8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

May 27, 2008

CABLEVISION SYSTEMS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware

(State of Incorporation)

1-14764	11-3415180
(Commission File Number)	(IRS Employer Identification Number)

CSC HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware

(State of Incorporation)

1-9046	11-2776686
(Commission File Number)	(IRS Employer Identification Number)

1111 Stewart Avenue, Bethpage, New York 11714

(Address of Principal Executive Offices)

Registrants’ telephone number, including area code:

(516) 803-2300

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01.Other Events

This Form 8-K hereby amends the combined Annual Report on Form 10-K as separately filed by Cablevision Systems Corporation and CSC Holdings, Inc. (collectively with Cablevision, the “Company”), as originally filed with the Securities and Exchange Commission (“SEC”) on February 28, 2008 (the “Original Filing”) to reclassify Fuse, a wholly-owned subsidiary of the Company, from the Rainbow segment to the Madison Square Garden segment for all periods presented due to the transfer of Fuse to our Madison Square Garden segment effective January 1, 2008 as described in our quarterly report on Form 10-Q for the quarter ended March 31, 2008.  In addition, this filing includes additional unaudited subsequent event information in Item 8 relating to the Company’s recently announced business acquisition transactions.

This Form 8-K only amends and reclassifies Item 1, Item 7 and Item 8 of the Original Filing, in each case, solely as a result of, and to reflect the reclassifications and subsequent event disclosure information discussed above, and no other Items in the Original Filing are amended hereby.  In addition, pursuant to rules of the SEC, Item 15 of Part IV of the Original Filing has been amended to contain the consents of the Company’s independent registered public accounting firm.  The consents of the Company’s independent registered public accounting firm are attached to this Form 8-K as Exhibit 99.3 and Exhibit 99.4.

Item 9.01.Financial Statements and Exhibits.

(c)          Exhibits.

99.1	Business section comprising Item 1 of Annual Report on Form 10-K as of and for the year ended December 31, 2007.
99.2	Management’s Discussion and Analysis of Financial Condition and Results of Operations comprising Item 7 of Annual Report on Form 10-K as of and for the year ended December 31, 2007.
99.3	Financial Statements comprising Item 8 of Annual Report on Form 10-K as of and for the year ended December 31, 2007.
99.4	Consent of Independent Registered Public Accounting Firm.
99.5	Consent of Independent Registered Public Accounting Firm.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CABLEVISION SYSTEMS CORPORATION
	By:	/s/ Michael P. Huseby
		Name:	Michael P. Huseby
		Title:	Executive Vice President and
			Chief Financial Officer
Dated: May 27, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CSC HOLDINGS, INC.
	By:	/s/ Michael P. Huseby
		Name:	Michael P. Huseby
		Title:	Executive Vice President and
			Chief Financial Officer
Dated: May 27, 2008

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EX-99.1

Exhibit 99.1

Item 1.                    Business

This combined Form 8-K is separately filed by Cablevision Systems Corporation (“Cablevision”) and CSC Holdings, Inc. (“CSC Holdings” and collectively with Cablevision, the “Company” or the “Registrants”).

Cablevision Systems Corporation

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

CSC Holdings

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

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

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

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

Our Madison Square Garden segment owns and operates the Madison Square Garden Arena and the adjoining WaMu Theater at Madison Square Garden, the New York Knickerbockers professional basketball team, the New York Rangers professional hockey team, the New York Liberty professional women’s basketball team, the Hartford Wolf Pack professional hockey team, a regional sports programming business (which includes Madison Square Garden Network (“MSG Network”) and Fox Sports Net New York), MSG Entertainment (which operates Radio City Music Hall and the Beacon Theatre in New York City under long-term leases and, since October 2007, owns and operates the Chicago Theatre in Chicago, Illinois), as well as the operations of Fuse, a national programming network effective January 1, 2008.  Prior to January 1, 2008, Fuse was included in the Rainbow segment.  Prior period segment information has been reclassified and reported on a comparable basis.  Madison Square Garden is a wholly-owned subsidiary of Rainbow Media Holdings.

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

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

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

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

Telecommunications Services

General

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

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

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

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

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

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

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

The following table sets forth certain statistical data regarding our video, high-speed data and VoIP operations as of the dates indicated.

	As of December 31,
	2007			2006			2005
	(in thousands, except per subscriber amounts)
Revenue Generating Units:
Basic Video Customers (1)	3,123			3,127			3,027
iO Digital Video Customers	2,628			2,447			1,963
Optimum Online High-Speed Data Customers	2,282			2,039			1,694
Optimum Voice Customers	1,592			1,209			731
Residential Telephone Customers	—			5			8
Total Revenue Generating Units	9,625			8,827			7,423
Customer Relationships (2)	3,317			3,300			3,175
Homes Passed by Cable (3)	4,679			4,562			4,484
Penetration:
Basic Video to Homes Passed	66.8		%	68.5		%	67.5		%
iO Digital to Basic Penetration	84.1		%	78.2		%	64.8		%
Optimum Online to Homes Passed	48.8		%	44.7		%	37.8		%
Optimum Voice to Homes Passed	34.0		%	26.5		%	16.3		%
Average Monthly Revenue per Basic Video Customer (“RPS”) (4)	$	125.10		$	115.30		$	100.46

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

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

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

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

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Subscriber Rates and Services; Marketing and Sales

Basic Cable

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

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

iO, TV

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

The digital video programming services currently offered to subscribers include:

·over 360 channels of entertainment,

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

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

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

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

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

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

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

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

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

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·a collection of enhanced television applications including News 12 Interactive (formerly Metro Traffic and Weather), iO dashboard, iO Showcase, Optimum Autos, Optimum Homes, CNET TV,  Hollywood.com TV and Broadway.com TV,

·DVR for iO service, giving subscribers the ability to record, pause and rewind live television, and

·iO Games, a wide variety of interactive games offered in distinct packages including the Arcade Pak, Casino Pak, Variety Pak, Hits Pak, Sesame Street Games Pak and Logic Pak.

With a large range of packages, iO TV offers over 360 channels from which to choose.

Packaging of the iO TV product includes the iO Gold package currently priced at $92.95 per month.  iO Gold features over 280 all digital channels, including more than 50 premium movie channels and 45 high definition television (“HDTV”) programming services.  iO Silver, currently priced at $72.95 per month, includes everything in iO Gold except for NBA TV, Flix and premium movie channels from Showtime, Cinemax and The Movie Channel.

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

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

Optimum Online

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

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

Optimum Online is currently priced at $49.95 per month on an a la carte basis with Optimum Online Boost available for an additional charge of $14.95 per month.  Discount and promotional pricing is available when Optimum Online is combined with other service offerings.

We ended 2007 with approximately 2.3 million Optimum online subscribers.

Optimum Voice

Optimum Voice is a VoIP service available exclusively to Optimum Online subscribers that offers unlimited local, regional and long-distance calling within the United States, Puerto Rico and Canada with popular calling features at one low, flat monthly rate.

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With Optimum Voice, customers can call anywhere within the United States, Puerto Rico and Canada, any time of the day or night, and talk as long as they like at the current price of $34.95 a month.  Discount and promotional pricing is available when Optimum Voice is combined with other service offerings.

Optimum Voice includes the following premium calling features, plus “My Optimum Voice”:

·Enhanced Voicemail

·Call Waiting

·Caller ID

·Caller ID Blocking

·Call Return

·Three-Way Calling

·Call Forwarding

·Anonymous call blocker - blocks all calls to a Voice customer where a calling party does not display their name or number

·Anonymous calling - hides the Voice customer’s name and number on all calls they make

·Find me - allows calls to a Voice customer’s phone number to ring up to three additional phone lines, such as a cell phone or work number, simultaneously

·Call waiting with caller ID

·Busy Redial

·VIP Ringing - a Voice customer can designate up to a certain number of telephone numbers to ring with a second, distinct ringtone

My Optimum Voice allows customers to easily manage calling features and receive voicemails via the Internet.  Customers can view all their call details at their convenience.

Optimum Voice World Call provides flat-rate international calling to anywhere in the world, for $19.95 per month (250 minutes per month).

Optimum Voice is available to Cablevision’s entire service area.  We ended 2007 with approximately 1.6 million Optimum Voice customers.

Bundled Offers

We offer several promotional packages with discounted pricing to customers who subscribe to one or more of our products as compared to the a la carte prices for each individual product.  Our “Optimum Triple Play” family package currently offers iO TV, Optimum Online and Optimum Voice for $29.95 per month for each for the first twelve months when purchased together.  A promotional package currently offers Optimum Online and Optimum Voice for $29.95 per month for each for the first twelve months when purchased together.  We also offer other pricing discounts for certain products that are added to existing service.

System Capacity

Our cable plant network uses state of the art technology including fiber optic cable.  The network is a minimum of 750 MHz two-way interactive system offering a combination of analog and digital channels, high-speed data and voice services.

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Programming

Adequate programming is available to the cable television systems from a variety of sources, including from Rainbow Media Holdings, our wholly-owned subsidiary.  Program suppliers’ compensation is typically a fixed, per subscriber monthly fee (subject to contractual escalations) based, in most cases, either on the total number of basic video subscribers of the cable television systems, or on the number of subscribers subscribing to the particular service.  The programming contracts are generally for a fixed period of time and are subject to negotiated renewal.  Cable programming costs have increased in recent years and are expected to continue to increase due to additional programming being provided to most subscribers, increased costs to produce or purchase cable programming and other factors.

Franchises

The Company’s cable television systems are operated in New York, New Jersey and Connecticut under non-exclusive franchise agreements with state and/or municipal franchising authorities.  Franchise agreements usually require payment of franchise fees and contain regulatory provisions addressing, among other things, upgrades, service quality, cable service to schools and other public institutions, insurance and indemnity bonds.  The terms and conditions of cable franchises vary from jurisdiction to jurisdiction.  Franchise authorities generally charge a franchise fee of up to 5% of certain of our revenues that are derived from the operation of the system within such locality.  The Company generally passes the franchise fee on to its subscribers, listing it as a separate item on the bill.

Franchise agreements are usually for a term of five to fifteen years from the date of grant; most are ten years.  Franchises usually are terminable only if the cable operator fails to comply with material provisions, and then only after complying with substantive and procedural protections afforded by federal and state law.  As of December 31, 2007, our ten largest franchise areas comprise approximately 47% of our total basic video customers and of those, three franchises, comprising approximately 198,000 basic video customers, are expired.  We are currently operating in these franchise areas under temporary authority.  In 2008, our franchise authority to serve 679,000 customers (as of December 31, 2007) in our largest municipality is scheduled to expire.  The Company has never lost a franchise for an area in which it operates.  Historically, expired franchises have routinely been renewed.  When a franchise agreement reaches expiration, a franchising authority may seek to impose new requirements, including requirements to upgrade facilities, to increase channel capacity and to provide additional support for local public, education and government access programming.  Negotiations can be protracted and franchise agreements sometimes expire before a renewal is negotiated and finalized.  State laws provide that pre-existing franchise terms continue in force during the renewal negotiations until agreement is reached or one or both parties seek to pursue “formal” franchise remedies under federal law.  Federal law provides significant substantive and procedural protections for cable operators seeking renewal of their franchises.  See “Regulation - Cable Television.”  Despite the Company’s efforts and the protections of federal law, it is possible that one or more of the Company’s franchises may be subject to termination or non-renewal or we may be required to make significant additional investments in response to requirements imposed in the course of the franchise renewal process.

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Rainbow

General

We conduct our programming activities through Rainbow Media Holdings.  Rainbow Media Holdings’ businesses include ownership interests in national programming networks and regional news networks.

Rainbow Media Holdings’ national entertainment programming networks include AMC, WE tv, IFC, VOOM HD Networks, Lifeskool and sportskool.

Rainbow Media Holdings owns News 12, 24-hour local news, traffic and weather services dedicated to covering areas within the New York metropolitan area and also owns and operates Rainbow Advertising Sales Corporation, a cable television advertising company.

The following table sets forth estimated subscriber information as of December 31, 2007, 2006 and 2005 for Rainbow Media Holdings’ programming businesses.  These businesses are wholly-owned subsidiaries of Rainbow Media Holdings, except as noted below.

	Viewing Subscribers (a)
	2007	2006	2005
	(in thousands)
Programming and Related Businesses
National Entertainment Programming Networks:
AMC	84,400	81,100	77,200
WE tv	57,200	52,700	50,900
IFC	44,600	40,100	37,300
Fuse (c)	47,000	42,000	35,500
VOOM HD Networks (b)	2,100	300	25
Lifeskool	10,000	4,700	4,800
sportskool	26,000	20,100	12,300
Regional Sports Networks:
Madison Square Garden Network/Fox Sports Net New York (c)	15,800	15,300	14,700
Regional News Services:
News 12 Services	3,900	3,800	3,700
News 12 Traffic and Weather	2,800	2,800	2,600

(a)Represents the number of subscribers to distributors’ systems that receive the referenced programming network.

(b)Rainbow Media Holdings holds an 80% interest in the VOOM HD Networks and EchoStar Communications Corporation holds the remaining 20%.  See Note 3 to consolidated financial statements.

(c)Fuse, Madison Square Garden Network and Fox Sports Net New York are part of the Company’s Madison Square Garden segment.

National Entertainment Programming Networks

AMC

With a comprehensive library of popular films, AMC offers movie-based entertainment for movie lovers.

AMC is available on cable television and other distribution platforms such as direct broadcast satellite (“DBS”) and video programming offered by telephone companies in the United States, and in the fourth quarter of 2006 and the first quarter of 2007, the AMC service was launched by certain cable television operators in Canada.  It is principally carried on basic or expanded basic tiers for which subscribers do not

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have to pay a premium to receive the network.  Affiliate revenues are based on fees paid by the distributors for the right to carry the programming.

AMC’s film library consists of films that are licensed from major studios such as Twentieth Century Fox, Warner Bros., Sony (MGM), NBC Universal, Paramount, and Buena Vista under long-term contracts, with sufficient films under contract as of December 31, 2007 to meet its minimum film programming needs through approximately midyear 2010.  AMC generally structures its contracts for the exclusive cable television right to carry the films during identified windows. AMC’s programming also includes Emmy and Golden Globe award winning/nominated originals such as the dramatic series Mad Men, the mini-series Broken Trail and the Hollywood news/talk show Shootout.

WE tv

WE tv is a 24-hour entertainment network for women.  The programming is available on multiple platforms and features films, original series and specials.

WE tv has licensed exclusive films and off-network series from major studios such as Twentieth Century Fox, NBC Universal and Warner Bros., as well as independent studios like Miramax and New Line to supplement its slate of original programming.  WE tv’s library has sufficient films licensed under contract as of December 31, 2007 to meet WE tv’s minimum film programming needs through approximately the end of the first quarter of 2011.  WE tv’s primetime schedule includes original programming with the most successful series being Bridezillas, Secret Lives of Women, Platinum Weddings, John Edward Cross Country and Ugliest House on the Block.  Additionally, WE tv’s programming includes acquired series such as Hope & Faith, Dharma & Greg, Rich Bride, Poor Bride and My Big Fat Fabulous Wedding.

IFC

IFC was the first network dedicated to independent films and related programming.  IFC presents feature-length films (domestically and internationally produced), documentaries, shorts, animation, new works, “cult classics” and originally produced programs which chronicle independent film trends.

IFC’s film library includes titles from IFC Entertainment’s film production, film distribution and VOD businesses, as well as from leading independent film studios like Miramax, MGM/UA, Lionsgate and New Line, with sufficient films under contract as of December 31, 2007 to meet its minimum film programming requirements needs through approximately the end of the first quarter of 2010.  IFC also features exclusive live coverage of notable international film events like the Cannes Film Festival and the Independent Spirit Awards as well as original series such as The Henry Rollins Show, The Minor Accomplishments of Jackie Woodman, Gunslinger Girl and The Whitest Kids U’Know, and original documentaries such as This Film Is Not Yet Rated, Heavy Load and At the Death House Door.

VOOM HD Networks

VOOM HD Holdings LLC (“VOOM HD”) currently offers a suite of 15 channels, produced exclusively in high definition and marketed for distribution to DBS and cable operators (“VOOM”).  The VOOM channels range from extreme sports and fashion to art and movies offering action sports on Rush HD; live sports coverage from arenas around the globe on Worldsport HD; a portal into intriguing people and extraordinary landscapes on Equator HD; cartoon worlds in detail on Animania HD; the world of art on Gallery HD; live auctions and original series for and about people with a passion for collecting on Treasure HD; 24/7 news shot in HD on HDNews; immersive pop music concerts on Rave HD; fashion, beauty and style on Ultra HD; the virtual worlds of video gaming on Gameplay HD; plus a selection of special interest, commercial-free HD movie channels, including a hi-definition film festival on Film Fest HD, award-winning and top-performing movies without borders on World Cinema HD, martial arts action on Kung Fu HD, movies and entertainment for the whole family on Family Room HD and movies

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on Monsters HD.  Currently, VOOM is available in the United States only on the Company’s cable television systems and EchoStar Communications Corporation’s (“EchoStar”) DISH Network.

In 2005, subsidiaries of the Company entered into agreements with EchoStar by which EchoStar acquired a 20% interest in VOOM HD and agreed to distribute VOOM on its DISH Network for a 15-year term.  The affiliation agreement with EchoStar for such distribution provides that if VOOM HD fails to spend $100 million per year (subject to reduction to the extent that the number of offered channels is reduced to fewer than 21), up to a maximum of $500 million in the aggregate, on VOOM, EchoStar may seek to terminate the agreement under certain circumstances.  On January 30, 2008, EchoStar purported to terminate the affiliation agreement, effective February 1, 2008, based on its assertion that VOOM HD had failed to comply with this spending provision in 2006.  On January 31, 2008, VOOM HD sought and obtained a temporary restraining order from New York Supreme Court for New York County prohibiting EchoStar from terminating the affiliation agreement.  In conjunction with its request for a temporary restraining order, VOOM HD filed a lawsuit against EchoStar asserting that EchoStar did not have the right to terminate the affiliation agreement.  That lawsuit is pending, as is the court’s decision on VOOM HD’s motion for a preliminary injunction.  Separately, on February 1, 2008, EchoStar began to distribute VOOM in a manner that the Company believes violates EchoStar’s obligations under the affiliation agreement.  On February 4, 2008, VOOM HD notified EchoStar of its position that this new distribution constitutes a material breach of the affiliation agreement and reserved all its rights and remedies.

Regional News Services

The regional news services provided by the Company include News 12 Long Island, News 12 New Jersey, News 12 Westchester, News 12 Connecticut, News 12 The Bronx and News 12 Interactive, as well as News 12 Traffic and Weather (collectively, the “News 12 Networks”).  The News 12 Networks are 24-hour local news, traffic and weather services dedicated to covering areas within the New York metropolitan area.

Regional Sports Networks

In April 2005, the Company and News Corporation restructured their ownership of Regional Programming Partners.  Prior to the April 2005 transaction, Regional Programming Partners was owned 60% by the Company and 40% by News Corporation.  As a result of the restructuring, the Company indirectly owns 100% of Madison Square Garden, L.P. (which includes Madison Square Garden Network and Fox Sports Net New York), and through June 2007, had owned 50% of Fox Sports Net New England and 60% of Fox Sports Net Bay Area.  Additionally, the Company no longer owns interests in Fox Sports Net Ohio, Fox Sports Net Florida, National Sports Partners or National Advertising Partners as a result of the restructuring.

In June 2007, the Company, through Rainbow Media Holdings, completed the sale to Comcast Corporation (“Comcast”) of (i) its 60% interest in Fox Sports Net Bay Area, for a purchase price of $366.8 million (the “Bay Area Sale”) and (ii) its 50% interest in Fox Sports Net New England, for a purchase price of $203.3 million (the “New England Sale”), for an aggregate purchase price of approximately $570 million, plus certain additional consideration to Rainbow Media Holdings, and customary working capital adjustments.

Other Services

Video-On-Demand Services

Rainbow Media Holdings’ on-demand services include Lifeskool (formerly Mag Rack) and sportskool.  Lifeskool provides a variety of on-demand special interest television programming on a variety of topics

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including cars, motorcycles, personal relationships, children’s entertainment and music instruction.  sportskool features expert sports instruction, coaching and guidance for a wide range of sports and fitness activities.  These services are currently offered to Cablevision’s subscribers as well as carried by other operators.

IFC in Theaters distributes critically acclaimed independent films, with the added ease and convenience of on-demand functionality. IFC in Theaters titles are new independent films that are available on-demand on the same day that they are distributed theatrically. This service is currently offered to Cablevision’s subscribers as well as being carried by other operators. IFC in Theaters releases 24 titles per year, with films such as I Want Someone to Eat Cheese With, Unknown, Alone With Her and The Wind That Shakes the Barley.

IFC Entertainment encompasses Rainbow Media Holdings’ film distribution, production and video-on-demand exhibition businesses and was created to extend the IFC brand beyond television and to establish itself as a leader in the independent film community.

Rainbow Network Communications

Rainbow Network Communications, servicing primarily Rainbow Media Holdings’ programming offerings, is a full service network programming origination and distribution company.  Its services include origination, transmission, video engineering, uplinking, encryption, affiliate engineering, technology consulting, transponder negotiation, content ordering, quality control and editing.  Rainbow Network Communications has a state of the art technology center that consolidates all master control/playback and uplink facilities in one location.  This center is fully digital which enables Rainbow Network Communications to process audio and video signals in both standard and high definition.

Madison Square Garden

Madison Square Garden is comprised of professional sports teams, a live entertainment company, a regional sports programming business, as well as the operations of Fuse, a national programming network effective January 1, 2008.  Prior to January 1, 2008, Fuse was included in the Rainbow segment (prior period segment information has been reclassified and reported on a comparable basis).  The sports teams include the New York Knicks of the National Basketball Association (“NBA”), the New York Rangers of the National Hockey League (“NHL”), the Hartford Wolf Pack of the American Hockey League, and the New York Liberty of the Women’s National Basketball Association.  In addition, Madison Square Garden owns and operates the Madison Square Garden Arena (the largest indoor arena in New York City), the WaMu Theater at Madison Square Garden and, effective October 2007, the Chicago Theatre in Chicago, Illinois.  It also leases and operates Radio City Music Hall and the Beacon Theatre in New York City.  Through June 30, 2007, it managed the Hartford Civic Center and Rentschler Field (sports and entertainment venues in Connecticut).  The Madison Square Garden Arena hosts home games of the Knicks, Rangers and Liberty as well as a wide range of sports and entertainment events, including college basketball, boxing, and family shows. Madison Square Garden’s entertainment business presents its proprietary Radio City Christmas Spectacular, which features the Radio City Rockettes, at Radio City Music Hall and in its touring Christmas productions.  The entertainment business also hosts a wide variety of other entertainment events at the Madison Square Garden Arena, the WaMu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre and the Chicago Theatre, including concerts by such notable artists as The Police, Eric Clapton, Jimmy Buffet, Bruce Springsteen and Justin Timberlake, and other events such as Wintuk (a co-production between Madison Square Garden Entertainment and Cirque du Soleil), the Ringling Bros. and Barnum & Bailey Circus, the Tony Awards and the NFL Draft.  MSG Media, which includes MSG Network and Fox Sports Net New York (which on March 10 will be renamed and relaunched as MSG Plus) features original sports and sports-related programming including the telecasting of games of the following professional sports teams: the New York Knicks, New York Rangers, New York Liberty, New York Islanders, New Jersey Devils and

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Buffalo Sabres.  Fuse is a music television network featuring music videos, artist interviews, live concerts, and series and specials.

Other Businesses and Assets

Clearview Cinemas operates 49 motion picture theaters containing 252 screens in the New York metropolitan area.

An indirect subsidiary of Rainbow Media Holdings owns a 90% interest in an entity, DTV Norwich LLC that holds FCC licenses in 46 metropolitan areas in the United States, including New York, Miami, Los Angeles, and Cleveland, to provide multi-channel video distribution and data service (“MVDDS”), which could be used to distribute video, data or other applications to subscribers via terrestrial transmission facilities and rooftop antennas.

PVI Virtual Media Services LLC is a wholly-owned subsidiary of the Company, which markets a real time video insertion system that through patented technology places computer generated electronic images into telecasts of sporting events and other programming.

We also own 21,477,618 shares of Comcast common stock acquired in connection with the sale of certain cable television systems and 12,742,033 shares of General Electric common stock acquired in connection with the sale of our interest in a national programming service.  All of these shares have been monetized pursuant to collateralized prepaid forward contracts.  See “Item 7A Quantitative and Qualitative Disclosures About Market Risk” for a discussion of our monetization contracts.

Competition

Cable Television

Our cable television systems operate in an intensely competitive environment, competing with a variety of other television programming delivery systems, including satellite-delivered signals, delivery systems of incumbent telephone companies and broadcast television signals available to homes within our market by over-the-air reception.

DBS.  A primary competitor to our cable television systems is DBS services.  Two major DBS services, EchoStar and DirecTV, are available to the vast majority of our customers.  According to the Federal Communications Commission’s (“FCC”) most recent (2007) report on video competition, DBS providers serve over 29% of households that subscribe to multichannel video programming services.  These services each offer over 300 channels of programming, including programming that is substantially similar to the programming that we offer.  Federal laws permit DBS systems to retransmit local broadcast television signals to their customers.  This has also enhanced the competitive position of DBS.  Our ability to compete with these DBS services is also affected by the quality and quantity of programming available to us and to them.  Federal law also generally provides DBS operators with access to all satellite-delivered cable programming services.  One of these services, DirecTV, also has exclusive arrangements with the NFL that gives it access to programming that we cannot offer and similar deals for other sporting events have been announced or reported.

Incumbent Telephone Companies.  We face intense competition from two incumbent telephone companies.   Verizon and AT&T Inc., which offer video programming in addition to their voice and high-speed Internet access services to residential customers in our service area, compete across all of our telecommunications products.  Verizon has made promotional offers to customers in our service area and we expect that they may make additional promotional offers in the future.  The attractive demographics of the Company’s service territory make this region a desirable location for investment in video distribution technologies by these companies.  Their competitive position has been improved by recent operational, regulatory and legislative advances that they have made.  For example, Verizon has constructed fiber to

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the home network plant that passes a significant number of households in our service area (currently about a quarter of the households according to our estimates).  Verizon has obtained authority to provide video service (it already has or needs no authority to provide phone and data services) for a majority of these homes passed, on a statewide basis in New Jersey and through numerous local franchises in New York.  Verizon has so far not indicated any plans to offer video service in Connecticut.  AT&T has obtained authorization to provide video service throughout its Connecticut footprint, which includes most of our service area in Connecticut.  See “Regulation” and “Risk Factors - Our business is subject to extensive government regulation and changes in current or future laws or regulations could restrict our ability to operate our business as we currently do” for a discussion of regulatory and legislative issues.  Verizon and AT&T also market DBS services in our service area.  Each of these companies has significantly greater financial resources than we do.

OVS.  In addition, competitive service providers that utilize the public rights-of-way can operate an “open video system” (OVS) subject only to selected portions of the federal regulations applicable to our cable systems, but still subject to certain local municipal franchising powers.  RCN Corporation is authorized to operate OVS systems that may compete with us in New York City.

Other Competitors.  Other sources of actual or potential video competition to cable television systems include broadcast television stations, private home dish earth stations, multichannel multipoint distribution services (“MMDS”), which deliver television programming over microwave super-high frequency channels received by subscribers with a special antenna, satellite master antenna television (“SMATV”) systems, which like MMDS generally serve large multiple dwelling units under an agreement with the landlord, and new services such as wireless local multipoint distribution service (“LMDS”), and MVDDS.  The statutory definition of a cable television system excludes facilities that do not use public rights-of-way.  This exempts wireless services from local franchise and other requirements applicable to cable television system operators.  No MVDDS systems have yet been commercially deployed in the United States.  Cable television systems also compete with entities that make digital video recorded movies and programs available for home rental or sale.

Another potential source of competition is the delivery of video programming over the Internet directly to subscribers.  There can be no assurance that the provision of video over the Internet or other existing, proposed, or as yet undeveloped technologies will not become dominant in the future and render our cable television systems less profitable or even obsolete.

High-Speed Data

Our high-speed data offering to consumers, Optimum Online, faces intense competition from other providers of high-speed Internet access, including services offered by local telephone companies such as Verizon and AT&T.  In addition, DBS providers have tested the use of certain spectrum to offer satellite-based high-speed data services and are offering broadband data services via partnerships and marketing arrangements with other providers such as Verizon, AT&T, Earthlink, Wildblue, Clearwire, Qwest, Embarq, Windstream, Cincinnati Bell, Frontier, CenturyTel, and Hawaiian Telcom.  The FCC has allocated spectrum for use by licensed and unlicensed providers of wireless broadband service, including LMDS, MVDDS, Broadband Radio Service/Educational Broadband Service, Wireless Communications Service, and Digital Electronic Message Service, which, if offered within Cablevision’s service area, could compete with our high-speed data offering.

VoIP

Our VoIP service, Optimum Voice, faces intense competition from other providers of voice services, including local exchange carriers such as Verizon and AT&T and other competitive providers of voice services, as well as VoIP providers like Vonage that do not own networks but can provide service to any person with a broadband connection from a cable company or other network.  Traditional wireline local

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exchange carriers and wireless providers have established customer relationships and existing network interconnection arrangements, which may give them an advantage in providing VoIP services.

Lightpath

Lightpath operates in the most competitive business telecommunications market in the country and competes against the very largest telecommunications companies - incumbent local exchange carriers (“ILECs”), other competitive local exchange companies (“CLECs”) and long distance companies.  More specifically, Lightpath faces substantial competition from Verizon and AT&T, which are the dominant providers of local telephone and broadband services in their respective service areas.  ILECs have significant advantages over Lightpath, including greater capital resources, an existing fully operational local network, and long-standing relationships with customers.

Wh ile Lightpath and the ILECs are competitors, Lightpath must enter into interconnection agreements with each ILEC so that Lightpath’s customers can make and receive calls to and from customers served by the ILECs and other telecommunications providers.  Federal and state law and regulations require ILECs to enter into such agreements and provide such facilities and services, at prices subject to regulation.  The specific price, terms and conditions of each agreement, however, depend on the outcome of negotiations between Lightpath and an ILEC.  Agreements are also subject to approval by the state regulatory commissions.  Lightpath has entered into interconnection agreements with Verizon for New York, New Jersey and portions of Connecticut and with AT&T for portions of Connecticut, which have been approved by the respective state commissions.  Lightpath also entered into interconnection agreements with regional carriers in New York and New Jersey.  These agreements, like all interconnection agreements, are for limited terms and are required to be renegotiated, arbitrated and approved subject to the laws in effect at that time.

Lightpath also faces competition from one or more competitive access providers and other new entrants in the local telecommunications and data marketplace, and competitive local exchange carriers.  In addition to the ILECs and CLECs, other potential competitors capable of offering voice and broadband services include electric utilities, long distance carriers, microwave carriers, wireless telephone system operators (such as cellular, PCS, and specialized mobile radio), and private networks built by large end users.  A continuing trend toward business combinations and alliances in the telecommunications industry may create stronger competition for Lightpath.

Programming and Entertainment

Rainbow Media Holdings’ programming networks operate in highly competitive markets.  First, our programming networks compete with other programming networks to obtain distribution on cable television systems and other multichannel video programming distribution systems, such as DBS, and ultimately for viewing by each system’s subscribers.  Second, our programming networks compete with other video programming distributors, including broadcasters and other programming entities, to secure desired entertainment and sports programming.  In each of these markets, some of our competitors are large publicly held companies that have greater financial resources than we do.   In addition, Rainbow Media Holdings competes with these entities for advertising revenue.

It is difficult to predict the future effect of technology on many of the factors affecting Rainbow Media Holdings’ competitive position.  For example, data compression technology has made it possible for most video programming distributors to increase their channel capacity, which may reduce the competition among programming networks and broadcasters for channel space.  On the other hand, the addition of channel space could also increase competition for desired entertainment and sports programming and ultimately, for viewing by subscribers.  As more channel space becomes available, the position of our programming networks in the most favorable tiers of these distributors would be an important goal.  Additionally, video content delivered directly to viewers over the Internet competes with our programming networks for viewership.

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Distribution of Programming Networks

The business of distributing programming networks to cable television systems and other multichannel video programming distributors is highly competitive. Our programming networks face competition from other programming networks for the right to be carried by a particular cable system or other multichannel video programming distribution system, and for the right to be carried on the service tier that will attract the most subscribers.  Once our programming network is selected by a cable or other multichannel video programming distribution system for carriage, that network competes for viewers not only with the other channels available on the system, but also with off-air broadcast television, pay-per-view channels and video-on-demand channels, as well as online services, mobile services, radio, print media, motion picture theaters, DVDs, and other sources of information, sporting events and entertainment.

Important to our success in each area of competition Rainbow Media Holdings faces are the prices we charge for our programming networks; the quantity, quality and variety of the programming offered on our networks; and the effectiveness of our networks’ marketing efforts.  The competition for viewers in the context of nonpremium programming networks directly correlates with the competition for advertising revenues with each of our competitors.

Our ability to successfully compete with other programming networks for distribution may be hampered because the cable television systems, DBS services or other systems through which distribution is sought may be affiliated with other programming networks.  In addition, because such affiliated cable television systems or DBS services may have a substantial number of subscribers, the ability of such programming networks to obtain distribution on affiliated cable television or DBS services may lead to increased subscriber and advertising revenue for such networks because of their increased penetration compared to our programming networks.  Even if such affiliated cable television or DBS operators carry our programming networks, there is no assurance that such cable television or DBS operators would not place their affiliated programming network on a more desirable tier, thereby giving the affiliated programming network a competitive advantage over our own.

New or existing programming networks with affiliations to desired broadcasting networks like NBC, ABC, CBS or FOX may also have a competitive advantage over our networks in obtaining distribution through the “bundling” of agreements to carry those programming networks with the agreements giving the cable system or other distributor the right to carry a broadcast station affiliated with the broadcasting network.

An important part of our strategy involves exploiting identified niches of the viewing audience that are generally well-defined and limited in size.  Rainbow Media Holdings has faced and will continue to face increasing competition as other programming networks and online or other services are launched that seek to serve the same or similar niches.

Sources of Programming

We also compete with other programming networks to secure desired programming.  Although some of this programming is generated internally through our efforts in original programming, most of our programming is obtained through agreements with other parties that have produced or own the rights to such programming.  Competition for this programming will increase as the number of programming networks increases.  Other programming networks that are affiliated with programming sources such as movie or television studios, film libraries or sports teams may have a competitive advantage over us in this area.

Competition for Entertainment Programming Sources.  With respect to the acquisition of entertainment programming, such as syndicated programs and movies, which are not produced by or specifically for programming networks, our competitors include national commercial broadcast television networks, local commercial broadcast television stations, the Public Broadcasting Service and local public television

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stations, pay-per-view programs, and other cable programming networks.  Some of these competitors have exclusive contracts with motion picture studios or independent motion picture distributors or own film libraries.  In the future, Internet-based video content distributors may also emerge as competitors for the acquisition of content or the rights to distribute content.

Competition for Sports Programming Sources.  Because the loyalty of the sports viewing audience to a sports programming network is primarily driven by loyalty to a particular team or teams, access to adequate sources of sports programming is particularly critical to our sports networks.  Madison Square Garden’s regional programming business competes for local and regional rights for teams or events principally with national or regional cable networks that specialize in or carry sports programming; television “superstations” which distribute sports and other programming by satellite; local and national commercial broadcast television networks; and independent syndicators that acquire and resell such rights nationally, regionally and locally.  Some of our competitors may own or control, or are owned or controlled by, sports teams, leagues or sports promoters.  This gives them an advantage in obtaining broadcast rights for such teams or sports.  Owners of distribution outlets such as DBS and cable television systems may also contract directly with the sports teams in their local service areas for the right to distribute games on their systems.

To remain competitive in acquiring rights to sports programming, Madison Square Garden’s regional programming business attempts to secure long-term rights agreements with teams, leagues, athletic conferences and other sports program suppliers.  Madison Square Garden’s regional programming business, however, is not always successful in doing so, and we cannot be assured that our strategy will enable Madison Square Garden’s regional programming business to offer sports programming of the type and in the quantity or quality necessary for such a business to remain competitive.  In addition, the increasing amount of sports programming available on a national basis, including pursuant to national rights arrangements (e.g., NBA on ABC, ESPN and TNT and NHL on NBC and Versus), as part of league-controlled sports networks (e.g., NBA TV and NFL Network), and in out-of-market packages (e.g., NBA’s League Pass), may have an adverse impact on our competitive position as Madison Square Garden’s programming networks compete for distribution and for viewers.

In the New York market, the two local professional baseball teams have each organized their own cable television networks featuring the games of their teams.  This adversely affects the competitive position of Madison Square Garden’s regional programming business in New York by denying or limiting our access to those games for our own networks and subjecting our networks to competition from these team-owned services.  On the other hand, the competitive position of Madison Square Garden’s regional programming business is substantially enhanced by our ownership of the New York Knicks and the New York Rangers.

Competition for Advertising Revenue.  The financial success of our programming businesses also depends in part upon unpredictable and volatile factors beyond our control, such as viewer preferences, the strength of the advertising market, the quality and appeal of the competing programming and the availability of other entertainment activities.  A shift in viewer preferences could cause our programming to decline in popularity, which could cause a decline in advertising revenues and could jeopardize renewal of our contracts with distributors.  A decline in available advertising expenditures by advertisers could also cause a decline in advertising revenues regardless of a change in viewer preferences, especially from increased competition by other programmers providing similar programming.  In addition, our competitors may have more flexible programming arrangements, as well as greater volumes of production, distribution and capital resources, and may be able to react more quickly to shifts in tastes and interests.

Madison Square Garden - Sports and Entertainment Businesses

In addition to the competition faced by Madison Square Garden’s regional programming business (as discussed above), Madison Square Garden sports teams’ financial success is dependent on their ability to generate advertising sales, paid attendance, luxury box rentals, and food, beverage and merchandise sales. 

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To a large extent, the ability of the teams to build excitement among fans, and therefore produce higher revenue streams, depends on the teams’ winning performance, which generates regular season and playoff attendance and luxury box rentals, and which also supports increases in prices charged for tickets, luxury box rentals, and advertising placement.  Each team’s success is dependent on its ability to acquire highly competitive personnel.  The governing bodies of the NBA and the NHL have the power and authority to take certain actions that they deem to be in the best interest of their respective leagues, which may not necessarily be consistent with maximizing the professional sports teams’ results of operations.  The Madison Square Garden Arena, the WaMu Theater, Radio City Music Hall and the Beacon Theatre compete with other sports and entertainment venues in the New York metropolitan area. The Chicago Theatre competes with entertainment venues in the Chicago area. Competition is affected primarily by the quality of the sports and entertainment offered to consumers and, to a lesser extent, by factors such as price, arena quality and location.

Clearview Cinemas

Clearview Cinemas as a smaller, regional film exhibitor, competes with a number of large theater chains and independent theaters with respect to acquiring licenses to films and attracting patrons.  The principal competitive factors in obtaining films from distributors include licensing terms, seating capacity, location, prestige of the theater chain and of the particular theater, quality of projection and sound equipment and the exhibitor’s ability and willingness to promote the distributor’s films.  Most of our competitors are in a stronger competitive position than Clearview Cinemas based upon these factors.  We believe that the principal competitive factors in attracting film audiences are the availability of marketable films, the location of theaters, theater comfort and environment, projection and sound quality, level of service and ticket price.  The theater exhibition industry also faces competition from other motion picture exhibition delivery systems, such as network, syndicated, on-demand and pay television; DVD and other home video systems; and the availability of films over the Internet.

Regulation

Cable Television

Our cable television systems are subject to extensive federal, state and local regulations.  Our systems are regulated under congressionally imposed uniform national guidelines, first set in the Cable Communications Policy Act of 1984 and amended by the Cable Television Consumer Protection and Competition Act of 1992 and the Telecommunications Act of 1996.

The following paragraphs describe the existing legal and regulatory requirements that are most significant to our business today.

Franchising.  Regulatory responsibility for local aspects of the cable business such as franchisee selection, system construction, safety, and customer service remains with state and local officials.  New York, New Jersey and Connecticut laws provide for comprehensive cable regulation, including approval of transfers of our cable franchises and consumer protection legislation.  At the urging of Verizon and AT&T, New Jersey and Connecticut recently enacted laws that provide for streamlined video franchising on a statewide basis.  Cablevision is also eligible for streamlined franchising under these laws.  State and local franchising jurisdiction, however, must be exercised consistently with federal law.  The Federal Cable Act authorizes states or localities to franchise our cable television systems on a non-exclusive basis but sets limits on their franchising powers.  It sets a ceiling on franchising authorities imposing franchise fees of not more than 5% of our gross revenues from our provision of cable television service.  It prohibits states and localities from requiring us to carry specific programming services, and protects us in seeking franchise renewals by limiting the factors a franchising authority may consider and requiring a due process hearing before denial of renewal.  Our franchising authorities cannot grant an exclusive cable franchise to us and cannot unreasonably refuse to award an additional franchise to compete with us.

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In December 2006, the FCC adopted rules that require municipalities, but not states, to act on local franchise applications from competitive providers like Verizon within 90 days.  The FCC also limited areas of negotiation between these applicants and municipalities that might otherwise slow the franchising process.  These rules are being challenged in federal court. We do not believe that these rules apply in the states in which we operate, where franchising is subject to state regulation, but we cannot predict the outcome of this litigation.  Even in states where the rules apply, the FCC has extended some of the limitations on municipalities to their negotiations with existing cable operators.

In New York, legislation has been introduced that would offer streamlined state video franchises to new video competitors with reduced regulatory obligations.  Existing cable operators would not be eligible for such franchises until their current franchises expire or are terminated by mutual agreement with the local franchising authority.

Rate Regulation.  In some of our cable television systems, the rates for our basic service package are subject to regulation by local franchising authorities in accordance with FCC rules.  Local municipalities or state cable television regulators may also regulate the rates we charge for the installation and lease of the equipment used by subscribers to receive the basic service package, including equipment that may also be used to receive other packages of programming, and the installation and monthly use of connections for additional television sets.  However, we are permitted to compute our regulated equipment rates by aggregating our costs of broad categories of equipment at the franchise, system, regional or company level.

Rate regulation is by federal law eliminated if one of our cable systems is subject to “effective competition” from another multichannel video programming distributor.  We have been successful in obtaining from the FCC such an “effective competition” finding in a number of communities in our market and are currently seeking such a finding in other communities.

Must-Carry/Retransmission Consent.  We are required by federal law to carry local broadcast stations (“must-carry”), or, at the option of a local broadcaster, to obtain the broadcaster’s prior consent for retransmission of its signal.  A substantial number of local broadcast stations currently carried by our cable television systems have elected to negotiate for retransmission consent.  Our cable television systems have reached retransmission consent agreements with most broadcast stations they currently carry, but the potential remains for broadcast station carriage to be discontinued if such an agreement is not renewed following its expiration.

Congress has established a “hard” date of February 17, 2009, as the deadline by which broadcasters must relinquish their analog spectrum.  No later than February 18, 2009, they must transmit solely in digital format.  The FCC has ruled that when a broadcaster completes its transition from analog to digital transmission, only its primary digital video stream will be entitled to must-carry.  The FCC has ruled that broadcasters may not demand mandatory carriage for other than the primary digital video programming stream.  The orders rejecting mandatory carriage of programming streams other than the primary digital video programming stream are currently subject to petitions for reconsideration pending for the FCC.

The FCC has also ruled that, beginning February 18, 2009, a cable operator must transmit the signals of must-carry stations in analog as well as digital format, unless all subscribers of the operator’s cable system can view the digital signal on every television set connected to the system.  This requirement runs until February 2012, but the FCC will review the rules in 2011 to determine their continued need.  This requirement has been challenged in federal court.

In the wake of publicized disputes between several cable operators and broadcasters, several members of Congress have expressed concern that current retransmission consent requirements and practices have had a negative effect on consumers, and stated that it is time for Congress to reexamine those requirements.  Other members of Congress have suggested that binding arbitration may be an appropriate means of resolving such disputes.  The FCC has solicited public comment on whether broadcasters can lawfully

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condition their consent to carriage on a cable operator’s agreement to carry an affiliated programming network.

Ownership Limitations.  Congress has required the FCC to set a national limit on the number of subscribers a cable company can serve, and a limit (the “channel occupancy rule”) on the number of channels on a cable system that can be occupied by video programming services in which the operator of that system has an attributable interest.  The FCC has established a national limit of 30% on the number of multichannel video households that a cable operator can serve.  That requirement is expected to be challenged in federal court.  The FCC is reviewing its channel occupancy rule, following a 2001 federal court decision that held unconstitutional the FCC’s prior rule establishing a 40% limit.

Set Top Boxes.  The FCC requires cable operators to separate security from non-security functions in digital set-top boxes in order to permit the manufacture and sale of these devices by third parties.  Beginning on July 1, 2007, cable operators were required to cease providing new digital set-top boxes that integrate security functions with the other capabilities provided by these boxes.  The FCC also requires cable operators to allow consumers to connect televisions and other consumer electronics equipment with a slot for a cable security card directly to digital cable systems to enable receipt of one-way digital programming without need for a set-top box.  The FCC has granted our request for a limited waiver of the integration ban for our set-top boxes, which rely on a different type of security card for separated security, and has temporarily grandfathered the use of our separate security solution until July 1, 2009.

Network Blackout/Nonduplication.  FCC rules require that we black out certain network and sports programming on imported distant broadcast television signals upon request.  The FCC also requires that we delete syndicated programming carried on distant signals upon the request of any local television/broadcast station holding the exclusive right to broadcast the same program within our local television market.

PEG and Leased Access.  Localities may require free access to public, educational or governmental channels on our systems.  We must make a limited number of commercial leased access channels available to third parties (including parties with potentially competitive video services) at regulated rates.  The FCC recently reduced the upper limit on the price we can charge for the use of leased access channels, and established additional leased access customer service standards and procedures for addressing complaints regarding alleged violations of the leased access rules.  These new rules are expected to be challenged in federal court.  The FCC has sought comment on whether the cap on the rates we can charge leased access programmers should also apply to programmers transmitting predominantly sales presentations or program length commercials.

Tiering/A La Carte.  Federal law requires us to establish a “basic service” package consisting, at a minimum, of all local broadcast signals that we carry, as well as, if the locality requests, all public, educational and governmental access programming carried by our systems.  All subscribers are required to purchase this tier as a condition of gaining access to any other programming that a cable operator provides.  We are also required to carry leased access programming on a tier that is available to more than fifty percent of our subscribers.  Federal law does not otherwise dictate the number or nature of programming services carried by a cable operator on each service tier.

Some members of Congress have proposed requiring cable operators to offer programming services on an unbundled basis rather than as part of a tier or to provide a greater array of tiers to give subscribers the option of purchasing a more limited number of programming services.  The FCC also has indicated an interest in requiring cable operators to offer programming services in this “a la carte” manner, and in February 2006 released a report finding “substantial benefits” in the a la carte model for delivering video programming.

Indecency and Obscenity Restrictions.  Cable operators and broadcasters are prohibited from transmitting obscene programming, but only broadcasters currently are subject to restrictions on the transmission of

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indecent material.  They may not transmit indecent programming when there is a reasonable risk of children in the audience (6 a.m. to 10 p.m.).  Some Members of Congress have proposed expanding the prohibitions on indecent programming to include cable and satellite programs, notwithstanding the availability of program blocking devices provided by cable and DBS operators.  Penalties for violations of this restriction can be severe.  Some members of Congress and the Chairman of the FCC have suggested that indecency restrictions for cable might be unnecessary if cable operators were to offer a separate tier of “family” programming or to offer programming services for purchase on an individual, “a la carte”, basis.

Violent Programming.  In April 2007, the FCC issued a report on violence in programming that recommended that Congress prohibit the availability of violent programming, including cable programming, during the hours when children are likely to be watching.  The report proposed that Congress consider requiring programming to be offered a la carte as one way of addressing violence in programming.

“70/70 Test.  The FCC has ordered cable operators to provide data to enable it to determine whether the so-called “70/70 test” in the Federal Cable Act has been satisfied.  Under this provision, when cable systems with 36 or more activated channels are available to 70 percent of households within the United States, and when 70 percent of those households subscribe to them, the FCC may promulgate any additional rules necessary to promote diversity of information sources.  In prior years, the FCC has concluded that this test has not been met.

