the number of Canadian distributors who carry the service and, to a lesser extent, increased film distribution revenues of IFC Entertainment due to an increased number of titles being distributed and increased affiliation revenues of our other international distribution channels | $ | 10,917 | ||
Other revenues due primarily to increased foreign licensing revenue and digital download revenue of IFC Entertainment, partially offset by a decrease in origination fee revenue at AMC Network Communications due to the termination of the Fox Sports Florida transmission agreement in November 2009 | 2,672 | |||
Revenues, net due to the shutdown of the domestic programming of VOOM in January 2009 and VOOM’s lower foreign distribution revenue | (3,548 | ) | ||
Intra-segment eliminations | (1,463 | ) | ||
$ | 8,578 | |||
Increase (decrease) in: | ||||
Costs at our other services (excluding VOOM) resulting primarily from increased programming costs of certain AMC/Sundance Channel Global services as a result of launches in additional territories in Europe and Asia in 2010 and increased content acquisition costs at IFC Entertainment due to an increased number of titles being distributed, partially offset by other decreases at AMC Network Communications | $ | 7,269 | ||
Programming costs at VOOM due to the shutdown of the domestic programming of VOOM in January 2009 and certain foreign programming of VOOM | (5,133 | ) | ||
Transmission and programming related expenses primarily at AMC/Sundance Channel Global as a result of launches in additional territories in Europe and Asia in 2010 | 7,845 | |||
Intra-segment eliminations | 1,929 | |||
$ | 11,910 | |||
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Increase (decrease) in: | ||||
General and administrative costs primarily at AMC/Sundance Channel Global and at IFC Entertainment due to increased cost allocations from RMH | $ | 1,163 | ||
Selling, marketing and advertising costs at AMC/Sundance Channel Global due to an increased distribution of our foreign services as a result of launches in additional territories in Europe and Asia in 2010 and at IFC Entertainment due to an increased number of titles being distributed | 4,363 | |||
Selling, general and administrative expenses at VOOM due primarily to lower legal fees, costs and related expenses in connection with the DISH Network contract dispute | (9,176 | ) | ||
Share-based compensation expense and expenses relating to Cablevision’s long-term incentive plans | 2,017 | |||
Intra-segment eliminations | 531 | |||
$ | (1,102 | ) | ||
Increase (decrease) in: | ||||
Revenues of the National Networks segment | $ | 120,031 | ||
Revenues of the International and Other segment | (35,107 | ) | ||
Inter-segment eliminations | (4,837 | ) | ||
$ | 80,087 | |||
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Increase (decrease) in: | ||||
Expenses of the National Networks segment | $ | 42,683 | ||
Expenses of the International and Other segment | (45,190 | ) | ||
Inter-segment eliminations | (2,088 | ) | ||
$ | (4,595 | ) | ||
Increase (decrease) in: | ||||
Expenses of the National Networks segment | $ | 29,561 | ||
Expenses of the International and Other segment | (18,228 | ) | ||
Inter-segment eliminations | 97 | |||
$ | 11,430 | |||
Increase (decrease) in: | ||||
Expenses of the National Networks segment | $ | 14,092 | ||
Expenses of the International and Other segment | (15,937 | ) | ||
$ | (1,845 | ) | ||
Increase (decrease) in: | ||||
AOCF of the National Networks segment | $ | 51,832 | ||
AOCF of the International and Other segment | 28,730 | |||
Inter-segment eliminations | (2,846 | ) | ||
$ | 77,716 | |||
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Increase (decrease): | ||||
Due to lower average interest rates on our indebtedness | $ | (16,113 | ) | |
Due to higher average debt balances | 711 | |||
Due to the settlement of our collateralized indebtedness in June 2008 | (6,766 | ) | ||
Due to lower interest income | 746 | |||
Other | 65 | |||
$ | (21,357 | ) | ||
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Years Ended December 31, | ||||||||
2009 | 2008 | |||||||
Net operating results of News 12, RASCO and other transferred entities, net of income taxes | $ | (36,960 | ) | $ | (29,991 | ) | ||
Other, net of income taxes | 2,169 | 3,125 | ||||||
$ | (34,791 | ) | $ | (26,866 | ) | |||
Years Ended December 31, | ||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||
% of Net | % of Net | Favorable | ||||||||||||||||||
Amount | Revenues | Amount | Revenues | (Unfavorable) | ||||||||||||||||
Revenues, net | $ | 896,493 | 100 | % | $ | 776,462 | 100 | % | $ | 120,031 | ||||||||||
Technical and operating expenses (excluding depreciation and amortization) | 272,329 | 30 | 229,646 | 30 | (42,683 | ) | ||||||||||||||
Selling, general and administrative expenses | 255,745 | 29 | 226,184 | 29 | (29,561 | ) | ||||||||||||||
Restructuring expense | — | — | 82 | — | 82 | |||||||||||||||
Depreciation and amortization | 89,603 | 10 | 75,511 | 10 | (14,092 | ) | ||||||||||||||
Operating income | $ | 278,816 | 31 | % | $ | 245,039 | 32 | % | $ | 33,777 | ||||||||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | Favorable | ||||||||||
Amount | Amount | (Unfavorable) | ||||||||||
Operating income | $ | 278,816 | $ | 245,039 | $ | 33,777 | ||||||
Share-based compensation | 12,405 | 8,360 | 4,045 | |||||||||
Restructuring expense | — | 82 | (82 | ) | ||||||||
Depreciation and amortization | 89,603 | 75,511 | 14,092 | |||||||||
AOCF | $ | 380,824 | $ | 328,992 | $ | 51,832 | ||||||
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Increase (decrease) in: | ||||
Revenues, net due to the acquisition of Sundance Channel in June 2008 | $ | 46,363 | ||
Affiliation fee revenues at AMC, WE tv and IFC due primarily to increases in affiliation rates and in subscribers (see below). | 37,384 | |||
Advertising revenues due primarily to higher units sold at AMC resulting from increased inventory, as well as improved program ratings and greater advertiser demand at WE tv | 35,570 | |||
Other revenues, net | 853 | |||
Intra-segment eliminations | (139 | ) | ||
$ | 120,031 | |||
Estimated Domestic | ||||||||
Subscribers | ||||||||
2009 | 2008 | |||||||
(In thousands) | ||||||||
National Programming Networks: | ||||||||
AMC(1) | 95,200 | 94,500 | ||||||
WE tv(1) | 74,900 | 72,000 | ||||||
IFC(1) | 60,400 | 58,700 | ||||||
Sundance Channel(2) | 37,900 | 30,800 |
(1) | Estimated U.S. subscribers as measured by Nielsen. | |
(2) | Subscriber counts are based on internal management reports and represent viewing subscribers. |
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Increase (decrease) in: | ||||
Amortization of program rights and series development/original programming costs and programming related costs (excluding the costs of Sundance Channel (acquired in June 2008)) due to increased amortization of non-film program rights | $ | 36,278 | ||
Amortization of program rights and series development/original programming costs and programming related costs of Sundance Channel (acquired in June 2008) | 6,544 | |||
Intra-segment eliminations | (139 | ) | ||
$ | 42,683 | |||
Increase (decrease) in: | ||||
Selling, general and administrative costs due to the acquisition of Sundance Channel in June 2008 | $ | 16,307 | ||
Other general and administrative costs due primarily to a shift of cost allocations from the International and Other reportable segment to the National Networks reportable segment (excluding the costs of Sundance Channel (acquired in June 2008)) | 6,382 | |||
Selling and marketing costs due primarily to a decrease in costs for the marketing and promotion of original programming at IFC | (1,153 | ) | ||
Management fees due to increased revenues at AMC and WE tv | 2,260 | |||
Share-based compensation expense and expenses relating to Cablevision’s long-term incentive plans | 5,765 | |||
$ | 29,561 | |||
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Years Ended December 31, | ||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||
% of Net | % of Net | Favorable | ||||||||||||||||||
Amount | Revenues | Amount | Revenues | (Unfavorable) | ||||||||||||||||
Revenues, net | $ | 95,921 | 100 | % | $ | 131,028 | 100 | % | $ | (35,107 | ) | |||||||||
Technical and operating expenses (excluding depreciation and amortization shown below) | 53,725 | 56 | 98,915 | 75 | 45,190 | |||||||||||||||
Selling, general and administrative expenses | 58,067 | 61 | 76,295 | 58 | 18,228 | |||||||||||||||
Restructuring expense | 5,162 | 5 | 46,795 | 36 | 41,633 | |||||||||||||||
Depreciation and amortization (including impairments) | 16,901 | 18 | 32,838 | 25 | 15,937 | |||||||||||||||
Operating loss | $ | (37,934 | ) | (40 | )% | $ | (123,815 | ) | (94 | )% | $ | 85,881 | ||||||||
Years Ended | ||||||||||||
December 31, | ||||||||||||
2009 | 2008 | Favorable | ||||||||||
Amount | Amount | (Unfavorable) | ||||||||||
Operating loss | $ | (37,934 | ) | $ | (123,815 | ) | $ | 85,881 | ||||
Share-based compensation | 2,318 | 1,899 | 419 | |||||||||
Restructuring expense | 5,162 | 46,795 | (41,633 | ) | ||||||||
Depreciation and amortization (including impairments) | 16,901 | 32,838 | (15,937 | ) | ||||||||
AOCF deficit | $ | (13,553 | ) | $ | (42,283 | ) | $ | 28,730 | ||||
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Increase (decrease) in: | ||||
Revenues, net primarily at IFC Entertainment due to an increase in the number of titles being distributed through cable television distributors as on demand offerings | $ | 3,796 | ||
Other revenues due primarily to an increase in film distribution revenues at IFC Entertainment due to an increased number of titles being distributed and transmission revenue at AMC Network Communications, partially offset by a decrease in production studio leasing revenue | 10,808 | |||
Revenues, net due to the Company’s decision in December 2008 to discontinue the domestic programming of VOOM (January 2009) (see below) | (51,519 | ) | ||
Intra-segment eliminations | 1,808 | |||
$ | (35,107 | ) | ||
Increase (decrease) in: | ||||
Programming costs at VOOM due to the shutdown of the domestic programming of VOOM in January 2009 | $ | (54,892 | ) | |
Programming costs (excluding VOOM) resulting primarily from an increase in distribution related costs at IFC Entertainment due to an increased number of titles being distributed and an increase at AMC/Sundance Channel Global due to the launch of Sundance Channel in certain territories of Europe and Asia and the launch of WE tv in Asia in 2009, partially offset by a decrease in transmission expenses at AMC Network Communications | 1,032 | |||
Program acquisition related expenses primarily at IFC Entertainment due to an increased number of titles being distributed and transmission and programming related expenses at AMC/Sundance Channel Global due to the launch of Sundance Channel in certain territories of Europe and Asia and the launch of WE tv in Asia in 2009 | 4,715 | |||
Intra-segment eliminations | 3,955 | |||
$ | (45,190 | ) | ||
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Increase (decrease) in: | ||||
Selling, general and administrative expenses at VOOM due to the shutdown of the domestic programming of VOOM in January 2009, partially offset by increased legal fees, costs and related expenses in connection with the DISH Network contract dispute | $ | (12,815 | ) | |
Administrative costs due primarily to a shift of cost allocations to the National Networks reportable segment from the International and Other reportable segment | (5,100 | ) | ||
Selling and marketing costs at IFC Entertainment due to an increased number of titles being distributed and an increase at AMC/Sundance Channel Global due to the launch of Sundance Channel in certain territories of Europe and Asia and the launch of WE tv in Asia in 2009 | 2,254 | |||
Share-based compensation expense and expenses relating to Cablevision’s long-term incentive plans | (1,042 | ) | ||
Intra-segment eliminations | (1,525 | ) | ||
$ | (18,228 | ) | ||
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Credit facility | $ | 412,500 | ||
Capital lease obligations | 19,198 | |||
Senior notes | 299,619 | |||
Senior subordinated notes | 324,134 | |||
Total debt | $ | 1,055,451 | ||
Interest expense | $ | 18,350 | ||
Capital expenditures | $ | 1,599 | ||
Years Ending December 31, | ||||
2011 | $ | 56,321 | ||
2012 | 402,796 | |||
2013 | 327,796 | |||
2014 | 327,796 | |||
2015 | 2,796 | |||
Thereafter | 11,804 | |||
Total | $ | 1,129,309 | ||
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Years Ending December 31, | ||||
