Derivative Financial Instruments

12 Months Ended

Dec. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Interest Rate Risk

To manage interest rate risk, the Company enters into interest rate swap contracts to adjust the amount of total debt that is subject to variable interest rates. Such contracts effectively fix the borrowing rates on floating rate debt to limit the exposure against the risk of rising interest rates. The Company does not enter into interest rate swap contracts for speculative or trading purposes and it has only entered into interest rate swap contracts with financial institutions that it believes are creditworthy counterparties. The Company monitors the financial institutions that are counterparties to its interest rate swap contracts and to the extent possible diversifies its swap contracts among various counterparties to mitigate exposure to any single financial institution.

The Company’s risk management objective and strategy with respect to interest rate swap contracts is to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows relating to interest payments on a portion of its outstanding debt. The Company is meeting its objective by hedging the risk of changes in its cash flows (interest payments) attributable to changes in the LIBOR index rate, the designated benchmark interest rate being hedged (the “hedged risk”), on an amount of the Company’s debt principal equal to the then-outstanding swap notional. The forecasted interest payments are deemed to be probable of occurring.

In 2011, the Company entered into primarily amortizing interest rate swap contracts to effectively fix borrowing rates on a substantial portion of the Company’s floating rate debt. These contracts were designated as cash flow hedges for accounting and tax purposes (see below). The Company assesses, both at the hedge’s inception and on an ongoing basis, hedge effectiveness based on the overall changes in the fair value of the interest rate swap contracts. Hedge effectiveness of the interest rate swap contracts is based on a hypothetical derivative methodology. Any ineffective portion of the interest rate swap contracts is recorded in current-period earnings.

As discussed in Note 7, in connection with the repayment of the term loan B facility in December 2012, the Company recorded an unrealized loss of $8,725 related to the interest rate swap contracts previously designated as cash flow hedges of a portion of the term loan B facility which was reclassified from accumulated other comprehensive loss to interest expense in the consolidated statement of income for the year ended December 31, 2012 as the related interest rate swap contracts no longer qualified for hedge accounting. Subsequent changes in fair values related to these interest rate swap contracts are recognized in earnings and included in interest expense. The interest rate swap contracts outstanding hedging the Company's floating rate debt on the Term Loan A Facility continue to be designated and qualify as effective interest rate swap cash flow hedges.

As of December 31, 2013, the Company had interest rate swap contracts outstanding with notional amounts aggregating $700,250, which consists of interest rate swap contracts with notional amounts of $500,250 that are designated as cash flow hedges and interest rate swap contracts with notional amounts of $200,000 that are not designated as hedging instruments. The Company’s outstanding interest rate swap contracts have varying maturities ranging from September 2015 to July 2017. At December 31, 2013, the Company’s interest rate swap contracts designated as cash flow hedges were highly effective, in all material respects.

Foreign Currency Exchange Rate Risk

To manage foreign currency exchange rate risk, the Company enters into foreign currency contracts from time to time with financial institutions to limit the exposure to fluctuations in foreign currency exchange rates. The Company does not enter into foreign currency contracts for speculative or trading purposes.

Historically, the Company's exposure to foreign currency fluctuations has been limited to certain trade receivables from the distribution of our programming in certain territories outside of the U.S. that are denominated in a foreign currency.During 2013, in order to mitigate the foreign currency exchange rate risk in fluctuations in the euro denominated purchase price of the pending acquisition of Chellomedia, the Company purchased euros and entered into foreign currency option contracts. As of December 31, 2013, cash and cash equivalents included €250,000 and prepaid expense and other current assets included $2,577 representing the fair value of foreign currency option contracts with notional amounts aggregating €125,000.

The fair values of the Company's derivative financial instruments included in the consolidated balance sheets are as follows:

	Asset Derivatives					Liability Derivatives
	Balance Sheet  Location	Fair Value				Balance Sheet  Location	Fair Value
		December 31,					December 31,
		2013		2012			2013		2012
Derivatives designated as hedging instruments:
Interest rate swap contracts		$	—	$	—	Other liabilities	$	7,136	$	13,398
Derivatives not designated as hedging instruments:
Interest rate swap contracts		—		—		Other liabilities	5,577		8,739
Foreign currency option contracts	Prepaid expenses and other current assets	2,577		—			—		—
Total derivatives		$	2,577	$	—		$	12,713	$	22,137

The amount of the gains and losses related to the Company's derivative financial instruments designated as hedging instruments are as follows:

	Amount of Gain or (Loss)  Recognized in Other  Comprehensive Income(“OCI”) on Derivatives  (Effective Portion)						Location of Gain or (Loss)Reclassified from Accumulated OCI  into Earnings  (Effective Portion)	Amount of Gain or (Loss)  Reclassified from Accumulated OCI  into Earnings (Effective Portion)(a)
	Years Ended December 31,							Years Ended December 31,
	2013			2012				2013			2012
Derivatives in cash flow hedging relationships:
Interest rate swap contracts	$	(1,018	)	$	(12,663	)	Interest expense	$	(7,280	)	$	(18,356	)

(a) There were no gains or losses recognized in earnings related to any ineffective portion of the hedging relationship or related to any amount excluded from the assessment of hedge effectiveness for the years ended December 31, 2013 and 2012.

The amount of the gains and losses related to the Company's derivative financial instruments not designated as hedging instruments are as follows:

	Location of Gain (Loss) Recognized in Earnings on Derivatives	Amount of Gain (Loss) Recognized in Earnings on Derivatives
		Years Ended December 31,
		2013		2012
Derivatives not designated as hedging relationships:
Interest rate swap contracts	Interest expense	$	569	$	(14	)
Foreign currency option contracts	Miscellaneous, net	1,151		—
Total		$	1,720	$	(14	)