Pole Attachments.  The FCC has authority to regulate utility company rates for cable rental of pole and conduit space unless states establish their own regulations in this area.  The states in which our cable television systems operate have adopted such regulations.  Utilities must provide cable television systems and telecommunications carriers with nondiscriminatory access to any pole, conduit or rights-of-way controlled by the utility.

The FCC has adopted regulations to govern the charges for pole attachments used by companies providing telecommunications services, including cable operators, and for attachments used by cable operators to provide Internet access services.  The states in which we operate have, to date, adopted the FCC regulations, with minor exceptions, although they remain free to adopt other pole attachment rules.

The FCC is considering raising the rates that cable operators may be charged to attach their wires to utility poles.  Among other things, the Commission proposes to raise the rate for attachments used for broadband Internet access services.  While the states in which we operate have established their own rates, such action by the FCC could affect regulation by the states.

Program Carriage.  The FCC’s program carriage rules govern disputes between cable operators and programming services over the terms of carriage.  We may not require a programming service to grant us a financial interest or exclusive carriage rights as a condition of its carriage on our cable systems, and we may not discriminate against programming services in the terms and conditions of carriage on the basis of their affiliation or nonaffiliation with us.

In June 2007, the FCC released a notice of proposed rulemaking considering changes to its program carriage rules, which govern disputes between programmers and distributors over carriage terms, including a proposal to require programmers and distributors to enter into “last best offer” style arbitration when they cannot reach agreement over carriage terms.  In addition, several states are also considering legislation that would mandate such arbitration for carriage disputes.  None of the states in which we operate have adopted such legislation.

Exclusive Access to Multitenant Buildings.  The FCC has prohibited cable operators from entering into agreements with owners of multitenant buildings under which the operator is the only provider of multichannel video service with access to the building.

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Exclusive Marketing and Bulk Billing Arrangements.  The FCC is reviewing whether cable operators should be prohibited from entering into exclusive marketing and bulk billing arrangements with owners of multitenant buildings.

Telemarketing.  The FCC and the Federal Trade Commission have adopted rules limiting the telemarketing practices of cable operators.

Privacy.  In the course of providing service, we collect certain personally identifiable information about our subscribers.  Our collection and use of this information is subject to a variety of Federal and state privacy requirements, including those imposed specifically on cable operators by the Communications Act.  The Communications Act requires a cable operator to give each subscriber annual written notice of the personally identifiable information that will be collected and the manner in which it is used, and sets limits, subject to certain exceptions, on our disclosure of that information to third parties.  As cable operators begin to provide interactive and other advanced services, additional privacy considerations may arise.

Other FCC Regulation.  The FCC regulates us in such areas as technical standards, and emergency alerts.  We also are prohibited by the Communications Act from transmitting obscene programming over our cable systems.  The FCC is also tasked by Congress to promote compatibility between cable television systems and other consumer electronic equipment.  The FCC is currently reviewing proposed standards for compatibility of digital equipment.

The FCC also imposes restrictions on our origination cablecasting channels and imposes rules governing political broadcasts; ownership and control of cable home wiring in single family residences and multiple dwelling units; closed captioning on networks we carry; and limitations on advertising contained in children’s programming that we carry.

The FCC requires us to pay annual “regulatory fees” that we may pass on to subscribers.  Other fees are assessed for the FCC licenses we hold for business radio, cable television relay systems and earth stations.  These fees may not be collected from our subscribers.

Federal Copyright Regulation.  We are required to pay copyright royalty fees to receive a statutory compulsory license to carry broadcast television signals.  The U.S. Copyright Office has increased our royalty fees from time to time and has, at times, recommended to Congress changes in the statutory compulsory licenses for cable television carriage of broadcast signals.  Such changes, if made, could adversely affect the ability of our cable television systems to obtain such programming, and could increase the cost of such programming.

High-Speed Internet

Regulatory Classification.  In March 2002, the FCC determined that broadband Internet access services like Optimum Online should be classified as “information services” for regulatory purposes, and the Supreme Court upheld that determination.  The FCC has traditionally subjected information services to a lesser degree of regulation than “telecommunications services,” which are offered to the public for a fee on a common carrier basis.  The FCC has adopted principles, but not rules, that similarly state that consumers are entitled to access all lawful Internet content using their broadband connections.

Access Obligations and “Net Neutrality.”  Some parties have proposed federal, state and local requirements that would force cable systems to provide access to third-party Internet service providers in addition to services the cable system itself provides, such as our Optimum Online cable modem service.  In 2002, the FCC asked whether it should nonetheless require cable operators to provide transmission capacity to unaffiliated Internet service providers.  The outcome of the FCC’s proceeding could affect the regulatory obligations imposed on Optimum Online, and the extent to which states and local authorities

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may regulate it or assess fees upon revenues generated by it.  Relatedly, some members of Congress have suggested that cable operators and other broadband service providers should be subject to a “net neutrality” requirement barring them from “interfering” with subscriber access to Internet content or from reaching agreement with certain content providers for preferential access.  Net neutrality legislation has also been introduced in the New York State legislature.  The FCC has adopted principles, but not rules, that state that consumers are entitled to access all lawful Internet content using their broadband connections.  In addition, the FCC is conducting a proceeding regarding whether there is a need for further regulatory intervention to ensure that consumers can access all lawful Internet content using their broadband connections.

Several entities have recently asked the FCC to rule that reasonable network management practices do not include conduct that would block, degrade, or unreasonably discriminate against lawful Internet applications, content or technologies including certain practices related to peer-to-peer traffic management.

Internet Access Service Consumer Protection.  The FCC is reviewing whether it should develop consumer protection requirements for all providers of broadband Internet access services like Optimum Online.  Congress also is considering proposals that would require all broadband Internet access service providers to comply with various rules, such as customer privacy, consumer service standards, and access for persons with disabilities.

Data Theft.  Legislation has been introduced in Congress and state legislatures, including those in which we operate, that would impose requirements on entities that collect personally identifiable information to protect that information against theft, notify customers of data theft, and penalize those companies that fail to comply with those requirements.

Currently, the Communications Act’s limitations on our collection and disclosure of cable subscribers’ personal information also apply with respect to broadband Internet access service provided by cable operators.  Broadband Internet access service is also subject to other federal and state privacy laws applicable to electronic communications.  Additionally, providers of broadband Internet access services like Optimum Online must comply with the FCC’s regulations implementing the Communications Assistance for Law Enforcement Act (“CALEA”), which requires providers to make their services and facilities accessible for law enforcement intercept requests.  Various other federal and state laws apply to providers of services that are accessible through Optimum Online, including copyright laws, prohibitions on obscenity, and a ban on unsolicited commercial e-mail.  Online content provided by Cablevision is also subject to these laws.

VoIP

The FCC, Congress, and several state commissions are examining issues surrounding the provision of VoIP services like Optimum Voice.  In February 2004, the FCC initiated a generic rulemaking proceeding concerning the legal and regulatory implications of IP-based services, including VoIP services.  In November 2004, the FCC determined that VoIP services with certain characteristics, including cable-provided VoIP services, are interstate services subject to federal rather than state jurisdiction.  The FCC’s determination was upheld by a federal court of appeals although the court found that the FCC’s order did not squarely address the classification of cable-provided VoIP services.  Although the FCC has not concluded its generic rulemaking proceeding, it has applied some regulations to VoIP service providers like Optimum Voice that have certain characteristics (these services are known as “interconnected VoIP services”).

Emergency 911 Services.  In June 2005, the FCC determined that interconnected VoIP services are required to provide enhanced 911 emergency services to their customers and must obtain affirmative acknowledgements that their customers understand the potential limitations of emergency 911 services offered in connection with interconnected VoIP services.  The FCC ruled that interconnected VoIP

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service providers were not permitted to further market their services unless they could provide 911 services and obtain all necessary acknowledgements from existing and new customers.  The FCC is considering changes to the 911 emergency calling capabilities interconnected VoIP service providers are required to provide and whether additional customer notification requirements should be applied.

CALEA.  In May 2006, the FCC determined that interconnected VoIP service providers like Optimum Voice are required to be compliant with CALEA standards.

Universal Service.  The FCC decided in June 2006 that interconnected VoIP services such as Optimum Voice should be required to contribute to the universal service fund on an interim basis.  The amount of universal service contribution for interconnected VoIP service providers is based on a percentage of revenues earned from end user interstate services.  The FCC developed three alternatives under which an interconnected VoIP service provider may elect to calculate its universal service contribution: (1) an interim safe harbor that assumes 64.9% of the provider’s end user revenues are interstate; (2) a traffic study to determine an allocation for interstate end user revenues; or (3) actual interstate and international end user revenues.  If an interconnected VoIP service provider calculates its universal service contributions based on its actual percentage of interstate calls, the interstate classification of the service might no longer apply, in which case the interconnected VoIP service provider could be subject to regulation by each state in which it operates as well as federal regulation.  The FCC’s application of universal service to interconnected VoIP providers was upheld by a federal court.

Lightpath and Optimum Voice are required to contribute to the federal universal service fund.  Rather than use the current revenue-based approach, the FCC is considering assessing universal service contributions based on a flat-fee charge, such as a per-line or per-number charge.  The FCC also is considering whether to apply universal service requirements to interconnected VoIP service providers on a permanent basis, and how contributions should be assessed in the future.  States may also assess such payments and subsidies on Lightpath for state universal service programs, and some states are looking at whether VoIP services like Optimum Voice should be subject to state universal service contribution requirements.

While a federal appeals court has upheld the FCC order requiring federal universal service contributions from interconnected VoIP service providers, questions remain about state jurisdiction to assess contributions on VoIP service providers for state universal service programs although some states have started to impose such fees on VoIP service providers.

CPNI.  In April 2007, the FCC adopted rules expanding protection of customer proprietary network information (“CPNI”), which includes such information as the quantity, type, destination, location, and amount of use of a service by a customer, and extending CPNI protection requirements to interconnected VoIP service providers like Optimum Voice effective December 8, 2007.  Interconnected VoIP providers are required to institute measures to protect customers’ CPNI from unauthorized disclosure to third parties, including use of passwords to protect online access to CPNI and telephone access to call detail information.  The FCC is considering revising its CPNI rules to place additional restrictions on storage and use of CPNI for both telecommunications carriers and interconnected VoIP service providers.

Access for Disabled Persons.  In June 2007, the FCC adopted rules requiring interconnected VoIP providers like Optimum Voice to comply with all disability access requirements that apply to telecommunications carriers, including provision of telecommunications relay services (“TRS”) for persons with speech or hearing impairments effective October 5, 2007.  The FCC is reviewing the technical solutions for routing interconnected VoIP service 711 calls to the appropriate TRS call center.

Regulatory Fees.  An August 2007 FCC order established that interconnected VoIP service providers must begin contributing to shared costs of FCC regulation through an annual regulatory fee assessment.  The order’s effective date has not yet been established.

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Local Number Portability.  In a November 2007 order, the FCC required interconnected VoIP service providers and their “numbering partners” to ensure that their customers have the ability to port their telephone numbers when changing providers to or from the interconnected VoIP service.  The order also clarifies that local exchange carriers and commercial mobile radio service providers have an obligation to port numbers to an interconnected VoIP service providers upon a valid port request.  Interconnected VoIP service providers are also required under the order to begin to contribute to federal funds to meet the shared costs of local number portability (“LNP”) and the costs of North American Numbering Plan Administration.  The order’s effective date has not yet been established.

The FCC is reviewing the implementation of LNP for interconnected VoIP services, including whether all current numbering requirements should be extended to interconnected VoIP services.  The FCC is also considering whether number porting intervals should be modified for all providers.

Intercarrier Compensation.  The FCC is currently reviewing whether to adopt a new regime to govern intercarrier compensation, including the adoption of unified compensation rates.  In addition, proceedings have been initiated to determine what intercarrier compensation charges should apply to the termination of VoIP traffic.

Other Services

Cablevision provides other services and features over its cable system, such as games and interactive advertising, that may be subject to a range of federal, state, and local laws such as privacy and consumer protection regulations.  Cablevision also maintains various websites that provide information and content regarding its businesses and offer merchandise for sale.  The operation of these websites is also subject to a similar range of requirements.

Telecommunications Services

The Telecommunications Act of 1996 was enacted to remove barriers to entry in the local telephone market that continues to be monopolized by the Bell Operating Companies (“BOCs”) and other ILECs by preempting state and local laws that restrict competition and by requiring ILECs to provide competitors, such as cable operators and long distance companies, with nondiscriminatory access and interconnection to the BOC and ILEC networks and access to certain portions of their communications networks (known as network elements) at cost-based rates.  The 1996 Telecommunications Act entitles our Lightpath subsidiary to certain rights, but as a telecommunications carrier, it also subjects Lightpath to regulation by the FCC and the states.  Lightpath’s designation as a telecommunications carrier also results in other regulations that may affect Lightpath and the services it offers.

Interconnection and Intercarrier Compensation.  The 1996 Telecommunications Act requires Lightpath to interconnect directly or indirectly with other telecommunications carriers.  In some cases, interconnecting carriers must compensate each other for the transport and termination of calls on their network (i.e., intercarrier compensation).  Accordingly, Lightpath is entitled, in some cases, to compensation from carriers when it terminates their originating calls on its network and in other cases is required to compensate another carrier for utilizing that carrier’s network to terminate traffic.  The FCC has adopted limits on the amounts of compensation that may be charged for certain types of tr affic.

Universal Service.  Lightpath is required to contribute to federal and state universal service funds.  Currently, the FCC assesses Lightpath for payments and other subsidies on the basis of a percentage of interstate revenue it receives from certain customers.  The FCC has placed limits on the mark-up carriers may place on the universal service line items on their customer bills.  States may also assess such payments and subsidies for state universal service programs.

Access for Disabled Persons. Lightpath is required by federal statute and FCC regulations to make its services accessible to persons with disabilities where accessibility is readily achievable.  In compliance

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with FCC rules, Lightpath also provides its subscribers, through use of the 711 abbreviated calling code, access to TRS, specialized services that enable persons with speech and hearing impairments to place calls using the telephone system.

Other Federal Regulation.  Lightpath is also subject to other FCC requirements in connection with the interstate long distance services it provides, including the payment of fees to fund the TRS fund, local number portability administration, the North American Numbering Plan, and the payment of regulatory fees to support the FCC.

CPNI  and Marketing Restrictions.  Lightpath is required to comply with the FCC’s rules restricting use of CPNI, which includes obtaining permission in certain cases prior to utilizing a customer’s information to market service.  Lightpath’s communications with its customers are subject to FCC, Federal Trade Commission, and state regulations on telemarketing, the sending of commercial e-mail messages, and the sending of commercial fax messages.

State Regulation.  Lightpath is also subject to regulation by the state commissions in each state in which it provides service.  In order to provide service, Lightpath must seek approval from each such state commission and may at times require local approval to construct facilities.  Lightpath is currently authorized and provides service in New York, Connecticut, and New Jersey.  Lightpath’s regulatory obligations vary from state to state and include some or all of the following requirements: filing tariffs (rates, terms and conditions); filing operational, financial, and customer service reports; seeking approval to transfer the assets or capital stock of the telephone company; seeking approval to issue stocks, bonds, and other forms of indebtedness of the telephone company; reporting customer service and quality of service requirements; making contributions to state universal service support programs; geographic build-out; and other matters relating to competition.

Programming and Entertainment

Cable television programming networks, such as those owned by Rainbow Media Holdings, are regulated by the FCC in certain respects if they are affiliated with a cable television system operator like Cablevision.  Other FCC regulations, although imposed on cable television operators and satellite operators, affect programming networks indirectly.

Closed Captioning and Advertising Restrictions on Children’s Programming.  Certain of Rainbow Media Holdings’ networks must provide closed-captioning of programming for the hearing impaired, and its programming and Internet websites intended primarily for children 12 years of age and under must comply with certain limits on advertising.

Indecency and Obscenity Restrictions.  Cable operators and other distributors are prohibited from transmitting obscene programming, and our affiliation agreements generally require us to refrain from including such programming on our networks.

Program Access.  The “program access” provisions of the Federal Cable Act generally require us to make Rainbow Media Holdings’ satellite-delivered video programming available to competing multichannel video programming providers, such as DBS providers and telephone companies on nondiscriminatory prices, terms and conditions, subject to certain exceptions specified in the statute and the FCC’s rules.  Under FCC rules in effect until October 2012, Rainbow Media Holdings cannot have exclusive contracts with cable operators for these services.  This prohibition has been challenged in federal court.  The program-access rules do not generally cover terrestrially-delivered programming created by cable-system affiliated programmers such as Rainbow Media Holdings.

The FCC is seeking comment on a proposal to allow a cable operator to seek repeal of the exclusivity ban prior to 2012 with respect to programming it owns, in markets where the cable operator faces competition from other video distributors; revisions to the program access complaint procedures; whether cable

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programming networks require programming distributors to purchase and carry undesired programming in return for the right to carry desired programming and, if so, whether such arrangements should be prohibited; and whether it would be appropriate to extend the Commission’s program access rules, including the exclusive contract prohibition, to terrestrially delivered cable-affiliated programming and programming delivered in high definition format.

Effect of “Must-Carry” Requirements.  The FCC’s implementation of the statutory “must-carry” obligations requires cable and DBS operators to give broadcasters preferential access to channel space.  This reduces the amount of channel space that is available for carriage of Rainbow Media Holdings’ networks by cable television systems and DBS operators.

Satellite Carriage.  All satellite carriers must under federal law offer their service to deliver Rainbow Media Holdings and its competitor programming networks on a nondiscriminatory basis (including by means of a lottery).  A satellite carrier cannot unreasonably discriminate against any customer in its charges or conditions of carriage.  Numerous competing satellite services today provide transponders that Rainbow Media Holdings could use to deliver its programming networks.

MVDDS

An indirect subsidiary of Rainbow Media Holdings owns a 90% interest in an entity that holds MVDDS licenses in 46 metropolitan areas including New York, Miami, Los Angeles, and Cleveland.  These licenses are for a 10-year term, with a renewal expectancy based on a showing of “substantial service” within each of these market areas at the end of 5 and 10 years into the license period.  The FCC’s rules prohibit us from holding more than a 20% interest in the MVDDS license in the New York market because of common ownership with our cable systems there. Absent a waiver of this restriction by the FCC, we would need to divest all or a sufficient portion of its investment in the New York City MVDDS license to comply with the restriction.  We currently hold such a waiver, which, unless extended, will expire on October 14, 2008.   We cannot provide any assurance that the FCC would grant a further waiver necessary for the Company to retain its interest in the New York license.

Employees and Labor Relations

As of December 31, 2007, we had 14,471 full-time, 2,234 part-time and 6,230 temporary employees of which 379, 1,151 and 3,594, respectively, were covered under collective bargaining agreements.  We believe that our relations with employees are satisfactory.

Available Information and Website

We make available free of charge, through our investor relations section at our website, http://www.cablevision.com/investor/index.jsp, our Form 10-K, Form 10-Q and Form 8-K reports and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the U.S. Securities and Exchange Commission (“SEC”).

The public may read and copy any materials the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549.  In addition, the public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at its web site http://www.sec.gov.

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EX-99.2

Exhibit 99.2

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Form 8-K contains statements that constitute forward looking information within the meaning of the Private Securities Litigation Reform Act of 1995, including restructuring charges, availability under credit facilities, levels of capital expenditures, sources of funds and funding requirements, among others.  Investors are cautioned that such forward looking statements are not guarantees of future performance or results and involve risks and uncertainties and that actual results or developments may differ materially from the forward looking statements as a result of various factors.  Factors that may cause such differences to occur include, but are not limited to:

·the level of our revenues;

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

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

·the cost of programming and industry conditions;

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

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

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

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

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

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

·demand for advertising inventory;

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

·the level of our capital expenditures;

·the level of our expenses;

·future acquisitions and dispositions of assets;

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

·market demand for new services;

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

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

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

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

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

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CABLEVISION SYSTEMS CORPORATION

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

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

Summary

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

Telecommunications Services

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

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

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

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extensive government regulation and changes in current or future laws or regulations could restrict our ability to operate our business as we currently do”.

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

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

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

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

Rainbow

In our Rainbow segment, which accounted for 13% of our consolidated revenues for the year ended December 31, 2007, we earn revenues in two principal ways.  First, we receive affiliate fee payments from cable television system operators, DBS operators and telephone companies (collectively referred to as “operators”).  These revenues are generally on a per subscriber basis and earned under multi-year contracts with those operators under our affiliation agreements.  The specific affiliate fee revenues we earn vary from operator to operator and also vary among our networks, but are generally based upon the number of each operator’s subscribers who receive our programming, referred to as “viewing subscribers.”  The second principal source of revenues in this segment is from advertising.  Under our agreements with cable television system operators and DBS operators and telephone companies, we have the right to sell a specific amount of national advertising time on our programming networks.  Our advertising revenues are more variable than affiliate fee revenues because most of our advertising is sold on a short-term basis, not under long-term contracts.  Also, our advertising revenues vary based upon the popularity of our programming as measured by rating services.

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

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

Madison Square Garden

Madison Square Garden, which accounted for 15% of our consolidated revenues for the year ended December 31, 2007, consists of our professional sports teams (principally the New York Knicks of the National Basketball Association (“NBA”) and the New York Rangers of the National Hockey League (“NHL”), along with the Hartford Wolf Pack of the American Hockey League and the New York Liberty of the Women’s National Basketball Association), a regional sports programming business, and an entertainment business, as well as the operations of Fuse, a national programming network effective January 1, 2008.  Prior to January 1, 2008, Fuse was included in the Rainbow segment  (prior period segment information has been reclassified and reported on a comparable basis).  Fuse is a music television network featuring music videos, artist interviews, live concerts, and series and specials.  It also operates the Madison Square Garden Arena, Radio City Music Hall, the WaMu Theater and, effective January 1, 2007, the Beacon Theatre in New York City.  In October 2007, Madison Square Garden purchased and assumed the operation of the Chicago Theatre in Chicago, Illinois.  Through June 30, 2007, it also operated the Hartford Civic Center and Rentschler Field (sports and entertainment venues in Connecticut).

Madison Square Garden faces competitive challenges unique to these activities.  We derive revenues in this segment primarily from our network businesses (see below), the sale of tickets, including luxury box rentals, to sporting and entertainment events, from rental rights fees paid to this segment by promoters that present events at our entertainment venues and the sports teams’ share of league-wide distributions of national television rights fees and royalties.  We also derive revenue from the sale of advertising at our owned and operated venues, from food, beverage and merchandise sales at these venues and from the licensing of our trademarks.  Madison Square Garden’s regional sports programming business and Fuse

4

derive their revenues from affiliate fees paid by cable television operators (including our cable television systems), satellite operators that provide video service and sales of advertising.  This segment’s financial performance is affected by the performance of all the teams presented and the attractiveness of its entertainment events and programming content.

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

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

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

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

Stock Option Related Matters

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

Critical Accounting Policies

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

Impairment of Long-Lived and Indefinite-Lived Assets:

The Company’s long-lived and indefinite lived assets at December 31, 2007 include excess costs over fair value of net assets acquired (“goodwill”) of $1,023,480, other intangible assets of $1,388,292 ($893,879

5

of which are indefinite-lived intangibles) and $3,472,203 of property, plant and equipment.  Such assets accounted for approximately 64% of the Company’s consolidated total assets.

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

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

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

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

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

6

no longer be exploited, a write-off for the portion of the unamortized cost of the film license agreement that was attributed to those films is recorded in technical and operating expense.

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

We have recorded impairment losses of approximately $3,160, $1,640 and $663 for the years ended December 31, 2007, 2006 and 2005, respectively, included in technical and operating expense, representing primarily the impairment of certain film and programming contracts.  In addition, we recorded impairment charges of $1,804, $2,104 and $7,697 in 2007, 2006 and 2005, respectively, included in depreciation and amortization related primarily to certain other long-lived assets and goodwill related to certain subsidiaries in our Rainbow segment in 2007, to our theater operations and PVI Virtual Media business in 2006 and to our theater operations and Rainbow segment in 2005, respectively.

Useful Lives of Finite-Lived Intangible Assets:

The Company has recognized intangible assets for affiliation relationships, affiliation agreements, advertiser relationships, season ticket holder relationships and suite holder contracts and relationships as a result of the Regional Programming Partners restructuring transaction with News Corporation in April 2005.  In addition, the Company has also recognized intangible assets for affiliation agreements and advertiser relationships as a result of the July 2003 repurchase of Metro-Goldwyn-Mayer, Inc.’s (“MGM”) 20% interest in each of American Movie Classics Company LLC, WE: Women’s Entertainment and The Independent Film Channel LLC and the repurchase of NBC’s interests in Rainbow Media Holdings LLC in various transactions in 2001 and 2002.  The Company has determined that such intangible assets have finite lives and has estimated those lives to be 4 to 11 years for affiliation agreements, 24 years for affiliation relationships, 7 to 10 years for advertiser relationships, 10 to 15 years for season ticket holder relationships and 3 to 11 years for suite holder contracts and relationships.  At December 31, 2007, the carrying values, net of accumulated amortization, were $332,546 for affiliation agreements and affiliation relationships, $7,068 for broadcast rights and other agreements, $49,779 for advertiser relationships, $59,529 for season ticket holder relationships, $12,031 for suite holder contracts and relationships and $33,460 for other intangibles.

The amount we originally allocated in purchase accounting to the affiliation agreements and affiliation relationships finite-lived intangibles in our consolidated financial statements is the estimated aggregate fair value of those affiliation agreements, affiliation relationships and the related customer relationships.  The useful lives for the affiliation agreements were determined based upon an analysis of the weighted average lives of existing agreements the Company had in place with its major customers at the time that purchase accounting was applied, plus an estimate for renewals of such agreements.  The Company has been successful in renewing its affiliation agreements and maintaining customer relationships in the past and believes it will be able to renew its major affiliation agreements and maintain those customer relationships in the future.  However, it is possible that the Company will not successfully renew such agreements as they expire or that if it does, the net revenue earned may not equal or exceed the net revenue currently being earned, which could have a significant adverse impact on our business.  In light of these facts and circumstances, the Company has determined that an estimated useful life of 4 to 11 years for affiliation agreements and 24 years for affiliation relationships is appropriate.

There have been periods when an existing affiliate agreement has expired and the parties have not finalized negotiations of either a renewal of that agreement or a new agreement for certain periods of

7

time.  In substantially all these instances, the affiliates continued to carry and pay for the service under oral or written interim agreements until execution of definitive replacement agreements or renewal.  In one case during 2004, there was a 10-day period in which an affiliate was restricted from carrying certain of the Company’s sports and entertainment networks because the parties had not reached agreement on contract renewal terms.  We reached a short-term agreement with the affiliate at the end of the 10-day period and that affiliate continuously carried the networks pursuant to successive subsequent short-term agreements through March 7, 2005.  However, we were unable to reach an agreement with this affiliate at expiration on March 7, 2005, and this affiliate discontinued carriage of certain of the Company’s sports networks.  On May 9, 2005, we reached a multi-year agreement on key rate and positioning terms for carriage of these sports networks and the parties subsequently entered into definitive documentation reflecting such agreement.  See “Impairment of Long-Lived and Indefinite-Lived Assets” discussion above.

If an affiliate were to cease carrying the service on an other than temporary basis, the Company would record an impairment charge for the then remaining carrying value of that affiliation agreement intangible asset.  If the Company were to renew an affiliation agreement at rates that produced materially less net revenue compared to the net revenue produced under the previous agreement, the Company would evaluate the impact on its cash flows and, if necessary, would further evaluate such indication of potential impairment by following the policy described above under “Impairment of Long-Lived and Indefinite-Lived Assets” for the asset group containing that intangible.  The Company also would evaluate whether the remaining useful life of the affiliation agreement remained appropriate.  Based on December 31, 2007 carrying values, if the estimated life of all affiliation agreements and affiliation relationships were shortened by 10%, the effect on amortization for the year ending December 31, 2008 would be to increase our annual amortization expense by approximately $6,300.

Valuation of Deferred Tax Assets:

Deferred tax assets have resulted primarily from the Company’s future deductible temporary differences and NOLs.  In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax asset will not be realized.  The Company’s ability to realize its deferred tax assets depends upon the generation of sufficient future taxable income and tax planning strategies to allow for the utilization of its NOLs and deductible temporary differences.  If such estimates and related assumptions change in the future, the Company may be required to record additional valuation allowances against its deferred tax assets, resulting in additional income tax expense in the Company’s consolidated statement of operations.  Management evaluates the realizability of the deferred tax assets and the need for additional valuation allowances quarterly.  At this time, based on current facts and circumstances, management believes that it is more likely than not that the Company will realize benefit for its gross deferred tax assets, except those deferred tax assets against which a valuation allowance has been recorded which relate to certain state NOLs.  In 2007 and 2006, the Company recorded decreases in the valuation allowance of $536 and $10,404, respectively, relating to certain state NOLs.  In 2005, the Company recorded an increase in the valuation allowance of $6,459, relating to certain state NOLs.  During 2007, 2006 and 2005, certain state NOLs expired prior to utilization.  The deferred tax asset corresponding to the expired NOLs had been fully offset by a valuation allowance.  The associated deferred tax asset and valuation allowance were both reduced by $1,122, $2,638 and $6,953 in 2007, 2006 and 2005, respectively.

Plant and Equipment:

Costs incurred in the construction of the Company’s cable television system, including line extensions to, and upgrade of, the Company’s hybrid fiber-coaxial infrastructure and headend facilities are capitalized.  These costs consist of materials, subcontractor labor, direct consulting fees, and internal labor and related costs associated with the construction activities.  The internal costs that are capitalized consist of salaries and benefits of Company employees and the portion of facility costs, including rent, taxes, insurance and utilities, that supports the construction activities.  These costs are depreciated over the estimated life of

8

the plant and headend facilities.  Costs of operating the plant and the technical facilities, including repairs and maintenance, are expensed as incurred.

Costs incurred to connect businesses or residences that have not been previously connected to the infrastructure or digital platform are also capitalized.  These costs include materials, subcontractor labor, internal labor to connect, provision and provide on-site and remote technical assistance and other related costs associated with the connection activities.  In addition, on-site and remote technical assistance during the provisioning process for new digital product offerings are capitalized.  The departmental activities supporting the connection process are tracked through specific metrics, and the portion of departmental costs that is capitalized is determined through a time weighted activity allocation of costs incurred based on time studies used to estimate the average time spent on each activity.  New connections are amortized over 5 years or 12 years for residence wiring and feeder cable to the home, respectively.  The portion of departmental costs related to reconnection, programming service up- and down- grade, repair and maintenance, and disconnection activities are expensed as incurred.

Certain Transactions

The following transactions occurred during the periods covered by this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

2007 Transactions.  In June 2007, Rainbow Media Holdings completed the sale to Comcast of (i) its 60% interest in Fox Sports Net Bay Area, for a purchase price of $366,750 (the “Bay Area Sale”) and (ii) its 50% interest in Fox Sports Net New England, for a purchase price of $203,250 (the “New England Sale”), for an aggregate purchase price of $570,000, plus certain additional consideration to Rainbow Media Holdings, subject to customary working capital adjustments.  The net operating results of Fox Sports Net Bay Area have been classified as discontinued operations for all periods presented.  The net operating results of Fox Sports Net Bay Area were previously reported in the Rainbow segment.

On May 2, 2007, Cablevision entered into a merger agreement with Central Park Holding Company, LLC (“Dolan Family Acquisition Company”), an entity owned by the Dolan Family Group, and Central Park Merger Sub, Inc.  The terms of the merger agreement provided that Central Park Merger Sub, Inc. would be merged with and into Cablevision and, as a result, Cablevision would continue as the surviving corporation and a wholly-owned subsidiary of Dolan Family Acquisition Company (the “Proposed Merger”).

On October 24, 2007, the Proposed Merger was submitted to a vote of Cablevision’s shareholders and did not receive shareholder approval.  Subsequently, the parties terminated the merger agreement pursuant to its terms.

2005 Transactions.  In April 2005, the Company and News Corporation restructured Regional Programming Partners.  As a result, the Company indirectly owns 100% of Madison Square Garden, L.P. and no longer owns interests in Fox Sports Net Ohio, Fox Sports Net Florida, National Sports Partners or National Advertising Partners.  The Company also owned 100% of Fox Sports Net Chicago, which was shut down in June 2006 and through June 2007 owned 50% of Fox Sports Net New England and 60% of Fox Sports Net Bay Area (see “2007 Transactions” above).

In 2005, subsidiaries of the Company entered into agreements with EchoStar by which EchoStar acquired a 20% interest in VOOM HD and agreed to distribute VOOM on its DISH Network for a 15-year term.  The affiliation agreement with EchoStar for such distribution provides that if VOOM HD fails to spend $100,000 per year (subject to reduction to the extent that the number of offered channels is reduced to fewer than 21), up to a maximum of $500,000 in the aggregate, on VOOM, EchoStar may seek to terminate the agreement under certain circumstances.  On January 30, 2008, EchoStar purported to terminate the affiliation agreement, effective February 1, 2008, based on its assertion that VOOM HD had failed to comply with this spending provision in 2006.  On January 31, 2008, VOOM HD sought and

9

obtained a temporary restraining order from New York Supreme Court for New York County prohibiting EchoStar from terminating the affiliation agreement.  In conjunction with its request for a temporary restraining order, VOOM HD filed a lawsuit against EchoStar asserting that EchoStar did not have the right to terminate the affiliation agreement.  That lawsuit is pending, as is the court’s decision on VOOM HD’s motion for a preliminary injunction.  Separately, on February 1, 2008, EchoStar began to distribute VOOM in a manner that the Company believes violates EchoStar’s obligations under the affiliation agreement.  On February 4, 2008, VOOM HD notified EchoStar of its position that this new distribution constitutes a material breach of the affiliation agreement and reserved all its rights and remedies.

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Results of Operations - Cablevision Systems Corporation

The following table sets forth on a historical basis certain items related to operations as a percentage of net revenues for the periods indicated:

STATEMENT OF OPERATIONS DATA

	Years Ended December 31,										Increase
	2007					2006					(Decrease)
				% of Net					% of Net		in Net
	Amount			Revenues		Amount			Revenues		Income
Revenues, net	$	6,484,481		100	%	$	5,828,493		100	%	$	655,988
Operating expenses:
Technical and operating (excluding depreciation, amortization and impairments shown below)	2,891,337			45		2,651,890			45		(239,447		)
Selling, general and administrative	1,558,455			24		1,471,366			25		(87,089		)
Restructuring expense (credits)	4,733			—		(3,484		)	—		(8,217		)
Depreciation and amortization (including impairments)	1,118,888			17		1,119,829			19		941
Operating income	911,068			14		588,892			10		322,176
Other income (expense):
Interest expense, net	(900,698		)	(14	)	(891,674		)	(15	)	(9,024		)
Equity in net income of affiliates	4,377			—		6,698			—		(2,321		)
Gain on sale of programming and affiliate interests, net	183,286			3		—			—		183,286
Gain (loss) on investments, net	(214,257		)	(3	)	290,052			5		(504,309		)
Write-off of deferred financing costs	(2,919		)	—		(14,083		)	—		11,164
Gain (loss) on derivative contracts, net	138,144			2		(253,712		)	(4	)	391,856
Loss on extinguishment of debt	(19,113		)	—		(13,125		)	—		(5,988		)
Minority interests	321			—		1,614			—		(1,293		)
Miscellaneous, net	2,636			—		2,845			—		(209		)
Income (loss) from continuing operations before taxes	102,845			2		(282,493		)	(5	)	385,338
Income tax benefit (expense)	(79,181		)	(1	)	140,462			2		(219,643		)
Income (loss) from continuing operations	23,664			—		(142,031		)	(2	)	165,695
Income from discontinued operations, net of taxes	195,235			3		16,428			—		178,807
Income (loss) before cumulative effect of a change in accounting principle	218,899			3		(125,603		)	(2	)	344,502
Cumulative effect of a change in accounting principle, net of taxes	(443		)	—		(862		)	—		419
Net income (loss)	$	218,456		3	%	$	(126,465	)	(2	)%	$	344,921

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STATEMENT OF OPERATIONS DATA (continued)

	Years Ended December 31,										Increase
	2006					2005					(Decrease)
				% of Net					% of Net		in Net
	Amount			Revenues		Amount			Revenues		Income
Revenues, net	$	5,828,493		100	%	$	5,082,045		100	%	$	746,448
Operating expenses:
Technical and operating (excluding depreciation, amortization and impairments shown below)	2,651,890			45		2,249,367			44		(402,523		)
Selling, general and administrative	1,471,366			25		1,283,938			25		(187,428		)
Restructuring credits	(3,484		)	—		(537		)	—		2,947
Depreciation and amortization (including impairments)	1,119,829			19		1,074,711			21		(45,118		)
Operating income	588,892			10		474,566			9		114,326
Other income (expense):
Interest expense, net	(891,674		)	(15	)	(748,665		)	(15	)	(143,009		)
Equity in net income of affiliates	6,698			—		3,219			—		3,479
Gain on sale of programming and affiliate interests, net	—			—		64,968			1		(64,968		)
Gain (loss) on investments, net	290,052			5		(138,312		)	(3	)	428,364
Write-off of deferred financing costs	(14,083		)	—		—			—		(14,083		)
Gain (loss) on derivative contracts, net	(253,712		)	(4	)	119,180			2		(372,892		)
Loss on extinguishment of debt	(13,125		)	—		—			—		(13,125		)
Minority interests	1,614			—		5,221			—		(3,607		)
Miscellaneous, net	2,845			—		650			—		2,195
Loss from continuing operations before taxes	(282,493		)	(5	)	(219,173		)	(4	)	(63,320		)
Income tax benefit	140,462			2		82,219			2		58,243
Loss from continuing operations	(142,031		)	(2	)	(136,954		)	(3	)	(5,077		)
Income from discontinued operations, net of taxes	16,428			—		226,274			4		(209,846		)
Income (loss) before extraordinary item	(125,603		)	(2	)	89,320			2		(214,923		)
Extraordinary loss on investment, net of taxes	(862		)	—		—			—		(862		)
Net income (loss)	$	(126,465	)	(2	)%	$	89,320		2	%	$	(215,785	)

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Comparison of Consolidated Year Ended December 31, 2007 Versus Year Ended December 31, 2006

Consolidated Results – Cablevision Systems Corporation

The Company classifies its business interests into three reportable segments:

·Telecommunications Services, consisting principally of our video, high-speed data, VoIP services and the commercial data and voice services operations of Optimum Lightpath;

·Rainbow, consisting principally of interests in national and regional television programming networks, including AMC, IFC, WE tv, News 12 and VOOM HD Networks; and

·Madison Square Garden, consisting principally of its professional sports teams, a regional sports programming business and an entertainment business, as well as the operations of Fuse, a national programming network effective January 1, 2008.  Prior to January 1, 2008, Fuse was included in the Rainbow segment.  Prior period segment information has been reclassified and reported on a comparable basis.

The Company allocates certain costs to each segment based upon their proportionate estimated usage of services.  The segment financial information set forth below, including the discussion related to individual line items, does not reflect inter-segment eliminations unless specifically indicated.

See “Business Segments Results” for a more detailed discussion relating to the operating results of our segments.

Revenues, net for the year ended December 31, 2007 increased $655,988 (11%) as compared to revenues for the prior year.  The net increase is attributable to the following:

Increase in revenues of the Telecommunication Services segment	$	483,462
Increase in revenues of the Rainbow segment	106,661
Increase in revenues of the Madison Square Garden segment	96,986
Other net decreases	(6,518		)
Inter-segment eliminations	(24,603		)
	$	655,988

Technical and operating expenses (excluding depreciation, amortization and impairments) include primarily:

·cable programming costs which are costs paid to programmers, net of amortization of any launch support received, for cable content and are generally paid on a per-subscriber basis;

·network management and field service costs which represent costs associated with the maintenance of our broadband network, including costs of certain customer connections;

·contractual rights expense to broadcast certain live sporting events and contractual compensation expense pursuant to employment agreements with professional sports teams’ personnel;

·amortization of costs to license programming, including program rights and production costs of our Rainbow businesses; and

·interconnection, call completion and circuit fees relating to our telephone and VoIP businesses which represent the transport and termination of calls with other telecommunications carriers.

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Technical and operating expenses (excluding depreciation and amortization and impairments) in 2007 increased $239,447 (9%) as compared to 2006.  The net increase is attributable to the following:

Increase in expenses of the Telecommunications Services segment	$	232,273
Increase in expenses of the Rainbow segment	31,003
Decrease in expenses of the Madison Square Garden segment	(2,086		)
Other net decreases	(2,134		)
Inter-segment eliminations	(19,609		)
	$	239,447

As a percentage of revenues, technical and operating expenses remained constant during 2007 as compared to 2006.

Selling, general and administrative expenses include primarily sales, marketing and advertising expenses, administrative costs, and costs of customer call centers.  Selling, general and administrative expenses increased $87,089 (6%) for 2007 as compared to 2006.  The net increase is attributable to the following:

Increase in expenses of the Telecommunications Services segment	$	76,176
Increase in expenses of the Rainbow segment	11,110
Increase in expenses of the Madison Square Garden segment	19,943
Other net decreases	(14,031		)
Inter-segment eliminations	(6,109		)
	$	87,089

As a percentage of revenues, selling, general and administrative expenses decreased 1% in 2007 compared to 2006.

Restructuring charges (credits) amounted to $4,733 in 2007 and $(3,484) in 2006. The 2007 amount related primarily to severance and other costs of $3,123 associated with the 2007 restructuring plans and adjustments to facility realignment provisions and other costs recorded in connection with the 2001, 2002 and 2006 restructuring plans of $1,610.  The 2006 amount related primarily to adjustments to facility realignment provisions recorded in connection with the 2001 and 2002 restructuring plans of $(3,996), partially offset by a charge of $512 relating to facility realignment and severance costs associated with the 2006 restructuring plans.

Depreciation and amortization (including impairments) decreased $941 for 2007 as compared to 2006. The net decrease consisted of a decrease in amortization expense of $1,864 due to certain long-lived assets becoming fully amortized, partially offset by an increase in depreciation expense of $923 due primarily to depreciation of new fixed assets and losses on certain asset disposals.

Net interest expense increased $9,024 (1%) during 2007 compared to 2006.  The net increase is attributable to the following:

Increase due to higher average debt balances related primarily to the financing of the 2006 special dividend in the second quarter of 2006, partially offset by lower outstanding collateralized indebtedness and the redemption of certain senior and senior subordinated notes and debentures in May 2006, August 2007 and December 2007	$	19,670
Decrease due to lower average interest rates on indebtedness	(4,326		)
Higher interest income	(3,626		)
Other net decreases	(2,694		)
	$	9,024

Equity in net income of affiliates amounted to $4,377 in 2007 compared to $6,698 in 2006.  Such amounts consist of the Company’s share of the net income of certain businesses in which the Company does not have a majority ownership interest.

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Gain on sale of affiliate interests of $183,286 for the year ended December 31, 2007 resulted from the sale of our 50% equity interest in the Fox Sports Net New England business in June 2007.

Gain (loss) on investments, net for the years ended December 31, 2007 and 2006 of $(214,257) and $290,052 respectively, consists primarily of the net change in the fair value of Comcast, General Electric, AT&T, Charter Communications, Leapfrog, and Adelphia Communications common stock owned by the Company.  As of December 31, 2007, the Company’s investment securities held as collateral consist of Comcast and General Electric common shares.  Our holdings of AT&T, Charter, Leapfrog and Adelphia common stock were delivered to each counterparty in connection with the settlement of their related monetization contracts upon their maturity.  The effects of these gains and losses are largely offset by the losses and gains on related derivative contracts described below.

Write-off of deferred financing costs for the year ended December 31, 2007 of $2,919 represents costs written off in connection with the partial redemption in August 2007 of Rainbow National Services’ senior subordinated notes due 2014.  Write-off of deferred financing costs for 2006 of $14,083 includes $6,084 of costs written off in connection with the refinancing of the Rainbow National Services LLC credit agreement in July 2006, $3,412 of costs written off in connection with the early redemption of CSC Holdings’ $250,000 principal amount of 10-1/2% Senior Subordinated Debentures due 2016 in May 2006, and $4,587 of costs written off in connection with the refinancing of the CSC Holdings credit agreement.

Gain (loss) on derivative contracts, net for the years ended December 31, 2007 and 2006 consisted of the following:

	Years Ended December 31,
	2007			2006
Unrealized and realized gain (loss) due to the change in fair value of the Company’s prepaid forward contracts relating to the AT&T, Comcast, Charter Communications, General Electric, and Leapfrog shares	$	214,712		$	(214,352	)
Unrealized and realized losses on interest rate swap contracts	(76,568		)	(39,360		)
	$	138,144		$	(253,712	)

The effects of these gains and losses are largely offset by the losses and gains on investment securities pledged as collateral which are included in gain (loss) on investments, net discussed above.

Loss on extinguishment of debt of $19,113 for the year ended December 31, 2007 represents the excess of the redemption price over the carrying value of the $175,000 principal amount of the Rainbow National Services senior subordinated notes due 2014 redeemed in August 2007.  Loss on extinguishment of debt of $13,125 for the year ended December 31, 2006 represents the premium paid on the early redemption of CSC Holdings’ $250,000 principal amount of 10-1/2% Senior Subordinated Debentures due 2016 in May 2006.

Minority interests for the years ended December 31, 2007 and 2006 of $321 and $1,614, respectively, represent other parties’ share of the net income (losses) of entities which are not entirely owned by us but which are consolidated in our financial statements.

Net miscellaneous income of $2,636 and $2,845 for the years ended December 31, 2007 and 2006, respectively, resulted primarily from dividends received on certain of the Company’s investment securities, partially offset by other miscellaneous expenses.

Income tax expense attributable to continuing operations of $79,181 for the year ended December 31, 2007 resulted primarily from the Company’s pretax income, state income tax expense of $7,120, tax expense of $10,831 for the impact of a change in the state rate used to measure deferred taxes, tax expense of $8,849, including accrued interest, recorded pursuant to Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes, and the tax impact of

15

non-deductible officers’ compensation and other non-deductible expenses of $9,355 and $6,285, respectively, partially offset by a decrease in the valuation allowance of $536 relating to certain state NOLs.

Income tax benefit attributable to continuing operations of $140,462 for the year ended December 31, 2006 resulted primarily from the Company’s pretax loss, state income tax benefit of $25,230, increased by a $10,404 decrease in the valuation allowance relating to certain state NOLs, a tax benefit of $16,356 resulting from the reduction in a tax contingency liability pursuant to a change in judgment, a tax benefit of $5,013 resulting from the favorable settlement of an issue with a taxing authority, partially offset by the impact of non-deductible officers’ compensation of $4,443 and other non-deductible expenses of $6,768.

Income (loss) from discontinued operations

In April 2005, the operations of the Rainbow DBS satellite distribution business were shut down.  In connection with the shut down, certain assets of the business, including the Rainbow 1 direct broadcast satellite and certain other related assets were sold to a subsidiary of EchoStar for $200,000 in cash.  This transaction closed in November 2005.

In 2006, the Company accrued $50,898, including interest, reflected as an expense in discontinued operations, as a result of the judgment entered against Cablevision and Rainbow DBS in the Loral matter (see Item 3.  Legal Proceedings).  The Company has posted a cash collateralized bond in the amount of $52,159, which is reflected as restricted cash in the Company’s consolidated balance sheet at December 31, 2007.

In April 2005, the Company and News Corporation restructured Regional Programming Partners.  As a result, the Company owns 100% of Madison Square Garden and no longer owns interests in Fox Sports Net Ohio, Fox Sports Net Florida, National Sports Partners or National Advertising Partners.  The Company also owned 100% of Fox Sports Net Chicago which was shut down in June 2006 and through June 2007, the Company owned a 60% interest in Fox Sports Net Bay Area and a 50% interest in Fox Sports Net New England.  In June 2007, the Company completed the sale of its 60% interest in Fox Sports Net Bay Area and its 50% interest in Fox Sports Net New England to Comcast.