2011 | $ | |||
2012 | ||||
2013 | ||||
2014 | ||||
2015 | ||||
Thereafter | ||||
Total | $ | |||
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Payments Due by Period | ||||||||||||||||||||||||
Year | Years | Years | More Than | |||||||||||||||||||||
Total | 1 | 2-3 | 4-5 | 5 Years | Other | |||||||||||||||||||
Off balance sheet arrangements: | ||||||||||||||||||||||||
Purchase obligations(1) | $ | 126,677 | $ | 94,211 | $ | 31,544 | $ | 922 | $ | — | $ | — | ||||||||||||
Operating lease obligations(2) | 89,925 | 13,277 | 26,269 | 25,522 | 24,857 | — | ||||||||||||||||||
Guarantees | 359 | 359 | — | — | — | — | ||||||||||||||||||
216,961 | 107,847 | 57,813 | 26,444 | 24,857 | — | |||||||||||||||||||
Contractual obligations reflected on the balance sheet: | ||||||||||||||||||||||||
Debt obligations(3) | 1,279,515 | 115,742 | 816,294 | 347,479 | — | — | ||||||||||||||||||
Program rights obligations | 454,825 | 116,190 | 185,922 | 105,977 | 46,736 | — | ||||||||||||||||||
Capital lease obligations(4) | 29,309 | 6,321 | 5,592 | 5,592 | 11,804 | — | ||||||||||||||||||
Contract obligations(5) | 2,909 | 1,782 | 1,041 | 86 | — | — | ||||||||||||||||||
Taxes(6) | 66,369 | 2,474 | — | — | — | 63,895 | ||||||||||||||||||
1,832,927 | 242,509 | 1,008,849 | 459,134 | 58,540 | 63,895 | |||||||||||||||||||
Total | $ | 2,049,888 | $ | 350,356 | $ | 1,066,662 | $ | 485,578 | $ | 83,397 | $ | 63,895 | ||||||||||||
(1) | Purchase obligation amounts not reflected on the balance sheet consist primarily of (i) long-term program rights obligations that have not yet met the criteria to be recorded in the balance sheet and (ii) long-term transmission service commitments. | |
(2) | Operating lease commitments represent future minimum payment obligations on various long-term, noncancelable leases for office space and office equipment. | |
(3) | Includes future payments due on the Company’s (i) credit facility debt, (ii) senior notes and (iii) senior subordinated notes includes related interest for fixed rate debt and estimated interest on variable rate debt calculated based on the prevailing interest rate as of December 31, 2010). The principal portion of these amounts will be repaid on the Distribution date with the proceeds from a portion of the New AMC Networks Debt we are incurring as part of the Distribution. |
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(4) | Reflects the principal amount of capital lease obligations, including related interest. | |
(5) | This amount represents primarily long-term carriage fees payable to distributors and additional annual required payments relating to the acquisitions of film website businesses in 2008 and 2009. | |
(6) | This amount represents tax liabilities, including accrued interest, relating to uncertain tax positions. |
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• | The desire to have a Board that encompasses a broad range of skills, expertise, industry knowledge, diversity of viewpoints, opinions, background and experience, and contacts relevant to our business; | |
• | Personal qualities and characteristics, accomplishments and reputation in the business community; | |
• | Ability and willingness to commit adequate time to Board and committee matters; and | |
• | The fit of the individual’s skill and personality with those of other directors and potential directors in building a Board that is effective, collegial and responsive to the needs of our Company. |
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Mr. Joshua W. Sapan | President and Chief Executive Officer |
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• | The majority of compensation for Cablevision’s executive officers should be at risk and based on the performance of Cablevision, so that actual compensation levels depend upon Cablevision’s actual performance as determined by its compensation committee. | |
• | Over time, incentive compensation of Cablevision’s executive officers should focus more heavily on long-term rather than short-term accomplishments and results. | |
• | Equity-based compensation should be used to align Cablevision’s executive officers’ interests with the stockholders’ interests. | |
• | The overall executive compensation program should be competitive, equitable and structured so as to ensure Cablevision’s ability to attract, retain, motivate and reward the talented executives who are essential to Cablevision’s continuing success. Total direct compensation, rather than individual compensation elements, is the focus in providing competitive compensation opportunities. |
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Mr. Sapan: | ||
Base Salary | ||
Target Bonus | ||
Target 2011 Long-Term Incentives |
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Change in | ||||||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||||||
Non-Equity | Nonqualified | |||||||||||||||||||||||||||||||
Option | Incentive | Deferred | ||||||||||||||||||||||||||||||
Stock | and Rights | Plan | Compensation | All Other | ||||||||||||||||||||||||||||
Salary | Awards | Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||||||
Name and Principal Position | Year | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | ($)(6) | ($) | ||||||||||||||||||||||||
Mr. Joshua W. Sapan | 2010 | 1,240,000 | 1,274,400 | — | 3,321,320 | 170,007 | 196,696 | 6,202,423 | ||||||||||||||||||||||||
President and Chief Executive Officer of RMH | ||||||||||||||||||||||||||||||||
(1) | For 2010, salary paid accounted for the following percentage of total compensation: Mr. Sapan 20%. | |
(2) | This column reflects the aggregate grant date fair value of restricted stock awards granted to Mr. Sapan in 2010. | |
(3) | No stock options and/or rights were granted in 2010. | |
(4) | This information reflects the annual incentive award for performance in 2010 and the value of performance awards granted in 2008, earned at the end of 2010 as follows: $1,625,000 and $1,696,320 respectively. | |
(5) | This column represents the sum of the increase in the present value of Mr. Sapan’s accumulated cash balance pension plan account and accumulated excess cash balance account. There were no above-market earnings on nonqualified deferred compensation. For more information regarding Mr. Sapan’s pension benefits, please see the Pension Benefits Table below. | |
(6) | The table below shows the components of this column: |
401(k) | Excess | Deferred | ||||||||||||||||||||||||||||||||||
Supplemental | Plan | Savings Plan | Life Insurance | Compensation | ||||||||||||||||||||||||||||||||
Benefit | Match | Match | Premiums | Awards | Dividends | Perquisites | ||||||||||||||||||||||||||||||
Name | Year | Plan | $ | ($) | ($) | ($)(a) | ($)(b) | ($)(c) | Total ($) | |||||||||||||||||||||||||||
Mr. Sapan | 2010 | — | — | — | — | 159,098 | 25,380 | 12,218 | 196,696 | |||||||||||||||||||||||||||
(a) | This column represents for Mr. Sapan the following amounts allocated under his deferred compensation award: a notional contribution of $150,000 and notional interest of $9,098 in 2010. For more information regarding his deferred compensation awards, see “— Compensation Discussion and Analysis — Cablevision Elements of In-Service Compensation — Other Types of Awards in Prior Years.” | |
(b) | This column represents quarterly cash dividends declared by Cablevision since August 2008. Holders of stock options and stock appreciation rights that had vested prior to December 31, 2004 received a cash dividend upon exercise. In October 2009, the compensation committee of the board of directors approved exercise price adjustments for all dividend eligible stock options and stock appreciation rights so that in the future cash dividends will result in a reduction of the exercise price rather than a cash payment. Holders of restricted shares are entitled to receive a cash amount equal to the dividends when the restricted shares vest. This column represents dividend payments made upon stock option and stock appreciation right exercises and restricted stock vesting in the respective periods. | |
(c) | This column includes the following components: (A) free cable television service, high-speed data and voice service; (B) use of Cablevision’s aircraft for personal travel; (C) use of Cablevision’s travel department to arrange for personal travel and (D) personal use of a car and driver. For more information regarding the calculation of these perquisites, see “— Compensation Discussion and Analysis — Perquisites.” |
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All | ||||||||||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||||||
Stock | ||||||||||||||||||||||||||||||||||||
Awards: | All Other | Exercise | Grant Date | |||||||||||||||||||||||||||||||||
Number of | Option | or Base | Fair Value | |||||||||||||||||||||||||||||||||
Shares of | Awards: | Price of | of Stock | |||||||||||||||||||||||||||||||||
Estimated Future Payouts Under Non- | Stock | Securities | Option | and Option | ||||||||||||||||||||||||||||||||
Grant | Equity Incentive Plan Awards | or | Underlying | Awards | Awards | |||||||||||||||||||||||||||||||
Name | Year | Date | Threshold($) | Target($) | Maximum($) | Units(#) | Options(#) | ($/Sh) | ($)(1) | |||||||||||||||||||||||||||
Mr. Sapan | 2010 | 3/10/10 | (2) | 53,100 | 1,274,400 | |||||||||||||||||||||||||||||||
2010 | 3/10/10 | (3) | 930,000 | 1,860,000 | 3,720,000 | |||||||||||||||||||||||||||||||
(1) | This amount reflects the aggregate grant date fair value of the restricted stock award granted to Mr. Sapan in 2010, as calculated under ASC Topic 718 on the date of grant. | |
(2) | This row reflects the number of shares and grant date fair value of restricted stock awarded in 2010. This grant of restricted stock, which was made under Cablevision’s 2006 Employee Stock Plan, is scheduled to vest in its entirety on March 10, 2013. | |
(3) | This row reflects the future payout with respect to a performance award that was granted under Cablevision’s Long-Term Incentive Plan in 2010. The performance award was granted with a target amount, subject to actual payment based on a sliding scale ranging from zero to two times the target amount. This performance award will be payable in the first quarter of 2013 if Cablevision achieves specified performance targets in the 12-month period ending December 31, 2012. For more information regarding the terms of these performance awards, see “— Compensation Discussion and Analysis — Cablevision Elements of In-Service Compensation — Performance Awards.” |
Option and Restricted Stock Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||||
Incentive | ||||||||||||||||||||||||||||||||||||
Plan | ||||||||||||||||||||||||||||||||||||
Equity | Awards: | |||||||||||||||||||||||||||||||||||
Incentive | Market or | |||||||||||||||||||||||||||||||||||
Equity | Plan | Payout | ||||||||||||||||||||||||||||||||||
Incentive | Awards: | Value of | ||||||||||||||||||||||||||||||||||
Plan | Number of | Unearned | ||||||||||||||||||||||||||||||||||
Awards: | Market | Unearned | Shares, | |||||||||||||||||||||||||||||||||
Number of | Number of | Number of | Number of | Value of | Shares, | Units or | ||||||||||||||||||||||||||||||
Securities | Securities | Securities | Shares or | Shares or | Units or | Other | ||||||||||||||||||||||||||||||
Underlying | Underlying | Underlying | Units of | Units of | Other | Rights | ||||||||||||||||||||||||||||||
Unexercised | Unexercised | Unexercised | Option | Option | Stock That | Stock That | Rights That | That | ||||||||||||||||||||||||||||
Options(#) | Options(#) | Unearned | Exercise | Expiration | Have Not | Have Not | Have Not | Have Not | ||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | Options(#) | Price($) | Date | Vested(#) | Vested($) (1) | Vested(#) | Vested($) | |||||||||||||||||||||||||||
Mr. Sapan | 125,267 | (2)(3) | 250,533 | (2)(3) | 8.47 | (4) | 170,600 | (5)(6) | 5,773,104 | (5)(6) | ||||||||||||||||||||||||||
(1) | Calculated using the closing price of Cablevision NY Group Class A Common Stock on the New York Stock Exchange on December 31, 2010 of $33.84 per share. |
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(2) | This award vests in thirds on the first three anniversaries of the grant date. One-third of the award vested on March 5, 2010, one-third on March 5, 2011 and the remaining one-third will vest on March 5, 2012. | |