The net operating results of the Fox Sports Net Bay Area, Fox Sports Net Chicago, Fox Sports Net Ohio and Fox Sports Net Florida businesses and those of the Rainbow DBS distribution business have been reported in discontinued operations in the Company’s consolidated statements of operations for all periods presented.

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Income (loss) from discontinued operations, net of taxes, for the years ended December 31, 2007 and 2006 reflects the following items, net of related income taxes and minority interests:

	Years Ended December 31,
	2007		2006
Gain on sale of Fox Sports Net Bay Area, net of taxes	$	186,281	$	—
Net operating results of the Rainbow DBS distribution business, including shutdown costs, net of taxes*	4,167		(33,472		)
Net operating results of Fox Sports Net Chicago, net of taxes**	—		40,955
Net operating results of Fox Sports Net Bay Area, net of taxes	4,787		8,982
Other, net of taxes	—		(37		)
	$	195,235	$	16,428

*The 2006 amount includes $30,025, net of taxes, representing the Make Whole Payment due to Loral.  See Item 3.  Legal Proceedings.

**The 2006 amount includes approximately $46,100, net of taxes, representing the collection in June 2006 of affiliate revenue from a cable affiliate, including approximately $42,200, net of taxes, relating to periods prior to 2006, that had not been previously recognized due to a contractual dispute.  The underlying contract was terminated in June 2006 and no further payments will be received under this contract.

Business Segments Results – Cablevision Systems Corporation

Telecommunications Services

The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenue for the Company’s Telecommunications Services segment:

	Years Ended December 31,
										Increase
	2007				2006					(Decrease) in
	Amount		% of Net Revenues		Amount			% of Net Revenues		Operating Income
Revenues, net	$	4,721,169	100	%	$	4,237,707		100	%	$	483,462
Technical and operating expenses (excluding depreciation and amortization)	2,006,880		43		1,774,607			42		(232,273		)
Selling, general and administrative expenses	910,207		19		834,031			20		(76,176		)
Restructuring credits	—		—		(17		)	—		(17		)
Depreciation and amortization	929,606		20		915,724			22		(13,882		)
Operating income	$	874,476	19	%	$	713,362		17	%	$	161,114

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Revenues, net for the year ended December 31, 2007 increased $483,462 (11%) as compared to revenues for the prior year.  The following table presents the increases by major components of revenues for the years ended December 31, 2007 and 2006 for the Company’s Telecommunications Services segment:

										Percent
	As of December 31,						Increase			Increase
	2007			2006			(Decrease)			(Decrease)
Video (including analog, digital, pay-per-view, video-on-demand and digital video recorder)	$	2,774,291		$	2,576,598		$	197,693		8	%
High-speed data	1,013,462			900,024			113,438			13	%
Voice	534,553			369,793			164,760			45	%
Advertising	118,473			119,239			(766		)	(1	)%
Other (including installation, home shopping, advertising sales commissions, and other products)	105,519			109,781			(4,262		)	(4	)%
Total cable television	4,546,298			4,075,435			470,863			12	%
Optimum Lightpath	215,476			210,594			4,882			2	%
Intra-segment eliminations	(40,605		)	(48,322		)	7,717			16	%
Total Telecommunications Services	$	4,721,169		$	4,237,707		$	483,462		11	%

Revenue increases reflected above are primarily derived from increases in the number of subscribers to our high speed data and voice services, including additional services sold to our existing video subscribers, (set forth in the table below), upgrades by video customers from the level of the programming package to which they subscribe, and general increases in rates, offset in part by offer discounts and other rate changes.  As a result, our average monthly revenue per basic video subscriber for the three months ended December 31, 2007 was $125.10 as compared with $115.30 for the three months ended December 31, 2006.  The increase in Optimum Lightpath net revenues is primarily attributable to growth in Ethernet data services, partially offset by reduced traditional data services and intra-segment revenue from the VoIP business.

The following table presents certain subscriber information as of December 31, 2007 and 2006 for the Company’s cable television systems (excluding Optimum Lightpath):

					Percent
	As of December 31,		Increase		Increase
	2007	2006	(Decrease)		(Decrease)
		(in thousands)
Basic video customers	3,123	3,127	(4	)	—
iO digital video customers	2,628	2,447	181		7	%
Optimum Online high-speed data customers	2,282	2,039	243		12	%
Optimum voice customers	1,592	1,209	383		32	%
Residential telephone customers	—	5	(5	)	(100	)%
Total revenue generating units	9,625	8,827	798		9	%

The Company had a decline of approximately 4,000 basic video customers, however it added approximately 798,000 revenue generating units (“RGUs”) in 2007.  The Company had slower growth during 2007 than experienced in prior years in iO digital video customers (181,000 in 2007 compared with 484,000 during 2006), Optimum Online customers (243,000 in 2007 compared with 345,000 during 2006) and voice customers (383,000 in 2007 compared with 478,000 during 2006).  The reduction in basic video subscribers and the slowing growth in other service offerings reflect the impact of the Company’s relatively high penetration rates and, to a lesser extent, the effects of intensifying competition, particularly from Verizon.  In the fourth quarter of 2007, the Company had an increase of approximately 1,000 basic video customers and added approximately 208,000 RGUs.

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Technical and operating expenses (excluding depreciation and amortization) for 2007 increased $232,273 (13%) compared to 2006.  The net increase is attributable to the following:

Increase in programming costs (including costs of on-demand services) due primarily to increases in the video services purchased by our subscribers, expanded service offerings, and programming rate increases	$	139,312
Resolution of a contractual programming dispute in 2006*	26,476
Increase in field service and network related costs primarily due to growth in revenue generating units	56,592
Increase in call completion and interconnection costs, taxes, and fees (net of related intra-segment eliminations) primarily due to our flat-rate international service offering which began in the second quarter of 2006 and subscriber growth, partially offset by lower rates	14,283
Increase in franchise fees	10,435
Net decrease in expense primarily due to presentation of certain customer related taxes as a reduction of revenue in 2007**	(15,360		)
Other net increases	32
Intra-segment eliminations	503
	$	232,273

*Represents the collection of $26,476 in 2006 related to the resolution of a contractual programming dispute, $19,476 of which was due in periods prior to 2006 but not recognized as a reduction to programming costs because it was being disputed and was not being paid by the affiliate.  The underlying contract was terminated in June 2006 and no further payments will be received under the contract.  Payments received under the contract were accounted for as a reduction to programming costs in 2006.

**Beginning in 2007, certain taxes and fees are now being collected from customers by the Company as agent and, accordingly, are reported as a reduction of revenue.

As a percentage of revenues, technical and operating expenses increased 1% during 2007 as compared to 2006.

Selling, general and administrative expenses increased $76,176 (9%) for 2007 as compared to 2006.  The net increase is attributable to the following:

Increase in sales and marketing costs	$	51,130
Increase in customer related costs (principally call center related costs) primarily due to increased revenue generating units	31,611
Decrease in share-based compensation expense	(15,160		)
Increase in expenses relating to Cablevision’s long-term incentive plans	4,533
Increase in other general and administrative costs	3,558
Intra-segment eliminations	504
	$	76,176

As a percentage of revenues, selling, general and administrative expenses decreased 1% in 2007 as compared to 2006.

Depreciation and amortization increased $13,882 (2%) for 2007 as compared to 2006.  The net increase resulted primarily from depreciation of new fixed assets, principally subscriber devices and VoIP equipment, partly offset by lower depreciation due to certain asset disposals in the fourth quarter of 2006.

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Rainbow

The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenues for the Company’s Rainbow segment:

	Years Ended December 31,
									Increase
	2007				2006				(Decrease) in
	Amount		% of Net Revenues		Amount		% of Net Revenues		Operating Income
Revenues, net	$	843,548	100	%	$	736,887	100	%	$	106,661
Technical and operating expenses (excluding depreciation, amortization and impairments)	328,436		39		297,433		40		(31,003		)
Selling, general and administrative expenses	336,464		40		325,354		44		(11,110		)
Restructuring charges	2,820		—		—		—		(2,820		)
Depreciation and amortization (including impairments)	89,117		11		92,561		13		3,444
Operating income	$	86,711	10	%	$	21,539	3	%	$	65,172

The Rainbow segment’s operating income is comprised of the following:

	Years Ended December 31,
	2007			2006
Operating income (loss):
AMC, WE tv and IFC	$	239,567		$	197,294
Other programming services	(152,856		)	(175,755		)
	$	86,711		$	21,539

Other programming services primarily consist of Lifeskool, sportskool, News 12 Networks, IFC Entertainment, VOOM, Rainbow Network Communications, and Rainbow Advertising Sales Corporation.  The operating losses from Rainbow’s other programming services were attributable primarily to VOOM, as well as the News 12 Networks, IFC Entertainment.

Revenues, net for the year ended December 31, 2007 increased $106,661 (14%) as compared to revenues for the prior year.  The net increase is attributable to the following:

Increase in advertising revenues at the AMC, IFC and WE tv businesses	$	35,259
Increase in affiliate fee revenues and other revenue at Rainbow’s other programming businesses, primarily at VOOM HD Networks due to increased distribution by EchoStar and its launch by Cablevision during the third quarter of 2007	42,363
Increase in affiliate fee revenues and other revenue at the AMC, WE tv and IFC businesses resulting primarily from increases in viewing subscribers and rates	31,891
Decrease in advertising revenues at Rainbow’s other programming businesses	(2,852		)
	$	106,661

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Revenue increases discussed above are primarily derived from increases in the number of viewing subscribers and affiliate fee rates charged for our services and the increases in the level of advertising on our networks.  The following table presents certain viewing subscriber information at December 31, 2007 and 2006:

	As of December 31,			Percent
	2007	2006	Increase	Increase
		(in thousands)
Viewing Subscribers:
AMC	84,400	81,100	3,300	4.1	%
WE tv	57,200	52,700	4,500	8.5	%
IFC	44,600	40,100	4,500	11.2	%
VOOM HD Networks	2,100	300	1,800	*

*The increase in VOOM HD Networks viewing subscribers is primarily due to growth in distribution by EchoStar and the launch of VOOM during the third quarter of 2007 by Cablevision.

Technical and operating expenses (excluding depreciation and amortization and impairments) for the year ended December 31, 2007 increased $31,003 (10%) compared to 2006.  The net increase is attributable to the following:

Net increase resulting from higher programming and contractual costs at the other Rainbow businesses, primarily at VOOM HD Networks, IFC Entertainment and for Rainbow’s film library assets	$	15,477
Net increase in other programming related expenses at the AMC, WE tv and IFC businesses which resulted primarily from amortization of licensed programming content and series development/original programming costs as well as broadband/video-on-demand related costs	26,586
Net decrease in original programming expenses at the AMC, WE tv and IFC businesses due to certain of those costs qualifying for capitalization in 2007	(11,060		)
	$	31,003

As a percentage of revenues, technical and operating decreased 1% during 2007 as compared to 2006.

Selling, general and administrative expenses increased $11,110 (3%) for 2007 compared to 2006.  The net increase is attributable to the following:

Net increase in selling, marketing and advertising costs at the AMC, WE tv and IFC businesses. The increase is due primarily to an increase in marketing and promotion of original programming series premieres	$	9,060
Net increase in selling, marketing and advertising costs at Rainbow’s other programming services primarily related to marketing and promotional activities. The increase is due primarily to an increase in marketing and promotion at IFC Entertainment	4,290
Decrease in share-based compensation expense	(8,819		)
Increase in expenses relating to Cablevision’s long-term incentive plans	3,047
Increase in administrative costs	3,532
	$	11,110

As a percentage of revenues, selling, general and administrative expenses decreased 4% in 2007 compared to 2006.

Restructuring charges of $2,820 for the year ended December 31, 2007 represents primarily severance charges resulting from the elimination of certain staff positions due to the consolidation and reorganization of certain departments.

Depreciation and amortization (including impairments) decreased $3,444 (4%) for 2007 as compared to 2006.  The decrease in depreciation and amortization expense was primarily attributable to a net decrease

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in depreciation expense relating to certain fixed assets becoming fully depreciated in 2006 and certain intangible assets becoming fully amortized in the first quarter of 2007.

Madison Square Garden

The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to net revenues for Madison Square Garden.

	Years Ended December 31,
										Increase
	2007				2006					(Decrease) in
	Amount		% of Net Revenues		Amount			% of Net Revenues		Operating Income
Revenues, net	$	1,002,182	100	%	$	905,196		100	%	$	96,986
Technical and operating expenses (excluding depreciation and amortization)	634,688		63		636,774			70		2,086
Selling, general and administrative expenses	242,923		24		222,980			25		(19,943		)
Restructuring charges	221		—		143			—		(78		)
Depreciation and amortization	62,399		6		65,171			7		2,772
Operating income (loss)	$	61,951	6	%	$	(19,872	)	(2	)%	$	81,823

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

Revenues, net for the year ended December 31, 2007 increased $96,986 (11%) as compared to revenues for the prior year.  This net increase is attributable to the following:

Higher revenues from entertainment events, including new New York City and Chicago venues in 2007, offset in part by the termination of the operating agreements for two Connecticut venues effective July 1, 2007	$	62,310
Net higher network (MSG Network, Fox Sports Net New York and Fuse) affiliate fees	26,220
Higher sports team playoff related revenue	8,764
Higher other sports team related revenues	5,089
Lower network other revenue, primarily from decreased advertising sales, excluding playoffs	(5,581		)
Other net increases	184
	$	96,986

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Technical and operating expenses (excluding depreciation and amortization) for the year ended December 31, 2007 decreased $2,086 as compared to the prior year.  This decrease is attributable to the following:

Higher costs associated with the higher revenues from entertainment events	$	44,030
Higher operating costs of venues, primarily new New York City and Chicago venues in 2007, offset in part by the termination of the operating agreements for two Connecticut venues effective July 1, 2007	9,518
Higher networks operating costs, primarily higher broadcast rights fees	5,530
Lower benefit from amortization of team related purchase accounting liabilities (see discussion below)	6,263
Higher sports team playoff related expenses	4,562
Lower net provisions for certain team personnel transactions (including the impact of luxury tax)	(55,837		)
Lower provision for National Basketball Association’s luxury tax (excluding impact of certain team personnel transactions referred to above)	(8,545		)
Lower other team operating expenses, primarily team personnel compensation	(8,637		)
Other net increases	1,030
	$	(2,086	)

The purchase accounting liabilities discussed above were established in April 2005 as a result of the Company’s acquisition of the minority interest in Madison Square Garden, L.P.  Following this transaction, the Company began to amortize these purchase accounting liabilities over the period of the respective player contracts.  During 2006 and 2005, the majority of these players were waived or traded and the unamortized purchase accounting liabilities associated with these players were written off.  Unamortized purchase accounting liabilities at December 31, 2007 amounted to $3,621.

As a percentage of revenues, technical and operating expenses decreased 7% during the year ended December 31, 2007 as compared to the prior year.

Selling, general, and administrative expenses for the year ended December 31, 2007 increased $19,943 (9%) as compared to the prior year. This increase is attributable to the following:

Higher annual employee compensation and related benefits and expenses relating to Cablevision’s long-term incentive plan (excluding share-based compensation)	$	10,664
Lower expenses related to Cablevision’s share-based compensation plans	(4,102		)
Other net increases, primarily higher legal and other professional fees and provision for settlement of litigation	13,381
	$	19,943

As a percentage of revenues, selling, general and administrative expenses decreased 1% during the year ended December 31, 2007 as compared to the prior year.

Depreciation and amortization expense for the year ended December 31, 2007 decreased $2,772 (4%) as compared to the prior year primarily as a result of certain assets becoming fully depreciated.

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Comparison of Consolidated Year Ended December 31, 2006 Versus Year Ended December 31, 2005

Consolidated Results – Cablevision Systems Corporation

Revenues, net for the year ended December 31, 2006 increased $746,448 (15%) as compared to revenues for the prior year.  The net increase is attributable to the following:

Increase in revenues of the Telecommunication Services segment	$	630,942
Increase in revenues of the Rainbow segment	43,972
Increase in revenues of the Madison Square Garden segment	57,644
Other net decreases	(994		)
Inter-segment eliminations	14,884
	$	746,448

Technical and operating expenses (excluding depreciation, amortization and impairments) include primarily:

·cable programming costs which are costs paid to programmers, net of amortization of any launch support received, for cable content and are generally paid on a per-subscriber basis;

·network management and field service costs which represent costs associated with the maintenance of our broadband network, including costs of certain customer connections;

·contractual rights payments to broadcast certain live sporting events and contractual payments pursuant to employment agreements with professional sports teams’ personnel;

·amortization of costs to license programming, including program rights and production costs of our Rainbow businesses; and

·interconnection, call completion and circuit fees relating to our telephone and VoIP businesses which represent the transport and termination of calls with other telecommunications carriers.

Technical and operating expenses (excluding depreciation and amortization and impairments) in 2006 increased $402,523 (18%) as compared to 2005.  The net increase is attributable to the following:

Increase in expenses of the Telecommunications Services segment	$	269,941
Increase in expenses of the Rainbow segment	22,765
Increase in expenses of the Madison Square Garden segment	93,699
Other net increases	596
Inter-segment eliminations	15,522
	$	402,523

As a percentage of revenues, technical and operating expenses increased 1% during 2006 as compared to 2005.  This increased percentage is primarily attributable to increases in technical and operating expenses of the Madison Square Garden segment and to a lesser extent the Rainbow segment.

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Selling, general and administrative expenses include primarily sales, marketing and advertising expenses, administrative costs, and costs of customer call centers.  Selling, general and administrative expenses increased $187,428 (15%) for 2006 as compared to 2005.  The net increase is attributable to the following:

Increase in expenses of the Telecommunications Services segment	$	129,474
Increase in expenses of the Rainbow segment	34,409
Increase in expenses of the Madison Square Garden segment	24,820
Other net decreases	(578		)
Inter-segment eliminations	(697		)
	$	187,428

On January 1, 2006, the Company adopted SFAS No. 123R, Share-Based Payment (“Statement No. 123R”).  Statement No. 123R eliminates the ability to account for share-based compensation transactions, as the Company formerly did, using the intrinsic value method as prescribed by Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and generally requires that share-based payments be accounted for using a fair-value-based method.  As a result of the adoption of Statement No. 123R, the Company’s stock plan expense for 2006 for all segments has increased as compared to 2005.

As a percentage of revenues, selling, general and administrative expenses remained constant in 2006 compared to 2005.

Restructuring credits amounted to $3,484 in 2006 and $537 in 2005. The 2006 amount related primarily to adjustments to facility realignment provisions recorded in connection with the 2001 and 2002 restructuring plans of $3,996, partially offset by a charge of $512 relating to facility realignment and severance costs associated with the 2006 restructuring plans. The 2005 amount is comprised of a $2,060 credit resulting from changes in estimates of facility realignment costs relating to the 2001 and 2002 restructuring plans, partially offset by $1,025 of severance costs in 2005 and $498 of additional provisions for severance costs associated with the 2004 and 2003 restructuring plans.

Depreciation and amortization (including impairments) increased $45,118 (4%) for 2006 as compared to 2005.  The net increase consisted of an increase in depreciation expense of $54,260 primarily from depreciation of new fixed assets in our telecommunication services segment, partially offset by a decrease in amortization expense of $8,401 primarily resulting from an impairment of certain intangibles recorded in 2005 attributable to the shutdown of two of three MetroChannels and a net decrease of $741 relating to the impairment of certain long-lived assets within our theater operations.

Net interest expense increased $143,009 (19%) during 2006 compared to 2005.  The net increase is attributable to the following:

Increase due to higher average debt balances related primarily to the financing of the special dividend on March 29, 2006, partially offset by lower outstanding collateralized indebtedness and the redemption of certain senior subordinated debentures	$	118,328
Increase due to higher average interest rates	48,990
Higher interest income	(20,654		)
Other net decreases	(3,655		)
	$	143,009

Equity in net income of affiliates amounted to $6,698 in 2006 compared to $3,219 in 2005.  Such amounts consist of the Company’s share of the net income or loss of certain businesses in which the Company does not have a majority ownership interest.

25

Gain on sale of affiliate interests of $64,968 for the year ended December 31, 2005 resulted primarily from the Company and News Corporation restructuring their ownership of National Sports Partners and National Advertising Partners.

Gain (loss) on investments, net for the years ended December 31, 2006 and 2005 of $290,052 and $(138,312) respectively, consists primarily of the net increase or decrease in the fair value of Comcast, General Electric, AT&T, Charter Communications, Leapfrog, and Adelphia Communications common stock owned by the Company. The effects of these gains and losses are largely offset by the losses and gains on related derivative contracts described below.

Write-off of deferred financing costs for the year ended December 31, 2006 of $14,083 includes $6,084 of costs written off in connection with the refinancing of the Rainbow National Services LLC credit agreement in July 2006, $3,412 of costs written off in connection with the early redemption of CSC Holdings’ $250,000 principal amount of 10-1/2% Senior Subordinated Debentures due 2016 in May 2006, and $4,587 of costs written off in connection with the refinancing of the CSC Holdings credit agreement.

Gain (loss) on derivative contracts, net for the years ended December 31, 2006 and 2005 consisted of the following:

	Years Ended December 31,
	2006			2005
Unrealized and realized gain (loss) due to the change in fair value of the Company’s prepaid forward contracts relating to the AT&T, Comcast, Charter Communications, General Electric, Leapfrog and Adelphia Communications shares	$	(214,352	)	$	135,677
Unrealized and realized losses on interest rate swap contracts	(39,360		)	(16,497		)
	$	(253,712	)	$	119,180

The effects of these gains and losses are largely offset by the losses and gains on investment securities pledged as collateral which are included in gain (loss) on investments, net discussed above.

Loss on extinguishment of debt of $13,125 for the year ended December 31, 2006 represents the premium paid on the early redemption of CSC Holdings’ $250,000 principal amount of 10-1/2% Senior Subordinated Debentures due 2016 in May 2006.

Minority interests of $1,614 and $5,221 for the years ended December 31, 2006 and 2005, respectively, represent other parties’ share of the net income or losses of entities which are not entirely owned by us but which are consolidated in our financial statements.

Net miscellaneous income of $2,845 and $650 for the years ended December 31, 2006 and 2005, respectively, resulted primarily from dividends received on certain of the Company’s investment securities, partially offset by other miscellaneous expenses.

Income tax benefit attributable to continuing operations of $140,462 for the year ended December 31, 2006 resulted primarily from the Company’s pretax loss, state income tax benefit of $25,230, increased by a $10,404 decrease in the valuation allowance relating to certain state NOLs, a tax benefit of $16,356 resulting from the reduction in a tax contingency liability pursuant to a change in judgment, a tax benefit of $5,013 resulting from the favorable settlement of an issue with a taxing authority, partially offset by the impact of non-deductible officers’ compensation of $4,443 and other non-deductible expenses of $6,768.

Income tax benefit attributable to continuing operations of $82,219 for the year ended December 31, 2005 resulted primarily from the pretax loss, state income tax benefit of $13,156, increased by a tax benefit of $6,701 resulting from an adjustment to a state tax rate, partially offset by an increase in the valuation

26

allowance of $6,459 relating to certain state NOLs and the impact of non-deductible officers’ compensation of $6,226 and other non-deductible expenses of $10,637.

As of December 31, 2006, the Company was being audited by the state of Ohio for the tax year ended December 31, 2000.  The primary audit issue was the amount of gain that should have been subject to tax in Ohio pursuant to the 2000 sale of certain cable television systems.  Ohio had asserted that more of the gain should be taxed in Ohio.  Ohio had issued a proposed assessment of additional tax due of approximately $55,000 plus interest of approximately $12,000.  As of December 31, 2006, the Company had recorded a liability with respect to such matter of $10,937, including interest, which represented management’s best estimate of the additional amount that may be owed.  In April 2007, the Company settled the Ohio income tax audit for the tax year ended December 31, 2000 for $18,000, inclusive of interest.  In 2007, the Company recognized additional income tax expense of $7,063, excluding the associated deferred tax benefit.

Income (loss) from discontinued operations

In April 2005, the operations of the Rainbow DBS satellite distribution business were shut down.  In connection with the shut down, certain assets of the business, including the Rainbow 1 direct broadcast satellite and certain other related assets were sold to a subsidiary of EchoStar for $200,000 in cash.  This transaction closed in November 2005.

In 2006, the Company accrued $50,898, including interest, reflected as an expense in discontinued operations, as a result of the judgment entered against Cablevision and Rainbow DBS in the Loral matter (see “Item 3.  Legal Proceedings”).  The Company has posted a cash collateralized bond in the amount of $52,159, which is reflected as restricted cash in the Company’s consolidated balance sheet at December 31, 2007.

In April 2005, the Company and News Corporation restructured Regional Programming Partners.  As a result, the Company indirectly owns 100% of Madison Square Garden, L.P. and no longer owns interests in Fox Sports Net Ohio, Fox Sports Net Florida, National Sports Partners or National Advertising Partners.  The Company also owned 100% of Fox Sports Net Chicago which was shut down in June 2006 and through June 2007, the Company owned a 60% interest in Fox Sports Net Bay Area and a 50% interest in Fox Sports Net New England.  In June 2007, the Company completed the sale of its 60% interest in Fox Sports Net Bay Area and its 50% interest in Fox Sports Net New England to Comcast.

The net operating results of the Fox Sports Net Bay Area, Fox Sports Net Chicago, Fox Sports Net Ohio and Fox Sports Net Florida businesses and those of the Rainbow DBS distribution business, which was shut down in April 2005, have been reported in discontinued operations in the Company’s consolidated statements of operations for all periods presented.

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Income (loss) from discontinued operations, net of taxes for the years ended December 31, 2006 and 2005 reflects the following items, net of related income taxes and minority interests:

	Years Ended December 31,
	2006			2005
Net operating results of the Rainbow DBS distribution business, including shutdown costs, net of taxes*	$	(33,472	)	$	(60,832	)
Net operating results of Fox Sports Net Ohio and Fox Sports Net Florida, net of taxes	—			6,652
Gain on sale of Fox Sports Net Ohio and Fox Sports Net Florida, net of taxes	—			266,810
Net operating results of Fox Sports Net Chicago, net of taxes**	40,955			1,620
Net operating results of Fox Sports Net Bay Area, net of taxes	8,982			9,421
Other, net of taxes	(37		)	2,603
	$	16,428		$	226,274

*The 2006 amount includes $30,025, net of taxes, representing the Make Whole Payment due to Loral.  See Item 3.  Legal Proceedings.

**The 2006 amount includes approximately $46,100, net of taxes, representing the collection in June 2006 of affiliate revenue from a cable affiliate, including approximately $42,200, net of taxes, relating to periods prior to 2006, that had not been previously recognized due to a contractual dispute.  The underlying contract was terminated in June 2006 and no further payments will be received under this contract.

Business Segments Results – Cablevision Systems Corporation

Telecommunications Services

The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenue for the Company’s Telecommunications Services segment:

	Years Ended December 31,
										Increase
	2006					2005				(Decrease) in
	Amount			% of Net Revenues		Amount		% of Net Revenues		Operating Income
Revenues, net	$	4,237,707		100	%	$	3,606,765	100	%	$	630,942
Technical and operating expenses (excluding depreciation and amortization)	1,774,607			42		1,504,666		42		(269,941		)
Selling, general and administrative expenses	834,031			20		704,557		20		(129,474		)
Restructuring charges (credits)	(17		)	—		295		—		312
Depreciation and amortization	915,724			22		843,177		23		(72,547		)
Operating income	$	713,362		17	%	$	554,070	15	%	$	159,292

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Revenues, net for the year ended December 31, 2006 increased $630,942 (17%) as compared to revenues for the prior year.  The following table presents the increases by major components of revenues for the years ended December 31, 2006 and 2005 for the Company’s Telecommunications Services segment:

	As of December 31,									Percent
	2006			2005			Increase			Increase
Video (including analog, digital, pay-per-view, video-on-demand and digital video recorder)	$	2,576,598		$	2,309,293		$	267,305		12	%
High-speed data	900,024			761,775			138,249			18	%
Voice	369,793			171,701			198,092			115	%
Advertising	119,239			110,033			9,206			8	%
Other (including installation, home shopping, advertising sales commissions, and other products)	109,781			98,093			11,688			12	%
Total cable television	4,075,435			3,450,895			624,540			18	%
Optimum Lightpath	210,594			195,486			15,108			8	%
Intra-segment eliminations	(48,322		)	(39,616		)	(8,706		)	(22	)%
Total Telecommunications Services	$	4,237,707		$	3,606,765		$	630,942		17	%

Revenue increases reflected above are primarily derived from increases in the number of subscribers to these services (set forth in the table below), upgrades by video customers from the level of the programming package to which they subscribe, additional services sold to our existing subscribers and general increases in rates, offset in part by offer discounts and other rate changes.  As a result, our average monthly revenue per basic video subscriber for the fourth quarter of December 2006 was $115.30 as compared with $100.46 for the fourth quarter of December 2005.  The increase in Optimum Lightpath net revenues is primarily attributable to growth in Ethernet data services and Optimum Voice call completion activity, partially offset by a decline in traditional circuit switched services.  The following table presents certain subscriber information as of December 31, 2006 and 2005 for the Company’s cable television systems (excluding Lightpath):

	As of December 31,		Increase		Percent Increase
	2006	2005	(Decrease)		(Decrease)
		(in thousands)
Basic video customers	3,127	3,027	100		3	%
iO digital video customers	2,447	1,963	484		25	%
Optimum Online high-speed data customers	2,039	1,694	345		20	%
Optimum voice customers	1,209	731	478		65	%
Residential telephone customers	5	8	(3	)	(33	)%
Total revenue generating units	8,827	7,423	1,404		19	%

The Company added basic video customers and RGUs in each quarter of 2006 aggregating approximately 100,000 and 1,404,000, respectively, for the year.  However, fewer basic video customers and RGUs were added during the fourth quarter of 2006 as compared to the fourth quarter of 2005.

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Technical and operating expenses (excluding depreciation and amortization) for 2006 increased $269,941 (18%) compared to 2005.  The net increase is attributable to the following:

Increase in programming costs (including costs of on-demand services) due primarily to subscriber growth, expanded service offerings, and programming rate increases	$	164,162
Increase in field service and network related costs primarily due to growth in revenue generating units	57,205
Increase in call completion and interconnection costs related to the VoIP business due primarily to subscriber growth and the costs of our flat-rate international service offering beginning in the second quarter of 2006	48,996
Resolution of a contractual programming dispute*	(26,476		)
Increase in VoIP related taxes and surcharges due primarily to subscriber growth, partially offset by favorable tax settlements	12,033
Other net increases	23,915
Intra-segment eliminations	(9,894		)
	$	269,941

*Represents the collection of $26,500 in June 2006 related to the resolution of a contractual programming dispute, $19,476 of which was due in periods prior to 2006 but not recognized as a reduction to programming costs because it was being disputed and was not being paid by the affiliate.  The underlying contract was terminated in June 2006 and no further payments will be received under the contract.  Payments received under the contract are accounted for as a reduction to programming costs.

As a percentage of revenues, technical and operating expenses remained constant, during 2006 as compared to 2005.

Selling, general and administrative expenses increased $129,474 (18%) for 2006 as compared to 2005.  The net increase is attributable to the following:

Increase in customer related costs (principally call center related costs) primarily due to increased revenue generating units	$	42,005
Increase in sales and marketing costs	41,666
Increase in share-based compensation expenses (includes the effects of adopting Statement No. 123R effective January 1, 2006)	24,828
Other general and administrative cost increases	11,400
Increase in expenses relating to a long-term incentive plan	8,387
Intra-segment eliminations	1,188
	$	129,474

As a percentage of revenues, selling, general and administrative expenses remained constant in 2006 as compared to 2005.

Restructuring charges amounted to $295 in 2005.  This amount is comprised primarily of $894 of severance costs associated with the 2005 restructuring plans and $263 of additional provisions for severance associated with the 2004 restructuring plans, partially offset by a credit of $896 resulting from changes in estimates of facility realignment costs relating to the 2002 restructuring plans.

Depreciation and amortization increased $72,547 (9%) for 2006 as compared to 2005.  The increase resulted primarily from depreciation of new fixed assets, primarily subscriber devices.

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Rainbow

The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenues for the Company’s Rainbow segment:

	Years Ended December 31,
									Increase
	2006				2005				(Decrease) in
	Amount		% of Net Revenues		Amount		% of Net Revenues		Operating Income
Revenues, net	$	736,887	100	%	$	692,915	100	%	$	43,972
Technical and operating expenses (excluding depreciation, amortization and impairments)	297,433		40		274,668		40		(22,765		)
Selling, general and administrative expenses	325,354		44		290,945		42		(34,409		)
Depreciation and amortization (including impairments)	92,561		13		100,221		14		7,660
Operating income	$	21,539	3	%	$	27,081	4	%	$	(5,542	)

Included in the Rainbow segment’s results of operations is operating income from AMC, IFC and WE tv aggregating $197,294 and $185,703, and operating losses from Rainbow’s other programming services aggregating $175,755 and $158,622 for the years ended December 31, 2006 and 2005, respectively.  These other programming services consist of, Mag Rack, sportskool, News 12 Networks, IFC Entertainment, VOOM, Rainbow Network Communications, Rainbow Advertising Sales Corp. and other Rainbow ventures.  The operating loss was attributable primarily to VOOM HD Networks, as well as the News 12 Networks.

Revenues, net for the year ended December 31, 2006 increased $43,972 (6%) as compared to revenues for the prior year.  The net increase is attributable to the following:

Increase in advertising revenues at the AMC, IFC and WE tv businesses	$	34,762
Increase in affiliate and other revenue at Rainbow’s other programming businesses	11,816
Increase in advertising revenues at Rainbow’s other programming businesses	5,570
Increase in affiliate and other revenue at the AMC, IFC and WE tv businesses resulting from increases in programming network subscribers and rate changes	9,809
Decrease attributable to the MetroChannel business which shut down two of its three channels in the second quarter of 2005	(17,985		)
	$	43,972

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Revenue increases discussed above are primarily derived from increases in the level of advertising on our networks, increases in the number of subscribers to our programming services, and increases in fees charged for our services.  The following table presents certain viewing subscriber information as of December 31, 2006 and 2005:

	As of December 31,			Percent
	2006	2005	Increase	Increase
	(in thousands)
Viewing Subscribers:
AMC	81,100	77,200	3,900	5.1	%
WE tv	52,700	50,900	1,800	3.5	%
IFC	40,100	37,300	2,800	7.5	%
VOOM HD Networks	300	25	275	—

Technical and operating expenses (excluding depreciation and amortization and impairments) for the year ended December 31, 2006 increased $22,765 (8%) compared to 2005.  The net increase is attributable to the following:

Net increase resulting from higher programming and contractual costs at the other Rainbow businesses, including the VOOM HD Networks	$	17,498
Net increase in programming costs at the AMC, IFC and WE tv businesses which resulted primarily from increased series development/original programming costs	9,240
Decrease resulting from the MetroChannel business, which shut down two of its three channels in the second quarter of 2005	(3,973		)
	$	22,765

As a percentage of revenues, technical and operating remained constant during 2006 as compared to 2005 resulting primarily from higher programming costs associated with the VOOM HD Networks.

Selling, general and administrative expenses increased $34,409 (12%) for 2006 compared to 2005.  The net increase is attributable to the following:

Increase in share-based compensation expenses (includes the effects of adopting Statement No. 123R effective January 1, 2006)	$	17,616
Increase in administrative costs	7,721
Increase in expenses relating to Cablevision’s long-term incentive plan	4,909
Net increase in selling, marketing and advertising costs primarily related to marketing and promotional activities	4,163
	$	34,409

As a percentage of revenues, selling, general and administrative expenses increased 2% in 2006 compared to 2005.

Depreciation and amortization (including impairments) decreased $7,660 (8%) for 2006 as compared to 2005.  The net decrease was comprised of approximately $4,963 resulting from the impairment of certain intangibles during the second quarter of 2005, a decrease of approximately $3,585 attributable to the MetroChannel business, which shut down two of its three channels in the second quarter of 2005, and a decrease of approximately $1,237 due to the transfer of certain intangibles to another operating segment in the second quarter of 2005.  Partially offsetting these decreases was an increase of approximately $2,125 resulting primarily from depreciation of new fixed assets.

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Madison Square Garden

The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to net revenues for Madison Square Garden.

	Years Ended December 31,
										Increase
	2006					2005				(Decrease) in
	Amount			% of Net Revenues		Amount		% of Net Revenues		Operating Income
Revenues, net	$	905,196		100	%	$	847,552	100	%	$	57,644
Technical and operating expenses (excluding depreciation and amortization)	636,774			70		543,075		64		(93,699		)
Selling, general and administrative expenses	222,980			25		198,160		23		(24,820		)
Restructuring charges	143			—		366		—		223
Depreciation and amortization	65,171			7		67,110		8		1,939
Operating income (loss)	$	(19,872	)	(2	)%	$	38,841	5	%	$	(58,713	)

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

Revenues, net for the year ended December 31, 2006 increased $57,644 (7%) as compared to revenues for the prior year.  This net increase is attributable to the following:

Return of National Hockey League games after the cancellation of 2004-2005 season	$	52,118
Higher other team related revenues	9,368
Lower advertising sales revenue and sublicense fees resulting from loss of Mets broadcast rights agreement	(26,877		)
Retroactive network affiliate rate adjustments recorded in 2005*	(17,834		)
Net higher other network affiliate fees from MSG Network and Fox Sports Net New York (excluding the impact of the cancellation of the NHL 2004-2005 season and the 2005 retroactive affiliate rate adjustments noted above) including the impact of the loss of the Mets broadcast rights agreement, and from Fuse	18,448
Net higher revenues from entertainment events	19,029
Other net increases	3,392
	$	57,644

*The retroactive network affiliate rate adjustments discussed above resulted from the signing of certain affiliate contracts in 2005 that increased rates for periods prior to January 1, 2005.  Therefore the results for the year ended December 31, 2005 reflect positive retroactive rate adjustments related to the periods prior to January 1, 2005 that did not recur in 2006.

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Technical and operating expenses (excluding depreciation and amortization) for the year ended December 31, 2006 increased $93,699 (17%) as compared to the prior year.  This increase is attributable to the following:

Return of National Hockey League games after the cancellation of the 2004-2005 season	$	70,153
Lower benefit from amortization of team related purchase accounting liabilities (see discussion below)	23,439
Higher provision for National Basketball Association’s luxury tax, including impact of certain team personnel transactions	21,844
Lower net provisions for certain team personnel transactions (excluding the impact of purchase accounting liabilities (see discussion below) and luxury tax)*	(17,418		)
Higher other team operating expenses, primarily team personnel compensation	13,828
Higher costs associated with the higher revenues from entertainment events	10,968
Lower broadcast rights fees other than those related to the resumption of the National Hockey League games, primarily due to the termination of the Mets broadcast rights agreement	(37,923		)
Higher operating costs of venues	6,199
Other net increases	2,609
	$	93,699

*The change in the provisions for certain team personnel transactions includes the settlement in 2006 of the dispute with the Knicks ex-head coach, Larry Brown, under which the Knicks agreed to pay Mr. Brown $18,500 of the disputed amount in connection with his employment agreement.

The purchase accounting liabilities discussed above were established in April 2005 as a result of the Company’s acquisition of the minority interest in Madison Square Garden, L.P.  Following this transaction the Company began to amortize these purchase accounting liabilities over the period of the respective player contracts.  During 2006 and 2005, the majority of these players were subsequently waived or traded and the unamortized purchase accounting liabilities associated with these players were immediately written off.  As a result, the amount of amortization associated with these team personnel transactions declined from $25,358 in 2005 to $3,381 in 2006.

As a percentage of revenues, technical and operating expenses increased 6% during the year ended December 31, 2006 as compared to the prior year.

Selling, general, and administrative expenses for the year ended December 31, 2006 increased $24,820 (13%) as compared to the prior year. This increase is attributable to the following:

Increase in share-based compensation expenses (including the effects of adopting Statement No. 123R effective January 1, 2006)	$	11,494
Higher employee salaries and related benefits due primarily to higher expenses relating to Cablevision’s long term incentive plan	8,847
Higher legal and other professional fees	3,689
Return of National Hockey League games after the cancellation of the 2004-2005 season	2,120
Lower charitable contributions due primarily to contributions in 2005 related to Hurricane Katrina relief	(4,301		)
Other net increases	2,971
	$	24,820

As a percentage of revenues, selling, general and administrative expenses increased 2% during the year ended December 31, 2006 as compared to the prior year.

Restructuring charges of $143 for the year ended December 31, 2006, represent costs associated with the elimination of certain staff positions occurring in 2006 and $366 for the year ended December 31, 2005, primarily represent charges recorded as a result of the final cost determination for benefits associated with the elimination of certain staff positions.

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Depreciation and amortization expense for the year ended December 31, 2006 decreased $1,939 (3%) as compared to the prior year resulting primarily from lower depreciation expense due to assets which became fully depreciated.  The lower depreciation expense was partly offset by higher amortization due primarily to the amortization of certain intangible assets recorded as a result of the Company’s acquisition of the minority interest in Madison Square Garden, L.P. in April 2005 and the transfer of certain intangibles from another operating segment in 2005.  This increase in amortization expense was partly offset by a decrease in the amortization of certain other intangibles that became fully amortized in 2005.

CSC HOLDINGS, INC.

The statements of operations of CSC Holdings are identical to the statements of operations of Cablevision, except for the following:

·Interest expense of $134,446, $132,784 and $124,498 for the years ended December 31, 2007, 2006 and 2005, respectively, relating to $1,500,000 of Cablevision senior notes issued in April 2004 included in Cablevision’s consolidated statements of operations,

·Interest income of $3,453, $3,958 and $89 for the years ended December 31, 2007, 2006 and 2005, respectively, related to cash held at Cablevision,

·Miscellaneous expenses of $177 included in Cablevision’s consolidated statement of operations for the year ended December 31, 2005, and

·Net income tax benefit of $55,448, $52,831 and $50,993 for the years ended December 31, 2007, 2006 and 2005, respectively, included in Cablevision’s consolidated statements of operations related to the items listed above.

Refer to Cablevision’s Management’s Discussion and Analysis of Financial Condition and Results of Operations herein.

CASH FLOW DISCUSSION

Operating Activities

Net cash provided by operating activities amounted to $939,740 for the year ended December 31, 2007 compared to $926,875 for the year ended December 31, 2006.  The 2007 cash provided by operating activities resulted from $1,142,552 of income before depreciation and amortization, $285,802 of non-cash items and a $36,929 increase in deferred revenue.  Partially offsetting these increases were decreases in cash resulting from a $198,663 increase in program rights resulting primarily from new film licensing and original programming agreements, a $122,962 increase in current and other assets, a $134,997 decrease in accounts payable and accrued liabilities, a $26,431 increase in other deferred costs, a $25,569 decrease in deferred carriage fees payable, and a $16,921 decrease in program rights obligations.

Net cash provided by operating activities amounted to $926,875 for the year ended December 31, 2006 compared to $886,363 for the year ended December 31, 2005.  The 2006 cash provided by operating activities resulted from $977,798 of income before depreciation and amortization, $109,820 of non-cash items, a $55,350 increase in accrued and other liabilities and $40,661 from an increase in accounts payable.  Partially offsetting these increases were decreases in cash resulting from a $137,196 increase in program rights resulting primarily from new film licensing and original programming agreements, a $59,243 increase in current and other assets, a $29,630 decrease in program rights obligations, a $17,336 decrease in deferred carriage fees payable, and a $13,349 increase in other deferred costs, including an $9,887 increase in deferred carriage fees.

Net cash provided by operating activities amounted to $886,363 for the year ended December 31, 2005.  The 2005 cash provided by operating activities resulted from $937,757 of income before depreciation and amortization, $78,004 of non-cash items, $87,035 from an increase in accrued and other liabilities, and

35

$45,371 from a net increase in deferred carriage fees payable, $29,533 from an increase in accounts payable and $25,499 from an increase in deferred revenue.  Partially offsetting these increases were decreases in cash resulting from a $142,703 increase in program rights resulting from new film licensing agreements, a $92,876 increase in current and other assets and an $81,257 increase in deferred carriage fees.  The increase of $81,257 in deferred carriage fees and an offsetting increase in current and non-current liabilities of $52,527 arose as one part of a series of multiple agreements entered into simultaneously with the settlement of the litigation between AMC and Time Warner Entertainment, L.P.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2007 was $551,242 compared to $872,709 for the year ended December 31, 2006.  The 2007 investing activities consisted primarily of $781,306 of capital expenditures ($678,384 of which relate to our Telecommunications Services segment) and other net cash payments aggregating $7,346, partially offset by proceeds from the sale of the Company’s interest in Fox Sports Net New England of $212,904 and net distributions from equity method investees of $24,506.

Net cash used in investing activities for the year ended December 31, 2006 was $872,709 compared to $762,960 for the year ended December 31, 2005.  The 2006 investing activities consisted primarily of $885,833 of capital expenditures ($819,747 of which relate to our Telecommunications Services segment), partially offset by other net cash receipts aggregating $13,124.

Net cash used in investing activities for the year ended December 31, 2005 was $762,960.  The 2005 investing activities consisted of $768,652 of capital expenditures ($695,327 of which relate to our Telecommunication Services Segment), $12,886 in additions to other intangible assets and $9,520 in increases to investment securities and other investments, partially offset by a decrease of $27,342 in restricted cash and other net cash receipts of $756.

Financing Activities

Net cash used in financing activities amounted to $923,292 for the year ended December 31, 2007 compared to $16,759 for the year ended December 31, 2006.  In 2007, the Company’s financing activities consisted primarily of $693,158 used for the redemption of senior notes and senior subordinated notes and debentures, net repayments of bank debt of $103,750, a payment of $69,025 representing the purchase of treasury stock relating to minimum statutory tax withholding requirements on restricted stock awards that vested during 2007, dividend distributions relating to the exercise or vesting of equity based awards of $67,319 and other net cash payments of $20,834, partially offset by proceeds from the exercise of stock options of $30,794.

Net cash used in financing activities amounted to $16,759 for the year ended December 31, 2006 compared to $644,594 for the year ended December 31, 2005.  In 2006, the Company’s financing activities consisted primarily of a $2,840,780 dividend distribution to common stockholders, $263,125 used for the redemption of CSC Holdings’ senior subordinated debentures, $47,540 in deferred financing costs and other net cash payments of $6,314, partially offset by net proceeds from bank debt of $3,141,000.

Net cash used in financing activities amounted to $644,594 for the year ended December 31, 2005.  In 2005, the Company’s financing activities consisted of net repayments of bank debt of $638,000 and other net cash payments of $6,594.

36

Discontinued Operations

The net effect of discontinued operations on cash and cash equivalents amounted to a cash inflow of $371,055, $117,619 and $137,030 for the years ended December 31, 2007, 2006 and 2005, respectively.

Operating Activities

Net cash provided by operating activities of discontinued operations amounted to $17,771 for the year ended December 31, 2007 compared to $109,956 for the year ended December 31, 2006.  The 2007 period includes the operating results of Fox Sports Net Bay Area for the six months ended June 30, 2007 compared to twelve months of operating results in the comparable 2006 period.  The 2007 cash provided by operating activities resulted primarily from net income of $27,123 before depreciation and amortization and non-cash items, partially offset by a net decrease in cash resulting from the net change in assets and liabilities of $9,352.

Net cash provided by operating activities of discontinued operations amounted to $109,956 for the year ended December 31, 2006 compared to net cash used by operating activities of $27,854 for the year ended December 31, 2005.  The 2006 cash provided by operating activities resulted primarily from income of $61,362 before depreciation and amortization and non-cash items, primarily from the collection of $77,996 of affiliate revenue in June 2006 from a cable affiliate that had not been previously collected due to a contractual dispute, and net changes in assets and liabilities of $48,594.

Net cash used by operating activities of discontinued operations amounted to $27,854 for the year ended December 31, 2005. The 2005 operating activities resulted primarily from a loss of $30,060 before depreciation and amortization and non-cash items, partially offset by net changes in assets and liabilities of $2,206.

Investing Activities

Net cash provided by investing activities of discontinued operations for the year ended December 31, 2007 was $328,823 compared to $4,003 for the year ended December 31, 2006.  The 2007 investing activities consisted of $381,979 of proceeds (net of cash on hand) from the sale of the Company’s interest in Fox Sports Net Bay Area, partially offset by an increase in restricted cash of $52,838 relating to the posting of a cash collateralized bond related to the Loral contract dispute and $318 of capital expenditures.