(3) | In February 2010, Cablevision completed the distribution to its stockholders of all of the outstanding common stock of MSG (the “MSG Distribution”). In connection with the MSG Distribution, Mr. Sapan received, in respect of his Cablevision stock options, 93,950 options for MSG Class A Common Stock, one-third of which vested on March 5, 2010, one-third on March 5, 2011 and the remaining one-third of which will vest on March 5, 2012. These options have an exercise price of $7.12. | |
(4) | The MSG Distribution resulted in a per share exercise price adjustment for all outstanding Cablevision awards. | |
(5) | This reflects (i) a grant of 47,100 shares of restricted stock made on March 3, 2008 that vested on March 3, 2011; (ii) a grant of 70,400 shares of restricted stock made on March 5, 2009 scheduled to vest on March 5, 2012; and (iii) a grant of 53,100 shares of restricted stock made on March 10, 2010 that is scheduled to vest on March 10, 2013. | |
(6) | In connection with the MSG Distribution, Mr. Sapan received, in respect of his Cablevision restricted stock, 29,375 shares of MSG restricted Class A Common Stock with a market value of $757,288; 11,775 shares of this restricted stock vested on March 3, 2011. |
Option Exercises | Restricted Stock | |||||||||||||||
Number of Shares | Value Realized on | Number of Shares | Value Realized | |||||||||||||
Name | Acquired on Exercise(1) | Exercise ($)(1) | Acquired on Vesting | on Vesting ($) | ||||||||||||
Mr. Sapan | 42,300 | 1,028,736 | (2)(3) | |||||||||||||
(1) | There were no exercises of Cablevision stock options by Mr. Sapan during 2010. | |
(2) | Calculated using the closing price (per share) of Cablevision NY Group Class A Common Stock on the New York Stock Exchange on March 2, 2010 multiplied by the number of shares vesting. | |
(3) | Dividends of $0.10 per share declared in August and November 2008, as well as February, May, July and November 2009 were associated with this vesting in addition to the value realized and reflected in the table. |
Number of Years | Present Value of | |||||||||
Credited Service | Accumulated Benefit | |||||||||
Name | Plan Name | (#)(1) | ($)(2) | |||||||
Mr. Sapan | Cablevision Cash Balance | |||||||||
Pension Plan | 13 | 204,472 | ||||||||
Cablevision Excess | ||||||||||
Cash Balance Plan | 10 | 855,333 | ||||||||
(1) | Years of service are calculated based on elapsed time measured from date of plan participation. Actual elapsed time as an employee of Cablevision is as follows: Mr. Sapan, 23 years. | |
(2) | Assumes that Mr. Sapan will take a lump sum payment of the cash balance benefits at retirement. The lump sum payment is based on an assumed retirement age of 65. The lump sum payable under the cash |
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balance plans was determined by crediting the account balances with an assumed interest-crediting rate of 3.94% until age 65. The present value of the accumulated benefits under the Cablevision Cash Balance Pension Plan and the Cablevision Excess Cash Balance Plan were calculated using a discount rate of 5.25%. |
Executive | Registrant | Aggregate | ||||||||||||||||||||
Contributions | Contributions | Earnings | Aggregate | Aggregate | ||||||||||||||||||
in 2010 FY | in 2010 FY(1) | in 2010 FY(2) | Withdrawals/ | Balance at | ||||||||||||||||||
Name | Plan Name | ($) | ($) | ($) | Distributions ($) | 2010 FYE ($) | ||||||||||||||||
Mr. Sapan | Cablevision Excess Savings Plan | — | — | 5,326 | — | 231,708 | ||||||||||||||||
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(1) | Does not include deferred compensation awards earned in 2010 and included in the Summary Compensation Table under “All Other Compensation” and described in Note 6 to that table. | |
(2) | These amounts are not reported in the “All Other Compensation” column of the Summary Compensation Table. |
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• | Termination of employment occurred after the close of business on December 31, 2010. | |
• | We have valued equity awards using the closing market price of Cablevision NY Group Class A Common Stock on the New York Stock Exchange on December 31, 2010, the last trading day of the year, of $33.84. | |
• | We have valued stock options at their intrinsic value, equal to the difference between $33.84 and the per share exercise price, multiplied by the number of shares underlying the stock options. | |
• | Where applicable, we have included in the calculation of the value of equity awards the payment of any quarterly dividends declared through December 31, 2010. | |
• | In the event of termination of employment, the payment of certain long-term incentive awards and other amounts may be delayed, depending upon the terms of each specific award agreement, the provisions of the applicable named executive officer’s employment agreement and the applicability of Section 409A. In quantifying aggregate termination payments, we have not taken into account the timing of the payments and we have not discounted the value of payments that would be made over time, except where otherwise disclosed. | |
• | We have assumed that all performance metrics for performance-based awards are achieved (but not exceeded). |
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Elements | Mr. Sapan | |||
Severance | — | |||
Most recent bonus | $ | 1,625,000 | ||
Unvested restricted stock | — | |||
Unvested stock options | — | |||
Unvested performance options | — | |||
Performance awards | — | |||
Deferred compensation award | $ | 707,427 | (1) | |
Consulting arrangements | — | |||
Health insurance benefits | — | |||
Executive life insurance premiums | — |
* | The amounts in this table do not include any payments or awards that were vested at December 31, 2010 or any pension or other vested retirement benefits. | |
(1) | Represents an estimated pro rata share of the then-current award amount of his deferred compensation award at December 31, 2010. |
Elements | Mr. Sapan | |||
Severance | — | |||
Most recent bonus | $ | 1,625,000 | ||
Unvested restricted stock | — | |||
Unvested stock options | — | |||
Unvested performance options | — | |||
Performance awards | — | |||
Deferred compensation award | $ | 707,427 | (1) | |
Consulting arrangements | — | |||
Health insurance benefits | — | |||
Executive life insurance premiums | — |
* | The amounts in this table do not include any payments or awards that were vested at December 31, 2010 or any pension or other vested retirement benefits. | |
(1) | Represents an estimated pro rata share of the then-current award amount of his deferred compensation award at December 31, 2010. |
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Elements | Mr. Sapan | |||
Severance | $ | 7,626,000 | (1) | |
Most recent bonus | $ | 1,625,000 | ||
Unvested restricted stock | — | |||
Unvested stock options | — | |||
Unvested performance options | — | |||
Performance awards | — | |||
Deferred compensation award | $ | 707,427 | (2) | |
Consulting arrangements | — | |||
Health insurance benefits | — | |||
Executive life insurance premiums | — |
* | The amounts in this table do not include any payments or awards that were vested at December 31, 2010 or any pension or other vested retirement benefits. | |
(1) | Represents severance equal to three times the sum of his salary and target bonus. | |
(2) | Represents an estimated pro rata share of the then-current award amount of his deferred compensation award at December 31, 2010. |
Elements | Mr. Sapan | |||
Severance | $ | 7,626,000 | (1) | |
Most recent bonus | $ | 1,625,000 | ||
Unvested restricted stock | — | |||
Unvested stock options | — | |||
Unvested performance options | — | |||
Performance awards | — | |||
Deferred compensation award | $ | 662,537 | (2) | |
Consulting arrangements | — | |||
Health insurance benefits | — | |||
Executive life insurance premiums | — |
* | The amounts in this table do not include any payments or awards that were vested at December 31, 2010 or any pension or other vested retirement benefits. | |
(1) | Represents severance equal to three times the sum of his salary and target bonus. | |
(2) | Represents an estimated pro rata share of the then-current award amount of his deferred compensation award at December 31, 2010. |
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Elements | Mr. Sapan | |||
Severance | — | |||
Most recent bonus | $ | 1,625,000 | ||
Unvested restricted stock | $ | 6,662,537 | (1) | |
Unvested stock options | — | |||
Unvested performance options | — | |||
Performance awards | $ | 3,100,000 | (2) | |
Deferred compensation award | $ | 878,432 | (3) | |
Consulting arrangements | — | |||
Health insurance benefits | — | |||
Executive life insurance premiums | — |
* | The amounts in this table do not include any payments or awards that were vested at December 31, 2010 or any pension or other vested retirement benefits. | |
(1) | Represents full vesting of the 2008, 2009 and 2010 grants of 47,100, 70,400 and 53,100 shares of restricted stock, respectively, with a value of $1,664,497, $2,443,936, and $1,816,817, respectively. The 2008 and 2009 grants include the vesting of 11,775 and 17,600 MSG dividend shares with a value of $303,560 and $453,728, respectively. | |
(2) | Represents full vesting of his 2008 performance award and pro rata vesting of his 2009 and 2010 performance awards; the remaining amounts of his performance awards would be forfeited. | |
(3) | Represents the estimated full value of the then-current award amount of his deferred compensation award as of December 31, 2010. |
Elements | Mr. Sapan | |||
Severance | — | |||
Most recent bonus | $ | 1,625,000 | ||
Unvested restricted stock | — | |||
Unvested stock options | — | |||
Unvested performance options | — | |||
Performance awards | — | |||
Deferred compensation award | $ | 878,432 | (1) | |
Consulting arrangements | — | |||
Health insurance benefits | — | |||
Executive life insurance premiums | — |
* | The amounts in this table do not include any payments or awards that were vested at December 31, 2010 or any pension or other vested retirement benefits. | |
(1) | Represents the estimated full value of the award amount of his then-current deferred compensation award as of December 31, 2010. |
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Elements | Mr. Sapan | |||
Severance | $ | 7,626,000 | (2) | |
Most recent bonus | $ | 1,625,000 | ||
Unvested restricted stock | $ | 6,662,537 | (3) | |
Unvested stock options | $ | 11,287,153 | (4) | |
Unvested performance options | — | |||
Performance awards | $ | 4,650,000 | (5) | |
Deferred compensation award | $ | 878,432 | (6) | |
Consulting arrangements | — | |||
Health insurance benefits | — | |||
Executive life insurance premiums | — |
* | The amounts in this table do not include any payments or awards that were vested at December 31, 2010 or any pension or other vested retirement benefits. | |
(1) | The numbers presented in this table reflect amounts payable as a result of termination of employment by the executive or Cablevision following a change in control. The amounts payable as a result of termination of employment by the executive or Cablevision following a going private transaction are generally equal to or less than the amounts payable as a result of termination of employment by the executive or Cablevision following a change in control. For specific information about payments for a termination following a going private transaction, see Notes (2) to (6) below. | |
(2) | Represents severance equal to three times the sum of his salary and target bonus. | |
(3) | Represents full vesting of the 2008, 2009 and 2010 grants of 47,100, 70,400 and 53,100 shares of restricted stock, respectively, with a value of $1,644,497, $2,443,936, and $1,816,817, respectively. The 2008 and 2009 grants include the vesting of 11,775 and 17,600 MSG dividend shares with a value of $303,560 and $453,728, respectively. | |
(4) | Represents full vesting of the executive’s 2009 grant of 375,800 Cablevision stock options and the 93,950 MSG stock options issued to Mr. Sapan in connection with the MSG Distribution. | |
(5) | Represents the full amount of the executive’s 2008, 2009 and 2010 performance awards of $1,860,000, $930,000 and $1,860,000, respectively. | |
(6) | Represents the estimated full value of the award amount of his then-current deferred compensation award as of December 31, 2010. |
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• | $ in senior secured term loans issued under our new senior secured credit facility described below; and | |
• | $ in senior unsecured notes, which we refer to as the senior notes. |
• | a senior secured revolving credit facility in a principal amount of $ , and | |