Net cash provided by investing activities of discontinued operations for the year ended December 31, 2006 was $4,003 compared to $79,534 for the year ended December 31, 2005.  The 2006 investing activities consisted of a $3,912 refund from a supplier and $555 of other net cash receipts, partially offset by $464 of capital expenditures.

Net cash provided by investing activities of discontinued operations for the year ended December 31, 2005 was $79,534. The 2005 investing activities consisted of $200,801 of proceeds primarily from the sale of the Rainbow DBS satellite, partially offset by $108,947 of net cash transferred to News Corporation as part of the Regional Programming Partners restructuring, $12,144 of capital expenditures and other net cash payments of $176.

The net increase in cash classified as assets held for sale was $24,461, $3,660 and $85,350 for the year ended December 31, 2007, 2006 and 2005, respectively.

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LIQUIDITY AND CAPITAL RESOURCES

Overview

Cablevision has no operations independent of its subsidiaries.  Cablevision’s outstanding securities consist of Cablevision NY Group Class A and Cablevision NY Group Class B common stock and $1,500,000 of debt securities.  Funding for the debt service requirements of our debt securities is provided by our subsidiaries’ operations, principally CSC Holdings, as permitted by the covenants governing CSC Holdings’ credit agreements and public debt securities.  Funding for our subsidiaries is generally provided by cash flow from operations, cash on hand, and borrowings under bank credit facilities made available to the Restricted Group (as later defined) and to Rainbow National Services LLC (“RNS”) and the proceeds from the issuance of notes and debentures in the capital markets.  The Company has accessed the debt markets for significant amounts of capital in the past and may do so in the future.

The following table summarizes our outstanding debt and present value of capital leases as well as interest expense and capital expenditures as of and for the year ended December 31, 2007:

	Cablevision		Restricted Group		Rainbow National Services		Other Entities		Total
Bank debt	$	—	$	4,388,750	$	500,000	$	—	$	4,888,750
Capital leases	—		—		16,229		49,178		65,407
Notes payable	—		1,017		—		—		1,017
Senior notes and debentures	1,500,000		3,696,403		298,745		—		5,495,148
Senior subordinated notes	—		—		323,311		—		323,311
Collateralized indebtedness relating to stock monetizations	—		—		—		847,154		847,154
Total debt	$	1,500,000	$	8,086,170	$	1,138,285	$	896,332	$	11,620,787
Interest expense	$	134,446	$	651,401	$	111,170	$	43,835	$	940,852
Capital expenditures	$	—	$	678,133	$	6,968	$	96,205	$	781,306

Total amounts payable by the Company and its subsidiaries in connection with its outstanding obligations during the five years subsequent to December 31, 2007 and thereafter, including capital leases and related interest, the value deliverable at maturity under monetization contracts and the $4,888,750 of outstanding bank debt as of December 31, 2007 are as follows:

	Cablevision		Restricted Group		Rainbow National Services		Other Entities			Total
2008	$	—	$	586,017	$	27,289	$	230,072	*	$	843,378
2009	500,000		1,185,000		27,289		674,033		*	2,386,322
2010	—		285,000		27,289		6,578			318,867
2011	—		1,435,000		52,289		6,578			1,493,867
2012	1,000,000		2,976,250		352,289		2,978			4,331,517
Thereafter	—		1,622,500		666,408		34,231			2,323,139
Total	$	1,500,000	$	8,089,767	$	1,152,853	$	954,470		$	11,697,090

*Cablevision has the option, at maturity, to deliver the shares of common stock underlying the monetization contracts along with proceeds from the related derivative contracts in full satisfaction of the maturing collateralized indebtedness or obtain the required cash equivalent of the common stock through new monetization and derivative contracts.  The amounts included in the table are $222,624 in 2008 and $667,455 in 2009.

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Restricted Group

As of December 31, 2007, CSC Holdings and those of its subsidiaries which conduct our cable television video operations (including approximately 3.1 million basic video customers and 2.6 million digital video customers) and high-speed data service (which encompasses approximately 2.3 million customers) and our VoIP services operations (which encompasses approximately 1.6 million customers), as well as Optimum Lightpath, our commercial data and voice service business, comprise the “Restricted Group” as they are subject to the covenants and restrictions of the credit facility and the indentures governing the notes and debentures securities issued by CSC Holdings.  In addition, the Restricted Group is also subject to the covenants of the debt issued by Cablevision.

Sources of cash for the Restricted Group include primarily cash on hand, cash flow from the operations of the businesses in the Restricted Group, borrowings under its bank credit agreement and issuance of notes and debentures in the capital markets and, from time to time, distributions or loans from its subsidiaries.  The Restricted Group’s principal uses of cash include capital spending, in particular the capital requirements associated with the growth of its services such as digital video, high-speed data and voice; debt service, including distributions made to Cablevision to service interest expense on its debt securities; other corporate expenses and changes in working capital; and investments that it may fund from time to time.  We currently expect that the net funding and investment requirements of the Restricted Group, including the repayment of notes aggregating $500,000 which mature in July 2008, will be met with cash on hand and cash generated by its operating activities and borrowings under the Restricted Group’s bank credit facility and that the Restricted Group’s available borrowing capacity under that credit facility will be sufficient to meet these requirements for the next 12 months.  The Company may also consider raising capital in the financial markets in order to satisfy existing obligations as well as for general corporate purposes, subject to satisfactory terms and conditions.

The Restricted Group’s credit facility consists of three components: a $1,000,000 revolver, a $1,000,000 term A-1 loan facility and a $3,500,000 term B loan facility.  The three components of the Restricted Group credit facility are direct obligations of CSC Holdings, guaranteed by most Restricted Group subsidiaries and secured by the pledge of the stock of most Restricted Group subsidiaries.  As of December 31, 2007, $52,994 of the $1,000,000 revolving credit facility was restricted for certain letters of credit issued on behalf of CSC Holdings and $947,006 of the revolver was undrawn.  The revolving credit facility and the term A-1 loan facility mature in February 2012 and the term B loan facility matures in March 2013.  The revolver has no required interim repayments.  The $1,000,000 term A-1 loan facility requires quarterly repayments of $12,500 in 2008, $62,500 in 2009 and 2010 and $100,000 in 2011.  The $3,500,000 term B loan facility is subject to quarterly repayments of $8,750 through March 31, 2012 and $822,500 beginning on June 30, 2012 through its maturity date in March 2013.  The borrowings under the Restricted Group credit facility may be repaid without penalty at anytime.  Outstanding borrowings under the term A-1 loan facility and term B loan facility was $950,000 and $3,438,750, respectively, at December 31, 2007.  The weighted average interest rates as of December 31, 2007 on borrowings under the term A-1 loan facility and term B loan facility were 6.40% and 6.90%, respectively.

The principal financial covenants, which are not identical for the revolving credit facility and the term A-1 loan facility, on the one hand, and the term B loan facility, on the other, include (i) under the revolving credit facility and the term A-1 loan facility, maximum total leverage as defined in the term A-1 loan facility of 5.50 times cash flow through December 31, 2008 with subsequent stepdowns over the life of the revolving credit facility and the term A-1 loan facility until reaching 4.50 times cash flow for periods beginning on and after January 1, 2010, (ii) under the revolving credit facility and the term A-1 loan facility, maximum senior secured leverage (as defined in the term A-1 loan facility) of 3.50 times cash flow through December 31, 2008 with annual stepdowns thereafter over the life of the revolving credit facility and the term A-1 loan facility until reaching 3.00 times cash flow for periods beginning on and after January 1, 2010, (iii) under the revolving credit facility and the term A-1 loan facility, a minimum ratio for cash flow to interest expense (as defined in the term A-1 loan facility) of 2.00 to 1, and

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(iv) under the revolving credit facility and the term A-1 loan facility, a minimum ratio of cash flow less cash taxes to total debt expense (as defined in the term A-1 loan facility to include interest expense, certain payments of principal and dividends paid by CSC Holdings to Cablevision to permit Cablevision to pay interest and certain principal payments on its debt) of 1.50 to 1.  These covenants and restrictions on the permitted use of borrowed funds in the revolving credit facility may limit our ability to utilize all of the undrawn revolver funds.  Additional covenants include limitations on liens and the issuance of additional debt.

Under the term B loan facility, we are limited in our ability to incur additional indebtedness based on a maximum total leverage ratio (as defined in the term B loan facility) of 6.00 times cash flow through December 31, 2008 with subsequent stepdowns over the life of the term B loan facility until reaching 5.00 times cash flow for periods beginning on and after January 1, 2010 and a maximum senior secured leverage ratio of 4.50 times cash flow (as defined in the term B loan facility).

Under the revolving credit facility and the term A-1 and term B loan facilities, there are generally no restrictions on investments that the Restricted Group may make, provided it is not in default; however, CSC Holdings must also remain in compliance with the maximum ratio of total indebtedness to cash flow and the maximum senior secured leverage ratio (each as defined in the term A-1 loan facility).  Our ability to make restricted payments is also limited by provisions in the term B loan facility and the indentures covering our notes and debentures.

CSC Holdings, a member of the Restricted Group, has issued senior notes and debentures, which also contain financial and other covenants, though they are generally less restrictive than the covenants contained in the Restricted Group’s bank credit facility.  Principal covenants include a limitation on the incurrence of additional indebtedness based upon a maximum ratio of total indebtedness to cash flow (as defined in the indentures) of 9.00 to 1 and limitations on dividends and distributions.  The indentures governing the Cablevision note and debenture issuances contain similar covenants and restrictions, including a limitation on additional debt incurrence based on a 9.00 to 1 debt to cash flow ratio (as defined in the indentures).  There are no covenants, events of default, borrowing conditions or other terms in the Restricted Group’s credit facility or in any of CSC Holdings’ or Cablevision’s other debt securities that are based on changes in the credit ratings assigned by any rating agency.  The Restricted Group was in compliance with all of its financial covenants under its various credit agreements as of December 31, 2007.

Cablevision’s and CSC Holdings’ future access to the debt markets and the cost of any future debt issuances are also influenced by their credit ratings, which are provided by Moody’s Investors Service and Standard & Poor’s.  Key factors in the assessment of Cablevision’s and CSC Holdings’ credit ratings include Cablevision and CSC Holdings’ financial strength and flexibility, operating capabilities, management risk tolerance and ability to respond to changes in the competitive landscape.  The corporate credit rating for Cablevision and CSC Holdings is Ba3 by Moody’s with a stable outlook and BB by Standard & Poor’s with a negative outlook.  Any future downgrade to the Cablevision and/or CSC Holdings credit ratings by either rating agency could increase the interest rate on future debt issuances and could adversely impact our ability to raise additional funds.

Rainbow and Rainbow National Services

RNS, our wholly-owned subsidiary which owns the Company’s AMC, WE tv and IFC programming operations, generated positive cash from operating activities for the years ended December 31, 2007 and 2006.  Its cash on hand, plus cash flow from operations and proceeds from borrowings available to it, provides the capital required for net funding and investment requirements of other Rainbow programming entities including the VOOM HD Networks and News 12 Networks subject to the applicable covenants and limitations contained in RNS’ financing agreements.  We currently expect that the net funding and investment requirements of RNS will be met with cash on hand and cash generated by its operating

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activities and borrowings under RNS’ bank credit facility and that RNS’ available borrowing capacity under its facility will be sufficient to meet these requirements for the next 12 months.

RNS has an $800,000 senior secured credit facility (the “RNS Credit Facility”), which consists of a $500,000 term A loan facility and a $300,000 revolving credit facility.  The term A loan facility matures June 30, 2013 and the revolving credit facility matures June 30, 2012.  The RNS Credit Facility allows RNS to utilize up to $50,000 of the revolving credit facility for letters of credit and up to $5,000 for a swing loan.  Further, the RNS Credit Facility provides for an incremental facility of up to $925,000, provided that it be for a minimum amount of $100,000.  If an incremental facility is established, RNS and the lenders will enter into a supplement to the RNS Credit Facility with terms and conditions that are no more restrictive than those in the RNS Credit Facility.  There are no commitments from the lenders to fund the incremental facility.

Outstanding borrowings under the term loan at December 31, 2007 were $500,000.  There were no borrowings outstanding under the $300,000 revolving credit facility at December 31, 2007.  The borrowings under the RNS Credit Facility may be repaid without penalty at any time.  RNS may use future borrowings under the RNS Credit Facility to make investments, distributions, and other payments permitted under the RNS Credit Facility and for general corporate purposes.

Borrowings under the RNS Credit Facility are direct obligations of RNS which are guaranteed jointly and severally by substantially all of its subsidiaries and by Rainbow Programming Holdings LLC (“RPH”), the direct parent of RNS, and are secured by the pledge of the stock of RNS and substantially all of its subsidiaries, and all of the other assets of RNS and substantially all of its subsidiaries (subject to certain limited exceptions).  At December 31, 2007, the interest rate on the term A loan facility was 6.15%.  The term A loan is to be repaid in quarterly installments of $6,250 from March 31, 2008 until December 31, 2010, $12,500 from March 31, 2011 until December 31, 2012, and $162,500 on March 31, 2013 and June 30, 2013, the maturity of the term A loan.  Any amounts outstanding under the revolving credit facility are due at maturity on June 30, 2012.

As defined in the RNS Credit Facility, the financial covenants consist of (i) a minimum ratio of operating cash flow to total interest expense for each quarter of 1.75 to 1, (ii) a maximum cash flow ratio of total indebtedness to operating cash flow of 6.75 to 1 through June 30, 2008, decreasing thereafter to 6.25 to 1, and (iii) a maximum senior secured leverage ratio of senior secured debt to operating cash flow of 5.50 to 1.  Additional covenants include restrictions on indebtedness, guarantees, liens, investments, dividends and distributions and transactions with affiliates.

On July 24, 2007, RNS entered into an equity commitment agreement with its sole member, RPH, pursuant to which RPH agreed to purchase additional membership interests in RNS for an aggregate purchase price of $203,000.  RNS used the proceeds of the investment by RPH to redeem $175,000 in aggregate principal amount of its 10-3/8% senior subordinated notes due 2014, representing 35% of the outstanding notes, at a redemption price equal to 110.375% of the principal amount of the notes plus accrued and unpaid interest to August 31, 2007, the redemption date.  In connection with the redemption, the Company recognized a loss on extinguishment of debt of $19,113, representing primarily the redemption premium, and wrote-off the related unamortized deferred financing costs of $2,919.  This redemption reduced the notes RNS had outstanding at December 31, 2007 to $325,000 principal amount of 10-3/8% senior subordinated notes due September 1, 2014 and $300,000 principal amount of 8-3/4% senior notes due September 1, 2012.  These notes are guaranteed by substantially all of RNS’ subsidiaries.

RNS was in compliance with all of its financial covenants under its credit agreement as of December 31, 2007.

In 2005, subsidiaries of the Company entered into agreements with EchoStar by which EchoStar acquired a 20% interest in VOOM HD and agreed to distribute VOOM on its DISH Network for a 15-year term.

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The affiliation agreement with EchoStar for such distribution provides that if VOOM HD fails to spend $100,000 per year (subject to reduction to the extent that the number of offered channels is reduced to fewer than 21), up to a maximum of $500,000 in the aggregate, on VOOM, EchoStar may seek to terminate the agreement under certain circumstances.  On January 30, 2008, EchoStar purported to terminate the affiliation agreement, effective February 1, 2008, based on its assertion that VOOM HD had failed to comply with this spending provision in 2006.  On January 31, 2008, VOOM HD sought and obtained a temporary restraining order from New York Supreme Court for New York County prohibiting EchoStar from terminating the affiliation agreement.  In conjunction with its request for a temporary restraining order, VOOM HD filed a lawsuit against EchoStar asserting that EchoStar did not have the right to terminate the affiliation agreement.  That lawsuit is pending, as is the court’s decision on VOOM HD’s motion for a preliminary injunction.  Separately, on February 1, 2008, EchoStar began to distribute VOOM in a manner that the Company believes violates EchoStar’s obligations under the affiliation agreement.  On February 4, 2008, VOOM HD notified EchoStar of its position that this new distribution constitutes a material breach of the affiliation agreement and reserved all its rights and remedies.

RNS’ future access to the debt markets and the cost of any future debt issuances are also influenced by its credit ratings, which are provided by Moody’s Investors Service and Standard & Poor’s.  Key factors in the assessment of RNS’ credit ratings include its free cash flow generating capacity, fiscal strategy, enterprise value and industry risk.  The corporate credit rating for RNS is Ba3 by Moody’s with a stable outlook and BB by Standard & Poor’s with a negative outlook.  Any future downgrade to the RNS credit ratings by either rating agency could increase the interest rate on future debt issuances and could adversely impact its ability to raise additional funds.

Madison Square Garden

Madison Square Garden does not have a credit facility at this time.  Effective January 1, 2008, Madison Square Garden, L.P. began providing the capital required for net funding and investment requirements of Fuse.  Prior to January 1, 2008, funding for Fuse was provided by RNS.  We currently expect Madison Square Garden’s funding requirements for the next twelve months to be met by its cash on hand and cash from operations.

During the fourth quarter of 2004, the Company announced its intent to renovate the Madison Square Garden Arena.  Although management of the Company is committed to this renovation project, another alternative, which would involve moving to a new arena on the site of the Farley post office, has also been pursued to date.  A substantial renovation or relocation of the Arena would require significant funding.

Monetization Contract Maturities

For the year ended December 31, 2007, monetization contracts covering 3,724,460 shares of our Charter Communications and 800,000 shares of our Leapfrog stock matured.  We settled our obligations under the related Charter Communications and Leapfrog collateralized indebtedness by delivering an equivalent number of Charter Communications and Leapfrog shares and the related equity derivative contracts.

During the next twelve months, monetization contracts covering 10,738,809 shares of Comcast Corporation mature.  The Company intends to either settle such transactions by delivering shares of the applicable stock and the related equity derivative contracts or by delivering cash from the net proceeds of new monetization transactions.

See “Item 7A Quantitative and Qualitative Disclosures About Market Risk” for a discussion of our monetization contracts.

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Contractual Obligations and Off Balance Sheet Commitments

The Company’s contractual obligations as of December 31, 2007, which consist primarily of our debt obligations, and the effect such obligations are expected to have on our liquidity and cash flow in future periods, are summarized in the following table:

	Payments Due by Period
	Total		Year 1		Years 2-3		Years 4-5		More than 5 years		Other
Off balance sheet arrangements:
Programming obligations (1)	$	2,652,556	$	869,731	$	1,151,002	$	605,136	$	26,687	$	—
Purchase obligations (2)	1,814,466		394,123		340,679		169,182		910,482		—
Operating lease obligations (3)	994,554		106,626		203,291		182,596		502,041		—
Guarantees (4)	518		518		—		—		—		—
Letters of Credit (5)	55,199		3,367		559		—		51,273		—
	5,517,293		1,374,365		1,695,531		956,914		1,490,483		—
Contractual obligations reflected on the balance sheet:
Debt obligations (6)	11,604,846		833,641		2,687,455		5,811,250		2,272,500		—
Program rights obligations	417,313		110,128		151,112		81,834		74,239		—
Capital lease obligations (7)	92,244		9,737		17,734		14,134		50,639		—
Contract obligations (8)	37,065		12,993		4,019		6,283		13,770		—
Taxes (9)	3,763		—		—		—		—		3,763
	12,155,231		966,499		2,860,320		5,913,501		2,411,148		3,763
Total	$	17,672,524	$	2,340,864	$	4,555,851	$	6,870,415	$	3,901,631	$	3,763

See discussion above regarding payment options the Company has on its monetization contracts.  See Notes 9 and 10 to our consolidated financial statements for a discussion of our long-term debt.  See Note 12 to our consolidated financial statements for a discussion of our operating leases.  See Note 1 to our consolidated financial statements for a discussion of our program rights obligations.

(1)Programming obligations represent contractual commitments with various programming vendors to provide video services to the Company’s subscribers.  Future fees under such contracts are based on numerous factors, including the number of subscribers receiving the programming.  Amounts reflected above are based on the number of subscribers receiving the programming as of December 2007 multiplied by the per subscriber rates contained in the executed agreements in effect as of December 31, 2007.

(2)Purchase obligation amounts not reflected on the balance sheet consist primarily of (i) long-term rights agreements which provide Madison Square Garden with exclusive broadcast rights to certain live sporting events in exchange for minimum contractual payments, (ii) payments under employment agreements that we have with our professional sports teams’ personnel that are generally guaranteed regardless of employee injury or termination, and (iii) minimum purchase requirements incurred in the normal course of the Company’s operations.

(3)Operating lease obligations represent primarily future minimum payment commitments on various long-term, noncancelable leases for office and storage space, lease commitments for Radio City Music Hall, the Beacon Theatre and Clearview Cinemas, and rental space on utility poles used for the Company’s Telecommunications Services Segment.

(4)Includes outstanding guarantees primarily by CSC Holdings in favor of certain financial institutions in respect of ongoing interest expense obligations and potential early termination events in connection with the monetization of the Company’s holdings of shares of Comcast Corporation common stock.

(5)Consist primarily of letters of credit obtained by CSC Holdings in favor of insurance providers and certain governmental authorities for the Telecommunications Services segment.

(6)Excludes interest payments and includes future payments due on the Company’s (i) bank debt, (ii) senior notes and debentures, (iii) senior subordinated notes and debentures, (iv) collateralized indebtedness, and (v) notes payable.

(7)Reflects the face amount of capital lease obligations, including related interest.

(8)Consist principally of amounts earned under employment agreements that we have with certain of our professional sports teams’ personnel.

(9)This amount represents noncurrent tax liabilities, including accrued interest, recognized pursuant to Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes.

The future cash payments reflected above do not include the impact of potential insurance recoveries or amounts which may be due to the NBA for luxury tax payments.

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In addition, the future cash payments reflected above do not include the payments required under the Company’s agreements with EchoStar relating to VOOM, the Company’s high-definition television programming service.  EchoStar was issued a 20% interest in VOOM HD Holdings, the Company’s subsidiary operating VOOM, and that 20% interest will not be diluted until $500,000 in cash has been invested in VOOM HD Holdings by the Company.  The affiliation agreement with EchoStar providing for distribution of VOOM for a 15-year term provides that if VOOM HD fails to spend $100,000 per year (subject to reduction to the extent that the number of offered channels is reduced to fewer than 21), up to a maximum of $500,000 in the aggregate, on VOOM, EchoStar may seek to terminate the agreement under certain circumstances (see Note 3).  VOOM HD also has the right to terminate the affiliation agreement if VOOM is discontinued in the future.  On the fifth or eighth anniversary of the effective date of the investment agreement, the termination of the affiliation agreement by EchoStar, or other specified events, EchoStar has a put right to require a wholly-owned subsidiary of Rainbow Media Holdings to purchase all of its equity interests in VOOM HD Holdings at fair value.  On the seventh or tenth anniversary of the effective date of the investment agreement, or the second anniversary date of the termination of the affiliation agreement by EchoStar, a wholly-owned subsidiary of Rainbow Media Holdings has a call right to purchase all of EchoStar’s ownership in VOOM HD Holdings at fair value.

An indirect subsidiary of Rainbow Media Holdings owns a 90% interest in DTV Norwich LLC.  The other investor has the right, for ten years, to put its remaining 10% interest to the Company at fair value to be determined by a process involving independent valuation experts.  The table above does not include any future payments that would be required upon the exercise of this put right.

Performance Award Amendment

On February 25, 2008, the Compensation Committee of the Company’s Board of Directors approved an amendment of the terms of the 2005 three-year cash performance awards (“2005 Awards”) awarded by the Company in 2005 to each of the Company’s executive officers at that time and 110 other members of management under the Company’s Long-Term Incentive Plan.  The 2005 Awards, which aggregated approximately $53,500, are payable in March 2008 if the Company has met certain compounded annual growth rate targets (“CAGR”) for both net revenues (“Net Revenue”) and adjusted operating cash flow (“AOCF”) over the 2005-2007 period.  The terms of the 2005 Awards required adjustment for divestitures of any operating entities during the plan period to eliminate the impact of such sales from the actual performance as well as the CAGR targets.  During the plan period, the Company sold and shutdown several businesses.  The original Net Revenue CAGR target, when adjusted for the dispositions, was achieved.  The original AOCF CAGR target, when adjusted for the dispositions, would have resulted in a 1.3 percentage point upward adjustment of the AOCF CAGR target causing the Company’s actual performance to fall short of the adjusted AOCF target.  The Compensation Committee approved the amendment of the 2005 Awards so that the original AOCF CAGR target for the 2005 Awards continued to apply without adjusting the target for the dispositions.  Accordingly, it is expected that payment of the 2005 Awards will be made in early March 2008.

The Compensation Committee approved the amendment primarily because it believed that the Company’s AOCF growth during the 2005-2007 period, while below the threshold for payout of the award, was outstanding.  Moreover, the decisions to dispose of operating entities were made because such actions were deemed to be in the best interest of the Company and the Compensation Committee believed it would be unfair to penalize the award recipients for executing the corporate strategy.

As a result of this amendment, awards payable to the Company’s four most highly compensated executive officers will not be deemed to be performance based compensation and therefore not deductible for income tax purposes.  This will result in a loss of approximately $10,000 of deductible expense.  The Company’s NOL for federal income tax purposes was approximately $2,300,000 at December 31, 2007.

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Managing our Interest Rate and Equity Price Risk

Interest Rate Risk

To manage interest rate risk, we have entered into interest rate swap contracts to adjust the proportion of total debt that is subject to variable and fixed interest rates.  Such contracts effectively fix the borrowing rates on floating rate debt to provide an economic hedge against the risk of rising rates and/or effectively convert fixed rate borrowings to variable rates to permit the Company to realize lower interest expense in a declining interest rate environment.  We do not enter into interest rate swap contracts for speculative or trading purposes and have only entered into transactions with counterparties that are rated investment grade.

All of our interest rate derivative contracts are entered into by CSC Holdings and are thus attributable to the Restricted Group; all such contracts are carried at their fair market values on our consolidated balance sheets, with changes in value reflected in the consolidated statements of operations.

Equity Price Risk

We have entered into derivative contracts to hedge our equity price risk and monetize the value of our shares of Comcast Corporation and General Electric Company.  These contracts, at maturity, are expected to offset declines in the fair value of these securities below the hedge price per share while allowing us to retain upside appreciation from the hedge price per share to the relevant cap price.  If any one of these contracts is terminated prior to its scheduled maturity date due to the occurrence of an event specified in the contract, we would be obligated to repay the fair value of the collateralized indebtedness less the sum of the fair values of the underlying stock and equity collar, calculated at the termination date.  As of December 31, 2007, this settlement amount totaled $492.  The underlying stock and the equity collars are carried at fair market value on our consolidated balance sheets and the collateralized indebtedness is carried at its accreted value.

See “Item 7A Quantitative and Qualitative Disclosures About Market Risk” for information on how we participate in changes in the market price of the stocks underlying these derivative contracts.

All of our monetization transactions are obligations of our wholly-owned subsidiaries that are not part of the Restricted Group; however, in certain of the Comcast transactions, CSC Holdings provided guarantees of the subsidiaries’ ongoing contract payment expense obligations and potential payments that could be due as a result of an early termination event (as defined in the agreements).  The guarantee exposure approximates the net sum of the fair value of the collateralized indebtedness less the sum of the fair values of the underlying stock and the equity collar.  All of our equity derivative contracts are carried at their current fair market value on our consolidated balance sheets with changes in value reflected in the consolidated statements of operations, and all of the counterparties to such transactions currently carry investment grade credit ratings.

Related Party Transactions

Dolan Family Group Transaction

On May 2, 2007, Cablevision entered into a merger agreement with Central Park Holding Company, LLC (“Dolan Family Acquisition Company”), an entity owned by the Dolan Family Group, and Central Park Merger Sub, Inc.  The terms of the merger agreement provided that Central Park Merger Sub, Inc. would be merged with and into Cablevision and, as a result, Cablevision would continue as the surviving corporation and a wholly-owned subsidiary of Dolan Family Acquisition Company.

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On October 24, 2007, the Proposed Merger was submitted to a vote of Cablevision’s shareholders and did not receive shareholder approval.  Subsequently, the parties terminated the merger agreement pursuant to its terms.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2007, the SEC published Staff Accounting Bulletin (“SAB”) No. 110, which amends SAB No. 107 to allow for the continued use, under certain circumstances, of the “simplified” method in developing an estimate of the expected term of so-called “plain vanilla” stock options accounted for under Statement No. 123R beyond December 31, 2007.  Companies can use the simplified method if they conclude that their stock option exercise experience does not provide a reasonable basis upon which to estimate expected term. SAB No. 110 will not have a significant impact on the Company’s future financial position or results of operations.  Beginning in 2008, for any stock option awards granted, the Company’s computation of expected life will be based on its historical stock option exercise experience as outlined in Statement No. 123R.

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141 (revised 2007), Business Combinations (“Statement No. 141R”).  Statement No. 141R requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date.  Statement No. 141R is effective for the Company for business combinations for which the acquisition date is on or after January 1, 2009. The provisions of Statement No. 141R will not impact the Company’s financial statements for prior periods.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (“Statement No. 160”).  Statement No. 160 clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.  Statement No. 160 is effective as of January 1, 2009 for the Company. The Company has not yet determined the impact that the adoption of Statement No. 160 will have on its financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115 (“Statement No. 159”).  Statement No. 159 permits entities to elect, at specified election dates, to measure eligible financial instruments and certain other items at fair value.  An entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date, and recognize upfront costs and fees related to those items in earnings as incurred.  Statement No. 159 is effective as of January 1, 2008 for the Company.  The Company has not yet determined the impact that the adoption of Statement No. 159 will have on its financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“Statement No. 157”).  Statement No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements.  Under Statement No. 157, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts.  It also clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability.  This Statement applies under other accounting pronouncements that require or permit fair value measurements.  Accordingly, this Statement does not require any new fair value measurements, however, for some entities, the application of Statement No. 157 could change current practices.  Statement No. 157 will be effective for the Company on January 1, 2008.  The FASB has deferred the adoption of Statement No. 157 for nonfinancial assets and nonfinancial liabilities for fiscal years beginning after November 15, 2008.  The Company has not yet determined the impact that the adoption of Statement No. 157 will have on its financial statements.

46

In November 2007, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 07-1 Accounting for Collaboration Arrangements Related to the Development and Commercialization of Intellectual Property (“EITF 07-1”).  EITF 07-1 provides guidance on how the parties to a collaborative agreement should account for costs incurred and revenue generated on sales to third parties, how sharing payments pursuant to a collaboration agreement should be presented in the income statement and certain related disclosure questions.  EITF No. 07-1 will be effective for the Company as of January 1, 2009.  An entity will report the effects of applying EITF No. 07-1 as a change in accounting principle through retrospective application to all prior periods presented for all arrangements existing as of the effective date.  The Company has not yet determined the impact that the adoption of EITF No. 07-1 will have on its financial statements.

47

EX-99.3

Exhibit 99.3

INDEX TO FINANCIAL STATEMENTS

	Page
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm	I-1
Consolidated Balance Sheets - December 31, 2007 and 2006	I-3
Consolidated Statements of Operations - years ended December 31, 2007, 2006 and 2005	I-5
Consolidated Statements of Stockholders’ Deficiency and Comprehensive Income (Loss) - years ended December 31, 2007, 2006 and 2005	I-6
Consolidated Statements of Cash Flows - years ended December 31, 2007, 2006 and 2005	I-8
Notes to Consolidated Financial Statements	I-10
CSC HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm	II-1
Consolidated Balance Sheets - December 31, 2007 and 2006	II-3
Consolidated Statements of Operations - years ended December 31, 2007, 2006 and 2005	II-5
Consolidated Statements of Stockholder’s Deficiency and Comprehensive Income (Loss) - years ended December 31, 2007, 2006 and 2005	II-6
Consolidated Statements of Cash Flows - years ended December 31, 2007, 2006 and 2005	II-7
Notes to Consolidated Financial Statements	II-9

1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Cablevision Systems Corporation:

We have audited Cablevision Systems Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Cablevision Systems Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting in Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.  Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Cablevision Systems Corporation and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Cablevision Systems Corporation and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholders’ deficiency and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2007, and our report dated February 28, 2008 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP
Melville, New York
February 28, 2008

I-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Cablevision Systems Corporation:

We have audited the accompanying consolidated balance sheets of Cablevision Systems Corporation and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholders’ deficiency and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2007.  In connection with our audits of the consolidated financial statements, we also have audited the related financial statement schedule listed in Item 15(a)(2).  These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Cablevision Systems Corporation and subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.  Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Notes 1 and 2 to the accompanying consolidated financial statements, the Company changed its method of quantifying errors in 2006 in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, adopted the provisions of Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment, as of January 1, 2006, adopted the provisions of Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, as of December 31, 2006, and adopted the provisions of FASB Interpretation  No. 48, Accounting for Uncertainty in Income Taxes, as of January 1, 2007.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Cablevision Systems Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 28, 2008 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP
Melville, New York
February 28, 2008, except for Notes 2, 4, 5, 8 and 19 which are as of May 27, 2008

I-2

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2007 and 2006

(Dollars in thousands)

	2007		2006
ASSETS
Current Assets:
Cash and cash equivalents	$	360,662	$	524,401
Restricted cash	58,416		11,390
Accounts receivable, trade (less allowance for doubtful accounts of $12,683 and $17,257)	543,151		516,533
Prepaid expenses and other current assets	189,306		157,003
Program rights, net	133,146		124,778
Deferred tax asset	232,984		184,032
Investment securities pledged as collateral	196,090		18,981
Derivative contracts	30,532		81,140
Assets held for sale	—		49,189
Total current assets	1,744,287		1,667,447
Property, plant and equipment, net of accumulated depreciation of $6,956,699 and $6,254,510	3,472,203		3,713,030
Investments in affiliates	—		49,950
Notes and other receivables	40,874		29,659
Investment securities pledged as collateral	668,438		1,080,229
Derivative contracts	43,020		—
Other assets	79,740		80,273
Program rights, net	420,923		375,700
Deferred carriage fees, net	151,507		173,059
Franchises	731,848		731,848
Affiliation, broadcast and other agreements, net of accumulated amortization of $448,392 and $390,324	339,614		397,682
Other intangible assets, net of accumulated amortization of $102,487 and $77,255	316,830		325,291
Excess costs over fair value of net assets acquired	1,023,480		1,024,168
Deferred financing and other costs, net of accumulated amortization of $88,011 and $68,705	107,813		117,409
Assets held for sale	—		79,112
	$	9,140,577	$	9,844,857

See accompanying notes to consolidated financial statements.

I-3

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (continued)

December 31, 2007 and 2006

(Dollars in thousands, except share and per share amounts)

	2007			2006
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current Liabilities:
Accounts payable	$	370,044		$	389,400
Accrued liabilities:
Interest	171,204			224,135
Employee related costs	291,268			388,474
Other accrued expenses	371,902			410,879
Deferred revenue	198,658			162,463
Program rights obligations	110,128			121,890
Liabilities under derivative contracts	2,893			6,568
Bank debt	110,000			93,750
Collateralized indebtedness	219,073			102,268
Capital lease obligations	5,351			7,069
Notes payable	1,017			17,826
Senior notes and debentures	500,000			499,952
Liabilities held for sale	—			6,024
Total current liabilities	2,351,538			2,430,698
Defined benefit plan and other postretirement plan obligations	57,596			82,517
Deferred revenue	12,691			14,337
Program rights obligations	307,185			312,344
Liabilities under derivative contracts	132,647			204,887
Other liabilities	264,446			251,437
Deferred tax liability	326,736			73,724
Bank debt	4,778,750			4,898,750
Collateralized indebtedness	628,081			819,306
Notes payable	—			1,017
Capital lease obligations	60,056			54,389
Senior notes and debentures	4,995,148			5,494,004
Senior subordinated notes	323,311			497,011
Minority interests	1,182			49,670
Liabilities held for sale	—			19
Total liabilities	14,239,367			15,184,110
Commitments and contingencies
Stockholders’ Deficiency:
Preferred Stock, $.01 par value, 50,000,000 shares authorized, none issued	—			—
CNYG Class A common stock, $.01 par value, 800,000,000 shares authorized, 255,648,391 and 250,927,804 shares issued and 231,007,266 and 228,643,568 shares outstanding	2,556			2,509
CNYG Class B common stock, $.01 par value, 320,000,000 shares authorized, 63,265,676 and 63,736,814 shares issued and outstanding	633			637
RMG Class A common stock, $.01 par value, 600,000,000 shares authorized, none issued	—			—
RMG Class B common stock, $.01 par value, 160,000,000 shares authorized, none issued	—			—
Paid-in capital	130,791			57,083
Accumulated deficit	(4,806,543		)	(5,027,473		)
	(4,672,563		)	(4,967,244		)
Treasury stock, at cost (24,641,125 and 22,284,236 CNYG Class A common shares)	(429,084		)	(360,059		)
Accumulated other comprehensive income (loss)	2,857			(11,950		)
Total stockholders’ deficiency	(5,098,790		)	(5,339,253		)
	$	9,140,577		$	9,844,857

See accompanying notes to consolidated financial statements.

I-4

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2007, 2006 and 2005

(Dollars in thousands, except per share amounts)

	2007			2006			2005
Revenues, net	$	6,484,481		$	5,828,493		$	5,082,045
Operating expenses:
Technical and operating (excluding depreciation, amortization and impairments shown below)	2,891,337			2,651,890			2,249,367
Selling, general and administrative	1,558,455			1,471,366			1,283,938
Restructuring expense (credits)	4,733			(3,484		)	(537		)
Depreciation and amortization (including impairments)	1,118,888			1,119,829			1,074,711
	5,573,413			5,239,601			4,607,479
Operating income	911,068			588,892			474,566
Other income (expense):
Interest expense	(940,852		)	(928,202		)	(764,539		)
Interest income	40,154			36,528			15,874
Equity in net income of affiliates	4,377			6,698			3,219
Gain on sale of programming and affiliate interests, net	183,286			—			64,968
Gain (loss) on investments, net	(214,257		)	290,052			(138,312		)
Gain (loss) on derivative contracts, net	138,144			(253,712		)	119,180
Write-off of deferred financing costs	(2,919		)	(14,083		)	—
Loss on extinguishment of debt	(19,113		)	(13,125		)	—
Minority interests	321			1,614			5,221
Miscellaneous, net	2,636			2,845			650
	(808,223		)	(871,385		)	(693,739		)
Income (loss) from continuing operations before income taxes	102,845			(282,493		)	(219,173		)
Income tax benefit (expense)	(79,181		)	140,462			82,219
Income (loss) from continuing operations	23,664			(142,031		)	(136,954		)
Income from discontinued operations, net of taxes (including net gain from the sale of Fox Sports Net Bay Area of $186,281 in 2007 and primarily from the Regional Programming Partners restructuring of $269,428 in 2005)	195,235			16,428			226,274
Income (loss) before cumulative effect of a change in accounting principle	218,899			(125,603		)	89,320
Cumulative effect of a change in accounting principle, net of taxes	(443		)	(862		)	—
Net income (loss)	$	218,456		$	(126,465	)	$	89,320
INCOME (LOSS) PER SHARE:
Basic net income (loss) per share:
Income (loss) from continuing operations	$	0.08		$	(0.50	)	$	(0.49	)
Income from discontinued operations	$	0.68		$	0.06		$	0.80
Cumulative effect of a change in accounting principle	$	—		$	—		$	—
Net income (loss)	$	0.76		$	(0.45	)	$	0.32
Basic weighted average common shares (in thousands)	288,271			283,627			281,936
Diluted net income (loss) per share:
Income (loss) from continuing operations	$	0.08		$	(0.50	)	$	(0.49	)
Income from discontinued operations	$	0.66		$	0.06		$	0.80
Cumulative effect of a change in accounting principle	$	—		$	—		$	—
Net income (loss)	$	0.74		$	(0.45	)	$	0.32
Diluted weighted average common shares (in thousands)	294,604			283,627			281,936

See accompanying notes to consolidated financial statements.

I-5

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY AND COMPREHENSIVE INCOME (LOSS)

Years ended December 31, 2007, 2006 and 2005

(Dollars in thousands)

	CNYG		CNYG			RMG		RMG											Accumulated
	Class A		Class B			Class A		Class B											Other
	Common		Common			Common		Common		Paid-in			Accumulated			Treasury			Comprehensive
	Stock		Stock			Stock		Stock		Capital			Deficit			Stock			Income (Loss)			Total
Balance at December 31, 2004	$	2,438	$	658		$	—	$	—	$	1,243,612		$	(3,530,287	)	$	(359,750	)	$	(3,935	)	$	(2,647,264	)
Net income	—		—			—		—		—			89,320			—			—			89,320
Minimum pension liability adjustment, net of taxes	—		—			—		—		—			—			—			182			182
Foreign currency translation, net of taxes	—		—			—		—		—			—			—			191			191
Comprehensive income																						89,693
Proceeds from exercise of options	20		—			—		—		13,925			—			—			—			13,945
Recognition of equity-based stock compensation arrangements	—		—			—		—		32,259			—			—			—			32,259
Conversion of CNYG Class B common stock to CNYG Class A common stock	16		(16		)	—		—		—			—			—			—			—
Treasury stock acquired from forfeiture of restricted shares	—		—			—		—		—			—			(3		)	—			(3		)
Contribution from CNYG Class B shareholder	—		—			—		—		6,337			—			—			—			6,337
Gain on issuance of members’ interest by subsidiary, net	—		—			—		—		10,397			—			—			—			10,397
Tax benefit related to stock options	—		—			—		—		1,256			—			—			—			1,256
Balance at December 31, 2005	2,474		642			—		—		1,307,786			(3,440,967		)	(359,753		)	(3,562		)	(2,493,380		)
Cumulative effect of adjustments resulting from the adoption of SAB No. 108, net of taxes (Note 2)	—		—			—		—		—			121,668			—			—			121,668
Adjusted balance at January 1, 2006	2,474		642			—		—		1,307,786			(3,319,299		)	(359,753		)	(3,562		)	(2,371,712		)
Net loss	—		—			—		—		—			(126,465		)	—			—			(126,465		)
Minimum pension liability adjustment, net of taxes	—		—			—		—		—			—			—			(1,484		)	(1,484		)
Comprehensive loss																						(127,949		)
Adjustment related to initial application of FASB Statement No. 158, net of taxes (Note 14)	—		—			—		—		—			—			—			(6,904		)	(6,904		)
Proceeds from exercise of options	30		—			—		—		15,610			—			—			—			15,640
Recognition of equity-based stock compensation arrangements	—		—			—		—		59,914			—			—			—			59,914
Treasury stock acquired from forfeiture and acquisition of restricted shares	—		—			—		—		—			—			(306		)	—			(306		)
Conversion of CNYG Class B common stock to CNYG Class A common stock	5		(5		)	—		—		—			—			—			—			—
Special cash dividend paid to CNYG Class A and CNYG Class B shareholders	—		—			—		—		(1,326,227		)	(1,581,709		)	—			—			(2,907,936		)
Balance at December 31, 2006	2,509		637			—		—		57,083			(5,027,473		)	(360,059		)	(11,950		)	(5,339,253		)

See accompanying notes to consolidated financial statements.

I-6

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY AND COMPREHENSIVE INCOME (LOSS) (continued)

Years ended December 31, 2007, 2006 and 2005

(Dollars in thousands)

	CNYG		CNYG			RMG		RMG											Accumulated
	Class A		Class B			Class A		Class B											Other
	Common		Common			Common		Common		Paid-in			Accumulated			Treasury			Comprehensive
	Stock		Stock			Stock		Stock		Capital			Deficit			Stock			Income (Loss)		Total
Net income	—		—			—		—		—			218,456			—			—		218,456
Minimum pension liability and post-retirement plan adjustments, net of taxes	—		—			—		—		—			—			—			14,807		14,807
Comprehensive income																					233,263
Proceeds from exercise of options	43		—			—		—		30,751			—			—			—		30,794
Recognition of equity-based stock compensation arrangements	—		—			—		—		53,787			—			—			—		53,787
Treasury stock acquired from forfeiture and acquisition of restricted shares	—		—			—		—		—			—			(69,025		)			(69,025		)
Conversion of CNYG Class B common stock to CNYG Class A common stock	4		(4		)	—		—		—			—			—			—		—
Special cash dividends paid in connection with employee stock option exercises, net of forfeitures related to restricted shares	—		—			—		—		(10,830		)	2,916								(7,914		)
Adjustment related to initial application of FASB Interpretation No. 48 (Note 11)	—		—			—		—		—			(442		)	—			—		(442		)
Balance at December 31, 2007	$	2,556	$	633		$	—	$	—	$	130,791		$	(4,806,543	)	$	(429,084	)	$	2,857	$	(5,098,790	)

See accompanying notes to consolidated financial statements.

I-7

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2007, 2006 and 2005

(Dollars in thousands)

	2007			2006			2005
Cash flows from operating activities:
Income (loss) from continuing operations	$	23,664		$	(142,031	)	$	(136,954	)
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities:
Depreciation and amortization (including impairments)	1,118,888			1,119,829			1,074,711
Equity in net income of affiliates	(4,377		)	(6,698		)	(3,219		)
Minority interests	(321		)	(1,614		)	(5,221		)
Gain on sale of programming and affiliate interests, net	(183,286		)	—			(64,968		)
Loss (gain) on investments, net	214,257			(284,542		)	138,312
Write-off of deferred financing costs	2,919			14,083			—
Unrealized loss (gain) on derivative contracts, net	(149,868		)	218,740			(156,082		)
Loss on extinguishment of debt	19,113			13,125			—
Share-based compensation expense related to equity classified awards	53,077			63,675			28,870
Deferred income tax	52,576			(150,008		)	(91,712		)
Amortization and write-off of program rights	145,072			123,827			113,926
Amortization of deferred financing costs and discounts on indebtedness	50,151			50,150			61,232
Amortization of other deferred costs	34,324			27,696			22,359
Provision for doubtful accounts	52,165			41,386			34,507
Change in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable, trade	(79,071		)	(107,635		)	(76,984		)
Notes and other receivables	(19,840		)	48,280			11,496
Inventory, prepaid expenses and other assets	(23,861		)	195			(10,680		)
Advances/payables to affiliates	(190		)	(1,263		)	1,223
Program rights	(198,663		)	(137,196		)	(142,703		)
Other deferred costs	(26,431		)	(13,349		)	(99,203		)
Accounts payable	(17,054		)	40,661			29,533
Accrued liabilities	(117,943		)	60,671			87,538
Program rights obligations	(16,921		)	(29,630		)	(731		)
Deferred revenue	36,929			(4,141		)	25,499
Deferred carriage payable	(25,569		)	(17,336		)	45,371
Minority interests	—			—			243
Net cash provided by operating activities	939,740			926,875			886,363
Cash flows from investing activities:
Capital expenditures	(781,306		)	(885,833		)	(768,652		)
Payments for acquisitions, net of cash acquired	—			—			(4,231		)
Proceeds from sale of equipment, net of costs of disposal	3,336			17,704			5,407
Distribution from (contribution to) equity method investees	24,506			(1,000		)	(420		)
Proceeds from sale of affiliate interests	212,904			—			—
Decrease (increase) in investment securities and other investments	277			907			(9,520		)
Decrease (increase) in restricted cash	5,812			(2,936		)	27,342
Additions to other intangible assets	(16,771		)	(1,551		)	(12,886		)
Net cash used in investing activities	(551,242		)	(872,709		)	(762,960		)

See accompanying notes to consolidated financial statements.