• | senior secured term loan facilities in an aggregate principal amount of $ . |
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• | the management of the businesses and affairs of AMC Networks on or prior to the Distribution; | |
• | the terms of the Distribution, our amended and restated certificate of incorporation, our by-laws and the other agreements entered into in connection with the Distribution; and | |
• | any decisions that have been made, or actions taken, relating to AMC Networks or the Distribution. |
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• | entering into any transaction pursuant to which 50% or more of our equity securities or assets would be acquired, whether by merger or otherwise, unless certain tests are met; | |
• | issuing equity securities, if any such issuances would, in the aggregate, constitute 50% or more of the voting power or value of our capital stock; | |
• | certain repurchases of our common shares; | |
• | ceasing to actively conduct our business; | |
• | amendments to our organizational documents (i) affecting the relative voting rights of our stock or (ii) converting one class of our stock to another; | |
• | liquidating or partially liquidating; and | |
• | taking any other action that prevents the Distribution and related transactions from being tax-free. |
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AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Combined Voting | ||||||||||||||
Power of All | ||||||||||||||
Classes of Stock | ||||||||||||||
Title of | Beneficial | Percent | Beneficially | |||||||||||
Name and Address | Stock Class(1) | Ownership | of Class | Owned | ||||||||||
. | ||||||||||||||
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• | one percent of the number of shares of our Class A Common Stock then outstanding; or | |
• | the average weekly trading volume of our Class A Common Stock on NASDAQ during the four calendar weeks preceding the filing of a notice of Form 144 with respect to such sale. |
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• | any breach of the director’s duty of loyalty to us or our stockholders; | |
• | acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; | |
• | payments of unlawful dividends or unlawful stock repurchases or redemptions; or | |
• | any transaction from which the director derived an improper personal benefit. |
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Consolidated Financial Statements as of December 31, 2010 and 2009 and for the years ended December 31, 2010, 2009 and 2008 | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-46 | ||||
Consolidated Financial Statements as of March 31, 2011 (Unaudited) and December 31, 2010 and for the three months ended March 31, 2011 and 2010 (Unaudited) | ||||
F-47 | ||||
F-48 | ||||
F-49 | ||||
F-50 | ||||
F-51 |
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2010 | 2009 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 79,960 | $ | 29,828 | ||||
Accounts receivable, trade (less allowance for doubtful accounts of $8,321 and $7,767) | 242,699 | 212,341 | ||||||
Amounts due from affiliates, net | 6,840 | 24,472 | ||||||
Program rights, net | 186,475 | 162,741 | ||||||
Prepaid expenses and other current assets | 42,950 | 48,716 | ||||||
Deferred tax asset | 7,516 | 7,499 | ||||||
Assets distributed to Cablevision in 2010 | — | 34,477 | ||||||
Total current assets | 566,440 | 520,074 | ||||||
Property and equipment, net of accumulated depreciation of $156,885 and $153,826 | 68,977 | 71,665 | ||||||
Program rights, net | 597,355 | 520,565 | ||||||
Amounts due from affiliates | 3,502 | 4,920 | ||||||
Note receivable from affiliate | 16,832 | 3,492 | ||||||
Deferred tax asset, net | 41,250 | 36,452 | ||||||
Deferred carriage fees, net | 69,343 | 91,626 | ||||||
Amortizable intangible assets, net of accumulated amortization of $675,038 and $588,388 | 364,882 | 451,532 | ||||||
Indefinite-lived intangible assets | 19,900 | 19,900 | ||||||
Goodwill | 83,173 | 83,173 | ||||||
Other assets | 15,043 | 22,754 | ||||||
Deferred financing costs, net of accumulated amortization of $16,388 and $13,138 | 7,199 | 10,449 | ||||||
Assets distributed to Cablevision in 2010 | — | 97,760 | ||||||
$ | 1,853,896 | $ | 1,934,362 | |||||
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIENCY) | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 46,459 | $ | 37,589 | ||||
Accrued liabilities: | ||||||||
Interest | 20,046 | 20,353 | ||||||
Employee related costs | 44,578 | 39,849 | ||||||
Deferred carriage fees payable | 2,218 | 1,677 | ||||||
Other accrued expenses | 23,888 | 29,301 | ||||||
Amounts due to affiliates, net | 10,678 | 11,888 | ||||||
Program rights obligations | 116,190 | 118,742 | ||||||
Deferred revenue | 17,859 | 15,081 | ||||||
Note payable to affiliate | — | 190,000 | ||||||
Credit facility debt | 50,000 | 25,000 | ||||||
Capital lease obligations | 4,575 | 4,286 | ||||||
Liabilities distributed to Cablevision in 2010 | — | 65,189 | ||||||
Total current liabilities | 336,491 | 558,955 | ||||||
Program rights obligations | 338,635 | 316,896 | ||||||
Senior notes | 299,552 | 299,283 | ||||||
Senior subordinated notes | 324,071 | 323,817 | ||||||
Credit facility debt | 425,000 | 555,000 | ||||||
Capital lease obligations | 15,677 | 20,325 | ||||||
Other liabilities | 89,639 | 88,485 | ||||||
Liabilities distributed to Cablevision in 2010 | — | 8,593 | ||||||
Total liabilities | 1,829,065 | 2,171,354 | ||||||
Commitments and contingencies | ||||||||
Stockholder’s equity (deficiency) | 24,831 | (236,992 | ) | |||||
$ | 1,853,896 | $ | 1,934,362 | |||||
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2010 | 2009 | 2008 | ||||||||||
Revenues, net (including revenues, net from affiliates of Cablevision of $29,203, $31,796 and $71,124, respectively) | $ | 1,078,300 | $ | 973,644 | $ | 893,557 | ||||||
Operating expenses: | ||||||||||||
Technical and operating (excluding depreciation, amortization and impairments shown below and including charges (credits) from affiliates of Cablevision of $3,971, $(2,043) and $(446), respectively) | 366,093 | 310,365 | 314,960 | |||||||||
Selling, general and administrative (including charges from affiliates of Cablevision of $100,230, $87,239, and $77,406 respectively) | 328,134 | 313,904 | 302,474 | |||||||||
Restructuring (credits) expense | (2,218 | ) | 5,162 | 46,877 | ||||||||
Depreciation and amortization (including impairments) | 106,455 | 106,504 | 108,349 | |||||||||
798,464 | 735,935 | 772,660 | ||||||||||
Operating income | 279,836 | 237,709 | 120,897 | |||||||||
Other income (expense): | ||||||||||||
Interest expense | (75,800 | ) | (76,541 | ) | (98,644 | ) | ||||||
Interest income | 2,388 | 836 | 1,582 | |||||||||
Loss on investments, net | — | — | (103,238 | ) | ||||||||
Gain on equity derivative contracts | — | — | 66,447 | |||||||||
Loss on interest rate swap contracts, net | — | (3,237 | ) | (2,843 | ) | |||||||
Loss on extinguishment of debt | — | — | (2,424 | ) | ||||||||
Miscellaneous, net | (162 | ) | 187 | 379 | ||||||||
(73,574 | ) | (78,755 | ) | (138,741 | ) | |||||||
Income (loss) from continuing operations before income taxes | 206,262 | 158,954 | (17,844 | ) | ||||||||
Income tax expense | (88,073 | ) | (70,407 | ) | (2,732 | ) | ||||||
Income (loss) from continuing operations | 118,189 | 88,547 | (20,576 | ) | ||||||||
Loss from discontinued operations, net of income taxes | (38,090 | ) | (34,791 | ) | (26,866 | ) | ||||||
Net income (loss) | $ | 80,099 | $ | 53,756 | $ | (47,442 | ) | |||||
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Balance, January 1, 2008 | $ | (570,665 | ) | |
Non-cash capital contributions, net | 193,155 | |||
VOOM HD non-controlling interest (see Note 15) | 18,101 | |||
Cash contributions from Cablevision | 235,353 | |||
Cash distributions to Cablevision | (65,938 | ) | ||
Deemed capital distribution related to utilization of Company tax losses by Cablevision | (41,066 | ) | ||
Net loss | (47,442 | ) | ||
Balance, December 31, 2008 | (278,502 | ) | ||
Non-cash capital contributions, net | 17,260 | |||
Cash contributions from Cablevision | 682 | |||
Cash distributions to Cablevision | (10,122 | ) | ||
Deemed capital distribution related to utilization of Company tax losses by Cablevision | (20,066 | ) | ||
Net income | 53,756 | |||
Balance, December 31, 2009 | (236,992 | ) | ||
Non-cash capital contributions, net | 19,909 | |||
Cash contributions from Cablevision | 204,018 | |||
Cash distributions to Cablevision | (53,754 | ) | ||
Deemed capital contribution related to utilization of Cablevision tax losses by the Company | 52,824 | |||
Distribution of net assets to Cablevision (see Note 5) | (41,273 | ) | ||
Net income | 80,099 | |||
Balance, December 31, 2010 | $ | 24,831 | ||
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2010 | 2009 | 2008 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Income (loss) from continuing operations | $ | 118,189 | $ | 88,547 | $ | (20,576 | ) | |||||
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization (including impairments) | 106,455 | 106,504 | 108,349 | |||||||||
Non-cash restructuring expense | — | 1,731 | 41,047 | |||||||||
Share-based compensation expense related to Cablevision equity classified awards | 16,267 | 13,716 | 11,781 | |||||||||
Amortization and write-off of program rights | 219,859 | 184,096 | 168,035 | |||||||||
Amortization of deferred carriage fees | 25,213 | 23,646 | 22,611 | |||||||||
Amortization of deferred financing costs, discounts on indebtedness and other costs | 3,773 | 3,962 | 10,245 | |||||||||
Provision for doubtful accounts | 1,484 | 2,528 | 3,120 | |||||||||
Loss on investments, net | — | — | 103,238 | |||||||||
Gain on equity derivative contracts | — | — | (66,447 | ) | ||||||||
Loss on interest rate swap contracts | — | — | 2,697 | |||||||||
Loss on extinguishment of debt | — | — | 2,424 | |||||||||
Deferred income tax expense (benefit) | 80,744 | 61,975 | (3,239 | ) | ||||||||
Changes in assets and liabilities, net of the effects of acquisitions: | ||||||||||||
Accounts receivable, trade | (36,422 | ) | (27,641 | ) | (5,691 | ) | ||||||
Amounts due from/to affiliates, net | 5,049 | 4,004 | (6,449 | ) | ||||||||
Prepaid expenses and other assets | 17,388 | (4,220 | ) | (16,494 | ) | |||||||
Program rights | (321,082 | ) | (222,111 | ) | (283,725 | ) | ||||||
Deferred carriage fees | (2,930 | ) | (585 | ) | (2,710 | ) | ||||||
Accounts payable, accrued expenses and other liabilities | 12,772 | (1,007 | ) | (11,692 | ) | |||||||
Program rights obligations | 19,337 | (27,840 | ) | 38,778 | ||||||||
Deferred carriage fees payable | (101 | ) | (3,303 | ) | (15,172 | ) | ||||||
Net cash provided by operating activities | 265,995 | 204,002 | 80,130 | |||||||||
Cash flows from investing activities: | ||||||||||||
Capital expenditures | (17,243 | ) | (13,419 | ) | (23,577 | ) | ||||||
Payments for acquisitions of businesses, net | (320 | ) | (470 | ) | (110,415 | ) | ||||||
Proceeds from sale of equipment, net of costs of disposal | 406 | 720 | 213 | |||||||||
Net cash used in investing activities | (17,157 | ) | (13,169 | ) | (133,779 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Capital contributions from Cablevision | 204,018 | 682 | 235,353 | |||||||||
Capital distributions to Cablevision | (53,754 | ) | (10,122 | ) | (65,938 | ) | ||||||
Additions to deferred financing costs | — | — | (2,941 | ) | ||||||||
Proceeds from note payable to affiliate | — | — | 60,000 | |||||||||
Repayment of note payable to affiliate | (190,000 | ) | — | — | ||||||||
Repayment of collateralized indebtedness | — | — | (368,097 | ) | ||||||||
Proceeds from credit facility debt | — | — | 276,000 | |||||||||
Repayment of credit facility debt | (105,000 | ) | (120,000 | ) | (76,000 | ) | ||||||
Principal payments on capital lease obligations | (4,080 | ) | (3,034 | ) | (2,541 | ) | ||||||
Net cash (used in) provided by financing activities | (148,816 | ) | (132,474 | ) | 55,836 | |||||||
Net increase in cash and cash equivalents from continuing operations | 100,022 | 58,359 | 2,187 | |||||||||
Cash flows from discontinued operations: | ||||||||||||
Net cash used in operating activities | (30,870 | ) | (48,967 | ) | (99,423 | ) | ||||||
Net cash (used in) provided by investing activities | (10,183 | ) | (4,753 | ) | 46,173 | |||||||
Net cash used in financing activities | — | — | — | |||||||||
Effect of change in cash related to net assets distributed to Cablevision in 2010 | (8,837 | ) | (291 | ) | 4,648 | |||||||
Net decrease in cash and cash equivalents from discontinued operations | (49,890 | ) | (54,011 | ) | (48,602 | ) | ||||||
Cash and cash equivalents at beginning of year | 29,828 | 25,480 | 71,895 | |||||||||
Cash and cash equivalents at end of year | $ | 79,960 | $ | 29,828 | $ | 25,480 | ||||||
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Note 1. | Nature of Operations and Basis of Presentation |
• | National Networks: Includes four nationally distributed programming networks: AMC, WE tv, IFC and Sundance Channel. These programming networks are distributed throughout the United States via cable and other multichannel distribution platforms, including direct broadcast satellite and platforms operated by telecommunications providers (we refer collectively to these cable and other multichannel distributors as “multichannel video distributors” or “distributors”); and | |
• | International and Other: Includes AMC/Sundance Channel Global, the Company’s international programming business; IFC Entertainment, the Company’s independent film distribution business; and AMC Network Communications (formerly Rainbow Network Communications), the Company’s network technical services business, which supplies an array of services to the network programming industry, primarily on behalf of the programming networks of the Company. AMC and Sundance Channel are available in Canada and Sundance Channel and WE tv are available in other countries throughout Europe and Asia. The International and Other reportable segment also includes VOOM HD Holdings LLC (“VOOM HD”), which historically offered a suite of channels, produced exclusively in HD and marketed for distribution to digital broadcast satellite and cable television distributors (“VOOM”). VOOM was available in the United States only on Cablevision’s cable television systems and on DISH Network, LLC, formerly a subsidiary of EchoStar Communications Corporation (“DISH Network”) (see Notes 4 and 15). On December 18, 2008, Cablevision decided to discontinue funding the domestic offerings of VOOM. Subsequently, VOOM HD terminated the domestic offerings of VOOM. VOOM HD discontinued the VOOM international channel as of December 31, 2009. As of December 31, 2010, VOOM HD distributed internationally the Rush HD channel, a network dedicated to action and adventure sports. The results of VOOM HD are presented in continuing operations. |
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Note 2. | Summary of Significant Accounting Policies |
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Reporting Unit | ||||
AMC | $ | 34,251 | ||
WE tv | 5,214 | |||
IFC | 13,582 | |||
Sundance Channel | 28,930 | |||
AMC Network Communications | 1,196 | |||
$ | 83,173 | |||
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Years Ending December 31, | ||||
2011 | $ | 116,190 | ||
2012 | 100,985 | |||
2013 | 84,937 | |||
2014 | 60,690 | |||
2015 | 45,287 | |||
Thereafter | 46,736 | |||
$ | 454,825 | |||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Non-Cash Investing and Financing Activities: | ||||||||||||
Continuing Operations: | ||||||||||||
Deemed capital contributions from (distributions to) affiliate related to the utilization of Cablevision (Company) tax losses by the Company (Cablevision) | $ | 52,824 | $ | (20,066 | ) | $ | (41,066 | ) | ||||
Deemed capital contribution from Cablevision due to forgiveness of net amounts due to Cablevision | — | — | 178,573 | |||||||||
Leasehold improvement paid by landlord | 554 | — | — | |||||||||
Reduction of capital lease obligation and related assets | 279 | — | 784 | |||||||||
Increase in capital lease obligations and accounts receivable from affiliates related to capital leases with affiliates of Cablevision | — | 6,539 | — | |||||||||
Capital distribution related to the entities transferred to Cablevision on December 31, 2010 (Note 5) | 41,273 | — | — | |||||||||
Redemption of collaterized indebtedness with related equity derivative contract | — | — | 44,057 | |||||||||
Value of General Electric common stock exchanged in the acquisition of Sundance Channel (Note 3) | — | — | 369,137 | |||||||||
Supplemental Data: | ||||||||||||
Cash interest paid — continuing operations | 72,335 | 72,919 | 89,605 | |||||||||
Cash interest paid — discontinued operations | — | 541 | 651 | |||||||||
Income taxes paid — continuing operations | 5,217 | 3,769 | 3,263 | |||||||||
Income taxes paid (refunded), net — discontinued operations | (1 | ) | (2 | ) | 32 |
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Note 3. | Transactions |
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Estimated | ||||||
Useful Life | ||||||
Cash | $ | 3,056 | ||||
Accounts receivable | 13,371 | |||||
Prepaid expenses and other assets | 30,102 | |||||
Affiliation agreements and affiliate relationships | 4 to 25 years | 314,200 | ||||
Advertiser relationships | 3 years | 12,700 | ||||
Trademarks | Indefinite-lived | 19,900 | ||||
Goodwill | Indefinite-lived | 28,931 | ||||
Accounts payable and accrued expenses | (11,316 | ) | ||||
Other liabilities | (16,244 | ) | ||||
Net assets acquired(1) | $ | 394,700 | ||||
(1) | Net of $87,716 of deferred tax effects which were recorded as a result of the expected tax free disposition of the General Electric common stock and the settlement of the related monetization contracts thereon described above. The deferred tax impact was comprised of (i) the reversal of a deferred tax liability of $136,581 on the unrealized tax gain with respect to the investment in General Electric common stock, (ii) an unrecognized tax benefit of $53,132 associated with an uncertain tax position of $53,132 that was primarily related to certain previously recognized deferred tax assets and (iii) $4,267 of deferred tax assets relating to future deductible temporary differences. |
Note 4. | Restructuring |
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Employee | Contractual | Other | ||||||||||||||
Severance | Program Rights | Costs | Total | |||||||||||||
Charges incurred | $ | 5,711 | (a) | $ | 40,974 | (b) | $ | 110 | $ | 46,795 | ||||||
Write-down of assets | — | (40,974 | )(b) | (73 | ) | (41,047 | ) | |||||||||
Payments | — | — | — | — | ||||||||||||
Restructuring liability at December 31, 2008 | 5,711 | — | 37 | 5,748 | ||||||||||||
Charges incurred | 579 | (c) | 4,572 | (d) | 11 | 5,162 | ||||||||||
Write-down of assets and other non-cash items | — | (1,712 | ) | 7 | (1,705 | ) | ||||||||||
Payments | (6,013 | ) | (2,390 | ) | — | (8,403 | ) | |||||||||
Restructuring liability at December 31, 2009 | 277 | 470 | 55 | 802 | ||||||||||||
Credits recognized | (249 | ) | (1,969 | )(d) | — | (2,218 | ) | |||||||||
Other adjustments | 22 | 2,048 | (e) | — | 2,070 | |||||||||||
Payments | (47 | ) | (549 | ) | — | (596 | ) | |||||||||
Restructuring liability at December 31, 2010 | $ | 3 | $ | — | $ | 55 | $ | 58 | ||||||||
(a) | Employee severance related to the elimination of 128 positions at VOOM HD. | |
(b) | Impairment charge related to certain contractual program rights assets that had no future usefulness and could no longer be exploited at VOOM HD or on any other programming subsidiary of the Company. | |
(c) | Employee severance related to the elimination of five positions at VOOM HD. | |
(d) | Represents unfavorable (favorable) negotiated settlements of contractual obligations with vendors. | |
(e) | Represents a reclassification of program rights obligations to accrued restructuring liability. |
Note 5. | Discontinued Operations |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenues, net | $ | 79,768 | $ | 69,723 | $ | 86,588 | ||||||
Loss before income taxes | $ | (63,311 | ) | $ | (58,189 | ) | $ | (44,968 | ) | |||
Income tax benefit | 25,221 | 23,398 | 18,102 | |||||||||
Loss from discontinued operations, net of income taxes | $ | (38,090 | ) | $ | (34,791 | ) | $ | (26,866 | ) | |||
Cash and cash equivalents | $ | 850 | ||
Accounts receivable, prepaid expenses and other current assets | 26,353 | |||
Advances due from affiliates | 5,399 | |||
Property and equipment, net and other long-term assets | 19,378 | |||
Deferred tax asset | 67,576 | |||
Intangible assets | 12,681 | |||
Total assets distributed | $ | 132,237 | ||
Accounts payable and accrued expenses | $ | 16,917 | ||
Amounts due to affiliates | 46,176 | |||
Other current liabilities | 2,096 | |||
Other long-term liabilities | 8,593 | |||
Total liabilities distributed | 73,782 | |||
Net assets distributed | $ | 58,455 | ||
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Note 6. | Property and Equipment |
December 31, | Estimated | |||||||||
2010 | 2009 | Useful Lives | ||||||||
Program, service and test equipment | $ | 115,325 | $ | 114,834 | 2 to 7 years | |||||
Satellite equipment | 15,503 | 15,717 | 13 years | |||||||
Furniture and fixtures | 15,922 | 15,392 | 2 to 8 years | |||||||
Transmission equipment | 37,495 | 38,699 | 5 years | |||||||
Leasehold improvements | 41,617 | 40,849 | Term of lease | |||||||
225,862 | 225,491 | |||||||||
Less accumulated depreciation and amortization | (156,885 | ) | (153,826 | ) | ||||||
$ | 68,977 | $ | 71,665 | |||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Satellite equipment | $ | 15,503 | $ | 15,717 | ||||
Less accumulated amortization | (5,097 | ) | (3,942 | ) | ||||
$ | 10,406 | $ | 11,775 | |||||
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Note 7. | Intangible Assets |
December 31, | Estimated | |||||||||||
2010 | 2009 | Useful Lives | ||||||||||
Gross carrying amount of amortizable intangible assets | ||||||||||||
Affiliation agreements and affiliate relationships | $ | 911,357 | $ | 911,357 | 4 to 25 years (1 | ) | ||||||
Advertiser relationships | 103,723 | 103,723 | 3 to 10 years (2 | ) | ||||||||
Other amortizable intangible assets | 24,840 | 24,840 | 4 to 10 years (3 | ) | ||||||||
1,039,920 | 1,039,920 | |||||||||||
Accumulated amortization | ||||||||||||
Affiliation agreements and affiliate relationships | (565,893 | ) | (494,393 | ) | ||||||||
Advertiser relationships | (84,684 | ) | (69,661 | ) | ||||||||
Other amortizable intangible assets | (24,461 | ) | (24,334 | ) | ||||||||
(675,038 | ) | (588,388 | ) | |||||||||
Amortizable intangible assets, net of accumulated amortization | 364,882 | 451,532 | ||||||||||
Indefinite-lived intangible assets | ||||||||||||
Trademarks | 19,900 | 19,900 | ||||||||||
Indefinite-lived intangible assets | 19,900 | 19,900 | ||||||||||
Goodwill | 83,173 | 83,173 | ||||||||||
Total intangible assets, net | $ | 467,955 | $ | 554,605 | ||||||||
Aggregate amortization expense | ||||||||||||
Years ended December 31, 2010 and 2009 | $ | 86,650 | $ | 83,676 |
Estimated amortization expense | ||||
Year ending December 31, 2011 | $ | 79,109 | ||
Year ending December 31, 2012 | 64,436 | |||
Year ending December 31, 2013 | 31,678 | |||
Year ending December 31, 2014 | 9,765 | |||
Year ending December 31, 2015 | 9,746 |
(1) | At December 31, 2010, the weighted average remaining useful life of affiliation agreements and affiliate relationships is 15 years. | |
(2) | At December 31, 2010, the weighted average remaining useful life of advertiser relationships is 3 years. | |
(3) | At December 31, 2010, the weighted average remaining useful life of other amortizable intangible assets is 5 years. |
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Note 8. | Debt |
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Years Ending December 31, | ||||
2011 | $ | 50,000 | ||
2012 | 400,000 | |||
2013 | 325,000 | |||
2014 | 325,000 | |||
2015 | — |
Note 9. | Derivative Contracts and Collateralized Indebtedness |
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Amount of Gain (Loss) | ||||||||||
Derivatives Not | Recognized | |||||||||
Designated as | Location of Gain | Years Ended December 31, | ||||||||
Hedging Instruments | (Loss) Recognized | 2009 | 2008 | |||||||
Interest rate swap contracts | Loss on interest rate swap contracts, net | $ | (3,237 | ) | $ | (2,843 | ) | |||
Prepaid forward contracts | Gain on equity derivative contracts, net | — | 66,447 | |||||||
Total derivative contracts | $ | (3,237 | ) | $ | 63,604 | |||||
Number of shares | 12,742,033 | |||
Collateralized indebtedness settled | $ | (412,154 | ) | |
Derivative contracts settled | 44,057 | |||
Net cash payment | $ | (368,097 | ) | |
Note 10. | Fair Value Measurement |
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• | Level I — Quoted prices for identical instruments in active markets. | |
• | Level II — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. | |
• | Level III — Instruments whose significant value drivers are unobservable. |
Level I | Level II | Level III | Total | |||||||||||||