I-8

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

Years ended December 31, 2007, 2006 and 2005

(Dollars in thousands)

	2007			2006			2005
Cash flows from financing activities:
Proceeds from bank debt	73,000			5,463,000			554,614
Repayment of bank debt	(176,750		)	(2,322,000		)	(1,192,614		)
Redemption of senior subordinated notes and debentures	(693,158		)	(263,125		)	—
Proceeds from collateralized indebtedness	—			595,035			210,973
Repayment of collateralized indebtedness	—			(548,867		)	(222,623		)
Dividend distribution to common stockholders	(67,319		)	(2,840,780		)	—
Proceeds from derivative contracts	—			6,496			6,462
Settlement of derivative contracts	—			(50,864		)	—
Proceeds from stock option exercises	30,794			15,334			13,942
Payments on capital lease obligations and other debt	(7,285		)	(8,739		)	(11,956		)
Deemed repurchase of restricted stock	(69,025		)	—			—
Deemed net capital contribution from shareholder	—			—			6,337
Additions to deferred financing and other costs	—			(47,540		)	(70		)
Distributions to minority partners	(13,549		)	(14,709		)	(9,659		)
Net cash used in financing activities	(923,292		)	(16,759		)	(644,594		)
Effect of exchange rate changes on cash and cash equivalents	—			—			191
Net increase (decrease) in cash and cash equivalents from continuing operations	(534,794		)	37,407			(521,000		)
Cash flows of discontinued operations:
Net cash provided by (used in) operating activities	17,771			109,956			(27,854		)
Net cash provided by investing activities	328,823			4,003			79,534
Net change in cash classified in assets held for sale	24,461			3,660			85,350
Net effect of discontinued operations on cash and cash equivalents	371,055			117,619			137,030
Cash and cash equivalents at beginning of year	524,401			369,375			753,345
Cash and cash equivalents at end of year	$	360,662		$	524,401		$	369,375

See accompanying notes to consolidated financial statements.

I-9

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company and Related Matters

Cablevision Systems Corporation and its majority-owned subsidiaries (“Cablevision” or the “Company”) own and operate cable television systems and through its subsidiary, Rainbow Media Holdings LLC, have ownership interests in companies that produce and distribute national entertainment, regional news and sports programming services, including Madison Square Garden, L.P. The Company also owns companies that provide advertising sales services for the cable television industry, provide telephone service, operate motion picture theaters, and through April 30, 2005, provided direct broadcast satellite service.  The Company classifies its business interests into three reportable segments:  Telecommunications Services, consisting principally of its video, high-speed data, Voice over Internet Protocol and its commercial data and voice services operations; Rainbow, consisting principally of interests in national and regional television programming networks, including AMC, IFC, WE tv, News 12 and the VOOM HD Networks; and Madison Square Garden, consisting principally of its professional sports teams, a regional sports programming business and an entertainment business, as well as the operations of Fuse, a national programming network effective January 1, 2008.  Prior to January 1, 2008, Fuse was included in the Rainbow segment.  Prior period segment information has been reclassified and reported on a comparable basis for information included in Notes 2, 4, 5, 8 and 19.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its majority owned subsidiaries.  All significant intercompany transactions and balances are eliminated in consolidation.

Revenue Recognition

The Company recognizes video, high-speed data, Voice over Internet Protocol, and telephony revenues as the services are provided to subscribers.  Installation revenue for the Company’s video, consumer high-speed data and Voice over Internet Protocol services is recognized as installations are completed, as direct selling costs have exceeded this revenue in all periods reported.  The Company classifies amounts billed to its customers for franchise and regulatory fees as a component of revenue.

The Company’s programming businesses recognize affiliate fee revenue from cable system operators, direct broadcast satellite operators and telecommunications companies as the programming is provided.  Advertising revenues are recognized when commercials are aired.

In some advertising sales arrangements, the Company’s programming businesses guarantee specified viewer ratings for their programming.  For these types of transactions, a portion of such revenue is deferred if the guaranteed viewer ratings are not met and is subsequently recognized either when the Company provides the required additional advertising time, the guarantee obligation contractually expires or performance requirements become remote.

Revenues derived from other sources are recognized when services are provided or events occur.

I-10

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Multiple-Element Transactions

If there is objective and reliable evidence of fair value for all elements of accounting in a multiple-element arrangement, the arrangement consideration is allocated to the separate elements of accounting based on relative fair values.  There may be cases in which there is objective and reliable evidence of the fair value of undelivered items in an arrangement but no such evidence for the delivered items.  In those cases, the Company utilizes the residual method to allocate the arrangement consideration.  Under the residual method, the amount of consideration allocated to the delivered items equals the total arrangement consideration less the aggregate fair value of the undelivered items.  In determining fair value, the Company refers to historical transactions or comparable cash transactions.

The Company may enter into affiliation agreements which are documented in one or more contracts; however negotiated contemporaneously.  Amounts paid/received by the Company may differ from the amounts that would have been paid/received if such arrangements were negotiated separately.  Judgments made in determining fair value impact the amount and period in which revenues are recognized over the term of the individual affiliation agreements.

Gross Versus Net Revenue Recognition

In the normal course of business, the Company is assessed non-income related taxes by governmental authorities, including franchising authorities, and collects such taxes from its customers. The Company’s policy is that, in instances where the tax is being assessed directly on the Company, amounts paid to the governmental authorities and amounts received from the customers are recorded on a gross basis. That is, amounts paid to the governmental authorities are recorded as technical and operating expenses and amounts received from the customer are recorded as revenues. For the years ended December 31, 2007, 2006 and 2005, the amount of franchise fees included as a component of net revenue aggregated $111,398, $101,213, and $91,546, respectively.

Technical and Operating Expenses

Costs of revenue related to sales of services are classified as “technical and operating” expenses in the accompanying statements of operations.

Programming Costs

The Company’s cable television business included in the Telecommunications Services segment has received, or may receive, incentives from programming distributors for carriage of the distributors’ programming.  The Company recognizes these incentives as a reduction of programming costs in technical and operating expense, generally over the term of the programming agreement.

Program Rights

Rights acquired to broadcast various professional sports teams’ events and programming for exhibition on the Company’s networks, are expensed on a straight-line basis (except for owned original programming) over the contract or license period.  Estimated future revenues are reviewed regularly and write-downs to net realizable value of the Company’s program rights costs are made as required.  Estimates of total gross revenues can change due to a variety of factors, including the level of advertising rates and subscriber fees.  Accordingly, revenue estimates related to the Company’s program rights are reviewed periodically and amortization is adjusted as necessary.

I-11

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

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

See Note 5 for a discussion of the Company’s review of the programming usefulness of its program rights inventory and impairment charges.

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

Advertising Expenses

Advertising costs are charged to expense when incurred.  Advertising costs amounted to $254,387, $221,158 and $202,618 for the years ended December 31, 2007, 2006 and 2005, respectively.

Cash and Cash Equivalents

Cash is invested in money market funds, bank time deposits or in obligations of the U.S. Treasury.  The Company’s cash investments are placed with money market funds or financial institutions that have received the highest rating awarded by Standard & Poor’s and Moody’s Investors Services.  The Company considers short-term investments with a maturity at date of purchase of three months or less to be cash equivalents.

Restricted Cash

Restricted cash at December 31, 2007 and 2006 amounted to $58,416 and $11,390, respectively.  The December 31, 2007 balance includes a cash collateralized bond in the amount of $52,159 relating to a judgment against the Company relating to a contract dispute with Loral Space and Communications Holding Corporation (see Notes 6 and 17). In addition, restricted cash at December 31, 2007 included cash required to be set aside under operating agreements between Madison Square Garden and the National Hockey League, and for collateralized letters of credit entered into by Madison Square Garden.  At December 31, 2006 restricted cash included cash required to be set aside pursuant to operating agreements between Madison Square Garden, the National Hockey League, the Hartford Civic Center and Rentschler Field, and for collateralized letters of credit entered into by Madison Square Garden.

I-12

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Accounts Receivable

The Company periodically assesses the adequacy of valuation allowances for uncollectible accounts receivable by evaluating the collectibility of outstanding receivables and general factors such as length of time individual receivables are past due, historical collection experience, and the economic and competitive environment.

Investments

Investment securities and investment securities pledged as collateral are classified as trading securities and are stated at fair value with realized and unrealized holding gains and losses included in net income (loss).

The Company’s interests in less than majority-owned entities in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee are accounted for under the equity method.  Equity method investments are recorded at original cost and adjusted to recognize the Company’s proportionate share of the investees’ net income or loss, additional contributions made and distributions received and amortization of basis differences.  The Company recognizes a loss if it is determined that an other than temporary decline in the value of the investment exists.

Long-Lived and Indefinite-Lived Assets

Property, plant and equipment, including construction materials, are carried at cost, and include all direct costs and certain indirect costs associated with the construction of cable television transmission and distribution systems, and the costs of new product and subscriber installations.  Equipment under capital leases is recorded at the present value of the total minimum lease payments.  Depreciation on equipment is calculated on the straight-line basis over the estimated useful lives of the assets or, with respect to equipment under capital leases and leasehold improvements, amortized over the shorter of the lease term or the assets’ useful lives and reported in depreciation and amortization (including impairments) in the consolidated statements of operations.

Intangible assets established in connection with acquisitions consist of affiliation agreements and affiliation relationships, broadcast rights and other agreements (primarily cable television system programming agreements), season ticket holder relationships, suite holder contracts and relationships, advertising relationships, other intangibles and excess costs over fair value of net assets acquired.  These intangible assets are amortized on a straight-line basis over their respective estimated useful lives.  Excess costs over fair value of net assets acquired (“goodwill”) and the value of franchises, trademarks and certain other intangibles acquired in purchase business combinations which have indefinite useful lives are not amortized.

The Company reviews its long-lived assets (property, plant and equipment, and intangible assets subject to amortization that arose from business combinations accounted for under the purchase method) for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable.  If the sum of the expected cash flows, undiscounted and without interest, is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value.

The Company evaluates the recoverability of its goodwill and indefinite-lived intangible assets annually or more frequently whenever events or circumstances indicate that the asset may be impaired.  Goodwill

I-13

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

impairment is determined using a two-step process.  The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill.  If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any.  The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill.  If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.  The implied fair value of goodwill is determined in the same manner as the amount of goodwill which would be recognized in a business combination.

The impairment test for other intangible assets not subject to amortization consists of a comparison of the fair value of the intangible asset with its carrying value.  If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

Program Rights Obligations

Amounts payable subsequent to December 31, 2007 related to program rights obligations are as follows:

Years Ending December 31,
2008	$	110,128
2009	85,225
2010	65,887
2011	44,699
2012	37,135
Thereafter	74,239

Deferred Carriage Fees

Deferred carriage fees represent amounts principally paid or payable to cable system operators, direct broadcast operators and telecommunications companies to guarantee carriage of certain programming services and are amortized as a reduction of revenue over the period of the related guarantee (1 to 15 years).

Deferred Financing Costs

Costs incurred to obtain debt are deferred and amortized to interest expense using the straight-line method over the life of the related debt.

Income Taxes

Income taxes are provided based upon the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 109, Accounting for Income Taxes, which requires the asset and liability method of accounting for deferred income taxes and permits the recognition of deferred tax assets, subject to an ongoing assessment of realizability.  The Company provides deferred taxes for the outside basis difference of its investment in partnerships.  Interest expense related to income tax liabilities recognized in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (adopted on January 1, 2007) (“FIN 48”) is included in income tax expense, consistent with the Company’s historical policy prior to adopting FIN 48.

I-14

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Common Stock of Cablevision

Each holder of Cablevision NY Group Class A  (“Class A”) common stock has one vote per share while holders of Cablevision NY Group Class B  (“Class B”) common stock have ten votes per share.  Class B shares can be converted to Class A common stock at anytime with a conversion ratio of one Class A common share for one Class B common share.  The Class A stockholders are entitled to elect 25% of Cablevision’s Board of Directors.  Class B stockholders have the right to elect the remaining members of Cablevision’s Board of Directors.  In addition, Class B stockholders entered into an agreement which has the effect of causing the voting power of these Class B stockholders to be cast as a block.

	Shares Outstanding
	Class A Common Stock	Class B Common Stock
Balance at December 31, 2004	221,986,022	65,817,742
Conversion of CNYG Class B common stock to CNYG Class A common stock	1,657,478	(1,657,478	)
Employee and non-employee director stock transactions	1,625,214	—
Balance at December 31, 2005	225,268,714	64,160,264
Conversion of Class B common stock to Class A common stock	423,450	(423,450	)
Employee and non-employee director stock transactions	2,951,404	—
Balance at December 31, 2006	228,643,568	63,736,814
Conversion of Class B common stock to Class A common stock	471,138	(471,138	)
Employee and non-employee director stock transactions	1,892,560	—
Balance at December 31, 2007	231,007,266	63,265,676

Dividends

Cablevision may pay dividends on its capital stock only from surplus as determined under Delaware law.  If dividends are paid on the Cablevision NY Group common stock, holders of the Class A common stock and Class B common stock are entitled to receive dividends, and other distributions in cash, stock or property, equally on a per share basis, except that stock dividends with respect to Class A common stock may be paid only with shares of Class A common stock and stock dividends with respect to Class B common stock may be paid only with shares of Class B common stock.  Cablevision’s senior notes and debentures, as well as certain senior notes and debentures of CSC Holdings and its subsidiaries restrict the amount of dividends and distributions in respect of any equity interests that can be made.

Special Dividend Payment

On April 7, 2006, the Board of Directors of Cablevision declared a special cash dividend of $10.00 per share on each outstanding share of its Class A common stock and Class B common stock.  The dividend was paid on April 24, 2006 to holders of record at the close of business on April 18, 2006.  The dividend was paid from the proceeds of a distribution of approximately $3,000,000 held in cash and cash equivalents from CSC Holdings to Cablevision.  The CSC Holdings distribution was funded from the proceeds of its term B loan facility which closed on March 29, 2006 (see Note 9).  The dividend payment on all outstanding shares of Cablevision common stock and certain common stock equivalents amounted to $2,834,649.  In addition, up to $126,838 representing $10.00 for each outstanding restricted share and each stock appreciation right and stock option vested as of December 31, 2004, would be payable when, and if, the restrictions lapse on each restricted share and when, and if, such stock appreciation rights and stock options are exercised.  At December 31, 2007, approximately $37,133 of the $126,838 is still

I-15

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

outstanding.  Cablevision recorded a decrease in additional paid in capital of $1,326,227 and an increase in accumulated deficit of $1,581,709 in connection with the payment of the special dividend through December 31, 2006.

Income (Loss) Per Common Share

Basic net income per common share for Cablevision is computed by dividing net income by the weighted average number of common shares outstanding during the period.  Diluted net income per common share for Cablevision reflects the dilutive effects of stock options, restricted stock, restricted stock units and other potentially dilutive financial instruments.

A reconciliation of the denominator of the basic and diluted net income per share calculation for Cablevision for the year ended December 31, 2007 is as follows:

	(in thousands)
Basic weighted average shares outstanding	288,271
Effect of dilution:
Stock options	3,008
Restricted stock awards	3,325
Diluted weighted average shares outstanding	294,604

Anti-dilutive shares (options whose exercise price exceeds the average market price of Cablevision’s common stock during the period) totaling 417 have been excluded from diluted weighted average shares outstanding for the year ended December 31, 2007.

Basic and diluted net loss per common share are computed by dividing net loss by the weighted average number of common shares outstanding during the period.  Potential dilutive common shares are not included in the diluted computation as their effect would be anti-dilutive.

Since Cablevision generated a loss from continuing operations for the years ended December 31, 2006 and 2005, the outstanding common stock equivalents during each of these periods were excluded from the computation of net loss per share as the impact would have been anti-dilutive.

Comprehensive Income (Loss)

Comprehensive income (loss), which is reported in the accompanying consolidated statements of shareholders’ deficiency consist of net income (loss) and other gains and losses affecting shareholders’ deficiency or attributed net assets that, under U.S. generally accepted accounting principles (“GAAP”), are excluded from net income (loss).  These components of accumulated other comprehensive income (loss) consist primarily of minimum pension liability adjustments, net of taxes and foreign currency translation gains (losses), net of taxes, in 2005.

In 2007 and 2005, the fair value of plan assets of certain of the Company’s defined benefit plans and post-retirement medical plans exceeded the plans’ net accumulated benefit obligations and the Company recorded a non-cash gain to accumulated comprehensive income, net of taxes, of $3,792 and $182, respectively.  In 2006, the net accumulated benefit obligation of certain of the Company’s defined benefit plans and post-retirement medical plans exceeded the fair value of the plans’ assets. As a result, the Company recorded a non-cash charge to accumulated comprehensive loss, net of taxes, of $1,484 as required by SFAS No. 87, Employers’ Accounting for Pensions (“Statement No. 87”).  Additionally,

I-16

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

during 2007, the Company “froze” two of its defined benefit plans resulting in a non-cash related benefit to accumulated comprehensive income (loss) of $11,015 ($18,803, net of taxes of $7,788) as described in Note 14.   As of December 31, 2006, the Company adopted the recognition and disclosure provisions of SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans (“Statement No. 158”) as described in Note 14.  As a result of adopting Statement No. 158 in 2006, the Company recognized an additional loss of $6,904, net of taxes, which was also charged to accumulated other comprehensive income (loss), net of taxes.

Share-Based Compensation

On January 1, 2006, the Company adopted SFAS No. 123R, Share-Based Payment (“Statement No. 123R”), that addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for either equity instruments of the enterprise or liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments.  Statement No. 123R eliminates the ability to account for share-based compensation transactions, as Cablevision formerly did, using the intrinsic value method as prescribed by Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and generally requires that such transactions be accounted for using a fair-value-based method and recognize such fair value of share-based payments as expenses in the consolidated statement of operations.

Cablevision adopted Statement No. 123R using the modified prospective method as of January 1, 2006. Cablevision’s consolidated financial statements as of and for the year ended December 31, 2006 reflect the impact of adopting Statement No. 123R.  In accordance with the modified prospective method, Cablevision’s consolidated financial statements for prior periods have not been restated to reflect, and do not include, the impact of Statement No. 123R.

Share-based compensation expense recognized during the period is based on the fair value of the portion of share-based payment awards that are ultimately expected to vest.  Share-based compensation expense recognized in Cablevision’s consolidated statements of operations during the years ended December 31, 2007 and 2006 included compensation expense for share-based payment awards granted prior to, but not yet vested as of December 31, 2005, that were adjusted for estimated forfeitures. As of December 31, 2005 share-based compensation expense was based on the grant date fair value estimated in accordance with the pro forma provisions of SFAS No. 123, Accounting for Stock-Based Compensation (“Statement No. 123”).  For these awards, the Company continues to recognize compensation expense using the accelerated attribution method under FASB Interpretation No. 28, Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans.  For options and performance based option awards granted after January 1, 2006, Cablevision recognizes compensation expense based on the estimated grant date fair value using the Black-Scholes valuation model using a straight-line amortization method.

For restricted shares and restricted stock units granted after January 1, 2006, Cablevision recognizes compensation expense using a straight-line amortization method, based on the grant date price of Class A common stock over the vesting period, except for restricted stock units granted to non-employee directors which vest 100% and are expensed at the date of grant.

For stock appreciation rights granted after January 1, 2006, Cablevision recognizes compensation expense using a straight-line amortization method based on the estimated fair value at each reporting period using the Black-Scholes valuation model.

I-17

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

As share-based compensation expense recognized in Cablevision’s statements of operations for the years ended December 31, 2007 and 2006 are based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.  Statement No. 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In the pro forma information required under Statement No. 123 for the periods prior to January 1, 2006, Cablevision accounted for forfeitures as they occurred.

Cash Flows

During 2007, 2006 and 2005, the Company’s non-cash investing and financing activities and other supplemental data were as follows:

	Years Ended December 31,
	2007		2006		2005
Non-Cash Investing and Financing Activities:
Continuing Operations
Acquisition of the 40% minority interest in certain Regional Programming Partners entities in exchange for the Company’s interests in Fox Sports Net Ohio, Fox Sports Net Florida, National Sports Partners and National Advertising Partners	$	—	$	—	$	604,080
Notes payable, including interest, contributed by News Corporation to Regional Programming Partners for no consideration	—		—		152,907
Capital lease obligations	11,234		11,751		180
Asset retirement obligations	29		136		10,870
Leasehold improvements paid by landlord	7,892		1,960		—
Redemption of collateralized indebtedness with restricted cash and related prepaid forward contracts	—		—		116,544
Redemption of collateralized indebtedness with related prepaid forward contracts and stock	102,469		290,943		247,647
Redemption of collateralized indebtedness with related prepaid forward contracts	—		31,385		43,604
Rights payments offset with repayment of a note receivable	—		—		40,000
Dividends payable on equity classified share-based awards	—		67,156		—
Discontinued Operations
Make whole payment obligation, including interest, to Loral	—		50,898		—
Supplemental Data:
Cash interest paid - continuing operations	943,404		831,026		698,215
Cash interest paid - discontinued operations	—		8		59
Income taxes paid (refunded), net - continuing operations	28,686		11,184		(4,005		)
Income taxes paid (refunded), net - discontinued operations	—		—		18

I-18

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Derivative Financial Instruments

The Company accounts for derivative financial instruments in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended (“Statement No. 133”).  Statement No. 133 requires that an entity recognize all derivatives, as defined, as either assets or liabilities measured at fair value.  The Company uses derivative instruments to manage its exposure to market risks from changes in certain equity prices and interest rates and does not hold or issue derivative instruments for speculative or trading purposes.  These derivative instruments are not designated as hedges, and changes in the fair values of these derivatives are recognized in earnings as gains (losses) on derivative contracts.

Concentrations of Credit Risk

Financial instruments that may potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents and trade receivables.  The Company did not have a single customer that represented 10% or more of its consolidated net revenues for the years ended December 31, 2007, 2006 and 2005, respectively, or 10% or more of its consolidated net trade receivables at December 31, 2007 and 2006, respectively.

Use of Estimates in Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

Recently Adopted Accounting Pronouncements

EITF No. 06-3

In June 2006, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 06-3, How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross Versus Net Presentation) (“EITF No. 06-3”), which addressed the income statement disclosures for taxes assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer, and may include, but are not limited to, sales, use, value added, and some excise taxes.  The presentation of taxes on either a gross (included in revenues and costs) or a net (excluded from revenues) basis is an accounting policy decision that should be disclosed pursuant to Accounting Principles Board Opinion No. 22.  In addition, for any such taxes that are reported on a gross basis, a company should disclose the amounts of those taxes in interim and annual financial statements for each period for which an income statement is presented if those amounts are significant and can be done on an aggregate basis.  EITF No. 06-3 was effective January 1, 2007 for the Company.  See “Gross Versus Net Revenue Recognition” discussion above.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Accounting for Registration Payment Arrangements

In December 2006, the FASB issued Staff Position No. EITF 00-19-2, Accounting for Registration Payment Arrangements (“FSP 00-19-2”).  FSP 00-19-2 provides guidance related to the accounting for registration payment arrangements and specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate arrangement or included as a provision of a financial instrument or arrangement, should be separately recognized and measured in accordance with SFAS No. 5, Accounting for Contingencies (“Statement No. 5”).  FSP 00-19-2 required that if the transfer of consideration under a registration payment arrangement is probable and can be reasonably estimated at inception, the contingent liability under such arrangement shall be included in the allocation of proceeds from the related financing transaction using the measurement guidance in Statement No. 5.  FSP 00-19-2 applied immediately to any registration payment arrangement entered into subsequent to the issuance of FSP 00-19-2.  For such arrangements entered into prior to the issuance of FSP 00-19-2, the guidance was effective for the Company as of January 1, 2007.  As a condition to the initial sale of CSC Holdings’ 6-3/4% Senior Notes due 2012, the Company entered into a registration rights agreement with the initial purchasers under which the Company agreed that it would file an exchange offer registration statement under the Securities Act with the Securities and Exchange Commission (“SEC”) and use its commercially reasonable best efforts to cause the exchange offer registration statement to be declared effective under the Securities Act.  If the exchange offer was not completed by May 11, 2005, the agreement provided for an increase of 1/4% per annum in the interest rate for the first 90 days after May 11, 2005 and an additional 1/4% per annum, up to a maximum of 1/2% per annum, at the beginning of each subsequent 90 day period that the exchange offer was not completed. Upon the completion of the exchange, the interest rate would revert to 6-3/4%.  In March 2007, the Company offered to exchange these notes for substantially identical publicly registered 6-3/4% Series B Senior Notes due 2012.  This exchange was completed on April 26, 2007.  In connection with the adoption of FSP 00-19-2 as of January 1, 2007, the Company recorded a charge of $443, net of taxes, as a cumulative effect of a change in accounting principle representing the estimated fair value of the 1/2% penalty interest expected to be incurred under the registration rights agreement subsequent to January 1, 2007.

Accounting for Uncertainty in Income Taxes

On January 1, 2007, the Company adopted FIN 48, Accounting for Uncertainty in Income Taxes - an interpretation of SFAS No. 109.  This Interpretation clarified the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109.  FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of an income tax position taken or expected to be taken in an income tax return.  The change in the net assets and liabilities recognized as a result of adopting the provisions of FIN 48 has been recorded as a charge of $442 to the opening balance of accumulated deficit.

Defined Benefit Pension and Other Postretirement Plans

In September 2006, the FASB issued Statement No. 158 which required companies to recognize in their statement of financial position an asset for a postretirement benefit plan’s overfunded status or a liability for a plan’s underfunded status and to measure a plan’s assets and its obligations that determine its funded status as of the end of the company’s fiscal year.  Additionally, Statement No. 158 required companies to recognize changes in the funded status of a defined benefit postretirement plan in the year in which the changes occur and to report those changes in comprehensive income (loss).  The provisions of Statement No. 158 have two separate effective dates.  The provision of Statement No. 158 that required a company

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

(with a calendar year-end) to recognize the funded status of its pension plan, and the disclosure requirements, was effective as of December 31, 2006, and the provision of Statement No. 158 that required a company (with a calendar year-end) to measure plan assets and benefit obligations as of the date of its fiscal year-end balance sheet is effective as of December 31, 2008.  See Note 14 for a discussion regarding the adoption of the provisions of Statement No. 158 effective December 31, 2006.  As the Company has historically measured it plan assets and benefit obligations as of December 31, the provisions of Statement No. 158 effective as of December 31, 2008 will have no impact on the Company’s financial position or results of operations upon adoption.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2007, the SEC published Staff Accounting Bulletin (“SAB”) No. 110, which amends SAB No. 107 to allow for the continued use, under certain circumstances, of the “simplified” method in developing an estimate of the expected term of so-called “plain vanilla” stock options accounted for under Statement No. 123R beyond December 31, 2007.  Companies can use the simplified method if they conclude that their stock option exercise experience does not provide a reasonable basis upon which to estimate expected term. SAB No. 110 will not have a significant impact on the Company’s future financial position or results of operations.  Beginning in 2008, for any stock option awards granted, the Company’s computation of expected life will be based on its historical stock option exercise experience as outlined in Statement No. 123R.

In December 2007, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 141 (revised 2007), Business Combinations (“Statement No. 141R”).  Statement No. 141R requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date.  Statement No. 141R is effective for the Company for business combinations for which the acquisition date is on or after January 1, 2009.  The provisions of Statement No. 141R will not impact the Company’s financial statements for prior periods.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (“Statement No. 160”).  Statement No. 160 clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.  Statement No. 160 is effective as of January 1, 2009 for the Company.  The Company has not yet determined the impact that the adoption of Statement No. 160 will have on its financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115 (“Statement No. 159”).  Statement No. 159 permits entities to elect, at specified election dates, to measure eligible financial instruments and certain other items at fair value.  An entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date, and recognize upfront costs and fees related to those items in earnings as incurred.  Statement No. 159 is effective as of January 1, 2008 for the Company.  The Company has not yet determined the impact that the adoption of Statement No. 159 will have on its financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“Statement No. 157”).  Statement No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements.  Under Statement No. 157, fair value refers to the price that would be received to sell an asset or paid to transfer a liability

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

in an orderly transaction between market participants in the market in which the reporting entity transacts.  It also clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability.  This Statement applies under other accounting pronouncements that require or permit fair value measurements.  Accordingly, this Statement does not require any new fair value measurements, however, for some entities, the application of Statement No. 157 could change current practices.  Statement No. 157 will be effective for the Company on January 1, 2008.  The FASB has deferred the adoption of Statement No. 157 for nonfinancial assets and nonfinancial liabilities to be effective for the Company on January 1, 2009.  The Company has not yet determined the impact that the adoption of Statement No. 157 will have on its financial statements.

In November 2007, the EITF reached a consensus on Issue No. 07-1 Accounting for Collaboration Arrangements Related to the Development and Commercialization of Intellectual Property (“EITF 07-1”).  EITF 07-1 provides guidance on how the parties to a collaborative agreement should account for costs incurred and revenue generated on sales to third parties, how sharing payments pursuant to a collaboration agreement should be presented in the income statement and certain related disclosure questions. EITF No. 07-1 will be effective for the Company as of January 1, 2009.  An entity will report the effects of applying EITF No. 07-1 as a change in accounting principle through retrospective application to all prior periods presented for all arrangements existing as of the effective date.  The Company has not yet determined the impact that the adoption of EITF No. 07-1 will have on its financial statements.

NOTE 2.                STAFF ACCOUNTING BULLETIN NO. 108

On September 13, 2006, the SEC issued SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.  SAB No. 108 was issued in order to eliminate the diversity in practice surrounding how public companies quantify financial statement misstatements.  SAB No. 108 requires that registrants quantify errors using both a balance sheet (“iron curtain”) and income statement (“rollover”) approach (“dual approach”) and evaluate whether either approach results in a misstated amount that, when all relevant quantitative and qualitative factors are considered, is material.  SAB No. 108 was effective for the Company’s year ended December 31, 2006.  In accordance with the guidance set forth in SAB No. 108, the Company corrected certain identified historical uncorrected balance sheet differences aggregating $121,668, net of taxes, which arose prior to January 1, 2006, as a cumulative effect adjustment to opening accumulated deficit as of January 1, 2006 in accordance with the “dual approach” set forth in SAB No. 108.  Historically, the Company evaluated uncorrected differences utilizing the “rollover” approach.  The Company believes its prior period assessments of uncorrected differences utilizing the “rollover” approach and the conclusions reached regarding its quantitative and qualitative assessments of materiality of such uncorrected differences, individually and in the aggregate, were appropriate.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The following table summarizes the impact of applying the guidance set forth in SAB No. 108 on the Company’s 2006 opening accumulated deficit balance:

	Additional Income (Expense)
	Period in which the Uncorrected Differences Originated
	Cumulative Uncorrected Differences as of December 31,			Year Ended December 31,			Adjustment Recorded as of January 1, 2006 to Accumulated
	2004			2005			Deficit
Excess accrual balances and other items, net of taxes (a)	$	104,396		$	(1,952	)	$	102,444
Tax adjustment relating to disability insurance (b)	361			9,734			10,095
Rent expense, net of taxes (c)	(7,670		)	(766		)	(8,436		)
Revenue related to promotional rates, net of taxes (d)	5,636			4,845			10,481
Video on demand revenue, net of related expenses and taxes (e)	836			54			890
Programmer audit accruals, net of taxes (f)	1,564			373			1,937
Disability and life insurance accruals, net of taxes (g)	1,953			254			2,207
Goodwill amortization, net of taxes (h)	2,076			(26		)	2,050
Impact on accumulated deficit	$	109,152		$	12,516		$	121,668

(a)In periods prior to 2000, the Company had determined that certain accounts payable and accrued liability account balances (including accruals for programming costs, non-income based taxes, worker’s compensation, franchise fees, health and dental, and pensions, among others) which had accumulated over a number of years to an aggregate $109,433, net of taxes, as of December 31, 2004, were not supportable as liabilities that the Company would be required to satisfy.  These amounts were substantially “frozen” as of December 31, 1999.  Historically, the Company had concluded that such prior year uncorrected differences were quantitatively and qualitatively immaterial to the Company’s prior year financial statements using the rollover method.  This adjustment also includes $2,190, net of taxes, as of December 31, 2004, representing an excess reserve for unreturned analog converters that was not adjusted in prior periods to reflect actual losses and $(3,933), net of taxes, as of December 31, 2004, relating to unreconciled cash receipts.  Additionally, this adjustment includes goodwill aggregating $3,292, net of taxes, as of December 31, 2004, and $1,994, net of taxes, for the year ended December 31, 2005, relating primarily to businesses that were sold where such goodwill was not included in their cost basis at the time of their sale for purposes of computing the associated gain on sale.

(b)In calculating the Company’s tax provision for periods through December 31, 2005, the Company incorrectly treated tax-exempt disability insurance proceeds as taxable and non-deductible disability insurance premiums as tax deductible with regard to disability insurance arrangements associated with players of certain of the Company’s professional sports teams.

(c)The Company historically recorded rent expense related to certain of its operating leases based on the contractual terms of the respective lease agreements instead of on a straight-line basis over the lease term as required by U.S. generally accepted accounting principles.  This adjustment represents the impact of correcting the recognition of rent expense to the straight-line basis.

(d)The Company determined that it did not recognize in the appropriate period a portion of revenue earned related to certain cable television customers with promotional rates. This revenue was recognized when the promotional rates expired, generally occurring one year after the promotion commenced.  This adjustment represents the revenue that should have been recognized in the respective periods when the services were provided, net of related tax effects.

(e)Prior to 2006, the Company recorded certain revenue from video on demand services as the services were billed to the customer instead of when the services were provided.  Such revenue was historically recorded in the subsequent month’s billing cycle.  This adjustment reflects the recognition of revenue, net of related expenses and taxes, which should have been recorded in the respective periods when the services were provided.

(f)The Company’s contracts with programming content providers typically allow for periodic audits of the programming payments made by the Company to these providers.  The Company records an accrual for a loss contingency related to the associated potential underpayment of programming fees if such amounts are deemed probable and estimable.  Based on the Company’s review of this accrual balance, it determined that the accrual was overstated in previous years based upon the occurrence of historical events.  This adjustment reflects the reduction of the accrual balance, net of taxes, in the appropriate periods.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

(g)The Company determined that its accrual for disability and life insurance premiums for one of the Company’s segments was based on an estimate that was not adjusted on a quarterly basis to reflect actual premiums paid.  This adjustment reflects the reduction of the accrual, net of taxes, for the respective periods.

(h)In 2002, the Company inappropriately amortized goodwill of $2,076, net of taxes.  This adjustment reflects the reversal of the amortization recognized in 2002.  U.S. generally accepted accounting principles required the Company to cease amortization of goodwill effective January 1, 2002.

The following table summarizes the impact of applying the guidance in SAB No. 108 related to the adjustments described above on the Company’s 2006 opening accumulated deficit by segment:

	Additional Income (Expense)
	Cumulative Uncorrected Differences as of January 1, 2006
	Tele-communications			Rainbow			Madison Square Garden		Other			Total
Excess accrual balances and other items	$	70,045		$	22,671		$	4,958	$	29,737		$	127,411
Rent expense	(10,040		)	(1,380		)	—		(2,920		)	(14,340		)
Revenue related to promotional rates	17,768			—			—		—			17,768
Video on demand revenue, net of related expenses	1,509			—			—		—			1,509
Programmer audit accruals	3,284			—			—		—			3,284
Disability and life insurance accruals	—			3,683			136		—			3,819
Goodwill amortization	—			—			3,474		—			3,474
	$	82,566		$	24,974		$	8,568	$	26,817		142,925
Income tax expense*												(31,352		)
Tax adjustment relating to disability insurance												10,095
Impact on accumulated deficit												$	121,668

*The income tax expense impact presented above is less than the amount that would be derived by applying the statutory rate to the aggregate pre-tax adjustment due to an income tax benefit of $28,553 resulting from a decrease in the required amount of the valuation allowance at the beginning of 2002 due to the decrease in deferred tax assets recognized in connection with the adjustments related to the excess accrual balances.  The valuation allowance was eliminated later in 2002 in connection with the application of purchase accounting associated with an acquisition.

NOTE 3.                TRANSACTIONS

2007 Transactions

Sale of Fox Sports Net Bay Area and Fox Sports Net New England

In June 2007, Rainbow Media Holdings completed the sale to Comcast Corporation (“Comcast”) of (i) its 60% interest in Fox Sports Net Bay Area, for a purchase price of $366,750 (the “Bay Area Sale”) and (ii) its 50% interest in Fox Sports Net New England, for a purchase price of $203,250 (the “New England Sale”), for an aggregate purchase price of $570,000, plus certain additional consideration to Rainbow Media Holdings, and customary working capital adjustments.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The Company recorded a pretax gain of $183,286 ($107,369, net of taxes) in connection with the New England Sale and a pretax gain of $317,995 ($186,281, net of taxes), relating to the Bay Area Sale.  The net operating results of Fox Sports Net Bay Area have been classified as discontinued operations for all periods presented.  The net operating results of Fox Sports Net Bay Area were previously reported in the Rainbow segment.

Contemporaneously with the execution of the agreement relating to the Bay Area Sale and the New England Sale, subsidiaries of the Company and Comcast entered into or extended affiliation agreements relating to (i) the carriage of the Versus and Golf Channel programming services on the Company’s cable television systems and (ii) the carriage of AMC, Fuse, IFC, WE tv, Lifeskool, sportskool, Madison Square Garden Network and Fox Sports Net New York on Comcast’s cable television systems.

2005 Transactions

Regional Programming Partners Restructuring

In April 2005, the Company and News Corporation restructured their ownership of Regional Programming Partners.  Prior to the April 2005 transaction, Regional Programming Partners was owned 60% by the Company and 40% by News Corporation.  As a result of the restructuring, the Company indirectly owns 100% of Madison Square Garden, L.P., 100% of Fox Sports Net Chicago (which was shut down in June 2006) and through June 2007, 50% of Fox Sports Net New England and therefore, no portion of the results of operations of these businesses is allocated to minority interests after the acquisition.  In connection with the restructuring, these businesses extended the terms of their long-term affiliation agreements with National Sports Partners and their advertising representation agreements with National Advertising Partners.

In connection with its December 2003 purchase of the interests that it did not own in Fox Sports Net Chicago and Fox Sports Net Bay Area, subsidiaries of Regional Programming Partners issued promissory notes in the aggregate amount of $150,000 to News Corporation.  As part of the restructuring, those promissory notes and accrued interest of $2,907 were contributed by News Corporation to Regional Programming Partners for no additional consideration and were cancelled without any payment being made on them.

National Sports Partners and National Advertising Partners were owned 50% by the Company and 50% by News Corporation.  As a result of the restructuring, the Company no longer owns any interest in National Sports Partners, National Advertising Partners, Fox Sports Net Ohio or Fox Sports Net Florida.

The Company and News Corporation continued to own 60% and 40%, respectively, of Fox Sports Net Bay Area through a separate partnership.  The Company continued to manage that network.  In connection with the restructuring, Fox Sports Net Bay Area extended the terms of its long-term affiliation agreement with National Sports Partners and its advertising representation agreement with National Advertising Partners.  See “2007 Transactions” above for a discussion regarding the sale of Fox Sports Net Bay Area.

The Company accounted for this exchange in accordance with APB Opinion No. 29, Accounting for Nonmonetary Transactions and, accordingly, the Company recorded the transaction with News Corporation at fair value at the date of the restructuring.  The Company recorded a gain in discontinued operations of $266,810, net of taxes, in connection with the transfer of the Company’s interests in Fox Sports Net Ohio and Fox Sports Net Florida.  The Company recorded a gain in continuing operations of

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

$66,558 in connection with the transfer of National Sports Partners and National Advertising Partners.  In addition, the excess of the net book value of the assets acquired over the purchase price of $94,320 was allocated to specific assets and liabilities based on fair values as follows:

	Useful Life
Land and development rights	Indefinite	$	37,573
Property and equipment, net	2 to 27.5 years	12,396
Amortizable intangible assets:
Affiliation agreements	4 years	17,951
Affiliation relationships	24 years	85,824
Advertiser relationships	7 years	6,004
Season ticket holder relationships	12 to 15 years	73,124
Suite holder contracts and relationships	3 to 11 years	21,167
Indefinite-lived intangible assets:
Trademarks		53,880
Sports franchises		96,215
Excess costs over fair value of net assets acquired		(460,853		)
Other assets and liabilities, net		9,399
Unfavorable contracts		(47,000		)
Net step-down to historical carrying values		$	(94,320	)

The Regional Programming Partners restructuring transaction was substantially tax deferred.

The unaudited pro forma revenue, loss from continuing operations, net income, loss per share from continuing operations and net income per share of the Company, as if the Company’s acquisition of the interests in entities exchanged with News Corporation had occurred on January 1, 2005, are as follows:

	Year Ended December 31, 2005
Revenues	$	5,082,045
Loss from continuing operations	$	(146,809	)
Net income	$	79,465
Basic and diluted loss per share from continuing operations	$	(0.52	)
Basic and diluted net income per share	$	0.28

Agreements with EchoStar

In 2005, subsidiaries of the Company entered into agreements with EchoStar Communications Corporation (“EchoStar”) by which EchoStar acquired a 20% interest in VOOM HD Holdings LLC (“VOOM HD”) and agreed to distribute VOOM on its DISH Network for a 15-year term.  The affiliation agreement with EchoStar for such distribution provides that if VOOM HD fails to spend $100,000 per year (subject to reduction to the extent that the number of offered channels is reduced to fewer than 21), up to a maximum of $500,000 in the aggregate, on VOOM, EchoStar may seek to terminate the agreement under certain circumstances.  On January 30, 2008, EchoStar purported to terminate the affiliation agreement, effective February 1, 2008, based on its assertion that VOOM HD had failed to comply with this spending provision in 2006.  On January 31, 2008, VOOM HD sought and obtained a temporary restraining order from New York Supreme Court for New York County prohibiting EchoStar from terminating the affiliation agreement.  In conjunction with its request for a temporary restraining

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

order, VOOM HD filed a lawsuit against EchoStar asserting that EchoStar did not have the right to terminate the affiliation agreement.  That lawsuit is pending, as is the court’s decision on VOOM HD’s motion for a preliminary injunction.  Separately, on February 1, 2008, EchoStar began to distribute VOOM in a manner that the Company believes violates EchoStar’s obligations under the affiliation agreement.  On February 4, 2008, VOOM HD notified EchoStar of its position that this new distribution constitutes a material breach of the affiliation agreement and reserved all its rights and remedies.

The agreements resulted in a non-monetary exchange whereby the Company provided EchoStar a 20% interest in VOOM HD Holdings in exchange for deferred carriage fees.  Accordingly, in 2005, the Company recorded deferred carriage fees for the fair value of the 20% interest in VOOM HD Holdings LLC surrendered of $18,101, which resulted in a gain on the issuance of member’s interest by a subsidiary of $10,397 (net of transaction costs of $295 and taxes of $7,409).  Since VOOM HD Holdings LLC is a start-up company, the gain was recorded as an increase to paid-in capital.

NOTE 4.                RESTRUCTURING CHARGES

In 2007, the Company recorded net restructuring charges aggregating $4,733 which included $2,902 of severance and other costs related to the elimination of approximately 77 positions, at certain programming businesses within the Rainbow segment and $221 of severance and other costs related to the elimination of two positions within the Madison Square Garden segment (these costs are expected to be fully paid in 2008), and $479, $277 and $854 relating to changes to the Company’s previous estimates recorded in connection with the Company’s 2001, 2002 and 2006 facility realignment plans, respectively.

In 2006, the Company recorded net restructuring credits aggregating $3,484 which consisted of $4,521 and $23 relating to changes to the Company’s previous estimates recorded in connection with the Company’s 2001 facility realignment plan and 2005 employee severance plan, respectively.  These credits were partially offset by charges of $143 related to the elimination of approximately ten positions at a programming business within the Madison Square Garden segment (which was fully paid as of December 31, 2006), charges associated with facility realignment and other related costs of $392 and charges of $525 relating to changes to the Company’s previous estimates recorded in connection with the Company’s 2002 facility realignment plan.

In 2005, the Company recorded net restructuring credits of $537 which consisted of $1,480 and $578 relating to changes to the Company’s previous estimates recorded in connection with the Company’s 2001 and 2002 facility realignment plans.  These credits were partially offset by a charge of $1,024 associated with the elimination of certain positions in various business units of the Company and restructuring charges of $234 and $263 relating to changes to the Company’s previous estimates recorded in connection with the Company’s 2003 and 2004 severance plans, respectively.

At December 31, 2007, restructuring liabilities of $2,344 and $151 were classified as a current liability and long-term liability, respectively, in the consolidated balance sheet.

NOTE 5.                IMPAIRMENT CHARGES

As part of its periodic review of expected programming usefulness, the Company recorded an impairment loss of $3,160, $1,640 and $663 in 2007, 2006 and 2005, respectively.  Approximately $1,123 and $663 of the impairment losses in 2007 and 2005, respectively, represent primarily the write-off of the carrying value of certain film and programming contracts of the Company’s Rainbow segment and are included in technical and operating expense.  Approximately $2,037 and $1,640 of the impairment losses in 2007 and

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

2006, respectively, represent primarily the write-off of the carrying value of certain film and programming contracts of the Company’s Madison Square Garden segment and are also included in technical and operating expense.

In addition, the Company recorded impairment charges of $1,804, $2,104 and $7,697 in 2007, 2006 and 2005, respectively, included in depreciation and amortization.  The charges in 2007 and 2005 related primarily to certain other long-lived assets and goodwill related to certain businesses in the Company’s theater operations and Rainbow segment, and the charges in 2006 related to the Company’s theater operations and PVI Virtual Media business.

In June 2006, the operations of the Fox Sports Net Chicago programming business were shut down.  In connection with the shut down, the Company recorded a goodwill impairment charge of $5,121 which was classified in discontinued operations.

NOTE 6.DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE

In June 2007, the Company completed the sale of its 60% interest in Fox Sports Net Bay Area, to Comcast (see Note 3).  In addition, in June 2006 and April 2005, respectively, the operations of the Fox Sports Net Chicago programming business and the Rainbow DBS satellite distribution business were shut down.  In connection with the Regional Programming Partners Restructuring in April 2005, the Company no longer owns any interest in Fox Sports Net Ohio and Fox Sports Net Florida.  As a result, the operating results of these businesses, net of taxes, have been classified in the consolidated statements of operations as discontinued operations for all periods presented.  Operating results of discontinued operations for the years ended December 31, 2007, 2006 and 2005 are summarized below:

	Year Ended December 31, 2007
	Fox Sports Net Bay Area			Rainbow DBS Distribution Business			Total
Revenues, net	$	53,892		$	—		$	53,892
Income before income taxes, including gain on sale of Fox Sports Net Bay Area of $317,995	$	326,166		$	7,114		$	333,280
Income tax expense	(135,098		)	(2,947		)	(138,045		)
Net income, including gain on sale of Fox Sports Net Bay Area of $186,281, net of taxes	$	191,068		$	4,167		$	195,235

I-28

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

	Year Ended December 31, 2006
	Fox Sports Net Bay Area			Fox Sports Net Chicago (a)			Rainbow DBS Distribution Business (b)			Other			Total
Revenues, net	$	98,969		$	79,204		$	—		$	—		$	178,173
Income (loss) before income taxes	$	15,227		$	72,985		$	(56,741	)	$	(62	)	$	31,409
Income tax benefit (expense)	(6,245		)	(32,030		)	23,269			25			(14,981		)
Net income (loss)	$	8,982		$	40,955		$	(33,472	)	$	(37	)	$	16,428

(a)Revenues, net includes $77,996 representing the collection in June 2006 of affiliate revenue from a cable affiliate, including $71,396 relating to periods prior to 2006, that had not been previously recognized due to a contractual dispute.  The underlying contract was terminated in June 2006 and no further payments will be received under this contract.

(b)Income (loss) before income taxes includes the recognition of the Make Whole Payment obligation due to Loral Space and Communications Holding Corporation (see discussion below).

	Year Ended December 31, 2005
	Fox Sports Net Bay Area			Fox Sports Net Chicago			Fox Sports Net Ohio and Fox Sports Net Florida			Rainbow DBS Satellite Distribution Business			Other			Total
Revenues, net	$	90,433		$	3,433		$	40,018		$	8,776		$	—		$	142,660
Income (loss) before income taxes	$	15,949		$	2,743		$	466,460		$	(102,983	)	$	4,405		$	386,574
Income tax benefit (expense)	(6,528		)	(1,123		)	(192,998		)	42,151			(1,802		)	(160,300		)
Net income (loss) including gain on restructuring of Regional Programming Partners of $266,810, and other gain of $2,618, net of taxes	$	9,421		$	1,620		$	273,462		$	(60,832	)	$	2,603		$	226,274

For the year ended December 31, 2005, the Company recorded a gain, net of taxes, of $2,521, primarily representing the transfer of the Company’s ownership interest in a subsidiary of PVI to PVI’s minority partner for the minority partner’s remaining ownership interest in PVI.  In addition, the Company recorded a gain, net of taxes, of $97 for the year ended December 31, 2005 that related primarily to a reduction of health and welfare expenses in connection with the transfer of the retail electronics business.