At December 31, 2010: | ||||||||||||||||
Cash equivalents(a) | $ | 78,908 | $ | — | $ | — | $ | 78,908 | ||||||||
At December 31, 2009: | ||||||||||||||||
Cash equivalents(a) | $ | 26,174 | $ | — | $ | — | $ | 26,174 |
(a) | Represents the Company’s investment in funds that invest primarily in money market securities. |
December 31, 2010 | ||||||||
Carrying | Estimated | |||||||
Amount | Fair Value | |||||||
Debt instruments: | ||||||||
Credit facility debt(a) | $ | 475,000 | $ | 475,000 | ||||
Senior notes | 299,552 | 300,750 | ||||||
Senior subordinated notes | 324,071 | 337,188 | ||||||
$ | 1,098,623 | $ | 1,112,938 | |||||
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December 31, 2009 | ||||||||
Carrying | Estimated | |||||||
Amount | Fair Value | |||||||
Debt instruments: | ||||||||
Credit facility debt(a) | $ | 580,000 | $ | 580,000 | ||||
Senior notes | 299,283 | 305,640 | ||||||
Senior subordinated notes | 323,817 | 342,875 | ||||||
$ | 1,203,100 | $ | 1,228,515 | |||||
(a) | The carrying value of the Company’s credit facility debt which bears interest at variable rates approximates its fair value. |
Note 11. | Leases |
2011 | $ | 13,277 | ||
2012 | 13,506 | |||
2013 | 12,763 | |||
2014 | 12,674 | |||
2015 | 12,848 | |||
Thereafter | 24,857 |
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Year ending December 31, 2011 | $ | 6,321 | ||
Year ending December 31, 2012 | 2,796 | |||
Year ending December 31, 2013 | 2,796 | |||
Year ending December 31, 2014 | 2,796 | |||
Year ending December 31, 2015 | 2,796 | |||
Thereafter | 11,804 | |||
Total minimum lease payments | 29,309 | |||
Less amount representing interest (at 7.7%-10.4%) | (9,057 | ) | ||
Present value of net minimum future capital lease payments | 20,252 | |||
Less principal portion of current installments | (4,575 | ) | ||
Long-term portion of obligations under capital leases | $ | 15,677 | ||
Note 12. | Affiliate Transactions |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenues, net | $ | 29,203 | $ | 31,796 | $ | 71,124 | ||||||
Operating expenses: | ||||||||||||
Technical and operating expenses: | ||||||||||||
Program rights charges to affiliates of Cablevision | $ | — | $ | (941 | ) | $ | (2,284 | ) | ||||
Production services | (770 | ) | (5,587 | ) | (3,073 | ) | ||||||
Other support functions | 561 | 376 | 189 | |||||||||
Health and welfare plans | 4,180 | 4,109 | 4,722 | |||||||||
Total technical and operating expenses | $ | 3,971 | $ | (2,043 | ) | $ | (446 | ) | ||||
Selling, general and administrative expenses: | ||||||||||||
Corporate general and administrative costs, net | $ | 32,370 | $ | 28,787 | $ | 28,177 | ||||||
Management fees | 26,511 | 23,773 | 21,513 | |||||||||
Health and welfare plans | 4,029 | 4,492 | 3,797 | |||||||||
Advertising expense | 2,391 | 1,391 | 1,193 | |||||||||
Sales support and other functions, net | 1,516 | 1,118 | — | |||||||||
Share-based compensation | 17,206 | 14,723 | 10,259 | |||||||||
Long-term incentive plans | 16,207 | 12,955 | 12,467 | |||||||||
Total selling, general and administrative expenses | $ | 100,230 | $ | 87,239 | $ | 77,406 | ||||||
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Note 13. | Benefit Plans |
Note 14. | Income Taxes |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Current expense: | ||||||||||||
Federal | $ | — | $ | — | $ | — | ||||||
State and other | 4,360 | 3,326 | 3,325 | |||||||||
4,360 | 3,326 | 3,325 | ||||||||||
Deferred expense (benefit): | ||||||||||||
Federal | 62,078 | 46,959 | (11,918 | ) | ||||||||
State | 18,666 | 15,016 | 8,679 | |||||||||
80,744 | 61,975 | (3,239 | ) | |||||||||
Tax expense relating to uncertain tax positions, including accrued interest | 2,969 | 5,106 | 2,646 | |||||||||
Income tax expense | $ | 88,073 | $ | 70,407 | $ | 2,732 | ||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Federal tax expense (benefit) at statutory rate | $ | 72,192 | $ | 55,634 | $ | (6,245 | ) | |||||
State income taxes, net of federal effect | 10,937 | 9,238 | (985 | ) | ||||||||
Changes in the valuation allowance | 1,398 | 1,309 | 1,189 | |||||||||
Change in the state rate used to measure deferred taxes, net of federal benefit | 1,236 | 638 | 2,604 | |||||||||
Tax expense relating to uncertain tax positions, including accrued interest, net of deferred tax benefits | 1,890 | 3,250 | 1,689 | |||||||||
Nondeductible expenses | 420 | 338 | 426 | |||||||||
Lower state tax rate used to measure deferred tax benefit on unrealized loss on stock investment | — | — | 4,054 | |||||||||
Income tax expense | $ | 88,073 | $ | 70,407 | $ | 2,732 | ||||||
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December 31, | ||||||||
2010 | 2009 | |||||||
Deferred Tax Asset (Liability) | ||||||||
Current | ||||||||
Compensation and benefit plans | $ | 3,235 | $ | 3,097 | ||||
Allowance for doubtful accounts | 2,725 | 2,658 | ||||||
Other liabilities | 1,821 | 1,947 | ||||||
Deferred tax asset | 7,781 | 7,702 | ||||||
Valuation allowance | (265 | ) | (203 | ) | ||||
Net deferred tax asset, current | 7,516 | 7,499 | ||||||
Non-current | ||||||||
NOLs and tax credit carry forwards | 120,687 | 117,973 | ||||||
Compensation and benefit plans | 22,964 | 21,565 | ||||||
Fixed assets and intangible assets | 18,782 | 22,298 | ||||||
Other liabilities | 3,688 | 2,512 | ||||||
Deferred tax asset | 166,121 | 164,348 | ||||||
Valuation allowance | (5,668 | ) | (4,332 | ) | ||||
Net deferred tax asset, noncurrent | 160,453 | 160,016 | ||||||
Investments in partnerships | (119,203 | ) | (123,564 | ) | ||||
Deferred tax liability, noncurrent | (119,203 | ) | (123,564 | ) | ||||
Net deferred tax asset, noncurrent | 41,250 | 36,452 | ||||||
Total net deferred tax asset | $ | 48,766 | $ | 43,951 | ||||
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Balance at December 31, 2009 | $ | 61,357 | ||
Increases related to prior year tax positions | — | |||
Decreases related to prior year tax positions | (226 | ) | ||
Increases related to current year tax positions | 2,449 | |||
Settlements | — | |||
Lapse of statute of limitations | — | |||
Balance at December 31, 2010 | $ | 63,580 | ||
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Note 15. | Commitments and Contingencies |
Payments Due by Period | ||||||||||||||||||||||||
Years | Years | More Than | ||||||||||||||||||||||
Total | Year 1 | 2-3 | 4-5 | 5 Years | Other | |||||||||||||||||||
Off balance sheet arrangements: | ||||||||||||||||||||||||
Purchase obligations(1) | $ | 126,677 | $ | 94,211 | $ | 31,544 | $ | 922 | $ | — | $ | — | ||||||||||||
Operating lease obligations(2) | 89,925 | 13,277 | 26,269 | 25,522 | 24,857 | — | ||||||||||||||||||
Guarantees | 359 | 359 | — | — | — | — | ||||||||||||||||||
216,961 | 107,847 | 57,813 | 26,444 | 24,857 | — | |||||||||||||||||||
Contractual obligations reflected on the balance sheet: | ||||||||||||||||||||||||
Debt obligations(3) | 1,279,515 | 115,742 | 816,294 | 347,479 | — | — | ||||||||||||||||||
Program rights obligations | 454,825 | 116,190 | 185,922 | 105,977 | 46,736 | — | ||||||||||||||||||
Capital lease obligations(4) | 29,309 | 6,321 | 5,592 | 5,592 | 11,804 | — | ||||||||||||||||||
Contract obligations(5) | 2,909 | 1,782 | 1,041 | 86 | — | — | ||||||||||||||||||
Taxes(6) | 66,369 | 2,474 | — | — | — | 63,895 | ||||||||||||||||||
1,832,927 | 242,509 | 1,008,849 | 459,134 | 58,540 | 63,895 | |||||||||||||||||||
Total | $ | 2,049,888 | $ | 350,356 | $ | 1,066,662 | $ | 485,578 | $ | 83,397 | $ | 63,895 | ||||||||||||
(1) | Purchase obligation amounts not reflected on the consolidated balance sheet consist primarily of (i) long-term program rights obligations and (ii) long-term transmission service commitments. | |
(2) | Operating lease commitments represent future minimum payment obligations on various long-term, noncancelable leases for office space and office equipment. | |
(3) | Includes future payments due on the Company’s (i) credit facility debt, (ii) senior notes and (iii) senior subordinated notes (includes related interest for fixed rate debt and estimated interest on variable rate debt calculated based on the prevailing interest rate as of December 31, 2010). | |
(4) | Reflects the principal amount of capital lease obligations, including related interest. | |
(5) | This amount represents primarily long-term carriage fees payable to distributors and additional annual required payments relating to the acquisitions of film website businesses in 2008 and 2009. | |
(6) | This amount represents tax liabilities, including accrued interest, relating to uncertain tax positions. |
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Note 16. | Segment Information |
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenues, net from continuing operations | ||||||||||||
National Networks | $ | 994,573 | $ | 896,493 | $ | 776,462 | ||||||
International and Other | 104,499 | 95,921 | 131,028 | |||||||||
Inter-segment eliminations | (20,772 | ) | (18,770 | ) | (13,933 | ) | ||||||
$ | 1,078,300 | $ | 973,644 | $ | 893,557 | |||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Inter-segment revenues | ||||||||||||
National Networks | $ | (325 | ) | $ | (213 | ) | $ | — | ||||
International and Other | (20,447 | ) | (18,557 | ) | (13,933 | ) | ||||||
$ | (20,772 | ) | $ | (18,770 | ) | $ | (13,933 | ) | ||||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Adjusted operating cash flow (deficit) from continuing operations | ||||||||||||
National Networks | $ | 419,051 | $ | 380,824 | $ | 328,992 | ||||||
International and Other | (14,686 | ) | (13,553 | ) | (42,283 | ) | ||||||
Inter-segment eliminations | (3,086 | ) | (3,173 | ) | (327 | ) | ||||||
$ | 401,279 | $ | 364,098 | $ | 286,382 | |||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Depreciation and amortization (including impairments) included in continuing operations | ||||||||||||
National Networks | $ | (92,735 | ) | $ | (89,603 | ) | $ | (75,511 | ) | |||
International and Other | (13,720 | ) | (16,901 | ) | (32,838 | ) | ||||||
$ | (106,455 | ) | $ | (106,504 | ) | $ | (108,349 | ) | ||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Share-based compensation expense included in continuing operations | ||||||||||||
National Networks | $ | (13,791 | ) | $ | (12,405 | ) | $ | (8,360 | ) | |||
International and Other | (3,415 | ) | (2,318 | ) | (1,899 | ) | ||||||
$ | (17,206 | ) | $ | (14,723 | ) | $ | (10,259 | ) | ||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Restructuring credit (expense) included in continuing operations | ||||||||||||
National Networks | $ | — | $ | — | $ | (82 | ) | |||||
International and Other (1) | 2,218 | (5,162 | ) | (46,795 | ) | |||||||
$ | 2,218 | $ | (5,162 | ) | $ | (46,877 | ) | |||||
(1) | In 2008, restructuring expense for the International and Other reportable segment primarily related to an impairment charge for certain contractual program rights assets at VOOM HD (see Note 4). |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Income (loss) from continuing operations | ||||||||||||
National Networks | $ | 312,525 | $ | 278,816 | $ | 245,039 | ||||||
International and Other | (29,603 | ) | (37,934 | ) | (123,815 | ) | ||||||
Inter-segment eliminations | (3,086 | ) | (3,173 | ) | (327 | ) | ||||||
$ | 279,836 | $ | 237,709 | $ | 120,897 | |||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Operating income (loss) from continuing operations before income taxes | ||||||||||||
Total operating income for reportable segments | $ | 279,836 | $ | 237,709 | $ | 120,897 | ||||||
Items excluded from operating income: | ||||||||||||
Interest expense | (75,800 | ) | (76,541 | ) | (98,644 | ) | ||||||
Interest income | 2,388 | 836 | 1,582 | |||||||||
Loss on investments, net | — | — | (103,238 | ) | ||||||||
Gain on equity derivative contracts | — | — | 66,447 | |||||||||
Loss on interest rate swaps, net | — | (3,237 | ) | (2,843 | ) | |||||||
Loss on extinguishment of debt | — | — | (2,424 | ) | ||||||||
Miscellaneous, net | (162 | ) | 187 | 379 | ||||||||
Income (loss) from continuing operations before income taxes | $ | 206,262 | $ | 158,954 | $ | (17,844 | ) | |||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Capital Expenditures | ||||||||||||
National Networks | $ | 1,600 | $ | 2,684 | $ | 8,486 | ||||||
International and Other | 15,643 | 10,735 | 15,091 | |||||||||
$ | 17,243 | $ | 13,419 | $ | 23,577 | |||||||
Note 17. | Concentration of Credit Risk |
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2010 | 2009 | 2008 | ||||||||||
Customer 1 | 11 | % | 11 | % | 11 | % | ||||||
Customer 2 | 12 | % | 13 | % | 11 | % |
Note 18. | Equity Plans |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Share-based Compensation Expense Related to Awards Granted to Company Employees: | ||||||||||||
Stock options | $ | 415 | $ | 512 | $ | 922 | ||||||
SARs | 846 | 848 | (1,065 | ) | ||||||||
Restricted shares | 9,414 | 8,275 | 6,513 | |||||||||
$ | 10,675 | $ | 9,635 | $ | 6,370 | |||||||
Share-based Compensation Expense Related to Cablevision Corporate Employees and Directors Allocated to the Company: | ||||||||||||
Stock options | $ | 914 | $ | 908 | $ | 818 | ||||||
SARs | 93 | 159 | (457 | ) | ||||||||
Restricted shares | 5,524 | 4,021 | 3,528 | |||||||||
$ | 6,531 | $ | 5,088 | $ | 3,889 | |||||||
Total Share-based Compensation Expense: | ||||||||||||
Stock options | $ | 1,329 | $ | 1,420 | $ | 1,740 | ||||||
SARs | 939 | 1,007 | (1,522 | ) | ||||||||
Restricted shares | 14,938 | 12,296 | 10,041 | |||||||||
$ | 17,206 | $ | 14,723 | $ | 10,259 | |||||||
Range of risk-free interest rates | 1.40%-1.85% | |
Weighted average expected life (in years) | 3.9 | |
Dividend yield | 1.56% | |
Weighted average volatility | 46.69% | |
Weighted average grant date fair value | $3.46 |
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Weighted | ||||||||||||||||||||
Weighted | Average | |||||||||||||||||||
Shares Under Option | Average | Remaining | ||||||||||||||||||
Time | Performance | Exercise | Contractual | Aggregate | ||||||||||||||||
Vesting | Vesting | Price Per | Term | Intrinsic | ||||||||||||||||
Options | Options | Share(a) | (in years) | Value(b) | ||||||||||||||||
Balance, December 31, 2009 | 787,508 | 10,000 | $ | 14.27 | 4.52 | $ | 10,005 | |||||||||||||
Exercised | (131,898 | ) | — | 10.42 | ||||||||||||||||
Forfeited/Expired | (46,500 | ) | — | 35.23 | ||||||||||||||||
Balance, December 31, 2010 | 609,110 | 10,000 | $ | 10.29 | 3.94 | $ | 14,580 | |||||||||||||
Options exercisable at December 31, 2010 | 358,577 | 10,000 | $ | 11.53 | 4.12 | $ | 8,224 | |||||||||||||
Options expected to vest in the future | 250,533 | — | $ | 8.47 | 3.68 | $ | 6,356 | |||||||||||||
(a) | In October 2009, the per share exercise price of options that were vested on or prior to December 31, 2004 were reduced to reflect the amount of the $10.00 special dividend and all other dividends declared by Cablevision (the “Dividends”). Holders of these shares will no longer receive the Dividends in cash upon exercise of the option. Option exercise prices relating to activity occurring after the MSG Distribution date were adjusted to 82.63% of their pre-MSG Distribution exercise prices. | |
(b) | The aggregate intrinsic value is calculated as the difference between (i) the exercise price of the underlying award and (ii) the quoted price of CNYG Class A Common Stock on December 31, 2010 or December 31, 2009, as indicated, and December 31, 2010 in the case of the options expected to vest in the future. |
Weighted Average | ||||||||
Number of | Fair Value per | |||||||
Restricted | Share at Date of | |||||||
Shares | Grant(b) | |||||||
Unvested award balance, December 31, 2009 | 1,480,310 | $ | 17.55 | |||||
Granted | 566,430 | 24.05 | ||||||
Vested | (270,300 | ) | 24.14 | |||||
Awards forfeited | (73,670 | ) | 14.73 | |||||
Transfers(a) | (5,120 | ) | 15.34 | |||||
Unvested award balance, December 31, 2010 | 1,697,650 | $ | 16.16 | |||||
(a) | Represents the transfer of unvested restricted stock awards for employees who transferred to Cablevision affiliated entities from the Company during the period. | |
(b) | Restricted shares grant date fair value amounts related to activities occurring after the MSG Distribution date were adjusted to 82.63% of their pre-MSG Distribution grant date fair value per share amounts. |
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Weighted Average | Weighted | |||||||||||||||
Exercise | Average | |||||||||||||||
Price per | Remaining | |||||||||||||||
Outstanding | Share at | Contractual | Aggregate | |||||||||||||
Vested | December 31, | Term | Intrinsic | |||||||||||||
SARs | 2010 | (in years) | Value* | |||||||||||||
Balance, December 31, 2010 | 47,015 | $ | 10.00 | 1.12 | $ | 1,121 | ||||||||||
* | The aggregate intrinsic value, which will be settled in cash, is calculated as the difference between (i) the exercise price of the underlying award and (ii) the quoted price of CNYG Class A Common Stock at December 31, 2010. |
Note 19. | Interim Financial Information (Unaudited) |
March 31, | June 30, | September 30, | December 31, | Total | ||||||||||||||||
2010: | 2010 | 2010 | 2010 | 2010 | 2010 | |||||||||||||||
Revenues, net | $ | 248,372 | $ | 260,013 | $ | 271,433 | $ | 298,482 | $ | 1,078,300 | ||||||||||
Operating expenses | (187,347 | ) | (188,375 | ) | (194,501 | ) | (228,241 | ) | (798,464 | ) | ||||||||||
Operating income | $ | 61,025 | $ | 71,638 | $ | 76,932 | $ | 70,241 | $ | 279,836 | ||||||||||
Income from continuing operations | $ | 24,029 | $ | 30,512 | $ | 33,741 | $ | 29,907 | $ | 118,189 | ||||||||||
Loss from discontinued operations, net of income taxes | (10,596 | ) | (8,411 | ) | (8,482 | ) | (10,601 | ) | (38,090 | ) | ||||||||||
Net income | $ | 13,433 | $ | 22,101 | $ | 25,259 | $ | 19,306 | $ | 80,099 | ||||||||||
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March 31, | June 30, | September 30, | December 31, | Total | ||||||||||||||||
2009: | 2009 | 2009 | 2009 | 2009 | 2009 | |||||||||||||||
Revenues, net | $ | 234,453 | $ | 235,088 | $ | 242,444 | $ | 261,659 | $ | 973,644 | ||||||||||
Operating expenses | (179,199 | ) | (171,817 | ) | (174,094 | ) | (210,825 | ) | (735,935 | ) | ||||||||||
Operating income | $ | 55,254 | $ | 63,271 | $ | 68,350 | $ | 50,834 | $ | 237,709 | ||||||||||
Income from continuing operations | $ | 19,371 | $ | 23,644 | $ | 27,411 | $ | 18,121 | $ | 88,547 | ||||||||||
Loss from discontinued operations, net of income taxes | (9,599 | ) | (8,458 | ) | (8,177 | ) | (8,557 | ) | (34,791 | ) | ||||||||||
Net income | $ | 9,772 | $ | 15,186 | $ | 19,234 | $ | 9,564 | $ | 53,756 | ||||||||||
Note 20. | Subsequent Events |
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Deductions/ | ||||||||||||||||
Balance at | Provision | Write-Offs | Balance at | |||||||||||||
Beginning | for Bad | and Other | End of | |||||||||||||
of Period | Debt | Charges | Period | |||||||||||||
Year Ended December 31, 2010 | ||||||||||||||||
Allowance for doubtful accounts | $ | 7,767 | $ | 1,484 | $ | (930 | )* | $ | 8,321 | |||||||
Year Ended December 31, 2009 | ||||||||||||||||
Allowance for doubtful accounts | $ | 6,231 | $ | 2,528 | $ | (992 | )* | $ | 7,767 | |||||||
Year Ended December 31, 2008 | ||||||||||||||||
Allowance for doubtful accounts | $ | 5,027 | $ | 3,120 | $ | (1,916 | )* | $ | 6,231 | |||||||
* | Amounts in 2010 and 2009 represent primarily the write-off of trade receivables following the filing of bankruptcy of certain advertisers and a cable television system operator. Amounts in 2008 represent primarily the write-off of trade receivables from a cable television system operator that had previously been fully reserved and the write-off of certain uncollectible advertising receivables. |
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March 31, | December 31, | |||||||
2011 | 2010 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 84,073 | $ | 79,960 | ||||
Accounts receivable, trade (less allowance for doubtful accounts of $8,817 and $8,321) | 223,908 | 242,699 | ||||||
Amounts due from affiliates, net | 23,755 | 6,840 | ||||||
Program rights, net | 199,660 | 186,475 | ||||||
Prepaid expenses and other current assets | 44,702 | 42,950 | ||||||
Deferred tax asset | 6,301 | 7,516 | ||||||
Total current assets | 582,399 | 566,440 | ||||||
Property and equipment, net of accumulated depreciation of $162,033 and $156,885 | 65,453 | 68,977 | ||||||
Program rights, net | 696,030 | 597,355 | ||||||
Amounts due from affiliates | 3,433 | 3,502 | ||||||
Note receivable from affiliate | — | 16,832 | ||||||
Deferred tax asset, net | 43,123 | 41,250 | ||||||
Deferred carriage fees, net | 65,106 | 69,343 | ||||||
Amortizable intangible assets, net of accumulated amortization of $694,816 and $675,038 | 345,104 | 364,882 | ||||||
Indefinite-lived intangible assets | 19,900 | 19,900 | ||||||
Goodwill | 83,173 | 83,173 | ||||||
Other assets | 14,204 | 15,043 | ||||||
Deferred financing costs, net of accumulated amortization of $17,200 and $16,388 | 6,387 | 7,199 | ||||||
$ | 1,924,312 | $ | 1,853,896 | |||||
LIABILITIES AND STOCKHOLDER’S EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 54,009 | $ | 46,459 | ||||
Accrued liabilities: | ||||||||
Interest | 5,033 | 20,046 | ||||||
Employee related costs | 28,863 | 44,578 | ||||||
Deferred carriage fees payable | 1,966 | 2,218 | ||||||
Other accrued expenses | 20,883 | 23,888 | ||||||
Amounts due to affiliates, net | 15,192 | 10,678 | ||||||
Program rights obligations | 127,110 | 116,190 | ||||||
Deferred revenue | 15,191 | 17,859 | ||||||
Credit facility debt | 50,000 | 50,000 | ||||||
Capital lease obligations | 3,838 | 4,575 | ||||||
Total current liabilities | 322,085 | 336,491 | ||||||
Program rights obligations | 430,401 | 338,635 | ||||||
Senior notes | 299,619 | 299,552 | ||||||
Senior subordinated notes | 324,134 | 324,071 | ||||||
Credit facility debt | 362,500 | 425,000 | ||||||
Capital lease obligations | 15,360 | 15,677 | ||||||
Other liabilities | 88,839 | 89,639 | ||||||
Total liabilities | 1,842,938 | 1,829,065 | ||||||
Commitments and contingencies | ||||||||
Stockholder’s equity | 81,374 | 24,831 | ||||||
$ | 1,924,312 | $ | 1,853,896 | |||||
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2011 | 2010 | |||||||
Revenues, net (including revenues, net from affiliates of Cablevision of $7,940 and $7,221, respectively) | $ | 272,903 | $ | 248,372 | ||||
Operating expenses: | ||||||||
Technical and operating (excluding depreciation and amortization and including charges from affiliates of Cablevision of $1,205 and $1,016, respectively) | 90,411 | 82,425 | ||||||
Selling, general and administrative (including charges from affiliates of Cablevision of $24,291 and $23,893, respectively) | 86,921 | 78,444 | ||||||
Restructuring credit | (34 | ) | (212 | ) | ||||
Depreciation and amortization | 24,926 | 26,690 | ||||||
202,224 | 187,347 | |||||||
Operating income | 70,679 | 61,025 | ||||||
Other income (expense): | ||||||||
Interest expense | (18,350 | ) | (19,666 | ) | ||||
Interest income | 457 | 550 | ||||||
Miscellaneous, net | 72 | 26 | ||||||
(17,821 | ) | (19,090 | ) | |||||
Income from continuing operations before income taxes | 52,858 | 41,935 | ||||||
Income tax expense | (23,136 | ) | (17,906 | ) | ||||
Income from continuing operations | 29,722 | 24,029 | ||||||
Income (loss) from discontinued operations, net of income taxes | 96 | (10,596 | ) | |||||
Net income | $ | 29,818 | $ | 13,433 | ||||
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Balance, December 31, 2010 | $ | 24,831 | ||
Cash capital contributions from Cablevision | 20,813 | |||
Deemed capital contribution related to the utilization of Cablevision tax losses by the Company | 19,075 | |||
Distribution of note receivable to Cablevision (see Note 3) | (17,113 | ) | ||
Non-cash capital contributions, net | 3,950 | |||
Net income | 29,818 | |||
Balance, March 31, 2011 | $ | 81,374 | ||
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2011 | 2010 | |||||||
Cash flows from operating activities: | ||||||||
Income from continuing operations | $ | 29,722 | $ | 24,029 | ||||
Adjustments to reconcile income from continuing operations to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 24,926 | 26,690 | ||||||
Share-based compensation expense allocations related to Cablevision equity classified awards | 3,931 | 3,495 | ||||||
Amortization and write-off of program rights | 54,417 | 47,999 | ||||||
Amortization of deferred carriage fees | 5,993 | 6,291 | ||||||
Amortization of deferred financing costs and discounts on indebtedness | 942 | 943 | ||||||
Provision for (recovery of) doubtful accounts | 935 | (86 | ) | |||||
Deferred income taxes | 18,352 | 16,374 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable, trade | 17,856 | 6,496 | ||||||
Amounts due from/to affiliates, net | (12,613 | ) | (9,614 | ) | ||||
Prepaid expenses and other assets | (892 | ) | 12,125 | |||||
Program rights | (166,477 | ) | (99,574 | ) | ||||
Deferred carriage fees | (1,756 | ) | (1,534 | ) | ||||
Accounts payable, accrued expenses and other liabilities | (29,334 | ) | (29,166 | ) | ||||
Program rights obligations | 102,686 | 36,304 | ||||||