Rainbow DBS

In April 2005, the operations of the Rainbow DBS satellite distribution business were shut down.  In connection with the shut down, certain assets of the business, including the Rainbow 1 direct broadcast satellite and certain other related assets were sold to a subsidiary of EchoStar for $200,000 in cash.  This transaction closed in November 2005.  In addition, Rainbow DBS had FCC licenses to construct, launch

I-29

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

and operate five fixed service Ka-band satellites and had entered into a contract in November 2004 for the construction by Lockheed Martin of these five Ka-band satellites at a cost of $740,000.  Rainbow DBS had the right to terminate the contract at any time, subject to certain maximum termination liabilities.  Rainbow DBS exercised this right on November 21, 2005, and the amount paid to Lockheed Martin in excess of the termination liability was repaid to the Company in March 2006.

In 2006, the Company accrued $50,898, including interest, reflected as an expense in discontinued operations, as a result of the judgment entered against Cablevision and Rainbow DBS in the Loral contract dispute (see Note 17).  The Company has posted a cash collateralized bond in the amount of $52,159, which is reflected as restricted cash in the Company’s consolidated balance sheet at December 31, 2007.

In the first quarter of 2006, the Company recorded an impairment loss of $7,179 relating to certain assets of the Rainbow DBS satellite distribution business which was classified in discontinued operations.  In the second quarter of 2006, these assets were sold.

In March 2007, the Federal Communications Commission (“FCC”) waived the bond requirement previously submitted by Rainbow DBS Company LLC with respect to five Ka-band licenses.  These bonds were originally cash collateralized by the Company.  In connection with the shut down of the Rainbow DBS satellite distribution business in 2005, the Company recorded a loss related to the outstanding bonds since the Company believed it was not probable that Rainbow DBS would meet the required FCC milestones.  As a result of the waiver from the FCC, the Company recorded a gain of $6,638, net of taxes, in the quarter ended March 31, 2007.  The Company received the cash collateral of $11,250 in the quarter ended June 30, 2007.

Fox Sports Net Chicago

In June 2006, the operations of the Fox Sports Net Chicago programming business were shut down.  In connection with the shut down, the Company recorded a goodwill impairment charge of $5,121 which was classified in discontinued operations.

Fox Sports Net Bay Area

As a result of the sale of the Company’s interest in Fox Sports Net Bay Area to Comcast in June 2007 (see Note 3), the assets and liabilities attributable to Fox Sports Net Bay Area have been classified in the consolidated balance sheet as of December 31, 2006 as assets and liabilities held for sale and consist of the following:

Cash and cash equivalents	$	24,461
Accounts receivable, prepaid and other current assets	24,728
Property and equipment, net and other long-term assets	15,950
Intangible assets, net	63,162
Total assets held for sale	$	128,301
Accounts payable and accrued expenses	$	5,059
Other current liabilities	965
Other long-term liabilities	19
Total liabilities held for sale	$	6,043

I-30

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

NOTE 7.                PROPERTY, PLANT AND EQUIPMENT

Costs incurred in the construction of the Company’s cable television system, including line extensions to, and upgrade of, the Company’s hybrid fiber-coaxial infrastructure and headend facilities are capitalized.  These costs consist of materials, subcontractor labor, direct consulting fees, and internal labor and related costs associated with the construction activities.  The internal costs that are capitalized consist of salaries and benefits of the Company’s employees and the portion of facility costs, including rent, taxes, insurance and utilities, that supports the construction activities.  These costs are depreciated over the estimated life of the plant (12-25 years), and headend facilities (4-15 years).  Costs of operating the plant and the technical facilities, including repairs and maintenance, are expensed as incurred.

Costs incurred to connect businesses or residences that have not been previously connected to the infrastructure or digital platform are also capitalized.  These costs include materials, subcontractor labor, internal labor to connect, provision and provide on-site and remote technical assistance and other related costs associated with the connection activities.  In addition, on-site and remote technical assistance during the provisioning process for new digital product offerings are capitalized.  The departmental activities supporting the connection process are tracked through specific metrics, and the portion of departmental costs that is capitalized is determined through a time weighted activity allocation of costs incurred based on time studies used to estimate the average time spent on each activity.  New connections are amortized over 5 years or 12 years for residence wiring and feeder cable to the home, respectively.  The portion of departmental costs related to reconnection, programming service up- and down- grade, repair and maintenance, and disconnection activities are expensed as incurred.

Property, plant and equipment (including equipment under capital leases) consist of the following assets, which are depreciated or amortized on a straight-line basis over the estimated useful lives shown below:

	December 31,				Estimated
	2007		2006		Useful Lives
Customer equipment	$	1,671,235	$	1,565,089	3 to 5 years
Headends and related equipment	652,933		610,563		4 to 15 years
Central office equipment	514,636		456,670		5 to 10 years
Infrastructure	4,755,756		4,599,159		3 to 25 years
Program, service and data processing equipment	1,289,623		1,252,570		2 to 13 years
Microwave equipment	38,081		35,667		5 to 8 years
Construction in progress (including materials and supplies)	65,353		68,136		—
Furniture and fixtures	169,413		171,062		2 to 12 years
Transportation equipment	240,106		228,414		3 to 15 years
Buildings and building improvements	398,766		368,921		2 to 40 years
Leasehold improvements	547,968		531,300		Term of lease
Land	85,032		79,989		—
	10,428,902		9,967,540
Less accumulated depreciation and amortization	6,956,699		6,254,510
	$	3,472,203	$	3,713,030

Depreciation expense on property, plant and equipment (including capital leases) for the years ended December 31, 2007, 2006 and 2005 amounted to $1,035,050, $1,034,127 and $980,608 (including impairments of $1,424, $1,205 and $2,734 in 2007, 2006 and 2005), respectively.

I-31

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

At December 31, 2007 and 2006, the gross amount of equipment and related accumulated amortization recorded under capital leases were as follows:

	December 31,
	2007		2006
Equipment	$	125,931	$	122,400
Less accumulated amortization	77,549		75,817
	$	48,382	$	46,583

NOTE 8.                INTANGIBLE ASSETS

The following table summarizes information relating to the Company’s acquired intangible assets at December 31, 2007 and 2006:

	December 31,				Estimated
	2007		2006		Useful Lives
Gross carrying amount of amortizable intangible assets
Affiliation relationships and affiliation agreements	$	742,416	$	742,416	4 to 24 years
Broadcast rights and other agreements	45,590		45,590		10 years
Season ticket holder relationships	75,005		75,005		10 to 15 years
Suite holder contracts and relationships	21,167		21,167		3 to 11 years
Advertiser relationships	103,524		103,524		7 to 10 years
Other intangibles	57,590		40,819		1 to 20 years
	1,045,292		1,028,521
Accumulated amortization
Affiliation relationships and affiliation agreements	409,870		353,518
Broadcast rights and other agreements	38,522		36,806
Season ticket holder relationships	15,476		10,027
Suite holder contracts and relationships	9,136		5,815
Advertiser relationships	53,745		42,274
Other intangibles	24,130		19,139
	550,879		467,579
Indefinite-lived intangible assets
Franchises	731,848		731,848
Sports franchises	96,215		96,215
FCC licenses and other intangibles	11,936		11,936
Trademarks	53,880		53,880
Excess costs over the fair value of net assets acquired	1,023,480		1,024,168
	1,917,359		1,918,047
Total intangible assets, net	$	2,411,772	$	2,478,989
Aggregate amortization expense
Years ended December 31, 2007 and 2006 (excluding impairment charges of $380 and $899, respectively)	$	83,458	$	84,803
Estimated amortization expense
Year ending December 31, 2008	$	83,675
Year ending December 31, 2009	77,266
Year ending December 31, 2010	74,260
Year ending December 31, 2011	73,510
Year ending December 31, 2012	65,372

I-32

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The changes in the carrying amount of excess costs over the fair value of net assets acquired for the years ended December 31, 2007 and 2006 are as follows:

	Tele- communications		MSG			Rainbow			Other			Total
Balance as of December 31, 2005	$	206,971	$	727,754		$	36,931		$	14,457		$	986,113
Cumulative effect of adjustments resulting from the adoption of SAB No. 108 (Note 2)	—		15,319			28,756			—			44,075
Adjusted balance at January 1, 2006	206,971		743,073			65,687			14,457			1,030,188
Impairment loss- continuing operations	—		—			—			(899		)	(899		)
Impairment loss- discontinued operations (Note 5)	—		—			(5,121		)	—			(5,121		)
Balance as of December 31, 2006	206,971		743,073			60,566			13,558			1,024,168
Sale of affiliate interest	—		—			(308		)	—			(308		)
Impairment loss - continuing operations	—		—			(380		)	—			(380		)
Other	—		(581		)	581			—			—
Balance as of December 31, 2007	$	206,971	$	742,492		$	60,459		$	13,558		$	1,023,480

NOTE 9.                DEBT

Bank Debt

The Company’s outstanding bank debt at December 31, 2007 and 2006 is as follows:

	December 31,
	2007		2006
Restricted Group:
Term A-1 loan facility	$	950,000	$	1,000,000
Term B loan facility	3,438,750		3,482,500
	4,388,750		4,482,500
Rainbow National Services:
Term A loan facility	500,000		500,000
Revolving loan facility	—		10,000
	500,000		510,000
Total bank debt	$	4,888,750	$	4,992,500

I-33

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Restricted Group

On February 24, 2006, the Restricted Group (comprised primarily of CSC Holdings’ cable television subsidiaries and its commercial data and voice services subsidiary) entered into a $2,400,000 credit facility with a group of banks consisting of three components:  a $1,000,000 revolver, a $1,000,000 term A-1 loan facility and a $400,000 term A-2 loan facility that has since been refinanced and repaid in full, as described below.  Approximately $1,300,000 of the $1,400,000 proceeds received from the term loans under the new credit facility was used to repay the outstanding borrowings and accrued interest under the prior Restricted Group credit facility that was scheduled to mature in June 2006, and fees and expenses.  On March 29, 2006, the Restricted Group entered into a new $3,500,000 term B loan facility, of which approximately $400,000 of the proceeds was used to prepay the outstanding borrowings of the term A-2 loan facility, including accrued interest, and fees and expenses.  The balance of the outstanding term B loan facility borrowings was invested in short-term AAA rated funds until approval of the special dividend by Cablevision’s Board of Directors.  On April 24, 2006 the approved special dividend was paid (see Note 1).

The Restricted Group credit facilities are direct obligations of CSC Holdings, guaranteed by most Restricted Group subsidiaries and secured by the pledge of the stock of most Restricted Group subsidiaries.  As of December 31, 2007, $52,994 of the $1,000,000 revolving credit facility was restricted for certain letters of credit issued on behalf of CSC Holdings and $947,006 of the revolver was undrawn.  The revolving credit facility and the term A-1 loan facility mature in February 2012 and the term B loan facility matures in March 2013.  The revolver has no required interim repayments, the $1,000,000 term A-1 loan facility requires quarterly repayments of $12,500 in 2008, $62,500 in 2009 and 2010 and $100,000 in 2011 and the $3,500,000 term B loan facility is subject to quarterly repayments of $8,750 through March 31, 2012 and $822,500 beginning on June 30, 2012 through its maturity date in March 2013.  The interest rate on the term A-1 loan facility varies, depending on the Restricted Group’s cash flow ratio (as defined), from .75% to 1.75% over the Eurodollar Rate for Eurodollar-based borrowings and from zero to .75% over the Base Rate for Base Rate Borrowings (as defined).  The interest rate on the borrowings under the term B loan facility is the Eurodollar Rate (as defined) plus 1.75% or prime rate plus .75%, at the Company’s election.  The interest rates as of December 31, 2007 on borrowings under the term A-1 loan facility and term B loan facility was 6.40% and 6.90%, respectively.

The principal financial covenants, which are not identical for the revolving credit facility and the term A-1 loan facility, on the one hand, and the term B loan facility, on the other, include (i) under the revolving credit facility and the term A-1 loan facility, maximum total leverage (as defined in the term A-1 loan facility) of 5.50 times cash flow through December 31, 2008 with subsequent stepdowns over the life of the revolving credit facility and the term A-1 loan facility until reaching 4.50 times cash flow for periods beginning on and after January 1, 2010, (ii) under the revolving credit facility and the term A-1 loan facility, maximum senior secured leverage (as defined in the term A-1 loan facility) of 3.50 times cash flow through December 31, 2008 with annual stepdowns thereafter over the life of the revolving credit facility and the term A-1 loan facility until reaching 3.00 times cash flow for periods beginning on and after January 1, 2010, (iii) under the revolving credit facility and the term A-1 loan facility, a minimum ratio for cash flow to interest expense (as defined in the term A-1 loan facility) of 2.00 to 1, and (iv) under the revolving credit facility and the term A-1 loan facility, a minimum ratio of cash flow less cash taxes to total debt expense (as defined in the term A-1 loan facility to include interest expense, certain payments of principal and dividends paid by CSC Holdings to Cablevision to permit Cablevision to pay interest and certain principal payments on its debt) of 1.50 to 1.  These covenants and restrictions on the permitted use of borrowed funds in the revolving credit facility may limit the Company’s ability to

I-34

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

utilize all of the undrawn revolver funds.  Additional covenants include limitations on liens and the issuance of additional debt.

Under the term B loan facility, the Company is limited in its ability to incur additional indebtedness based on a maximum total leverage ratio (as defined in the term B loan facility) of 6.00 times cash flow through December 31, 2008 with subsequent stepdowns over the life of the term B loan facility until reaching 5.00 times cash flow for periods beginning on and after January 1, 2010 and a maximum senior secured leverage ratio (as defined in the term B loan facility) of 4.50 times cash flow.

Under the revolving credit facility and the term A-1 and term B loan facilities, there are generally no restrictions on investments that the Restricted Group may make, provided it is not in default; however, CSC Holdings must also remain in compliance with the maximum ratio of total indebtedness to cash flow and the maximum senior secured leverage ratio (each as defined in the term A-1 loan facility).  The Company’s ability to make restricted payments is also limited by provisions in the term B loan facility and the indentures covering the Company’s notes and debentures.

The Restricted Group was in compliance with all of its financial covenants under its various credit agreements as of December 31, 2007.

The Company is obligated to pay fees of 0.25% to 0.50% per annum based on undrawn revolver commitment balances.

In connection with the Restricted Group credit facility, the Company incurred deferred financing costs of $42,004, which are being amortized to interest expense over the term of the Restricted Group credit facility.  In connection with the repayment of the term A-2 loan facility and the prior Restricted Group credit facility, the Company wrote-off $4,587 of unamortized deferred financing costs in 2006.

Rainbow National Services

On July 5, 2006, Rainbow National Services LLC (“RNS”), an indirect wholly-owned subsidiary of the Company entered into a replacement bank facility (the “RNS Credit Facility”) providing for an $800,000 senior secured facility which consists of a $500,000 term A loan facility and a $300,000 revolving credit facility which was used primarily to refinance its then existing credit facility.  The term A loan facility matures June 30, 2013 and the revolving credit facility matures June 30, 2012.  The RNS Credit Facility allows RNS to utilize up to $50,000 of the revolving credit facility for letters of credit and up to $5,000 for a swing loan.  Further, the RNS Credit Facility provides for an incremental facility of up to $925,000, provided that it be for a minimum amount of $100,000.  If an incremental facility is established, RNS and the lenders will enter into a supplement to the RNS Credit Facility with terms and conditions that are no more restrictive than those of the RNS Credit Facility.  There are no commitments from the lenders to fund an incremental facility.

On July 5, 2006, RNS borrowed the entire $500,000 term A loan facility and $10,000 under the revolving credit facility.  RNS used the $510,000 borrowed under the RNS Credit Facility and $88,048 of additional available cash to repay all of its outstanding borrowings, accrued interest and fees due under its August 2004 $950,000 senior secured credit facility of which $592,500 was outstanding under a term loan at July 5, 2006 and to pay certain fees and expenses incurred in connection with the RNS Credit Facility.  RNS may use future borrowings under the credit agreement to make investments, distributions, and other payments permitted under the RNS Credit Facility and for general corporate purposes.  The borrowings under the RNS Credit Facility may be repaid without penalty at any time.

I-35

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Borrowings under the RNS Credit Facility are direct obligations of RNS which are guaranteed jointly and severally by substantially all of its subsidiaries and by Rainbow Programming Holdings LLC (“RPH”), the direct parent of RNS, and are secured by the pledge of the stock of RNS and substantially all of its subsidiaries and all of the other assets of RNS and substantially all of its subsidiaries (subject to certain limited exceptions).  Borrowings under the RNS Credit Facility bear interest based on either the Base Rate (the greater of the Federal Funds Rate plus 0.5% and the prime rate (as defined in the RNS Credit Facility)), or the Eurodollar Rate (as defined in the RNS Credit Facility).  The interest rate under the RNS Credit Facility varies, depending on RNS’ cash flow ratio (as defined in the RNS Credit Facility) from 1.0% to 1.5% over the Eurodollar Rate for Eurodollar-based borrowings and from zero to 0.5% over the Base Rate for Base Rate borrowings.  At December 31, 2007, the interest rate on the term A loan facility was 6.15%.  The term A loan is to be repaid in quarterly installments of $6,250 from March 31, 2008 until December 31, 2010, $12,500 from March 31, 2011 until December 31, 2012, and $162,500 on March 31, 2013 and June 30, 2013, the term A loan maturity date.  Any amounts outstanding under the revolving credit facility are due at maturity on June 30, 2012.

As defined in the RNS Credit Facility, the financial covenants consist of (i) a minimum ratio of operating cash flow to total interest expense for each quarter of 1.75 to 1, (ii) a maximum cash flow ratio of total indebtedness to operating cash flow of 6.75 to 1 through June 30, 2008, decreasing thereafter to 6.25 to 1, and (iii) a maximum senior secured leverage ratio of senior secured debt to operating cash flow of 5.50 to 1.  Additional covenants include restrictions on indebtedness, guarantees, liens, investments, dividends and distributions and transactions with affiliates.  RNS was in compliance with all of its financial covenants under its credit agreement as of December 31, 2007.

RNS is obligated to pay fees of 0.375% per annum on any undrawn revolver commitment.

In connection with the RNS Credit Facility, RNS incurred deferred financing costs of $5,536, which are being amortized to interest expense over the term of the RNS Credit Facility.  The Company recorded $6,084 as a write-off of deferred financing costs associated with the repayment of the August 2004 credit facility in 2006.

I-36

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Senior Notes and Debentures

The following table summarizes the Company’s senior notes and debentures:

							Carrying Amount at
	Date	Maturity			Face		December 31,
Issuer	Issued	Date	Rate		Amount		2007		2006
CSC Holdings (a)	December 1997	December 2007	7.875	%	$	500,000	$	—	$	499,952
CSC Holdings (b)	July 1998	July 2008	7.25	%	500,000		500,000		500,000
CSC Holdings (b)	July 1999	July 2009	8.125	%	500,000		499,650		499,423
CSC Holdings (b)	August 1997	August 2009	8.125	%	400,000		399,793		399,668
CSC Holdings (b)	March 2001	April 2011	7.625	%	1,000,000		998,957		998,635
CSC Holdings (c) (e)	April 2004	April 2012	6.75	%	500,000		500,000		500,000
RNS (d)	August 2004	September 2012	8.75	%	300,000		298,745		298,476
CSC Holdings (b)	February 1998	February 2018	7.875	%	300,000		298,264		298,088
CSC Holdings (b)	July 1998	July 2018	7.625	%	500,000		499,739		499,714
							3,995,148		4,493,956
Cablevision (b)	April 2004	April 2009	Floating		500,000		500,000		500,000
Cablevision (c)	April 2004	April 2012	8.00	%	1,000,000		1,000,000		1,000,000
							$	5,495,148	$	5,993,956

(a)In December 2007, the Company redeemed these senior notes utilizing cash on hand.

(b)These notes are not redeemable by the Company prior to maturity.

(c)The Company may redeem some or all of the notes at any time at a make-whole redemption price calculated by reference to market interest rates for comparable maturity treasury notes plus a spread.

(d)The senior notes are redeemable, in whole or in part, at a redemption price equal to 104.375% of face value at any time on or after September 1, 2008, 102.188% of face value on or after September 1, 2009, and 100% of face value on or after September 1, 2010.

(e)During 2007 these notes were exchanged for registered notes as required by the purchase agreement under which the notes were sold and consequently, the interest rate decreased from 7.25% to 6.75%.

The indentures under which the senior notes and debentures were issued contain various covenants, which are generally less restrictive than those contained in the credit agreement of the issuer.

Senior Subordinated Notes and Debentures

In August 2004, RNS issued $500,000 face amount of 10 3/8% senior subordinated notes due September 1, 2014.  These senior subordinated notes were discounted $3,915, upon original issuance.  These notes are guaranteed by substantially all of the subsidiaries of RNS.  RNS may redeem the senior subordinated notes, in whole or in part, at a redemption price equal to 105.188% of face value on or after September 1, 2009, 103.458% on or after September 1, 2010, 101.729% on or after September 1, 2011, and 100% on or after September 1, 2012.  The notes are redeemable at the redemption price plus accrued and unpaid interest through the redemption date.

On July 24, 2007, RNS entered into an equity commitment agreement with its sole member, RPH, an indirect wholly-owned subsidiary of Rainbow Media Holdings, pursuant to which RPH agreed to purchase additional membership interests in RNS for an aggregate purchase price of $203,000.  RNS used the proceeds of the investment by RPH to redeem $175,000 in aggregate principal amount of its senior subordinated notes due 2014, representing 35% of the outstanding notes, at the redemption price of

I-37

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

110.375% of the principal amount of the notes plus accrued and unpaid interest to August 31, 2007, the redemption date.  In connection with the redemption, the Company recognized a loss on extinguishment of debt of $19,113, representing primarily the redemption premium, and wrote-off the related unamortized deferred financing costs of $2,919.  The carrying value of these notes at December 31, 2007 was $323,311.

In June 2006, the Company redeemed its CSC Holdings 10 1/2% senior subordinated debentures due May 2016 at a redemption price of 105.25%.  In connection with the redemption, the Company recognized a loss on extinguishment of debt of $13,125, representing the redemption premiums paid and wrote-off the remaining deferred financing costs of $3,412.

The indentures under which the senior subordinated notes and debentures were issued contain various covenants, which are generally less restrictive than those contained in the credit agreement of the issuer.

Summary of Five Year Debt Maturities

Total amounts payable by the Company under its various debt obligations outstanding as of December 31, 2007, including collateralized indebtedness (see Note 10) and capital leases (including interest), during the five years subsequent to December 31, 2007, are as follows:

Years Ending December 31,
2008	$	843,378
2009	2,386,322
2010	318,867
2011	1,493,867
2012	4,331,517

NOTE 10.              COLLATERALIZED INDEBTEDNESS AND DERIVATIVES

To manage interest rate risk, the Company has from time to time entered into interest rate swap contracts to adjust the proportion of total debt that is subject to variable and fixed interest rates.  Such contracts fix the borrowing rates on floating rate debt to provide an economic hedge against the risk of rising rates and/or convert fixed rate borrowings to variable rates to provide an economic hedge against the risk of higher borrowing costs in a declining interest rate environment.  On December 31, 2007, all of the Company’s interest rate swap agreements to pay floating rates of interest with a total notional amount of $450,000 matured.  At December 31, 2006, the fair value of such contracts was $6,568, a net liability position.  These agreements were not designated as hedges for accounting purposes.

In addition, the Company has entered into prepaid interest rate swap agreements in connection with its monetization of certain of its stock holdings, discussed below.  These contracts require the Company to pay a floating rate of interest in exchange for fixed rate interest payments, the net present value of which was paid to the Company at the contract’s inception.  As of December 31, 2007 and 2006, the total notional value of such contracts was $105,061, and the fair values of such contracts aggregated $5,009 and $10,340, a net liability position, respectively.  These agreements have not been designated as hedges for accounting purposes.

In April 2006, CSC Holdings entered into several interest rate swap contracts in the notional amount of $3,700,000 to effectively fix borrowing rates on floating rate debt.  As a result of these transactions, the

I-38

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

interest rate paid on approximately 84% of the Company’s debt as of December 31, 2007 is fixed.  The table below summarizes certain terms of these interest rate swap contracts as of December 31, 2007:

Maturity Date	Notional Amount		Weighted Average Fixed Rate Paid by the Company		Weighted Average Effective Floating Rate Received by the Company as of December 31, 2007
April 2008	$	500,000	5.24	%	5.09	%
April 2009	$	600,000	5.25	%	5.09	%
June 2010	$	2,600,000	5.34	%	4.83	%

As of December 31, 2007 and 2006, the interest rate swap contracts noted above had a fair value and carrying value of $108,141 and $31,398, a net liability position, respectively, as reflected under derivative contracts in the Company’s consolidated balance sheets.

The changes in the fair value of the Company’s swap agreements and the net realized losses as a result of net cash interest expense for the years ended December 31, 2007, 2006 and 2005 aggregating $(76,568), $(39,360) and $(16,497), respectively, are reflected in gain (loss) on derivative contracts in the accompanying consolidated statements of operations.

The Company has also entered into various transactions to provide an economic hedge against equity price risk on certain of its stock holdings.  The Company had monetized all of its stock holdings in Charter Communications, Inc., AT&T Inc., Comcast Corporation, General Electric Company and Leapfrog Enterprises, Inc. through the execution of prepaid forward contracts, collateralized by an equivalent amount of the respective underlying stock.  The contracts set a floor and cap on the Company’s participation in the changes in the underlying stock prices and at maturity are expected to offset declines in the fair values of the underlying stock below the hedge price per share, while allowing the Company to retain upside appreciation from the hedge price per share to the cap price.  At maturity, the contracts provide for the option to deliver cash or shares of AT&T, Comcast, Charter Communications, General Electric or Leapfrog stock (as the case may be) with a value determined by reference to the applicable stock price at maturity.

The Company received cash proceeds upon execution of the prepaid forward contracts discussed above which has been reflected as collateralized indebtedness in the accompanying consolidated balance sheets.  In addition, the Company separately accounts for the equity derivative component of the prepaid forward contracts.  These equity derivatives have not been designated as hedges for accounting purposes.  Therefore, the fair values of the equity derivatives of $51,162 and $(82,009), at December 31, 2007 and 2006, respectively, have been reflected in the accompanying consolidated balance sheets as an asset (liability) and the net increases (decreases) in the fair value of the equity derivative component of the prepaid forward contracts of $214,712, $(214,352) and $135,677, for the years ended December 31, 2007, 2006 and 2005, respectively, are included in gain (loss) on derivative contracts in the accompanying consolidated statements of operations.

For the years ended December 31, 2007, 2006 and 2005, the Company recorded a gain (loss) on investments of $(213,754), $284,096 and $(135,082) respectively, representing the net increases or decreases in the fair values of all investment securities pledged as collateral for the period.

I-39

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

2007 Settlements of Collateralized Indebtedness

The following table summarizes the settlement of the Company’s collateralized indebtedness for the year ended December 31, 2007.  The Company’s collateralized indebtedness obligations relating to shares of Charter Communications and Leapfrog common stock were settled by delivering the underlying securities and proceeds from the related equity derivative contracts.

	Charter			Leapfrog			Total
Number of shares	3,724,460			800,000
Collateralized indebtedness settled	$	(83,231	)	$	(19,238	)	$	(102,469	)
Prepaid forward contracts	70,903			10,638			81,541
Fair value of underlying securities delivered	12,328			8,600			20,928
Net cash payment	$	—		$	—		$	—

2006 Settlements of Collateralized Indebtedness

The following table summarizes the settlement of the Company’s collateralized indebtedness for the year ended December 31, 2006.  The Company’s collateralized indebtedness obligations relating to shares of Charter Communications and AT&T common stock were settled by delivering the underlying securities and proceeds from the related equity derivative contracts.  The Company’s collateralized indebtedness obligations relating to Comcast and General Electric shares were settled by delivering the cash equal to the collateralized loan value, net of the value of the related equity derivative contracts.  The cash was obtained from the proceeds of new monetization contracts covering an equivalent number of Comcast and General Electric shares, proceeds from a prepaid interest rate swap executed in conjunction with the equity derivative contract related to the Comcast shares and, in certain instances, cash from CSC Holdings.  The terms of the new contracts allow the Company to retain upside participation in both Comcast and General Electric shares up to each respective contract’s upside appreciation limit with downside exposure limited below the respective hedge price.

	Charter			AT&T			Comcast			General Electric			Total
Number of shares	5,586,687			3,449,785			7,159,206			12,742,033
Collateralized indebtedness settled	$	(125,907	)	$	(165,036	)	$	(266,224	)	$	(314,028	)	$	(871,195	)
Prepaid forward contracts	119,177			63,974			31,385			(50,864		)	163,672
Fair value of underlying securities delivered	6,730			101,062			—			—			107,792
Net cash payment	—			—			(234,839		)	(364,892		)	(599,731		)
Proceeds from new monetization contracts	—			—			212,774			382,261			595,035
Proceeds from prepaid interest rate swap contract	—			—			6,496			—			6,496
	—			—			219,270			382,261			601,531
Net cash receipt (payment)	$	—		$	—		$	(15,569	)	$	17,369		$	1,800

I-40

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

At December 31, 2007, the Company has principal collateralized indebtedness obligations of $219,073 relating to shares of Comcast and General Electric common stock that mature during the next twelve months.  The Company intends to settle such obligations by either delivering shares of the applicable stock and proceeds of the equity derivative contracts or delivering cash from the proceeds of new monetization transactions.  In the event of an early termination of any of these contracts, the Company would be obligated to repay the fair value of the collateralized indebtedness less the sum of the fair values of the underlying stock and equity collar, calculated at the termination date.  As of December 31, 2007, this settlement amount totaled $492.

NOTE 11.              INCOME TAXES

The Company files a consolidated federal income tax return with its 80% or more owned subsidiaries.

Income tax expense (benefit) attributable to the Company’s continuing operations consists of the following components:

	Years Ended December 31,
	2007		2006			2005
Current expense:
Federal	$	10,315	$	—		$	—
State and other	3,957		9,546			9,493
	14,272		9,546			9,493
Deferred expense (benefit):
Federal	25,097		(84,347		)	(63,355		)
State	27,479		(65,661		)	(28,357		)
	52,576		(150,008		)	(91,712		)
Tax expense, including accrued interest, recognized pursuant to FIN 48	12,333		—			—
Income tax expense (benefit)	$	79,181	$	(140,462	)	$	(82,219	)

The income tax benefit attributable to the Company’s continuing operations for 2005 excludes deferred federal and state tax benefits of $1,256, resulting from the exercise of stock options, which were credited directly to paid-in capital.   No income tax benefit has been recognized as an increase to paid in capital with regard to excess tax benefits occurring during 2007 and 2006.

The income tax expense attributable to the Company’s discontinued operations was classified as deferred income tax expense for all periods presented (see Note 6).

I-41

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The income tax expense (benefit) attributable to the Company’s continuing operations differs from the amount derived by applying the statutory federal rate to pretax income principally due to the effect of the following items:

	Years Ended December 31,
	2007			2006			2005
Federal tax expense (benefit) at statutory federal rate	$	35,996		$	(98,873	)	$	(76,711	)
State income taxes, net of federal benefit	7,120			(25,230		)	(13,156		)
Changes in the valuation allowance	(536		)	(10,404		)	6,459
Change in the state rate used to determine deferred taxes, net of federal benefit	10,831			1,706			(6,701		)
Tax expense, including accrued interest, recognized pursuant to FIN 48, net of deferred tax benefits	8,849			—			—
Reduction of a tax contingency liability	—			(16,356		)	—
Favorable settlement of an issue with a taxing authority	—			(5,013		)	—
Nondeductible officers’ compensation	9,355			4,443			6,226
Other nondeductible expenses	6,285			6,768			10,637
Other	1,281			2,497			(8,973		)
Income tax expense (benefit)	$	79,181		$	(140,462	)	$	(82,219	)

I-42

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

For the Company, the tax effects of temporary differences which give rise to significant portions of deferred tax assets or liabilities and the corresponding valuation allowance at December 31, 2007 and 2006 are as follows:

	December 31,
	2007			2006
Deferred Tax Asset (Liability)
Current
Benefits of tax loss carryforwards	$	231,806		$	67,418
Compensation and benefit plans	21,516			62,201
Allowance for doubtful accounts	3,285			4,416
Restructuring liabilities	943			1,723
Investments	—			14,694
Other liabilities	42,554			37,368
Deferred tax asset	300,104			187,820
Valuation allowance	(6,928		)	(3,788		)
Net deferred tax asset, current	293,176			184,032
Investments	(60,192		)	—
Deferred tax liability, current	(60,192		)	—
Net deferred tax asset, current	232,984			184,032
Noncurrent
Benefits of tax loss and credit carryforwards	729,519			1,103,588
Compensation and benefit plans	109,819			87,992
Other	22,771			32,895
Deferred tax asset	862,109			1,224,475
Valuation allowance	(19,902		)	(24,700		)
Net deferred tax asset, noncurrent	842,207			1,199,775
Fixed assets and intangibles	(435,167		)	(461,372		)
Investments	(118,959		)	(221,902		)
Partnership investments	(596,827		)	(573,744		)
Other assets	(17,990		)	(16,481		)
Deferred tax liability, noncurrent	(1,168,943		)	(1,273,499		)
Net deferred tax liability, noncurrent	(326,736		)	(73,724		)
Total net deferred tax asset (liability)	$	(93,752	)	$	110,308

At December 31, 2007, the Company had consolidated federal tax net operating loss carryforwards (“NOLs”) of $2,284,457 expiring on various dates through 2026.  The Company has recorded a deferred tax asset for such NOLs.

I-43

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The Company’s NOLs expire as follows:

2012	$	45,353
2018	89,315
2019	454,188
2020	87,952
2021	364,501
2022	171,492
2023	342,694
2024	591,539
2026	137,423
Total	$	2,284,457

The tax deduction resulting from the exercise and issuance of certain share-based awards exceeded the aggregate compensation expense for such awards by $130,924 and $18,377 in 2007 and 2006, respectively.  These ‘windfall’ deductions result in excess tax benefits that must be analyzed to determine whether realization has occurred.  As described in Note 15, the Company uses the ‘with-and-without’ approach to determine whether an excess tax benefit has been realized.  Upon realization, such excess tax benefits will be recognized as an increase to paid-in capital.  Given the Company’s NOL position, no income tax benefit has been recognized for such excess tax benefits.  Accordingly, the NOLs for the Company disclosed above exclude such windfall tax deductions occurring in 2007 and 2006.

As of December 31, 2007, the Company has $10,415 of alternative minimum tax credit carry forwards, which do not expire.

Deferred tax assets have resulted primarily from the Company’s future deductible temporary differences and NOLs.  In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax asset will not be realized.  The Company’s ability to realize its deferred tax assets depends upon the generation of sufficient future taxable income and tax planning strategies to allow for the utilization of its NOLs and deductible temporary differences.  If such estimates and related assumptions change in the future, the Company may be required to record additional valuation allowances against certain of its deferred tax assets resulting in additional income tax expense in the Company’s consolidated statement of operations.  Management evaluates the realizability of the deferred tax assets and the need for additional valuation allowances quarterly.  Management believes that it is more likely than not that the Company will realize benefit for its gross deferred tax assets, except for certain of its deferred tax assets against which a valuation allowance has been recorded relating to certain state NOLs.

The Company adopted the provisions of FIN 48 on January 1, 2007.  The cumulative effect of applying the provisions of FIN 48 resulted in a charge of $442 to the opening balance of the accumulated deficit.  A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at January 1, 2007	$	10,353
Increases related to prior year tax positions	9,532
Decreases related to prior year tax positions	(12		)
Increases related to current year tax positions	811
Settlements	(13,780		)
Lapse of statute of limitations	(182		)
Balance at December 31, 2007	$	6,722

I-44

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

As of December 31, 2007, if all uncertain tax positions were sustained at the amounts reported or expected to be reported in the Company’s tax returns, the Company’s income tax expense attributable to continuing operations would decrease by $5,599.

Interest expense related to income tax liabilities recognized in accordance with the provisions of FIN 48 is included in income tax expense, consistent with the Company’s historical policy.  Interest expense of $2,184 and the associated deferred tax benefit of $893 have been recognized during the year ended December 31, 2007 and are included in income tax expense attributable to continuing operations in the consolidated statement of operations.  At December 31, 2007, accrued interest on uncertain tax positions was $581 and was included in other noncurrent liabilities in the consolidated balance sheet.

Management does not believe that it is reasonably possible that the total amount of unrecognized tax benefit for uncertain tax positions existing as of December 31, 2007, based on information available as of that date, will significantly increase or decrease within twelve months of December 31, 2007.

As of January 1, 2007, the Company had a liability recorded with regard to the Ohio income tax audit for the year ended December 31, 2000 of $10,937, including accrued interest.  In April 2007, the Company settled the Ohio income tax audit for the tax year ended December 31, 2000 for $18,000, inclusive of interest.  In 2007, the Company recognized additional income tax expense of $7,063, excluding the related deferred tax benefit.

In July 2007, the IRS completed its audit of the Company’s consolidated federal income tax returns for 2002 and 2003.  The completion of this audit did not have a significant effect on the Company’s consolidated financial statements.  In October 2007, the IRS began an audit of the Company’s consolidated federal income tax returns for 2004 and 2005.

With a few exceptions, the Company is no longer subject to state and local income tax audits by taxing authorities for years prior to 2003.  The most significant jurisdictions in which the Company is required to file income tax returns include the state of New York, New Jersey and Connecticut and the city of New York.  In September 2007, the state of New York started an audit of 2003 through 2005.

Management does not believe that the resolution of the ongoing income tax examinations described above will have a material adverse impact on the financial position of the Company.  Changes in the liabilities for uncertain tax positions will be recognized in the interim period in which the positions are effectively settled or there is a change in factual circumstances.

NOTE 12.              OPERATING LEASES

The Company leases certain office, production, transmission, theater and event facilities under terms of leases expiring at various dates through 2027.  The leases generally provide for escalating rentals over the term of the lease plus certain real estate taxes and other costs or credits.  Costs associated with such operating leases are recognized on a straight-line basis over the initial lease term.  The difference between rent expense and rent paid is recorded as deferred rent.  Rent expense for the years ended December 31, 2007, 2006 and 2005 amounted to $92,522, $81,642 and $78,984, respectively.

In addition, the Company rents space on utility poles for its operations.  The Company’s pole rental agreements are for varying terms, and management anticipates renewals as they expire.  Pole rental expense for the years ended December 31, 2007, 2006 and 2005 amounted to $14,467, $13,777 and $12,325, respectively.

I-45

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Madison Square Garden operates Radio City Music Hall under a long-term lease.  Under the terms of the lease agreement, Madison Square Garden is required to meet certain net worth, cash flow, and building utilization requirements.  In the event Madison Square Garden were to fail to meet the lease requirements and was unable to remedy such defaults, the landlord could have the option of terminating the lease.

The minimum future annual payments for all operating leases for continuing operations (with initial or remaining terms in excess of one year) during the next five years and thereafter, including pole rentals from January 1, 2008 through December 31, 2012, at rates now in force are as follows:

2008	$	106,626
2009	104,258
2010	99,033
2011	93,744
2012	88,852
Thereafter	502,041

NOTE 13.              AFFILIATE AND RELATED PARTY TRANSACTIONS

Equity Method Investments

The following table reflects the Company’s ownership percentages and balances of equity method investments as of December 31, 2007 and 2006:

	Ownership Percentages				Investment Balances
	December 31,
	2007		2006		2007		2006
Fox Sports Net New England (a)	—		50.0	%	$	—	$	47,656
Other	22.2	%	22.2	%	—		2,294
Net investment in affiliates					$	—	$	49,950

The Company’s share of the net income (loss) of these affiliates for the years ended December 31, 2007, 2006 and 2005 is as follows:

	Years Ended December 31,
	2007			2006		2005
Fox Sports Net New England (a)	$	4,467		$	6,698	$	6,645
National Sports Partners (b)	—			—		(3,379		)
National Advertising Partners (b)	—			—		(47		)
Other	(90		)	—		—
	$	4,377		$	6,698	$	3,219

(a)See Note 3 for a discussion regarding the sale of the Company’s ownership interest in Fox Sports Net New England in June 2007.

(b)See Note 3 for a discussion of the Regional Programming Partners restructuring in 2005 which eliminated the Company’s ownership interest in these entities.

I-46

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The following table includes certain unaudited financial information for Fox Sports Net New England as of December 31, 2006:

	December 31, 2006
	(unaudited)
Total assets (a)	$	85,861
Total liabilities	13,502

(a)Includes $477 due to Fox Sports New England from the Company at December 31, 2006.

Prior to sale of the Company’s interest in Fox Sports Net New England in 2007 and National Sports Partners and National Advertising Partners in 2005, the Company had provided certain transmission and production services to these affiliates.  For the years ended December 31, 2007, 2006 and 2005, $741, $1,358 and $1,608, respectively, of revenues were earned from services provided to these entities.  Costs incurred by the Company for these programming, entertainment and advertising services provided by these affiliates and included in operating expenses for the years ended December 31, 2007, 2006 and 2005 amounted to $325, $342 and $3,509, respectively.

Other Affiliates and Related Parties

During 2007, 2006 and 2005, the Company provided services to or incurred costs on behalf of other affiliates, including from time to time, members of the Dolan family or to entities owned by members of the Dolan family.  All costs incurred on behalf of these affiliates are reimbursed to the Company.  Aggregate amounts due from and due to these affiliates at December 31, 2007 and 2006 are summarized below:

	December 31,
	2007		2006
Advances to affiliates	$	25	$	153
Accounts payable to affiliates	253		94

Dolan Family Group Transaction

On May 2, 2007, Cablevision entered into a merger agreement with Central Park Holding Company, LLC (“Dolan Family Acquisition Company”), an entity owned by the Dolan Family Group, and Central Park Merger Sub, Inc.  The terms of the merger agreement provided that Central Park Merger Sub, Inc. would be merged with and into Cablevision and, as a result, Cablevision would continue as the surviving corporation and a wholly-owned subsidiary of Dolan Family Acquisition Company (the “Proposed Merger”).

On October 24, 2007, the Proposed Merger was submitted to a vote of Cablevision’s shareholders and did not receive shareholder approval.  Subsequently, the parties terminated the merger agreement pursuant to its terms.

Rainbow DBS

In February 2005, the Company signed a letter of intent under which VOOM HD, LLC, a private company formed by two of the Company’s Class B shareholders, Charles F. Dolan and Thomas C. Dolan,

I-47

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

had planned to acquire from the Company the business, assets and liabilities of the Company’s Rainbow DBS satellite business not included in the agreement with EchoStar (see Note 3).  The letter of intent between the Company and VOOM HD, LLC expired on February 28, 2005 without a definitive agreement being reached.

Following the expiration of the letter of intent, the Company began shutting down the Rainbow DBS satellite distribution operations.  In March 2005, the Company entered into an agreement with Charles F. Dolan and Thomas C. Dolan (“March 2005 Agreement”) pursuant to which the parties agreed to work cooperatively to finalize the separation of Rainbow DBS from the Company.  The Company agreed that no new shutdown activities would be undertaken at Rainbow DBS during the term of the agreement.  In accordance with the March 2005 Agreement, Charles F. Dolan deposited $15,000 with the Company to fund any expenditures above those contemplated in the shutdown budget, net of March 2005 revenue earned.  This agreement terminated on March 31, 2005 and, in accordance with its terms, the distribution business of Rainbow DBS was shutdown effective April 30, 2005 and the Board of Directors confirmed such shutdown decision at a meeting on April 7, 2005.

Cash deposited by Charles F. Dolan under the March 2005 Agreement that was not used to fund costs or segregated to pay costs associated with new commitments or other agreements of $8,663 was returned to him prior to December 31, 2005.  Cash of $6,337 deposited by Charles F. Dolan which was used to fund the incremental costs less March 2005 revenue earned related to the Rainbow DBS satellite distribution business, net of the related discounted income tax benefit to the Company, was recorded as a deemed net equity contribution in 2005.

NOTE 14.              BENEFIT PLANS

Adoption of Statement No. 158

Effective December 31, 2006, the Company adopted the recognition and disclosure provisions of Statement No. 158 which requires employers to recognize in their balance sheets the overfunded or underfunded status of defined benefit postretirement plans, measured as the difference between the fair value of plan assets and the benefit obligation (the projected benefit obligation for pension plans and the accumulated postretirement benefit obligation for other postretirement plans).  Employers must recognize the change in the funded status of the plan in the year in which the change occurs through accumulated other comprehensive income. Statement No. 158 also requires plan assets and obligations to be measured as of the employers’ balance sheet date. The measurement provision of Statement No. 158 will be effective on January 1, 2009 for the Company with early application encouraged.  This will not have an impact to the Company’s financial position or results of operations as its current measurement date is December 31 for all plans.

Prior to the adoption of the recognition provisions of Statement No. 158, the Company accounted for its defined benefit postretirement plans under Statement No. 87 and SFAS No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions (“Statement No. 106”). Statement No. 87 required that a liability (additional minimum pension liability or “AML”) be recorded when the accumulated benefit obligation (“ABO”) liability exceeded the fair value of plan assets.  Any adjustment was recorded as a non-cash charge to accumulated other comprehensive income in shareholders’ equity (deficit). Statement No. 106 required that the liability recorded should represent the actuarial present value of all future benefits attributable to an employee’s service rendered to date.  Under both Statement No. 87 and Statement No. 106, changes in the funded status were not immediately recognized, rather they were deferred and recognized ratably over future periods.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Upon adoption of the recognition provisions of Statement No. 158, the Company recognized the amounts of prior changes in the funded status of their postretirement benefit plans through accumulated other comprehensive loss.  As a result, the Company recognized the following adjustments in individual line items of its consolidated balance sheet as of December 31, 2006:

	Prior to AML and Statement No. 158  Adjustments			Pretax 2006 AML  Adjustment			Pretax Effect of Adopting Statement No. 158			Post AML and Statement No. 158 Adjustments
Accrued employee related costs	$	69,389		$	—		$	(69,389	)	$	—
Defined benefit obligations	—			2,516			81,092			83,608
Accumulated other comprehensive loss	(6,028		)	(2,516		)	(11,703		)	(20,247		)

Income tax benefits associated with the effect of adopting Statement No. 158 and the 2006 AML adjustment amounted to $4,799 and $1,032, respectively.

The adoption of Statement No. 158 had no effect on the Company’s consolidated statement of operations for the year ended December 31, 2006, or for any prior period presented and did not have a material impact to any of the Company’s debt covenants under its various credit agreements.

Plan Descriptions

Qualified and Non-qualified Defined Benefit Plans

Cablevision Retirement Plans (collectively, the “Cablevision Qualified and Non-qualified Defined Benefit Plans)

The Company sponsors a non-contributory qualified defined benefit Cash Balance Retirement Plan (the “Retirement Plan”) for the benefit of non-union employees other than those of the theater business.  Under the Retirement Plan, the Company credits a certain percentage of eligible base pay into an account established for each participant which is credited with a market based rate of return annually.

The Company also maintains an unfunded non-contributory non-qualified defined benefit excess cash balance plan (“Excess Cash Balance Plan”) covering certain employees of the Company who participate in the Retirement Plan, and an unfunded supplemental defined benefit plan (the “CSC Supplemental Benefit Plan”) for the benefit of certain officers and employees of the Company.  As part of the CSC Supplemental Benefit Plan, the Company established a nonqualified defined benefit pension plan, which provides that, upon attaining normal retirement age, a participant will receive a benefit equal to a specified percentage of the participant’s average compensation, as defined.  All participants are 100% vested in the CSC Supplemental Benefit Plan.

I-49

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Madison Square Garden Retirement Plans (collectively, the “Madison Square Garden Qualified and Non-qualified Defined Benefit Plans)

Madison Square Garden sponsors a non-contributory qualified defined benefit pension plan (“MSG Plan”) covering certain of its non-union employees hired prior to January 1, 2001.  Benefits payable to retirees under this plan are based upon years of service and participants’ compensation.