Deferred carriage fees payable | (252 | ) | (129 | ) | ||||
Net cash provided by operating activities | 48,436 | 40,643 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (1,599 | ) | (577 | ) | ||||
Payment for acquisition of a business | (135 | ) | (135 | ) | ||||
Proceeds from sale of equipment, net of costs of disposal | 13 | 335 | ||||||
Net cash used in investing activities | (1,721 | ) | (377 | ) | ||||
Cash flows from financing activities: | ||||||||
Capital contributions from Cablevision | 20,813 | 190,918 | ||||||
Capital distributions to Cablevision | — | (8,491 | ) | |||||
Repayment of credit facility debt | (62,500 | ) | (16,250 | ) | ||||
Repayment of note payable to affiliate | — | (190,000 | ) | |||||
Principal payments on capital lease obligations | (1,093 | ) | (1,040 | ) | ||||
Net cash used in financing activities | (42,780 | ) | (24,863 | ) | ||||
Net increase in cash and cash equivalents from continuing operations | 3,935 | 15,403 | ||||||
Cash flows from discontinued operations: | ||||||||
Net cash provided by (used in) operating activities | 178 | (7,437 | ) | |||||
Net cash used in investing activities | — | (505 | ) | |||||
Net cash used in financing activities | — | — | ||||||
Effect of change in cash related to net assets distributed to Cablevision in 2010 | — | (442 | ) | |||||
Net increase (decrease) in cash and cash equivalents from discontinued operations | 178 | (8,384 | ) | |||||
Cash and cash equivalents at beginning of period | 79,960 | 29,828 | ||||||
Cash and cash equivalents at end of period | $ | 84,073 | $ | 36,847 | ||||
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Note 1. | Business |
• | National Networks: Includes four nationally distributed programming networks: AMC, WE tv, IFC and Sundance Channel. These programming networks are distributed throughout the United States via cable and other multichannel distribution platforms, including direct broadcast satellite and platforms operated by telecommunications providers (we refer collectively to these cable and other multichannel distributors as “multichannel video distributors” or “distributors”); and | |
• | International and Other: Includes AMC/Sundance Channel Global, the Company’s international programming business; IFC Entertainment, the Company’s independent film distribution business; and AMC Network Communications (formerly Rainbow Network Communications), the Company’s network technical services business, which supplies an array of services to the network programming industry, primarily on behalf of the programming networks of the Company. AMC and Sundance Channel are available in Canada and Sundance Channel and WE tv are available in other countries throughout Europe and Asia. The International and Other reportable segment also includes VOOM HD Holdings LLC (“VOOM HD”), which as of March 31, 2011, distributed internationally the Rush HD channel, a network dedicated to action and adventure sports. VOOM HD ceased distributing the Rush HD channel in Europe in April 2011. The results of VOOM HD are presented in continuing operations. |
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Note 2. | Basis of Presentation |
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Note 3. | Cash Flows |
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Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Non-Cash Investing and Financing Activities: | ||||||||
Continuing Operations: | ||||||||
Deemed capital contributions from affiliate related to the utilization of Cablevision tax losses by the Company (see Note 4) | $ | 19,075 | $ | 9,476 | ||||
Capital distribution for the transfer of a note receivable to Cablevision (see below) | (17,113 | ) | — | |||||
Increase in capital lease obligations and related assets | 39 | — | ||||||
Deemed capital contribution related to the allocation of Cablevision share-based compensation expense | 3,931 | 3,495 | ||||||
Supplemental Data: | ||||||||
Cash interest paid — continuing operations | 32,421 | 33,718 | ||||||
Cash interest paid — discontinued operations | — | — | ||||||
Income taxes paid — continuing operations | 4,171 | 860 | ||||||
Income taxes paid — discontinued operations | — | 3 |
Note 4. | Income Taxes |
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Note 5. | Intangible Assets |
March 31, | December 31, | Estimated | ||||||||||
2011 | 2010 | Useful Lives | ||||||||||
Gross carrying amount of amortizable intangible assets | ||||||||||||
Affiliation agreements and affiliate relationships | $ | 911,357 | $ | 911,357 | 4 to 25 years | |||||||
Advertiser relationships | 103,723 | 103,723 | 3 to 10 years | |||||||||
Other amortizable intangible assets | 24,840 | 24,840 | 4 to 10 years | |||||||||
1,039,920 | 1,039,920 | |||||||||||
Accumulated amortization | ||||||||||||
Affiliation agreements and affiliate relationships | 583,768 | 565,893 | ||||||||||
Advertiser relationships | 86,555 | 84,684 | ||||||||||
Other amortizable intangible assets | 24,493 | 24,461 | ||||||||||
694,816 | 675,038 | |||||||||||
Amortizable intangible assets, net of accumulated amortization | 345,104 | 364,882 | ||||||||||
Indefinite-lived intangible assets | ||||||||||||
Trademarks | 19,900 | 19,900 | ||||||||||
Indefinite-lived intangible assets | 19,900 | 19,900 | ||||||||||
Goodwill | 83,173 | 83,173 | ||||||||||
Total intangible assets, net | $ | 448,177 | $ | 467,955 | ||||||||
Aggregate amortization expense | ||||||||||||
Three months ended March 31, 2011 | $ | 19,778 |
Estimated amortization expense | ||||
Year ending December 31, 2011 | $ | 79,109 | ||
Year ending December 31, 2012 | 64,436 | |||
Year ending December 31, 2013 | 31,678 | |||
Year ending December 31, 2014 | 9,765 | |||
Year ending December 31, 2015 | 9,746 |
Note 6. | Fair Value Measurement |
• | Level I — Quoted prices for identical instruments in active markets. |
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• | Level II — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. | |
• | Level III — Instruments whose significant value drivers are unobservable. |
Level I | Level II | Level III | Total | |||||||||||||
At March 31, 2011: | ||||||||||||||||
Assets: | ||||||||||||||||
Cash equivalents(a) | $ | 77,325 | $ | — | $ | — | $ | 77,325 | ||||||||
At December 31, 2010: | ||||||||||||||||
Assets: | ||||||||||||||||
Cash equivalents(a) | $ | 78,908 | $ | — | $ | — | $ | 78,908 |
(a) | Represents the Company’s investment in funds that invest primarily in money market securities. |
March 31, 2011 | ||||||||
Carrying | Estimated | |||||||
Amount | Fair Value | |||||||
Debt instruments: | ||||||||
Credit facility debt(a) | $ | 412,500 | $ | 412,500 | ||||
Senior notes | 299,619 | 300,000 | ||||||
Senior subordinated notes | 324,134 | 337,610 | ||||||
$ | 1,036,253 | $ | 1,050,110 | |||||
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December 31, 2010 | ||||||||
Carrying | Estimated | |||||||
Amount | Fair Value | |||||||
Debt instruments: | ||||||||
Credit facility debt(a) | $ | 475,000 | $ | 475,000 | ||||
Senior notes | 299,552 | 300,750 | ||||||
Senior subordinated notes | 324,071 | 337,188 | ||||||
$ | 1,098,623 | $ | 1,112,938 | |||||
(a) | The carrying value of the Company’s credit facility debt which bears interest at variable rates approximates its fair value. |
Note 7. | Segment Information |
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Revenues, net from continuing operations | ||||||||
National Networks | $ | 251,845 | $ | 232,036 | ||||
International and Other | 25,381 | 19,882 | ||||||
Inter-segment eliminations | (4,323 | ) | (3,546 | ) | ||||
Total | $ | 272,903 | $ | 248,372 | ||||
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Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Inter-segment revenues | ||||||||
National Networks | $ | (70 | ) | $ | (95 | ) | ||
International and Other | (4,253 | ) | (3,451 | ) | ||||
$ | (4,323 | ) | $ | (3,546 | ) | |||
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Adjusted operating cash flow (deficit) from continuing operations | ||||||||
National Networks | $ | 106,356 | $ | 100,272 | ||||
International and Other | (7,104 | ) | (9,539 | ) | ||||
Inter-segment eliminations | 296 | 614 | ||||||
$ | 99,548 | $ | 91,347 | |||||
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Depreciation and amortization included in continuing operations | ||||||||
National Networks | $ | (21,311 | ) | $ | (23,183 | ) | ||
International and Other | (3,615 | ) | (3,507 | ) | ||||
$ | (24,926 | ) | $ | (26,690 | ) | |||
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Share-based compensation expense included in continuing operations | ||||||||
National Networks | $ | (3,150 | ) | $ | (3,085 | ) | ||
International and Other | (827 | ) | (759 | ) | ||||
$ | (3,977 | ) | $ | (3,844 | ) | |||
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Restructuring credit included in continuing operations | ||||||||
National Networks | $ | — | $ | — | ||||
International and Other | 34 | 212 | ||||||
$ | 34 | $ | 212 | |||||
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Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Operating income (loss) from continuing operations | ||||||||
National Networks | $ | 81,895 | $ | 74,004 | ||||
International and Other | (11,512 | ) | (13,593 | ) | ||||
Inter-segment eliminations | 296 | 614 | ||||||
$ | 70,679 | $ | 61,025 | |||||
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Income from continuing operations before income taxes | ||||||||
Total operating income for reportable segments | $ | 70,679 | $ | 61,025 | ||||
Items excluded from operating income: | ||||||||
Interest expense | (18,350 | ) | (19,666 | ) | ||||
Interest income | 457 | 550 | ||||||
Miscellaneous, net | 72 | 26 | ||||||
Income from continuing operations before income taxes | $ | 52,858 | $ | 41,935 | ||||
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Capital expenditures | ||||||||
National Networks | $ | 724 | $ | 102 | ||||
International and Other | 875 | 475 | ||||||
$ | 1,599 | $ | 577 | |||||
Note 8. | Concentration of Credit Risk |
2011 | 2010 | |||||||
Customer 1 | 11 | % | 11 | % | ||||
Customer 2 | 13 | % | 13 | % |
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Note 9. | Legal Matters |
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Note 10. | Equity Plans |
Weighted Average | ||||||||
Number of | Fair Value per | |||||||
Restricted | Share at Date of | |||||||
Shares | Grant | |||||||
Unvested award balance, December 31, 2010 | 1,697,650 | $ | 16.16 | |||||
Granted(a) | 379,620 | 36.10 | ||||||
Vested | (354,300 | ) | 20.82 | |||||
Awards forfeited | (21,230 | ) | 15.75 | |||||
Transfers(b) | (25,900 | ) | 15.79 | |||||
Unvested award balance, March 31, 2011 | 1,675,840 | $ | 19.71 | |||||
(a) | There are no performance criteria applicable to the restricted stock awards granted by Cablevision in 2011 to the Company’s named executive officers. Following the Distribution, these restricted stock awards will be canceled and reissued in the form of AMC Networks restricted stock awards. When these awards are canceled and reissued, performance criteria will apply to certain restricted stock awards that were granted to named executive officers whose compensation is potentially subject to Section 162(m) of the IRS Code. | |
(b) | Represents restricted shares for an employee who was transferred from the Company to an affiliate of Cablevision. |
Note 11. | Affiliate Transactions |
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2011 | 2010 | |||||||
Revenues, net | $ | 7,940 | $ | 7,221 | ||||
Operating expenses: | ||||||||
Technical and operating expenses: | ||||||||
Production services | $ | — | $ | (202 | ) | |||
Other support functions | 118 | 136 | ||||||
Health and welfare plans | 1,087 | 1,082 | ||||||
Total technical and operating expenses | $ | 1,205 | $ | 1,016 | ||||
Selling, general and administrative expenses: | ||||||||
Corporate general and administrative costs, net | $ | 7,739 | $ | 8,132 | ||||
Management fees | 6,740 | 6,218 | ||||||
Health and welfare plans | 1,040 | 1,049 | ||||||
Advertising expense | 325 | 185 | ||||||
Production services | (193 | ) | — | |||||
Other support functions | 72 | 6 | ||||||
Sales support and other functions, net | 1,273 | 701 | ||||||
Share-based compensation | 3,977 | 3,845 | ||||||
Long-term incentive plans | 3,318 | 3,757 | ||||||
Total selling, general and administrative expenses | $ | 24,291 | $ | 23,893 | ||||
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Note 12. | Subsequent Event |
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