Madison Square Garden also maintains an unfunded, non-qualified defined benefit pension plan for the benefit of certain employees of Madison Square Garden who participate in the underlying qualified plan.  This plan provides that, upon retirement, a participant will receive a benefit based on a formula which reflects the participant’s compensation as defined by the plan.

As of December 31, 2007, both the MSG Plan and the non-qualified defined benefit pension plan for the benefit of certain employees of Madison Square Garden were amended.  The amendments “froze” all benefits earned through December 31, 2007 and eliminated the ability of participants to earn benefits for future service under these plans.  Effective January 1, 2008, the Retirement Plan and the Excess Cash Balance Plan were amended to permit affected MSG Plan participants to earn benefits under these plans.  The Retirement Plan and Excess Cash Balance Plan will provide incremental, but reduced benefits to affected participants for future services, from what they would have received under the MSG Plan and the Madison Square Garden non-qualified defined benefit pension plan.  Accordingly, the Company has accounted for this transaction as a negative plan amendment which reduced the liability relating to these plans by $18,803 with the offset to accumulated other comprehensive income.  This amount will be amortized into income as a reduction of future periodic pension expense over the estimated remaining work lives of affected participants.

In addition, Madison Square Garden sponsors two non-contributory qualified defined benefit pension plans covering certain of its union employees (“MSG Union Plans”).  Benefits payable to retirees under these plans are based upon years of service and, for one plan, participants’ compensation, and are funded through trusts established under the plans.

Other Postretirement Benefit Plan

Madison Square Garden sponsors a contributory welfare plan (“Madison Square Garden Postretirement Benefit Plan”) which provides certain postretirement health care benefits to certain of its employees hired prior to January 1, 2001 and their dependents.

Defined Contribution Benefit Plans

The Company also maintains the Cablevision CHOICE 401(k) savings plan, a contributory qualified defined contribution plan for the benefit of non-union employees of the Company.  The Company also has four additional 401(k) plans covering various union employees, as well as employees of certain businesses.  Employees can contribute a percentage of eligible annual compensation and the Company will make a matching cash contribution or discretionary contribution, as defined in the respective plan.  In addition, the Company maintains an unfunded non-qualified excess savings plan for which the Company provides a matching contribution similar to the Cablevision CHOICE 401(k) Savings Plan.  The cost associated with these plans was $18,155, $16,850 and $13,511 for the years ended December 31, 2007, 2006 and 2005, respectively.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Multi-employer Plans

Madison Square Garden also contributes to various multiemployer pension plans.  Contributions made to these multiemployer plans for the years ended December 31, 2007, 2006 and 2005 amounted to $6,323, $6,966 and $5,846, respectively.

Plan Results for Defined Benefit Plans

Summarized below is the funded status and the amounts recorded on the Company’s consolidated balance sheets for all of the Company’s qualified and non-qualified defined benefit pension and other postretirement benefit plans at December 31, 2007 and 2006:

	Cablevision Qualified and Non-qualified Defined Benefit Plans						Madison Square Garden Qualified and Non-qualified Defined Benefit Plans						Madison Square Garden Postretirement Benefit Plan
	2007			2006			2007			2006			2007			2006
Change in benefit obligation:
Benefit obligation at beginning of year	$	177,656		$	142,922		$	99,809		$	93,670		$	6,907		$	7,494
Service cost	31,615			29,378			4,805			4,988			367			399
Interest cost	10,045			8,212			5,919			5,441			380			361
Amendments	207			—			(18,803		)	—			—			—
Actuarial loss (gain)	2,911			3,776			(10,241		)	(2,718		)	(1,170		)	(1,086		)
Benefits paid	(8,844		)	(6,632		)	(1,688		)	(1,572		)	(238		)	(261		)
Benefit obligation at end of year	213,590			177,656			79,801			99,809			6,246			6,907
Change in plan assets:
Fair value of plan assets at beginning of year	146,220			116,604			54,544			45,198			—			—
Actual return on plan assets	9,551			10,737			3,841			5,091			—			—
Employer contributions	28,447			25,511			12,216			5,827			—			—
Benefits paid	(8,844		)	(6,632		)	(1,688		)	(1,572		)	—			—
Fair value of plan assets at end of year	175,374			146,220			68,913			54,544			—			—
Unfunded status at end of year*	(38,216		)	(31,436		)	(10,888		)	(45,265		)	(6,246		)	(6,907		)
Unrecognized actuarial loss	12,811			7,697			3,183			12,806			(579		)	580
Unrecognized prior service cost (credit)	207			—			(18,569		)	258			(1,050		)	(1,182		)
Unrecognized transition asset	—			—			(2		)	(5		)	—			—
Net amount recognized	$	(25,198	)	$	(23,739	)	$	(26,276	)	$	(32,206	)	$	(7,875	)	$	(7,509	)

*The aggregate unfunded status at December 31, 2007 relating to the Madison Square Garden Qualified and Non-qualified Defined Benefit Plans was $14,766, net of aggregated plan assets in excess of plan obligations of $3,878.

The accumulated benefit obligations for the Cablevision Qualified and Non-qualified Defined Benefit Plans and Madison Square Garden Qualified and Non-qualified Defined Benefit Plans aggregated $292,562 and $252,952 for the years ended December 31, 2007 and 2006, respectively.

I-51

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost (credit) during the next fiscal year relating to the defined benefit and other post retirement benefit plans are as follows:

Prior service credit recognition	$	(1,726	)
Actuarial loss	116
Transition asset recognition	(2		)
Total	$	(1,612	)

The Company’s net unfunded liability relating to its defined benefit and other postretirement benefit plans at December 31, 2007 is as follows:

Cablevision Qualified and Non-qualified Defined Benefit Plans	$	(38,216	)
Madison Square Garden Qualified and Non-qualified Defined Benefit Plans	(14,766		)
Madison Square Garden Postretirement Benefit Plan	(6,246		)
	(59,228		)
Less: Current portion	1,632
Long-term defined benefit plan and other postretirement plan obligations	$	(57,596	)
Long-term defined benefit plan asset	$	3,878

Components of the net periodic pension cost, recorded primarily in selling, general and administrative expenses, for the Company’s qualified and non-qualified defined benefit and other postretirement plans for the years ended December 31, 2007, 2006 and 2005, are as follows:

	Cablevision Qualified and Non-qualified Defined Benefit Plans									Madison Square Garden Qualified and Non-qualified Defined Benefit Plans									Madison Square Garden Postretirement Benefit Plan
	2007			2006			2005			2007			2006			2005			2007			2006			2005
Service cost	$	31,615		$	29,378		$	26,593		$	4,805		$	4,988		$	4,205		$	367		$	399		$	415
Interest cost	10,045			8,212			6,727			5,919			5,441			4,508			380			361			361
Expected return on plan assets	(11,745		)	(9,882		)	(8,046		)	(4,569		)	(3,686		)	(3,032		)	—			—			—
Recognized prior service cost (credit)	—			11			62			25			25			29			(133		)	(133		)	(156		)
Recognized actuarial loss (gain)	—			—			93			111			627			117			(10		)	(4		)	17
Recognized transition asset	—			—			—			(3		)	(3		)	(3		)	—			—			—
Net periodic benefit cost	$	29,915		$	27,719		$	25,429		$	6,288		$	7,392		$	5,824		$	604		$	623		$	637

I-52

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Plan Assumptions for Defined Benefit Plans

Weighted-average assumptions used to determine net periodic cost and benefit obligations for the Cablevision Qualified and Non-qualified Defined Benefit Plans are as follows:

	Weighted-Average Assumptions
	Net Periodic Benefit Cost for the Years Ended December 31,						Benefit Obligations at December 31,
	2007		2006		2005		2007		2006
Discount rate	5.80	%	5.80	%	6.05	%	5.75	%	5.80	%
Rate of increase in future compensation levels	4.40	%	4.15	%	4.12	%	4.50	%	4.40	%
Rate of return on plan assets (qualified plans only)	8.00	%	8.00	%	8.00	%	N/A		N/A

Weighted-average assumptions used to determine net periodic benefit cost and benefit obligations for the Madison Square Garden Qualified and Non-qualified Defined Benefit Plans are as follows:

	Weighted-Average Assumptions
	Net Periodic Benefit Cost for the  Years Ended December 31,						Benefit Obligations at  December 31,
	2007		2006		2005		2007		2006
Discount rate	6.14	%	5.75	%	6.00	%	6.15	%	6.14	%
Rate of increase in future compensation levels	4.39	%	4.00	%	3.16	%	3.00	%	4.39	%
Rate of return on plan assets (qualified plans only)	8.00	%	8.00	%	8.00	%	N/A		N/A

In 2007, 2006 and 2005, the discount rate used by the Company was determined (based on the expected duration of the benefit payments for the pension plan) by referring to applicable bond yields (such as Moody’s Aaa Corporate Bonds) and the Buck Consultants’ Discount Rate Model (which is developed by examining the yields on selected highly rated corporate bonds), to select a rate at which the Company believed the pension benefits could be effectively settled.  The Company’s expected long-term return on plan assets is based on a periodic review and modeling of the plan’s asset allocation structure over a long-term horizon.  Expectations of returns for each asset class are the most important of the assumptions used in the review and modeling and are based on comprehensive reviews of historical data and economic/financial market theory.  The expected long-term rate of return was selected from within the reasonable range of rates determined by (a) historical real returns, net of inflation, for the asset classes covered by the investment policy, and (b) projections of inflation over the long-term period during which benefits are payable to plan participants.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Weighted-average assumptions used to determine net periodic benefit cost and benefit obligations for the Madison Square Garden Postretirement Benefit Plan are as follows:

	Weighted-Average Assumptions
	Net Periodic Benefit Cost for the Years Ended December 31,						Benefit Obligations at December 31,
	2007		2006		2005		2007		2006
Discount rate	6.05	%	5.75	%	6.00	%	6.05	%	6.05	%
Health care trend rate assumed for next year	9.00	%	9.00	%	8.00	%	10.00	%	9.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	5.00	%	5.00	%	5.00	%	5.00	%	5.00	%
Year that the rate reaches the ultimate trend rate	2013		2012		2009		2014		2013

Assumed healthcare cost trend rates have a significant effect on the amounts reported for the healthcare plans.  A one-percentage point change in the assumed health care cost trend rates would have the following effects:

	Increase (Decrease) in net Periodic Benefit Cost for the Years Ended December 31,									Increase (Decrease) in Benefit Obligations at December 31,
	2007			2006			2005			2007			2006
One percentage point increase	$	121		$	129		$	137		$	772		$	1,001
One percentage point decrease	$	(101	)	$	(107	)	$	(114	)	$	(663	)	$	(840	)

Plan Assets and Investment Policy

The weighted average asset allocation of Cablevision’s Retirement Plan at December 31, 2007 and 2006 was as follows:

	Plan Assets at December 31,
	2007		2006
Asset Category:
Equity securities	64	%	57	%
Fixed income securities	28		34
Other	8		9
	100%		100	%

I-54

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The weighted average asset allocation of the MSG Plan at December 31, 2007 and 2006 was as follows:

	Plan Assets at December 31,
	2007		2006
Asset Category:
Equity securities	64	%	62	%
Fixed income securities	28		29
Other	8		9
	100%		100	%

On January 1, 2007, the Cablevision and MSG qualified defined benefit plan assets were pooled together into the Cablevision Retirement Plan Master Trust (“Master Trust”).  Although assets of these plans are commingled in the Master Trust, the trustee maintains supporting records for the purpose of allocating the net gain or loss of the investment account to the participating plans.  The net investment income or loss of the investment assets is allocated by the trustee to each participating plan based on the relationship of the interest of each plan to the total of the interests of the plans.

The Master Trust’s investment objectives are to invest in portfolios that would obtain a market rate of return throughout economic cycles, commensurate with the investment risk and cash flow needs of the plans.  This requires the Master Trust to subject a portion of its assets to increased risk to generate a greater rate of return.  The investments held in the Master Trust are readily marketable and can be sold to fund benefit payment obligations of the plans as they become payable.

Benefit Payments and Contributions for Defined Benefit Plans

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid relating to Cablevision’s Qualified and Non-qualified Defined Benefit Plans:

2008	$	20,141
2009	27,401
2010	34,778
2011	29,223
2012	31,245
2013-2017	171,545

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid relating to the Madison Square Garden Qualified and Non-qualified Defined Benefit Plans:

2008	$	2,311
2009	2,574
2010	2,722
2011	2,816
2012	2,921
2013-2017	18,219

Of the amounts expected to be paid in 2008, the Company has recorded $1,632 as a current liability in its consolidated balance sheets at December 31, 2007, since this amount represents the aggregate benefit payment obligation payable in the next twelve months that exceeds the fair value of aggregate plan assets at December 31, 2007.

I-55

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The Company makes contributions to the Retirement Plan, the MSG Plan and MSG Union Plans, which are all qualified defined benefit plans.  The Company currently expects to contribute approximately $34,200 and $294 to the Retirement Plan and to the MSG Union Plans in 2008, respectively.

NOTE 15.EQUITY AND LONG-TERM INCENTIVE PLANS

Equity Plans

In April 2006, the Company’s Board of Directors approved the Cablevision Systems Corporation 2006 Employee Stock Plan and the Cablevision Systems Corporation 2006 Stock Plan for Non-Employee Directors, which was approved by Cablevision’s stockholders at its annual stockholders meeting on May 18, 2006.

Under the 2006 Employee Stock Plan, the Company is authorized to grant incentive stock options, nonqualified stock options, restricted shares, restricted stock units, stock appreciation rights and other equity-based awards.  The Company may grant awards for up to 23,000,000 shares of Class A common stock (subject to certain adjustments).  Options and stock appreciation rights under the 2006 Employee Stock Plan must be granted with an exercise price of not less than the fair market value of a share of Class A common stock on the date of grant and must expire no later than 10 years from the date of grant (or up to one additional year in the case of the death of a holder).  The terms and conditions of awards granted under the 2006 Employee Stock Plan, including vesting and exercisability, will be determined by the compensation committee of the Board of Directors and may be based upon performance criteria.

Under the 2006 Stock Plan for Non-Employee Directors, the Company is authorized to grant nonqualified stock options, restricted stock units and other equity-based awards.  The Company may grant awards for up to 1,000,000 shares of Class A common stock (subject to certain adjustments). Options under this plan must be granted with an exercise price of not less than the fair market value of a share of Class A common stock on the date of grant and must expire no later than 10 years from the date of grant (or up to one additional year in the case of the death of a holder).  The terms and conditions of awards granted under the 2006 Stock Plan for Non-Employee Directors, including vesting and exercisability, are determined by the compensation committee.  Unless otherwise provided in an applicable award agreement, options granted under this plan will be fully vested and exercisable, and restricted stock units granted under this plan will be fully vested, upon the date of grant.  Unless otherwise determined by the compensation committee, on the date of each annual meeting of the Company’s stockholders, each non-employee director will receive restricted stock units with a fair market value of $40,000 and a grant of 4,000 options on such date.  In 2007, the Company granted its non-employee directors an aggregate of 36,900 restricted stock units, which also vested on the date of grant.

Previously, Cablevision had an employee stock plan (“1996 Employee Stock Plan”) under which it was authorized to grant incentive stock options, nonqualified stock options, restricted shares, restricted stock units, stock appreciation rights, and bonus awards and a non-employee director stock plan (“1996 Non-Employee Director Stock Plan”) under which it was authorized to grant options and restricted stock units. The 1996 Employee Stock Plan expired in February 2006 and the 1996 Non-Employee Director Stock Plan expired in May 2006.  These plans provided that the exercise price of stock options and stock appreciation rights could not be less than the fair market value per share of Class A common stock on the date the option was granted and the options expired no later than 10 years from the date of grant (or up to one additional year in the case of the death of a holder of nonqualified options).  As discussed in Note 17, a review determined that during the 1997-2002 period there were a number of instances in which stock options and stock appreciation rights were issued with exercise prices that were lower, and in some cases

I-56

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

substantially lower, than the fair market value per share of Cablevision’s common stock on the actual date of grant.

Options and stock appreciation rights have typically been scheduled to vest over three years in 33-1/3% annual increments and expire 10 years from the grant date.  Restricted shares have typically been subject to three or four year cliff vesting.  Performance based options were typically subject to approximately two year or three year cliff vesting, with exercisability subject to performance criteria.  Performance based options expire 10 years from the date of grant (or up to one additional year in the case of the death of the holder).  Options and restricted stock units issued to non-employee directors have been fully vested on the date of grant.  The Company has 809,000 performance based options and 1,049,219 stock appreciation rights outstanding at December 31, 2007.

As a result of the special dividend (see Note 1), options or stock appreciation rights issued under the 1996 Employee Stock Plan and the 1996 Non-Employee Director Stock Plan that were not vested on or prior to December 31, 2004 were adjusted to reduce their per share exercise price by the $10.00 amount of the special dividend.  The per share exercise price of options or stock appreciation rights that were vested on or prior to December 31, 2004 were not adjusted and the holder will receive the $10.00 special dividend amount upon exercise of the option or right.  Holders of restricted shares outstanding on April 24, 2006 will receive $10.00 per restricted share when and if the restrictions lapse on such shares.  Holders of non-employee director restricted stock units received $10.00 per share underlying such units on the date the special dividend was paid.

Impact of the Adoption of Statement No. 123R

As Statement No. 123R requires that options and performance based option compensation expense be based on awards that are ultimately expected to vest, share-based compensation (which includes options, performance options, restricted stock, restricted stock units and stock appreciation rights) for the years ended December 31, 2007 and 2006 has been reduced for estimated forfeitures.  Forfeitures were estimated based on historical experience.  Share-based compensation expense recognized as selling, general and administrative expense for the years ended December 31, 2007 and 2006 amounted to $52,039 and $80,587 (of which $53,077 and $63,675 related to equity classified awards), respectively.  An income tax benefit of $17,407 and $28,618 was recognized in continuing operations resulting from this share-based compensation expense for the years ended December 31, 2007 and 2006, respectively.  In connection with the adoption of Statement No. 123R, the Company recorded $862 as a cumulative effect of a change in accounting principle, net of taxes, in the Company’s consolidated statement of operations for the year ended December 31, 2006.

The following table presents actual expense (income) relating to Cablevision’s stock plan recorded pursuant to Statement No. 123R for 2007 and 2006 and APB Opinion No. 25 for 2005 and the pro forma information disclosed pursuant to Statement No. 123 for 2005:

	Stock Plan Expense (Income)
	2007 Actual			2006 Actual		2005 Actual			2005 Pro forma
Stock options	$	14,464		$	25,947	$	1,016		$	13,502
Stock appreciation rights	(1,038		)	16,912		(1,324		)	(1,367		)
Restricted shares	38,613			37,728		27,014			27,155
Share based compensation	$	52,039		$	80,587	$	26,706		$	39,290

I-57

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

In connection with Cablevision’s adoption of Statement No. 123R, Cablevision uses the ‘with-and-without’ approach described in EITF Topic No. D-32, Intraperiod Tax Allocation of the Tax Effect of Pretax Income from Continuing Operations, to determine the recognition and measurement of excess tax benefits.

Prior to adopting Statement No. 123R, Cablevision presented all tax benefits resulting from the exercise of stock options as operating cash flows in the statement of cash flows.  Statement No. 123R requires cash flows resulting from excess tax benefits to be classified as a part of cash flows from financing activities.  This requirement will reduce net operating cash flows and increase net financing cash flows in periods after the effective date in which the excess tax deductions result in a reduction of income taxes payable.  Excess tax benefits are realized tax benefits from tax deductions for options exercised and restricted shares issued in excess of the deferred tax asset attributable to stock compensation costs for such awards.  No excess tax benefits for the years ended December 31, 2007 and 2006 were recorded as a result of adopting Statement No. 123R.  Cash received from option exercises for the years ended December 31, 2007, 2006 and 2005 was $30,571, $15,334 and $13,925, respectively.  The total income tax benefit recognized pursuant to the exercise of options recorded in stockholders’ deficiency was $1,256 for the year ended December 31, 2005.

Valuation Assumptions - Stock Options and Stock Appreciation Rights

Cablevision calculates the fair value of each option award on the date of grant and for each stock appreciation right on the date of grant and at the end of each reporting period using the Black-Scholes option pricing model.  For unvested share-based awards as of January 1, 2006, granted prior to 2006, Cablevision’s computation of expected life was determined based on historical experience of similar awards, giving consideration to the contractual terms of the share-based awards and vesting schedules.  In addition, for stock appreciation rights, expected term was also determined based on historical experience of similar awards as of December 31, 2007 and 2006.  For options granted in 2006, Cablevision’s computation of expected life was based on the simplified method (the average of the vesting period and option term) as prescribed in SAB No. 107, Share Based Payments.  The interest rate for periods within the contractual life of the share-based award is based on interest yields for U.S. Treasury instruments in effect at the time of grant and as of December 31, 2007 and 2006 for stock appreciation rights.  Cablevision applies a dividend yield of zero for its share-based awards since it has historically never paid an ordinary dividend.  Cablevision’s computation of expected volatility is based on historical volatility of its common stock.

The following weighted average assumptions were used in calculating the fair value of options granted for the year ended December 31, 2006:  Range of risk-free interest rates used - 4.75%-4.96%, Expected life (in years) - 6.0, Dividend yield - 0%, and Weighted average volatility - 53.33%.  The weighted average grant date fair value for options granted in 2006 was $11.46.  There were no options granted during 2007.

The following assumptions were used to calculate the fair value of stock appreciation rights outstanding as of December 31, 2007 and 2006, respectively:  Range of risk-free interest rates used – 3.12%-3.45% and 4.74%-5.09%, Weighted average expected life (in years) – 1.48 and 1.30, Dividend yield - 0%, and Weighted average volatility – 21.08% and 20.61%.  The weighted average grant date fair value of rights outstanding at December 31, 2007 and 2006 was $13.36 and $18.66, respectively.

I-58

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Share-Based Payment Award Activity

The following table summarizes activity for Cablevision’s stock options for the year ended December 31, 2007 and 2006:

						Weighted
				Weighted		Average
	Shares Under Option			Average		Remaining
	Time		Performance	Exercise		Contractual	Aggregate
	Vesting		Vesting	Price Per		Term (in	Intrinsic
	Options		Options	Share		years)	Value**
Balance, December 31, 2006*	9,068,966		809,000	$	16.60	6.84	$	156,226
Exercised	(2,352,265	)	—	$	13.01
Forfeited/Expired	(96,701	)	—	$	23.32
Balance, December 31, 2007*	6,620,000		809,000	$	17.65	6.23	$	77,595
Options exercisable at December 31, 2007*	5,431,057		—	$	17.73	5.56	$	63,446
Options expected to vest in the future*	1,155,180		797,982	$	17.44	8.06	$	13,801

*As a result of the special dividend (see Note 1), options issued under the 1996 Employee Stock Plan and the 1996 Non-Employee Director Plan that were not vested on or prior to December 31, 2004 were adjusted to reduce their per share exercise price by the $10.00 amount of the special dividend.  The per share exercise price of options that were vested on or prior to December 31, 2004 was not adjusted and the holders will receive the $10.00 special dividend amount upon exercise.

**The aggregate intrinsic value is calculated as the difference between (i) the exercise price of the underlying award and (ii) the quoted price of Cablevision’s NY Group Class A common stock on December 31, 2007 and 2006 plus, where applicable, the $10.00 special dividend.

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of Cablevision’s common stock for the 6,985,850 options outstanding (which included 4,990,973 exercisable options) that were in-the-money at December 31, 2007.  For the years ended December 31, 2007, 2006 and 2005, the aggregate intrinsic value of options exercised under Cablevision’s stock option plans was $64,553, $22,794 and $12,358, respectively, determined as of the date of option exercise, plus for the 2007 and 2006 periods, the $10.00 special dividend which each holder of options vested on or prior to December 31, 2004 received upon exercise.  When an option is exercised, Cablevision issues new shares of stock.

I-59

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The following table summarizes activity for Cablevision’s restricted shares (which includes restricted stock units) for the years ended December 31, 2007 and 2006:

	Restricted  Shares		Weighted Average Fair Value Per Share  at Date of Grant
Unvested award balance, December 31, 2006	8,108,639		$	19.26
Granted	2,164,584		$	29.09
Awards vested	(5,420,148	)	$	18.42
Forfeited	(406,786	)	$	20.39
Unvested award balance, December 31, 2007	4,446,289		$	24.97

There were no unvested stock appreciation rights outstanding as of December 31, 2007.

	Outstanding Vested Stock Appreciation Rights	Weighted Average Exercise Price Per Share at December 31,  2007		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic  Value*
Balance, December 31, 2007	1,049,219	$	25.26	2.51	$	13,391

*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 Cablevision’s NY Group Class A common stock plus, the $10.00 special dividend.

For the years ended December 31, 2007, 2006 and 2005, the amount of cash used by the Company to settle the aggregate intrinsic value of stock appreciation rights exercised under the Company’s stock plans was $15,018, $11,258 and $6,549, respectively, determined as of the date of exercise.  The aggregate intrinsic value, which was settled in cash, is calculated as the difference between (i) the exercise price of the underlying awards and (ii) the quoted price of the Class A common stock as of the date of exercise, plus for the 2007 and 2006 periods, the $10.00 special dividend which each holder of rights vested prior to December 31, 2004 received upon exercise.

As of December 31, 2007, there was $70,804 of total unrecognized compensation cost related to the Company’s unvested options and restricted shares granted under the Company’s stock plans. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 1 year.

For the year ended December 31, 2007, 2,156,599 of the restricted shares that vested were acquired by the Company to fulfill the employees’ statutory minimum tax withholding obligations of $69,025 for the applicable income and other employment taxes.  The 2,156,599 acquired shares have been classified as treasury stock.

Pro Forma Information for Period Prior to the Adoption of Statement No. 123R

Prior to the adoption of Statement No. 123R, the Company had applied the intrinsic value based method of accounting prescribed by APB Opinion No. 25 and related interpretations, to account for its share-based compensation awards.  Under this method, compensation expense was recorded only if on the date of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

grant the current market price of the underlying stock exceeded the exercise price.  The Company provided the disclosures required under Statement No. 123, as amended by SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosures.  Employee share-based compensation expense for the year ended December 31, 2005, is based on the accounting prescribed by APB Opinion No. 25 and related interpretations and has not been restated for the adoption of Statement No. 123R.  Forfeitures of awards were recognized as they occurred.

The table below sets forth the pro forma net income (loss) as if compensation cost was determined in accordance with Statement No. 123 for options granted in 1995 through 2005:

	Year Ended December 31, 2005
Net income	$	89,320
Add: Stock based employee compensation cost included in reported net income, net of taxes	20,703
Deduct: Stock based employee compensation expense determined under fair value based method, net of taxes	(28,078		)
Pro forma net income	$	81,945
Basic and diluted net income per common share:
As reported	$	0.32
Pro forma	$	0.29

The Company estimated the fair value of each option grant using the Black-Scholes option pricing model.  The following assumptions were used in calculating these fair values for the year ended December 31, 2005:

Risk free interest rate	4.5		%
Volatility	57.0		%
Dividend Yield	0		%
Weighted average grant date fair value	$	13.60
Expected life in years	5.0

Long-Term Incentive Plans

In April 2006, the Company’s Board of Directors approved the Cablevision Systems Corporation 2006 Cash Incentive Plan, which was approved by the Company’s stockholders at its annual stockholders meeting in May 2006.

Prior to the Cash Incentive Plan, the Company had a Long-Term Incentive Plan, under which certain executives had been granted cash awards, some of which were performance based, that vested over varying required service periods and were typically payable at the end of the vesting period or on specified dates.  One form of award received by certain executives under this plan was a performance retention award, vesting over 7 years.  The terms of the performance retention awards provided that the executive could have requested a loan from the Company in the amount of the award prior to its vesting, subject to certain limitations, provided that such loan was secured by a lien in favor of the Company on property owned by the executive.  Effective July 30, 2002, such requests for advances on amounts of awards are no longer permitted.  Imputed interest to those executives on these interest free loans amounted to $687, $900 and $911, respectively for the years ended December 31, 2007, 2006 and 2005.  As of December 31, 2007 and 2006, $6,745 and $23,850 was outstanding in respect of advances made pursuant to this plan.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

In connection with long-term incentive awards granted under the two plans, the Company has recorded expenses of $69,767, $59,144 and $41,857 for the years ended December 31, 2007, 2006 and 2005, respectively.  At December 31, 2007, the Company had accrued $47,562 for performance-based awards for which the performance criteria had not yet been met as of December 31, 2007 as such awards are based on achievement of certain performance criteria through December 31, 2009.  The Company has accrued the amount that it currently believes will ultimately be paid based upon the performance criteria established for these performance-based awards.  If the Company subsequently determines that the performance criteria for such awards is not probable of being achieved, the Company would reverse the accrual in respect of such award at that time.  In addition, as of December 31, 2007, the Company had approximately $53,500 accrued in connection with the 2005 awards discussed below.

On February 25, 2008, the Compensation Committee of the Company’s Board of Directors approved an amendment of the terms of the 2005 three-year cash performance awards (“2005 Awards”) awarded by the Company in 2005 to each of the Company’s executive officers at that time and 110 other members of management under the Company’s Long-Term Incentive Plan.  The 2005 Awards, which aggregated approximately $53,500, are payable in March 2008 if the Company has met certain compounded annual growth rate targets (“CAGR”) for both net revenues (“Net Revenue”) and adjusted operating cash flow (“AOCF”) over the 2005-2007 period.  The terms of the 2005 Awards required adjustment for divestitures of any operating entities during the plan period to eliminate the impact of such sales from the actual performance as well as the CAGR targets.  During the plan period, the Company sold and shutdown several businesses.  The original Net Revenue CAGR target, when adjusted for the dispositions, was achieved.  The original AOCF CAGR target, when adjusted for the dispositions, would have resulted in a 1.3 percentage point upward adjustment of the AOCF CAGR target causing the Company’s actual performance to fall short of the adjusted AOCF target.  The Compensation Committee approved the amendment of the 2005 Awards so that the original AOCF CAGR target for the 2005 Awards continued to apply without adjusting the target for the dispositions.  Accordingly, it is expected that payment of the 2005 Awards will be made in early March 2008.

As a result of this amendment, awards payable to the Company’s four most highly compensated executive officers will not be deemed to be performance based compensation and therefore not deductible for income tax purposes.  This will result in a loss of approximately $10,000 of deductible expense.  The Company’s NOL for federal income tax purposes was $2,284,457 at December 31, 2007.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

NOTE 16.CONTRACTUAL OBLIGATIONS

Future cash payments required under unconditional purchase obligations pursuant to contracts entered into by the Company in the normal course of business are as follows as of December 31, 2007:

	Payments Due by Period
	Total		Year 1		Years 2-3		Years 4-5		More than 5 years		Other
Off balance sheet arrangements:
Programming obligations (1)	$	2,652,556	$	869,731	$	1,151,002	$	605,136	$	26,687	$	—
Purchase obligations (2)	1,814,466		394,123		340,679		169,182		910,482		—
Guarantees (3)	518		518		—		—		—		—
Letters of credit (4)	55,199		3,367		559		—		51,273		—
Total	4,522,739		1,267,739		1,492,240		774,318		988,442		—
Contractual obligations reflected on the balance sheet:
Contract obligations (5)	37,065		12,993		4,019		6,283		13,770		—
Taxes (6)	3,763		—		—		—		—		3,763
Total	$	4,563,567	$	1,280,732	$	1,496,259	$	780,601	$	1,002,212	$	3,763

(1)Programming obligations represent contractual commitments with various programming vendors to provide video services to the Company’s video subscribers.  Future fees under such contracts are based on numerous factors, including the number of subscribers receiving the programming.  Amounts reflected above are based on the number of subscribers receiving the programming as of December 2007 multiplied by the per subscriber rates contained in the executed agreements in effect as of December 31, 2007.

(2)Purchase obligation amounts not reflected on the balance sheet consist primarily of (i) long-term rights agreements which provide Madison Square Garden with exclusive broadcast rights to certain live sporting events in exchange for minimum contractual payments, (ii) payments under employment agreements that the Company has with professional sports teams’ personnel that are generally guaranteed regardless of employee injury or termination, and (iii) minimum purchase requirements incurred in the normal course of to the Company’s operations.

(3)Consists principally of outstanding guarantees primarily by CSC Holdings in favor of certain financial institutions in respect of ongoing interest expense obligations and potential early termination events in connection with the monetization of the Company’s holdings of shares of Comcast Corporation common stock.

(4)Consists primarily of letters of credit obtained by CSC Holdings in favor of insurance providers and certain governmental authorities for the Telecommunications Services segment.

(5)Consist principally of amounts earned under employment agreements that the Company has with professional sports teams’ personnel.

(6)This amount represents tax liabilities, including accrued interest, recognized pursuant to FIN 48.

The future cash payments reflected above do not include the impact of potential insurance recoveries or amounts which may be due to the National Basketball Association (“NBA”) for luxury tax payments.

In addition, the future cash payments reflected above do not include the payments required under the Company’s agreements with EchoStar relating to VOOM, the Company’s high-definition television programming service.  EchoStar was issued a 20% interest in VOOM HD Holdings, the Company’s subsidiary operating VOOM, and that 20% interest will not be diluted until $500,000 in cash has been invested in VOOM HD Holdings by the Company.  The affiliation agreement with EchoStar providing for distribution of VOOM for a 15-year term provides that if VOOM HD fails to spend $100,000 per year (subject to reduction to the extent that the number of offered channels is reduced to fewer than 21), up to a maximum of $500,000 in the aggregate, on VOOM, EchoStar may seek to terminate the agreement under certain circumstances (see Note 3).  VOOM HD also has the right to terminate the affiliation agreement if VOOM is discontinued in the future.  On the fifth or eighth anniversary of the effective date

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

(April 2005) of the investment agreement, the termination of the affiliation agreement by EchoStar, or other specified events, EchoStar has a put right to require a wholly-owned subsidiary of Rainbow Media Holdings to purchase all of its equity interests in VOOM HD Holdings at fair value.  On the seventh or tenth anniversary of the effective date of the investment agreement, or the second anniversary date of the termination of the affiliation agreement by EchoStar, a wholly-owned subsidiary of Rainbow Media Holdings has a call right to purchase all of EchoStar’s ownership in VOOM HD Holdings at fair value.

An indirect subsidiary of Rainbow Media Holdings owns a 90% interest in DTV Norwich LLC.  The other investor has the right, for ten years, to put its remaining 10% interest to the Company at fair value to be determined by a process involving independent valuation experts.  The table above does not include any future payments that would be required upon the exercise of this put right.

Many of the Company’s franchise agreements and utility pole leases require the Company to remove its cable wires and other equipment upon termination of the respective agreements.  The Company has concluded that the fair value of these asset retirement obligations cannot be reasonably estimated since the range of potential settlement dates is not determinable.

NOTE 17.              LEGAL MATTERS

Tracking Stock Litigation

In August 2002, purported class actions naming as defendants Cablevision and each of its directors were filed in the Delaware Chancery Court.  The actions, which allege breach of fiduciary duties and breach of contract with respect to the exchange of the Rainbow Media Group tracking stock for Cablevision NY Group common stock, were purportedly brought on behalf of all holders of publicly traded shares of Rainbow Media Group tracking stock.  The actions sought to (i) enjoin the exchange of Rainbow Media Group tracking stock for Cablevision NY Group common stock, (ii) enjoin any sales of “Rainbow Media Group assets,” or, in the alternative, award rescissory damages, (iii) if the exchange is completed, rescind it or award rescissory damages, (iv) award compensatory damages, and (v) award costs and disbursements.  The actions were consolidated into one action on September 17, 2002, and on October 3, 2002, Cablevision filed a motion to dismiss the consolidated action.  The action was stayed by agreement of the parties pending resolution of a related action brought by one of the plaintiffs to compel the inspection of certain books and records of Cablevision.  On October 26, 2004, the parties entered into a stipulation dismissing the related action, and providing for Cablevision’s production of certain documents. On December 13, 2004, plaintiffs filed a consolidated amended complaint.  Cablevision filed a motion to dismiss the amended complaint.  On April 19, 2005, the court granted that motion in part, dismissing the breach of contract claim but declining to dismiss the breach of fiduciary duty claim on the pleadings.

In August 2003, a purported class action naming as defendants Cablevision, directors and officers of Cablevision and certain current and former officers and employees of the Company’s Rainbow Media Holdings and American Movie Classics subsidiaries was filed in New York Supreme Court by the Teachers Retirement System of Louisiana (“TRSL”).  The actions relate to the August 2002 Rainbow Media Group tracking stock exchange and allege, among other things, that the exchange ratio was based upon a price of the Rainbow Media Group tracking stock that was artificially deflated as a result of the improper recognition of certain expenses at the national services division of Rainbow Media Holdings.  The complaint alleges breaches by the individual defendants of fiduciary duties.  The complaint also alleges breaches of contract and unjust enrichment by Cablevision.  The complaint seeks monetary damages and such other relief as the court deems just and proper.  On October 31, 2003, Cablevision and other defendants moved to stay the action in favor of the previously filed actions pending in Delaware or,

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

in the alternative, to dismiss for failure to state a claim.  On June 10, 2004, the court stayed the action on the basis of the previously filed action in Delaware.  TRSL subsequently filed a motion to vacate the stay in the New York action, and simultaneously filed a motion to intervene in the Delaware action and to stay that action.  Cablevision opposed both motions.  On April 19, 2005, the court in the Delaware action denied the motion to stay the Delaware action and granted TRSL’s motion to intervene in that action.  On June 22, 2005, the court in the New York action denied TRSL’s motion to vacate the stay in that action.

Cablevision reached an agreement in principle with respect to the settlement of the Delaware action in the quarter ended June 30, 2007.  In connection with the anticipated settlement, Cablevision expects to seek dismissal of the New York action as well as the Delaware action.  A hearing on the proposed settlement is scheduled to take place in April 2008.

The Wiz Bankruptcy

TW, Inc. (“TW”), a former subsidiary of the Company and operator of The Wiz consumer retail electronics business, is the subject of a Chapter 11 bankruptcy proceeding in the U.S. Bankruptcy Court for the District of Delaware.  In February 2005, TW filed a complaint in the bankruptcy proceeding against Cablevision and certain of its affiliates seeking recovery of alleged preferential transfers in the aggregate amount of $193,457.  Also in February 2005, the Official Committee of Unsecured Creditors of TW (the “Committee”) filed a motion seeking authority to assume the prosecution of TW’s alleged preference claims and to prosecute certain other causes of action.  The bankruptcy court granted the Committee’s motion on or about March 10, 2005, thereby authorizing the Committee, on behalf of TW, to continue the preference suit and to assert other claims.  On March 12, 2005, the Committee filed a complaint in the bankruptcy court against Cablevision, certain of its affiliates, and certain present and former officers and directors of Cablevision and of its former subsidiary Cablevision Electronics Investments, Inc. (“CEI”).  The Committee’s complaint, as amended, asserts preferential transfer claims allegedly totaling $193,858, breach of contract, promissory estoppel, and misrepresentation claims allegedly totaling $310,000, and fraudulent conveyance, breach of fiduciary duty, and other claims seeking unspecified damages.  On June 30, 2005, Cablevision filed a motion to dismiss several of the claims in the amended complaint.  On October 31, 2005, the bankruptcy court denied the motion to dismiss.  The bankruptcy court’s ruling on the motion to dismiss allowed the Committee to proceed with its claims against Cablevision and the other defendants.  A hearing on solvency issues was held November 29 and 30, 2007.  At that hearing, the court ruled that the Committee had failed to prove that CEI was insolvent at any point before 2003, a ruling that the Company believes will have the effect of significantly limiting many of the Committee’s claims.  Cablevision believes that the claims asserted by the Committee are without merit and is contesting them vigorously.

Dolan Family Group 2006 Proposal

In October 2006, a number of shareholder class action lawsuits (the “Transactions Lawsuits”) were filed against Cablevision and its individual directors in New York Supreme Court, Nassau County, relating to the October 8, 2006 offer by the Dolan Family Group to acquire all of the outstanding shares of Cablevision’s common stock, except for the shares held by the Dolan Family Group.  These lawsuits allege breaches of fiduciary duty and seek injunctive relief to prevent consummation of the proposed transaction and compensatory damages.  (In addition, a similar claim was added to a shareholder derivative action involving claims for alleged options backdating that was pending in the District Court for the Eastern District of New York, which is described below under “Stock Option Related Matters.”)  The New York Supreme Court ordered expedited discovery, which began in November 2006.  On January 12, 2007, the Special Transaction Committee of the Board (“Special Transaction Committee”)

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

received a revised proposal from the Dolan Family Group to acquire all of the outstanding shares of common stock of Cablevision, except for the shares held by the Dolan Family Group.  On January 16, 2007, the Special Transaction Committee delivered a letter to Charles F. Dolan and James L. Dolan, rejecting as inadequate the revised proposal.  As discussed in Note 18, on May 2, 2007, Cablevision entered into a merger agreement pursuant to which, if the merger contemplated thereby was consummated, the Dolan Family Group would obtain ownership of all of the common stock equity of Cablevision (the “Proposed Merger”).  Lawyers representing shareholders in certain of the Transactions Lawsuits, in consultation with lead counsel for the plaintiffs in the Nassau County Supreme Court options backdating litigations, participated in the negotiations to improve the financial terms of the Proposed Merger as well as to add certain contractual provisions designed to protect the rights of shareholders. Based upon the above events and circumstances, and the role that the lead counsel for the plaintiffs in the Transactions Lawsuits played in connection with the Proposed Merger, the parties subsequently reached a memorandum of understanding for the dismissal of the Transactions Lawsuits (and of the going-private claim in the cases pending in the U.S. District Court for the Eastern District of New York), subject to approval of a settlement by the Nassau County Supreme Court, and for the transfer to Cablevision, if the Proposed Merger were to be consummated, of the options-related derivative claims pending in the Nassau County Supreme Court and in the U.S. District Court for the Eastern District of New York.  Pursuant to the memorandum of understanding, the parties executed a stipulation of settlement as of September 18, 2007.  The stipulation of settlement was conditioned on, among other things, consummation of the Proposed Merger, and provided that the stipulation would become null and void and of no further force and effect in the event that this condition was not satisfied.  This condition was not satisfied.

Director Litigation

Cablevision was named as a nominal defendant in a purported shareholder derivative complaint filed in the Court of Chancery of the State of Delaware.  The action was brought derivatively on behalf of Cablevision and named as additional defendants Charles F. Dolan, the Chairman of Cablevision, and Rand Araskog, Frank Biondi, John Malone and Leonard Tow, each of whom was appointed as a director on March 2, 2005 by Mr. Dolan and certain other holders of the Company’s NY Group Class B common stock.  The complaint alleges that Charles F. Dolan, as the controlling Class B shareholder of Cablevision, by purporting to remove three Cablevision Board members (William J. Bell, Sheila Mahony and Steven Rattner) and replace them with the four new directors, wrongfully interfered with the Board’s role in managing the affairs of Cablevision and sought to substitute his judgment of how to proceed with the VOOM service of Cablevision’s Rainbow DBS subsidiary above that of the Board.  The action seeks, among other things, to preliminarily and permanently enjoin Charles F. Dolan from interfering with the managerial prerogatives of Cablevision’s Board; rescinding the purported appointment of the new directors; rescinding the removal of Mr. Bell, Ms. Mahony and Mr. Rattner as directors and restoring them to their positions as directors and directing Charles F. Dolan to account to Cablevision for its damages.  There have been no developments in the case since May 2005, when the parties agreed that defendants need not respond to the complaint until further notice from the plaintiff.

Patent Litigation

Cablevision is named as a defendant in certain lawsuits claiming infringement of various patents relating to various aspects of the Company’s businesses.  In certain of these cases other industry participants are also defendants.  In certain of these cases the Company expects that any potential liability would be the responsibility of the Company’s equipment vendors pursuant to applicable contractual indemnification provisions.  To the extent that the allegations in these lawsuits have been analyzed by the Company at the current stage of their proceedings, the Company believes that the claims are without merit and intend to

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

defend the actions vigorously.  The final disposition of these actions is not expected to have a material adverse effect on the Company’s consolidated financial position.

Contract Dispute

In September 2005, Loral filed an action against Cablevision and Rainbow DBS for breach of contract based on a letter agreement dated March 23, 2001 (“the Letter Agreement”) between Loral and Rainbow DBS.  Loral alleged that the sale of the Rainbow-1 satellite and related assets to EchoStar constituted a sale of “substantially all of the assets of Rainbow DBS” triggering a “Make Whole Payment” under the Letter Agreement of $33,000 plus interest.  A trial in this matter took place in January 2007 in New York Supreme Court for New York County.  On January 24, 2007, the jury returned a verdict finding that the EchoStar sale had triggered a Make Whole Payment under the Letter Agreement, requiring a payment to Loral of $50,898, including interest, which was accrued for in 2006 and reflected as an expense in discontinued operations.  On March 12, 2007, judgment was entered against Cablevision and Rainbow DBS in the amount of $52,159.  Cablevision and Rainbow DBS filed a motion for judgment as a matter of law, or in the alternative for a new trial, which was denied by the court on March 30, 2007.  The Company has posted a cash collateralized bond in the amount of $52,159, which is reflected as restricted cash in the Company’s consolidated balance sheet at December 31, 2007.  The Company filed an appeal with the New York Supreme Court Appellate Division, First Department, which affirmed the judgment on February 19, 2008.

Accounting Related Investigations

In June 2003, the Company reported that it had discovered certain improper expense accruals primarily at the national programming services of the Company’s Rainbow segment.  The improper expense recognition matter has been the subject of investigations by the SEC and the U.S. Attorney’s Office for the Eastern District of New York.  The SEC is continuing to investigate the improper expense recognition matter and the Company’s timing of recognition of launch support, marketing and other payments under affiliation agreements.  The Company continues to fully cooperate with such investigations.

Stock Option Related Matters

The Company announced on August 8, 2006 that, based on a voluntary review of its past practices in connection with grants of stock options and stock appreciation rights (“SARs”), it had determined that the grant date and exercise price assigned to a number of its stock option and SAR grants during the 1997-2002 period did not correspond to the actual grant date and the fair market value of Cablevision’s common stock on the actual grant date.  The review was conducted with a law firm that was not previously involved with the Company’s stock option plans.  The Company has advised the SEC and the U.S. Attorney’s Office for the Eastern District of New York of these matters and each has commenced an investigation.  The Company received a grand jury subpoena from the U.S. Attorney’s Office for the Eastern District of New York seeking documents related to the stock options issues.  The Company received a document request from the SEC relating to its informal investigation into these matters.  The Company continues to fully cooperate with such investigations.

In addition, in August, September and October 2006, purported derivative lawsuits (including one purported combined derivative and class action lawsuit) relating to the Company’s past stock option and SAR grants were filed in New York State Supreme Court for Nassau County, the United States District Court for the Eastern District of New York, and Delaware Chancery Court for New Castle County, by parties identifying themselves as shareholders of Cablevision purporting to act on behalf of Cablevision. 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

These lawsuits named as defendants certain present and former members of Cablevision’s Board of Directors and certain present and former executive officers, alleging breaches of fiduciary duty and unjust enrichment relating to practices with respect to the dating of stock options, recordation and accounting for stock options, financial statements and SEC filings, and alleged violation of IRC 162(m).  In addition, certain of these lawsuits asserted claims under Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934 and Section 304 of the Sarbanes-Oxley Act.  The lawsuits sought damages from all defendants, disgorgement from the officer defendants, declaratory relief, and equitable relief, including rescission of the 2006 Employee Stock Plan and voiding of the election of the director defendants.  On October 27, 2006, the Board of Directors of Cablevision appointed Grover C. Brown and Zachary W. Carter as directors and, on the same date, appointed Messrs. Brown and Carter to a newly formed Special Litigation Committee (“SLC”) of the Board.  The SLC was directed by the Board to review and analyze the facts and circumstances surrounding these claims, which purport to have been brought derivatively on behalf of the Company, and to consider and determine whether or not prosecution of such claims is in the best interests of the Company and its shareholders, and what actions the Company should take with respect to the cases.  The SLC, through its counsel, filed motions in all three courts to intervene and to stay all proceedings until completion of the SLC’s independent investigation of the claims raised in these actions.  The Delaware action subsequently was voluntarily dismissed without prejudice by the plaintiff.  The actions pending in Nassau County have been consolidated and a single amended complaint has been filed in that jurisdiction. Similarly, the actions pending in the Eastern District of New York have been consolidated and a single amended complaint has been filed in that jurisdiction.  Both the Nassau County action and the Eastern District of New York action assert derivative claims on behalf of the Company as well as direct claims on behalf of Cablevision shareholders relating to the Company’s past stock option and SAR grants.  On November 14, 2006, the trial court in the Nassau County action denied the SLC’s motion for a stay of proceedings and ordered expedited discovery.  The Appellate Division of the New York State Supreme Court subsequently stayed all proceedings in the Nassau County action (including all discovery) pending the SLC’s appeal of the denial of its stay motion.  On October 9, 2007, the Appellate Division affirmed the trial court’s denial of the SLC’s motion to stay proceedings. The U.S. District Court for the Eastern District of New York granted the SLC’s motion for a stay and stayed the cases pending in that court.  That stay expired following the determination that the transaction contemplated by the Dolan Family Group 2006 Proposal would not close.  There have been a series of extensions and/or stays in the Nassau County and Eastern District actions, and both actions are currently stayed until March 14, 2008.

The Company has continued to incur substantial expenses for legal services in connection with the Company’s stock option related litigation and the investigations by the SEC and the U.S. Attorney’s Office for the Eastern District of New York.

Antitrust Lawsuit

On September 20, 2007, an antitrust lawsuit was filed in the U.S. District Court for the Central District of California against Cablevision and several other defendants, including other cable and satellite providers and programming content providers.  The complaint alleges that the defendants have violated Section 1 of the Sherman Antitrust Act by agreeing to the sale and licensing of programming on a “bundled” basis and by offering programming in packaged tiers rather than on an “a la carte” basis.  The plaintiffs, purportedly on behalf of a nationwide class of cable and satellite subscribers, seek unspecified treble monetary damages and injunctive relief to compel the offering of channels to subscribers on an “a la carte” basis.  The Company intends to defend against this lawsuit vigorously.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Other Matters

In addition to the matters discussed above, the Company is party to various lawsuits, some involving claims for substantial damages.  Although the outcome of these other matters cannot be predicted with certainty and the impact of the final resolution of these other matters on the Company’s results of operations in a particular subsequent reporting period is not known, management does not believe that the resolution of these other lawsuits will have a material adverse effect on the financial position of the Company or the ability of the Company to meet its financial obligations as they become due.

NOTE 18.DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, Trade, Notes and Other Receivables, Prepaid Expenses and Other Assets, Advances to Affiliates, Accounts Payable, Accounts Payable to  Affiliates and Accrued Liabilities.

The carrying amount approximates fair value due to the short-term maturity of these instruments.

Derivative Contracts and Liabilities Under Derivative Contracts

Derivative contracts are carried on the accompanying consolidated balance sheets at fair value based on dealer quotes.

Investment Securities and Investment Securities Pledged as Collateral

Marketable securities are carried on the accompanying consolidated balance sheets at their fair value based upon quoted market prices.

Bank Debt, Collateralized Indebtedness, Notes Payable, Senior Notes and Debentures and Senior Subordinated Notes

The fair values of each of the Company’s debt instruments are based on quoted market prices for the same or similar issues or on the current rates offered to the Company for instruments of the same remaining maturities.

Interest Rate Swap Agreements

Interest rate swap agreements are carried on the accompanying consolidated balance sheets at fair value based on valuations provided by a derivative valuation system using current market interest rate data.  These values represent the estimated amount the Company would receive or pay to terminate agreements, taking into consideration current interest rates.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The fair value of the Company’s debt instruments are summarized as follows:

	December 31, 2007
	Carrying Amount		Estimated Fair Value
Debt instruments:
Bank debt	$	4,888,750	$	4,888,750
Collateralized indebtedness	847,154		847,581
Senior notes and debentures	5,495,148		5,398,500
Senior subordinated notes	323,311		341,250
Notes payable	1,017		1,017
	$	11,555,380	$	11,477,098

	December 31, 2006
	Carrying Amount		Estimated Fair Value
Debt instruments:
Bank debt	$	4,992,500	$	4,992,500
Collateralized indebtedness	921,574		901,035
Senior notes and debentures	5,993,956		6,032,589
Senior subordinated notes and debentures	497,011		551,682
Notes payable	18,843		19,165
	$	12,423,884	$	12,496,971

Fair value estimates related to the Company’s debt instruments and interest rate swap agreements discussed above are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

NOTE 19.              SEGMENT INFORMATION

The Company classifies its business interests into three reportable segments: Telecommunications Services, consisting principally of its video, high-speed data, Voice over Internet Protocol and its commercial data and voice services operations; Rainbow, consisting principally of interests in national and regional cable television programming networks, including AMC, IFC, WE tv, News 12 and the VOOM HD Networks; and Madison Square Garden, consisting principally of its professional sports teams, a regional sports programming business and an entertainment business, as well as the operations of Fuse, a national programming network effective January 1, 2008.  Prior to January 1, 2008, Fuse was included in the Rainbow segment.  Prior period segment information has been reclassified and reported on a comparable basis.

The Company’s reportable segments are strategic business units that are managed separately.  The Company evaluates segment performance based on several factors, of which the primary financial measure is business segment adjusted operating cash flow (defined as operating income (loss) before depreciation and amortization (including impairments), stock plan income or expense and restructuring charges or credits), a non-GAAP measure.  The Company has presented the components that reconcile adjusted operating cash flow to operating income (loss), an accepted GAAP measure.  Information as to the operations of the Company’s business segments is set forth below.

I-70

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

	Years Ended December 31,
	2007			2006			2005
Revenues, net from continuing operations
Telecommunications Services	$	4,721,169		$	4,237,707		$	3,606,765
Rainbow	843,548			736,887			692,915
Madison Square Garden	1,002,182			905,196			847,552
All other (a)	77,873			84,391			85,385
Inter-segment eliminations	(160,291		)	(135,688		)	(150,572		)
	$	6,484,481		$	5,828,493		$	5,082,045

Inter-segment eliminations are primarily affiliate revenues recognized by the Company’s Rainbow and Madison Square Garden segments from the sale of cable network programming to the Company’s Telecommunication Services segment.

	Years Ended December 31,
	2007		2006		2005
Inter-segment revenues
Telecommunications Services	$	1,839	$	1,529	$	2,420
Rainbow	53,408		39,248		49,280
Madison Square Garden	105,034		94,911		98,872
Other	10		—		—
	$	160,291	$	135,688	$	150,572

Reconciliation (by Segment and in Total) of Adjusted Operating Cash Flow to Operating Income (Loss) from Continuing Operations

	Years Ended December 31,
	2007			2006			2005
Adjusted operating cash flow from continuing operations
Telecommunications Services	$	1,828,407		$	1,668,554		$	1,412,199
Rainbow	193,382			137,653			133,239
Madison Square Garden	136,286			61,259			110,640
All other (b)	(71,347		)	(81,642		)	(80,632		)
	$	2,086,728		$	1,785,824		$	1,575,446

	Years Ended December 31,
	2007			2006			2005
Depreciation and amortization (including impairments) included in continuing operations
Telecommunications Services	$	(929,606	)	$	(915,724	)	$	(843,177	)
Rainbow	(89,117		)	(92,561		)	(100,221		)
Madison Square Garden	(62,399		)	(65,171		)	(67,110		)
All other(c)	(37,766		)	(46,373		)	(64,203		)
	$	(1,118,888	)	$	(1,119,829	)	$	(1,074,711	)

I-71

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

	Years Ended December 31,
	2007			2006			2005
Stock expense included in continuing operations
Telecommunications Services	$	(24,325	)	$	(39,485	)	$	(14,657	)
Rainbow	(14,734		)	(23,553		)	(5,937		)
Madison Square Garden	(11,715		)	(15,817		)	(4,323		)
All other (c)	(1,265		)	(1,732		)	(1,789		)
	$	(52,039	)	$	(80,587	)	$	(26,706	)

	Years Ended December 31,
	2007			2006			2005
Restructuring credits (charges) included in continuing operations
Telecommunications Services	$	—		$	17		$	(295	)
Rainbow	(2,820		)	—			—
Madison Square Garden	(221		)	(143		)	(366		)
All other (c)	(1,692		)	3,610			1,198
	$	(4,733	)	$	3,484		$	537

	Years Ended December 31,
	2007			2006			2005
Operating income (loss) from continuing operations
Telecommunications Services	$	874,476		$	713,362		$	554,070
Rainbow	86,711			21,539			27,081
Madison Square Garden	61,951			(19,872		)	38,841
All other (b)	(112,070		)	(126,137		)	(145,426		)
	$	911,068		$	588,892		$	474,566

I-72

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

A reconciliation of reportable segment amounts to the Company’s consolidated balances is as follows:

	Years Ended December 31,
	2007			2006			2005
Operating income (loss) from continuing operations before income taxes
Total operating income for reportable segments	$	1,023,138		$	715,029		$	619,992
Other operating loss (b)	(112,070		)	(126,137		)	(145,426		)
Operating income	911,068			588,892			474,566
Items excluded from operating income:
Interest expense	(940,852		)	(928,202		)	(764,539		)
Interest income	40,154			36,528			15,874
Equity in net income of affiliates	4,377			6,698			3,219
Gain on sale of programming and affiliate interests, net	183,286			—			64,968
Gain (loss) on investments, net	(214,257		)	290,052			(138,312		)
Gain (loss) on derivative contracts, net	138,144			(253,712		)	119,180
Write-off of deferred financing costs	(2,919		)	(14,083		)	—
Loss on extinguishment of debt	(19,113		)	(13,125		)	—
Minority interests	321			1,614			5,221
Miscellaneous, net	2,636			2,845			650
Income (loss) from continuing operations before income taxes	$	102,845		$	(282,493	)	$	(219,173	)

(a)Represents net revenues of Clearview Cinemas and PVI Virtual Media.

(b)Principally includes unallocated corporate general and administrative costs, in addition to the operating results of Clearview Cinemas and PVI Virtual Media.  It also includes costs allocated to Fox Sports Net Bay Area, Fox Sports Net Ohio, Fox Sports Net Florida, Fox Sports Net Chicago and Rainbow DBS (distribution operations) that were not eliminated as a result of the disposition or shut down of these businesses.

(c)Includes expenses and/or credits relating to Clearview Cinemas, PVI Virtual Media, certain corporate expenses/credits and certain costs allocated to Fox Sports Net Bay Area, Fox Sports Net Ohio, Fox Sports Net Florida, Fox Sports Net Chicago and Rainbow DBS (distribution operations) that were not eliminated as a result of the disposition or shut down of these businesses.

	December 31,
	2007			2006
Assets
Telecommunications Services	$	7,671,965		$	6,636,723
Rainbow (a)	2,194,370			2,239,141
Madison Square Garden	1,971,496			1,864,117
Corporate, other and inter-segment eliminations	(2,697,254		)	(1,023,425		)
Assets held for sale	—			128,301
	$	9,140,577		$	9,844,857

(a)Rainbow assets include amounts due from the Rainbow DBS distribution business of $266,210 and $276,245 at December 31, 2007 and 2006, respectively, which are eliminated in consolidation.

I-73

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

	Years Ended December 31,
	2007		2006		2005
Capital Expenditures
Telecommunications Services	$	678,384	$	819,747	$	695,327
Rainbow	26,172		20,281		27,037
Madison Square Garden	50,800		23,761		22,379
Corporate and other	25,950		22,044		23,909
	$	781,306	$	885,833	$	768,652

Substantially all revenues and assets of the Company’s reportable segments are attributed to or located in the United States and are primarily concentrated in the New York metropolitan area.

NOTE 20.              INTERIM FINANCIAL INFORMATION (Unaudited)

The following is a summary of the Company’s selected quarterly financial data for the years ended December 31, 2007 and 2006:

	March 31,			June 30,			September 30,			December 31,			Total
	2007			2007			2007			2007			2007
2007:
Revenues, net	$	1,562,633		$	1,567,984		$	1,511,799		$	1,842,065		$	6,484,481
Operating expenses	(1,392,315		)	(1,359,595		)	(1,309,731		)	(1,511,772		)	(5,573,413		)
Operating income	$	170,318		$	208,389		$	202,068		$	330,293		$	911,068
Income (loss) from continuing operations	$	(33,430	)	$	127,414		$	(78,896	)	$	8,576		$	23,664
Income (loss) from discontinued operations, net of taxes	7,597			190,018			(440		)	(1,940		)	195,235
Income (loss) before cumulative effect of a change in accounting principle	(25,833		)	317,432			(79,336		)	6,636			218,899
Cumulative effect of a change in accounting principle, net of taxes	(443		)	—			—			—			(443		)
Net income (loss)	$	(26,276	)	$	317,432		$	(79,336	)	$	6,636		$	218,456
Basic income (loss) per share:
Income (loss) from continuing operations	$	(0.12	)	$	0.44		$	(0.27	)	$	0.03		$	0.08
Income (loss) from discontinued operations	$	0.03		$	0.66		$	—		$	(0.01	)	$	0.68
Cumulative effect of a change in accounting principle, net of taxes	$	—		$	—		$	—		$	—		$	—
Net income (loss)	$	(0.09	)	$	1.10		$	(0.27	)	$	0.02		$	0.76

I-74

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Diluted income (loss) per share:
Income (loss) from continuing operations	$	(0.12	)	$	0.43	$	(0.27	)	$	0.03		$	0.08
Income (loss) from discontinued operations	$	0.03		$	0.65	$	—		$	(0.01	)	$	0.66
Cumulative effect of a change in accounting principle, net of taxes	$	—		$	—	$	—		$	—		$	—
Net income (loss)	$	(0.09	)	$	1.08	$	(0.27	)	$	0.02		$	0.74

	March 31,			June 30,			September 30,			December 31,			Total
	2006			2006			2006			2006			2006
2006:
Revenues, net	$	1,387,668		$	1,396,789		$	1,381,716		$	1,662,320		$	5,828,493
Operating expenses	(1,288,221		)	(1,237,068		)	(1,254,744		)	(1,459,568		)	(5,239,601		)
Operating income	$	99,447		$	159,721		$	126,972		$	202,752		$	588,892
Income (loss) from continuing operations	$	(56,284	)	$	(28,527	)	$	(61,735	)	$	4,515		$	(142,031	)
Income (loss) from discontinued operations, net of taxes	(824		)	43,113			2,578			(28,439		)	16,428
Income (loss) before cumulative effect of a change in accounting principle	(57,108		)	14,586			(59,157		)	(23,924		)	(125,603		)
Cumulative effect of a change in accounting principle, net of taxes	(862		)	—			—			—			(862		)
Net income (loss)	$	(57,970	)	$	14,586		$	(59,157	)	$	(23,924	)	$	(126,465	)
Basic and diluted income (loss) per share:
Income (loss) from continuing operations	$	(0.20	)	$	(0.10	)	$	(0.22	)	$	0.02		$	(0.50	)
Income (loss) from discontinued operations	$	—		$	0.15		$	0.01		$	(0.10	)	$	0.06
Cumulative effect of a change in accounting principle, net of taxes	$	—		$	—		$	—		$	—		$	—
Net income (loss)	$	(0.20	)	$	0.05		$	(0.21	)	$	(0.08	)	$	(0.45	)

I-75

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

NOTE 21.              OTHER MATTERS

Settlement with Time Warner

On September 29, 2005, AMC and Time Warner Entertainment, L.P. settled existing litigation whereby the Company simultaneously entered into 11 separate affiliation agreements with Time Warner.  These agreements included amendments and enhancements to existing affiliation agreements for some of the Company’s programming services and new affiliation agreements and new distribution for other programming services of the Company.  The amendments included a long-term extension of Time Warner’s affiliation agreement with AMC with rate and positioning terms that are favorable to AMC.  Because of the long-term benefits to the Company from the extension and enhancement of the AMC agreement, the $74,000 of required payments, all of which have been paid to Time Warner over the 2005-2007 period, attributable to AMC were capitalized as deferred carriage fees and are being amortized as a reduction to revenue over the approximate 13 year life of the extended AMC affiliation agreement.

Resolutions of Contract Disputes

In June 2006, the Company collected $26,500 related to the resolution of a contractual programming dispute, $19,476 of which was due in periods prior to 2006 but not recognized as a reduction to programming costs because it was being disputed and was not being paid by the affiliate.  The underlying contract was terminated in June 2006 and no further payments will be received under the contract.

In connection with the resolution of another contract dispute, Fox Sports Net Chicago, which was shut down in June 2006, recorded $77,996 of affiliate revenue in June 2006 including $71,396, relating to periods prior to 2006, that had not been previously recognized due to the dispute.  Such affiliate revenue has been reported in discontinued operations.  The underlying contract was terminated in June 2006 and no further payments will be received under the contract.

NOTE 22.              SUBSEQUENT EVENTS (Unaudited)

Sundance Channel L.L.C.

On May 6, 2008, Rainbow Media Holdings entered into an agreement to acquire Sundance Channel L.L.C. (“Sundance”) from General Electric Company’s NBC Universal, CBS Corporation’s Showtime Networks, and entities controlled by Robert Redford.  The purchase price of $496,000 (subject to customary working capital adjustments) will be paid through an exchange of approximately 12.7 million shares of common stock of General Electric Company held by Rainbow Media Holdings, with a cash adjustment at closing based upon the value of the General Electric Company shares in relation to the total purchase price.  Under the transaction structure, General Electric Company will receive all of the General Electric Company common stock and the CBS and Redford entities will receive cash in exchange for their interest in Sundance.  The transaction is expected to be an exchange of the General Electric Company shares that is tax free to the Company.  The Company also expects to receive a full step up in the tax basis of Sundance.  In connection with the exchange of the General Electric Company shares, the Company will repay the fair value of the monetization debt and settle the related equity derivative contracts associated with those shares.  The cash portion of the purchase price and the repayment of the monetization indebtedness and the settlement of the associated equity derivative contracts are expected to be satisfied with cash on hand and/or borrowings under either the Rainbow National Services LLC or CSC Holdings revolving credit agreements.

I-76

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Consummation of the transaction is subject to customary closing conditions, including receipt of regulatory approvals.

Newsday LLC

On May 11, 2008, CSC Holdings entered into a Formation Agreement with Tribune Company to form a new limited liability company (“Newsday LLC”).  Under the terms of the Formation Agreement, Tribune Company, through its subsidiaries, will contribute the Newsday business (the “Newsday Media Group Business”) and CSC Holdings will contribute newly issued Senior Notes of Cablevision with a fair market value of $650,000 on the contribution date.

Also on the contribution date, Newsday LLC will borrow $650,000 under a new secured credit facility, and Tribune Company will receive $630,000 in cash from the proceeds of that financing (which includes the $18,000 of prepaid rent mentioned below).  CSC Holdings will provide funds to Newsday LLC to pay certain transaction costs.

As a result of these transactions, CSC Holdings, through a wholly-owned subsidiary, will own approximately 97% and Tribune Company, through a wholly-owned subsidiary, will own approximately 3% of the equity in Newsday LLC.  CSC Holdings will have operational control of Newsday LLC.

The Newsday Media Group Business was valued at $632,000 in the transaction, and Tribune Company will also receive $18,000 at closing as prepaid rent under certain leases of property used in the business, bringing the total transaction value to $650,000.

The debt securities contributed by CSC Holdings will have terms which mirror Cablevision’s 8% Senior Notes due 2012.  Bank of America has provided a firm financing commitment with respect to the $650,000 of financing to be raised by Newsday LLC.  Under the commitment letter from Bank of America, borrowings by Newsday LLC will be guaranteed by CSC Holdings and secured by a lien on the assets of Newsday LLC, including the Cablevision Senior Notes contributed by CSC Holdings.  Tribune Company has agreed to indemnify CSC Holdings with respect to any payments that CSC Holdings makes under its guarantee of the Newsday LLC financing.  Newsday LLC will generally be prohibited from using the proceeds received from any repayment of the Cablevision Senior Notes contributed by CSC Holdings to acquire non-publicly traded notes or debt instruments of Cablevision or CSC Holdings, and Newsday LLC will be required under the financing agreements to maintain cash or cash equivalents or publicly traded notes or debt instruments of Cablevision or CSC Holdings with an aggregate principal amount that exceeds the then-outstanding borrowings by Newsday LLC.

CSC Holdings and Tribune Company will enter into a Tax Matters Agreement pursuant to which, among other things, CSC Holdings will agree that it will indemnify Tribune Company for certain taxes incurred by Tribune Company if, prior to January 1, 2018, Newsday LLC sells or otherwise disposes of the Newsday Media Group Business contributed by Tribune Company or fails to maintain outstanding indebtedness in specified minimum amounts over time (reducing to $335,000 on January 1, 2018).

At any time after the tenth anniversary of the closing of the transaction and prior to the thirteenth anniversary of the closing, CSC Holdings will have the right to purchase Tribune Company’s entire interest in Newsday LLC.  At any time after the thirteenth anniversary of the closing and on or prior to the date that is six months after such anniversary, Tribune Company will have the right to require CSC Holdings to purchase Tribune Company’s entire interest in Newsday LLC.  In either case, the purchase price will be the fair market value of the interest.

I-77

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Consummation of the transaction is subject to customary closing conditions, including receipt of regulatory approvals.

I-78

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholder
CSC Holdings, Inc.:

We have audited CSC Holdings, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  CSC Holdings, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting in Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.  Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.  Our audit also included performing such other procedures as we considered necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, CSC Holdings., Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of CSC Holdings, Inc. and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholder’s deficiency and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2007, and our report dated February 28, 2008 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP
Melville, New York

February 28, 2008

II-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholder
CSC Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of CSC Holdings, Inc. and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholder’s deficiency and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2007.  In connection with our audits of the consolidated financial statements, we also have audited the related financial statement schedule listed in Item 15(a)(2).  These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CSC Holdings, Inc. and subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.  Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Notes 1 and 2 to the accompanying consolidated financial statements, the Company changed its method of quantifying errors in 2006 in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, adopted the provisions of Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment as of January 1, 2006, adopted the provisions of Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, as of December 31, 2006, and adopted the provisions of FASB Interpretation  No. 48, Accounting for Uncertainty in Income Taxes, as of January 1, 2007.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), CSC Holdings, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 28, 2008 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP
Melville, New York

February 28, 2008, except for Notes 2, 4, 5, 8 and 19 which are as of May 27, 2008

II-2

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONSOLIDATED BALANCE SHEETS

December 31, 2007 and 2006

(Dollars in thousands)

	2007		2006
ASSETS
Current Assets:
Cash and cash equivalents	$	331,901	$	390,143
Restricted cash	58,416		11,390
Accounts receivable, trade (less allowance for doubtful accounts of $12,683 and $17,257)	543,151		516,533
Prepaid expenses and other current assets	189,281		156,806
Program rights, net	133,146		124,778
Deferred tax asset	283,483		236,037
Advances to affiliates	361,770		229,677
Investment securities pledged as collateral	196,090		18,981
Derivative contracts	30,532		81,140
Assets held for sale	—		49,189
Total current assets	2,127,770		1,814,674
Property, plant and equipment, net of accumulated depreciation of $6,956,699 and $6,254,510	3,472,203		3,713,030
Investments in affiliates	—		49,950
Notes and other receivables	40,874		29,659
Investment securities pledged as collateral	668,438		1,080,229
Derivative contracts	43,020		—
Other assets	79,740		80,273
Program rights, net	420,923		375,700
Deferred carriage fees, net	151,507		173,059
Franchises	731,848		731,848
Affiliation, broadcast and other agreements, net of accumulated amortization of $448,392 and $390,324	339,614		397,682
Other intangible assets, net of accumulated amortization of $102,487 and $77,255	316,830		325,291
Excess costs over fair value of net assets acquired	1,023,480		1,024,168
Deferred financing and other costs, net of accumulated amortization of $69,926 and $55,445	93,782		98,553
Assets held for sale	—		79,112
	$	9,510,029	$	9,973,228

See accompanying notes to consolidated financial statements

II-3

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONSOLIDATED BALANCE SHEETS (continued)

December 31, 2007 and 2006

(Dollars in thousands, except share and per share amounts)

	2007			2006
LIABILITIES AND STOCKHOLDER’S DEFICIENCY
Current Liabilities:
Accounts payable	$	370,044		$	389,400
Accrued liabilities:
Interest	141,992			194,634
Employee related costs	289,717			328,966
Other accrued expenses	368,907			410,862
Deferred revenue	198,658			162,463
Program rights obligations	110,128			121,890
Liabilities under derivative contracts	2,893			6,568
Bank debt	110,000			93,750
Collateralized indebtedness	219,073			102,268
Capital lease obligations	5,351			7,069
Notes payable	1,017			17,826
Senior notes and debentures	500,000			499,952
Liabilities held for sale	—			6,024
Total current liabilities	2,317,780			2,341,672
Defined benefit plan and other postretirement plan obligations	57,596			82,517
Program rights and other contract obligations	307,185			312,344
Deferred revenue	12,691			14,337
Liabilities under derivative contracts	132,647			204,887
Other liabilities	258,246			243,789
Deferred tax liability	569,613			262,843
Bank debt	4,778,750			4,898,750
Collateralized indebtedness	628,081			819,306
Senior notes and debentures	3,495,148			3,994,004
Senior subordinated notes	323,311			497,011
Notes payable	—			1,017
Capital lease obligations	60,056			54,389
Minority interests	1,182			49,670
Liabilities held for sale	—			19
Total liabilities	12,942,286			13,776,555
Commitments and contingencies
Stockholder’s Deficiency:
Series A Cumulative Convertible Preferred Stock, 200,000 shares authorized, none issued	—			—
Series B Cumulative Convertible Preferred Stock, 200,000 shares authorized, none issued	—			—
8% Series D Cumulative Preferred Stock, $.01 par value, 112,500 shares authorized, none issued ($100 per share liquidation preference)	—			—
Common stock, $.01 par value, 20,000,000 shares authorized, 11,595,635 shares issued and outstanding	116			116
Paid-in capital	182,721			120,017
Accumulated deficit	(3,617,951		)	(3,911,510		)
	(3,435,114		)	(3,791,377		)
Accumulated other comprehensive income (loss)	2,857			(11,950		)
Total stockholder’s deficiency	(3,432,257		)	(3,803,327		)
	$	9,510,029		$	9,973,228

See accompanying notes to consolidated financial statements

II-4

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2007, 2006 and 2005

(Dollars in thousands)

	2007			2006			2005
Revenues, net	$	6,484,481		$	5,828,493		$	5,082,045
Operating expenses:
Technical and operating (excluding depreciation, amortization and impairments shown below)	2,891,337			2,651,890			2,249,367
Selling, general and administrative	1,558,455			1,471,366			1,283,938
Restructuring expense (credits)	4,733			(3,484		)	(537		)
Depreciation and amortization (including impairments)	1,118,888			1,119,829			1,074,711
	5,573,413			5,239,601			4,607,479
Operating income	911,068			588,892			474,566
Other income (expense):
Interest expense	(806,406		)	(795,418		)	(640,041		)
Interest income	36,701			32,570			15,785
Equity in net income of affiliates	4,377			6,698			3,219
Gain on sale of programming and affiliate interests, net	183,286			—			64,968
Gain (loss) on investments, net	(214,257		)	290,052			(138,312		)
Gain (loss) on derivative contracts, net	138,144			(253,712		)	119,180
Write-off of deferred financing costs	(2,919		)	(14,083		)	—
Loss on extinguishment of debt	(19,113		)	(13,125		)	—
Minority interests	321			1,614			5,221
Miscellaneous, net	2,636			2,845			827
	(677,230		)	(742,559		)	(569,153		)
Income (loss) from continuing operations before income taxes	233,838			(153,667		)	(94,587		)
Income tax benefit (expense)	(134,629		)	87,631			31,226
Income (loss) from continuing operations	99,209			(66,036		)	(63,361		)
Income from discontinued operations, net of taxes (including net gain from the sale of Fox Sports Net Bay Area of $186,281 in 2007 and primarily from the Regional Programming Partners restructuring of $269,428 in 2005)	195,235			16,428			226,274
Income (loss) before cumulative effect of a change in accounting principle	294,444			(49,608		)	162,913
Cumulative effect of a change in accounting principle, net of taxes	(443		)	(862		)	—
Net income (loss)	$	294,001		$	(50,470	)	$	162,913

See accompanying notes to consolidated financial statements.

II-5

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S DEFICIENCY AND

COMPREHENSIVE INCOME (LOSS)

Years ended December 31, 2007, 2006 and 2005

(Dollars in thousands)

	Common Stock		Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total
Balance at December 31, 2004	$	64	$	2,342,587		$	(3,520,225	)	$	(3,935	)	$	(1,181,509	)
Net income	—		—			162,913			—			162,913
Minimum pension liability adjustment, net of taxes	—		—			—			182			182
Foreign currency translation, net of taxes	—		—			—			191			191
Comprehensive income												163,286
Tax benefit related to stock options	—		1,256			—			—			1,256
Recognition of equity-based stock compensation arrangements	—		32,259			—			—			32,259
Gain on issuance of member’s interest by subsidiary, net	—		10,397			—			—			10,397
Contribution from shareholder	—		6,337			—			—			6,337
Net contributions from Cablevision	31		(31		)	—			—			—
Balance at December 31, 2005	$	95	$	2,392,805		$	(3,357,312	)	$	(3,562	)	$	(967,974	)
Cumulative effect of adjustments resulting from the adoption of SAB No. 108, net of tax (Note 2)	—		—			121,668			—			121,668
Adjusted balance at January 1, 2006	95		2,392,805			(3,235,644		)	(3,562		)	(846,306		)
Net loss	—		—			(50,470		)	—			(50,470		)
Minimum pension liability adjustment, net of taxes	—		—			—			(1,484		)	(1,484		)
Comprehensive income												(51,954		)
Adjustment related to initial application of FASB Statement No. 158, net of tax (Note 15)	—		—			—			(6,904		)	(6,904		)
Recognition of equity-based stock compensation arrangements	—		59,914			—			—			59,914
Distributions to Cablevision relating to special cash dividends paid to CNYG Class A and CNYG Class B shareholders	—		(2,332,681		)	(625,396		)	—			(2,958,077		)
Issuance of stock to Cablevision	21		(21		)	—			—			—
Balance at December 31, 2006	$	116	$	120,017		$	(3,911,510	)	$	(11,950	)	$	(3,803,327	)
Net income						294,001						294,001
Minimum pension liability and post-retirement plan adjustments, net of taxes	—		—			—			14,807			14,807
Comprehensive income												308,808
Recognition of equity-based stock compensation arrangements	—		53,787						—			53,787
Contributions from Cablevision	—		8,917						—			8,917
Adjustment related to initial application of FASB Interpretation No. 48 (Note 12)	—		—			(442		)	—			(442		)
Balance at December 31, 2007	$	116	$	182,721		$	(3,617,951	)	$	2,857		$	(3,432,257	)

See accompanying notes to consolidated financial statements.

II-6

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2007, 2006 and 2005

(Dollars in thousands)

	2007			2006			2005
Cash flows from operating activities:
Income (loss) from continuing operations	$	99,209		$	(66,036	)	$	(63,361	)
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities:
Depreciation and amortization (including impairments)	1,118,888			1,119,829			1,074,711
Equity in net income of affiliates	(4,377		)	(6,698		)	(3,219		)
Minority interests	(321		)	(1,614		)	(5,221		)
Gain on sale of programming and affiliate interests, net	(183,286		)	—			(64,968		)
Loss (gain) on investments, net	214,257			(284,542		)	138,312
Write-off of deferred financing costs	2,919			14,083			—
Unrealized loss (gain) on derivative contracts, net	(149,868		)	218,740			(156,082		)
Loss on extinguishment of debt	19,113			13,125			—
Share-based compensation expense related to equity classified awards	53,077			63,675			28,870
Deferred income tax	104,377			(97,177		)	(40,719		)
Amortization and write-off of program rights	145,072			123,827			113,926
Amortization of deferred financing costs and discounts on indebtedness	45,326			45,325			56,406
Amortization of other deferred costs	34,324			27,696			22,359
Provision for doubtful accounts	52,165			41,386			34,507
Change in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable, trade	(79,071		)	(107,635		)	(76,984		)
Notes and other receivables	(19,884		)	48,324			11,445
Inventory, prepaid expenses and other assets	(23,861		)	195			(10,680		)
Advances/payables to affiliates	(123,829		)	(122,917		)	(114,253		)
Program rights	(198,663		)	(137,196		)	(142,703		)
Other deferred costs	(26,431		)	(13,349		)	(99,203		)
Accounts payable	(17,054		)	40,661			29,533
Accrued liabilities	(120,632		)	59,180			85,036
Program rights obligations	(16,921		)	(29,630		)	(731		)
Deferred revenue	36,929			(4,141		)	25,499
Deferred carriage payable	(25,569		)	(17,336		)	45,371
Minority interests	—			—			243
Net cash provided by operating activities	935,889			927,775			888,094
Cash flows from investing activities:
Capital expenditures	(781,306		)	(885,833		)	(768,652		)
Payments for acquisitions, net of cash acquired	—			—			(4,231		)
Proceeds from sale of equipment, net of costs of disposal	3,336			17,704			5,407
Distribution from (contribution to) equity method investees	24,506			(1,000		)	(420		)
Proceeds from sale of affiliate interests	212,904			—			—
Decrease in investment securities and other investments	277			907			164
Decrease (increase) in restricted cash	5,812			(2,936		)	27,342
Additions to other intangible assets	(16,771		)	(1,551		)	(12,886		)
Net cash used in investing activities	(551,242		)	(872,709		)	(753,276		)

See accompanying notes to consolidated financial statements.

II-7

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

Years ended December 31, 2007, 2006 and 2005

(Dollars in thousands)

	2007			2006			2005
Cash flows from financing activities:
Proceeds from bank debt	73,000			5,463,000			554,614
Repayment of bank debt	(176,750		)	(2,322,000		)	(1,192,614		)
Redemption of senior subordinated notes and debentures	(693,158		)	(263,125		)	—
Proceeds from collateralized indebtedness	—			595,035			210,973
Repayment of collateralized indebtedness	—			(548,867		)	(222,623		)
Proceeds from derivative contracts	—			6,496			6,462
Settlement of derivative contracts	—			(50,864		)	—
Payments on capital lease obligations and other debt	(7,285		)	(8,739		)	(11,956		)
Capital contribution from (distribution to) Cablevision, net	3,798			(2,958,077		)	—
Deemed net capital contribution from shareholder	—			—			6,337
Additions to deferred financing and other costs	—			(47,540		)	(70		)
Distributions to minority partners	(13,549		)	(14,709		)	(9,659		)
Net cash used in financing activities	(813,944		)	(149,390		)	(658,536		)
Effect of exchange rate changes on cash and cash equivalents	—			—			191
Net decrease in cash and cash equivalents from continuing operations	(429,297		)	(94,324		)	(523,527		)
Cash flows of discontinued operations:
Net cash provided by (used in) operating activities	17,771			109,956			(27,854		)
Net cash provided by investing activities	328,823			4,003			79,534
Net change in cash classified in assets held for sale	24,461			3,660			85,350
Net effect of discontinued operations on cash and cash equivalents	371,055			117,619			137,030
Cash and cash equivalents at beginning of year	390,143			366,848			753,345
Cash and cash equivalents at end of year	$	331,901		$	390,143		$	366,848

See accompanying notes to consolidated financial statements.

II-8

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company and Related Matters

CSC Holdings, Inc. (“CSC Holdings” or the “Company”), is a wholly-owned subsidiary of Cablevision Systems Corporation (“Cablevision”).  The Company and its majority-owned subsidiaries own and operate cable television systems and through its subsidiary, Rainbow Media Holdings LLC, have ownership interests in companies that produce and distribute national entertainment, regional news and sports programming services, including Madison Square Garden, L.P.  The Company also owns companies that provide advertising sales services for the cable television industry, provide telephone service, operate motion picture theaters, and through April 30, 2005, provided direct broadcast satellite service.  The Company classifies its business interests into three reportable segments:  Telecommunications Services, consisting principally of its video, high-speed data, Voice over Internet Protocol and its commercial data and voice services operations; Rainbow, consisting principally of interests in national and regional television programming networks, including AMC, IFC, WE tv, News 12 and the VOOM HD Networks; and Madison Square Garden, consisting principally of its professional sports teams, a regional sports programming business and an entertainment business, as well as the operations of Fuse, a national programming network effective January 1, 2008.  Prior to January 1, 2008, Fuse was included in the Rainbow segment.  Prior period segment information has been reclassified and reported on a comparable basis for information included in Notes 2, 4, 5, 8 and 19.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its majority owned subsidiaries.  All significant intercompany transactions and balances are eliminated in consolidation.

Revenue Recognition

The Company recognizes video, high-speed data, Voice over Internet Protocol, and telephony revenues as the services are provided to subscribers.  Installation revenue for the Company’s video, consumer high-speed data and Voice over Internet Protocol services is recognized as installations are completed, as direct selling costs have exceeded this revenue in all periods reported.  The Company classifies amounts billed to its customers for franchise and regulatory fees as a component of revenue.

The Company’s programming businesses recognize affiliate fee revenue from cable system operators, direct broadcast satellite operators and telecommunications companies as the programming is provided.  Advertising revenues are recognized when commercials are aired.  In some advertising sales arrangements, the Company’s programming businesses guarantee specified viewer ratings for their programming.  For these types of transactions, a portion of such revenue is deferred if the guaranteed viewer ratings are not met and is subsequently recognized either when the Company provides the required additional advertising time, the guarantee obligation contractually expires or performance requirements become remote.

Revenues derived from other sources are recognized when services are provided or events occur.

II-9

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Multiple-Element Transactions

If there is objective and reliable evidence of fair value for all elements of accounting in a multiple-element arrangement, the arrangement consideration is allocated to the separate elements of accounting based on relative fair values.  There may be cases in which there is objective and reliable evidence of the fair value of undelivered items in an arrangement but no such evidence for the delivered items.  In those cases, the Company utilizes the residual method to allocate the arrangement consideration.  Under the residual method, the amount of consideration allocated to the delivered items equals the total arrangement consideration less the aggregate fair value of the undelivered items.  In determining fair value, the Company refers to historical transactions or comparable cash transactions.

The Company may enter into affiliation agreements which are documented in one or more contracts; however negotiated contemporaneously.  Amounts paid/received by the Company may differ from the amounts that would have been paid/received if such arrangements were negotiated separately.  Judgments made in determining fair value impact the amount and period in which revenues are recognized over the term of the individual affiliation agreements.

Gross Versus Net Revenue Recognition

In the normal course of business, the Company is assessed non-income related taxes by governmental authorities, including franchising authorities, and collects such taxes from its customers. The Company’s policy is that, in instances where the tax is being assessed directly on the Company, amounts paid to the governmental authorities and amounts received from the customers are recorded on a gross basis. That is, amounts paid to the governmental authorities are recorded as technical and operating expenses and amounts received from the customer are recorded as revenues. For the years ended December 31, 2007, 2006 and 2005, the amount of franchise fees included as a component of net revenue aggregated $111,398, $101,213, and $91,546, respectively.

Technical and Operating Expenses

Costs of revenue related to sales of services are classified as “technical and operating” expenses in the accompanying statements of operations.

Programming Costs

The Company’s cable television business included in the Telecommunications Services segment has received, or may receive, incentives from programming distributors for carriage of the distributors’ programming.  The Company recognizes these incentives as a reduction of programming costs in technical and operating expense, generally over the term of the programming agreement.

Program Rights

Rights acquired to broadcast various professional sports teams’ events and programming for exhibition on the Company’s networks, are expensed on a straight-line basis (except for owned original programming) over the contract or license period.  Estimated future revenues are reviewed regularly and write-downs to net realizable value of the Company’s program rights costs are made as required.  Estimates of total gross revenues can change due to a variety of factors, including the level of advertising rates and subscriber

II-10

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

fees.  Accordingly, revenue estimates related to the Company’s program rights are reviewed periodically and amortization is adjusted as necessary.

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

See Note 5 for a discussion of the Company’s review of the programming usefulness of its program rights inventory and impairment charges.

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

Advertising Expenses

Advertising costs are charged to expense when incurred.  Advertising costs amounted to $254,387, $221,158 and $202,618 for the years ended December 31, 2007, 2006 and 2005, respectively.

Cash and Cash Equivalents

Cash is invested in money market funds, bank time deposits or in obligations of the U.S. Treasury.  The Company’s cash investments are placed with money market funds or financial institutions that have received the highest rating awarded by Standard & Poor’s and Moody’s Investors Services.  The Company considers short-term investments with a maturity at date of purchase of three months or less to be cash equivalents.

Restricted Cash

Restricted cash at December 31, 2007 and 2006 amounted to $58,416 and $11,390, respectively.  The December 31, 2007 balance includes a cash collateralized bond in the amount of $52,159 relating to a judgment against the Company relating to a contract dispute with Loral Space and Communications Holding Corporation (see Notes 6 and 17).  In addition restricted cash at December 31, 2007 included cash required to be set aside under operating agreements between Madison Square Garden and the National Hockey League, and for collateralized letters of credit entered into by Madison Square Garden. 

II-11

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

At December 31, 2006 restricted cash included cash required to be set aside pursuant to operating agreements between Madison Square Garden, the National Hockey League, the Hartford Civic Center and Rentschler Field, and for collateralized letters of credit entered into by Madison Square Garden.

Accounts Receivable

The Company periodically assesses the adequacy of valuation allowances for uncollectible accounts receivable by evaluating the collectibility of outstanding receivables and general factors such as length of time individual receivables are past due, historical collection experience, and the economic and competitive environment.

Investments

Investment securities and investment securities pledged as collateral are classified as trading securities and are stated at fair value with realized and unrealized holding gains and losses included in net income (loss).

The Company’s interests in less than majority-owned entities in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee are accounted for under the equity method.  Equity method investments are recorded at original cost and adjusted to recognize the Company’s proportionate share of the investees’ net income or loss, additional contributions made and distributions received and amortization of basis differences.  The Company recognizes a loss if it is determined that an other than temporary decline in the value of the investment exists.

Long-Lived and Indefinite-Lived Assets

Property, plant and equipment, including construction materials, are carried at cost, and include all direct costs and certain indirect costs associated with the construction of cable television transmission and distribution systems, and the costs of new product and subscriber installations.  Equipment under capital leases is recorded at the present value of the total minimum lease payments.  Depreciation on equipment is calculated on the straight-line basis over the estimated useful lives of the assets or, with respect to equipment under capital leases and leasehold improvements, amortized over the shorter of the lease term or the assets’ useful lives and reported in depreciation and amortization (including impairments) in the consolidated statements of operations.

Intangible assets established in connection with acquisitions consist of affiliation agreements and affiliation relationships, broadcast rights and other agreements (primarily cable television system programming agreements), season ticket holder relationships, suite holder contracts and relationships, advertising relationships, other intangibles and excess costs over fair value of net assets acquired.  These intangible assets are amortized on a straight-line basis over their respective estimated useful lives.  Excess costs over fair value of net assets acquired (“goodwill”) and the value of franchises, trademarks and certain other intangibles acquired in purchase business combinations which have indefinite useful lives are not amortized.

The Company reviews its long-lived assets (property, plant and equipment, and intangible assets subject to amortization that arose from business combinations accounted for under the purchase method) for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be

II-12

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

recoverable.  If the sum of the expected cash flows, undiscounted and without interest, is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value.

The Company evaluates the recoverability of its goodwill and indefinite-lived intangible assets annually or more frequently whenever events or circumstances indicate that the asset may be impaired.  Goodwill impairment is determined using a two-step process.  The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill.  If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any.  The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill.  If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.  The implied fair value of goodwill is determined in the same manner as the amount of goodwill which would be recognized in a business combination.

The impairment test for other intangible assets not subject to amortization consists of a comparison of the fair value of the intangible asset with its carrying value.  If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

Program Rights Obligations

Amounts payable subsequent to December 31, 2007 related to program rights obligations are as follows:

Years Ending December 31,
2008	$	110,128
2009	85,225
2010	65,887
2011	44,699
2012	37,135
Thereafter	74,239

Deferred Carriage Fees

Deferred carriage fees represent amounts principally paid or payable to cable system operators, direct broadcast operators and telecommunications companies to guarantee carriage of certain programming services and are amortized as a reduction of revenue over the period of the related guarantee (1 to 15 years).

Deferred Financing Costs

Costs incurred to obtain debt are deferred and amortized to interest expense using the straight-line method over the life of the related debt.

Income Taxes

Income taxes are provided based upon the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 109, Accounting for Income Taxes, which requires the asset and liability method of

II-13

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

accounting for deferred income taxes and permits the recognition of deferred tax assets, subject to an ongoing assessment of realizability.  The Company provides deferred taxes for the outside basis difference of its investment in partnerships.  Interest expense related to income tax liabilities recognized in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (adopted on January 1, 2007) (“FIN 48”) is included in income tax expense, consistent with the Company’s historical policy prior to adopting FIN 48.

Common Stock of CSC Holdings

CSC Holdings has 20,000,000 common shares authorized of which 11,595,635 are issued and outstanding as of December 31, 2007 and 2006.  Each common share has one vote per share and all shares are owned by Cablevision.

CSC Holdings may pay dividends on their capital stock only from surplus as determined under Delaware law.  CSC Holdings’ senior notes and debentures, as well as certain senior notes and debentures of CSC Holdings’ subsidiaries restrict the amount of dividends and distributions in respect of any equity interests that can be made.

Income (Loss) Per Common Share

Basic and diluted net income (loss) per common share are not presented since the Company is a wholly-owned subsidiary of Cablevision.

Comprehensive Income (Loss)

Comprehensive income (loss), which is reported in the accompanying consolidated statements of shareholders’ deficiency consist of net income (loss) and other gains and losses affecting shareholders’ deficiency or attributed net assets that, under U.S. generally accepted accounting principles (“GAAP”), are excluded from net income (loss).  These components of accumulated other comprehensive income (loss) consist primarily of minimum pension liability adjustments, net of taxes and foreign currency translation gains (losses), net of taxes, in 2005.

In 2007 and 2005, the fair value of plan assets of certain of the Company’s defined benefit plans and post-retirement medical plans exceeded the plans’ net accumulated benefit obligations and the Company recorded a non-cash gain to accumulated comprehensive income, net of taxes, of $3,792 and $182, respectively.  In 2006, the net accumulated benefit obligation of certain of the Company’s defined benefit plans and post-retirement medical plans exceeded the fair value of the plans’ assets. As a result, the Company recorded a non-cash charge to accumulated comprehensive loss, net of taxes, of $1,484 as required by SFAS No. 87, Employers’ Accounting for Pensions (“Statement No. 87”).  Additionally, during 2007, the Company “froze” two of its defined benefit plans resulting in a non-cash related benefit to accumulated comprehensive income (loss) of $11,015 ($18,803, net of taxes of $7,788) as described in Note 14.   As of December 31, 2006, the Company adopted the recognition and disclosure provisions of SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans (“Statement No. 158”) as described in Note 14.  As a result of adopting Statement No. 158 in 2006, the Company recognized an additional loss of $6,904, net of taxes, which was also charged to accumulated other comprehensive income (loss), net of taxes.

II-14

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Share-Based Compensation

On January 1, 2006, Cablevision adopted SFAS No. 123R, Share-Based Payment (“Statement No. 123R”), that addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for either equity instruments of the enterprise or liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments.  Cablevision adopted Statement No. 123R using the modified prospective method as of January 1, 2006.

For the Company, share-based compensation expense is recognized in its statements of operations for the years ended December 31, 2007 and 2006 based on allocations provided by Cablevision.

Share-based compensation expense recognized during the period is based on the fair value of the portion of share-based payment awards that are ultimately expected to vest.  Share-based compensation expense recognized in the Company’s consolidated statements of operations during the years ended December 31, 2007 and 2006 included compensation expense for share-based payment awards granted prior to, but not yet vested, as of December 31, 2005 based on the grant date fair value estimated in accordance with the pro forma provisions of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“Statement No. 123”).  As share-based compensation expense recognized in the Company’s statements of operations for the years ended December 31, 2007 and 2006 are based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.  Statement No. 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In the pro forma information required under Statement No. 123 for the periods prior to January 1, 2006, the Company accounted for forfeitures as they occurred.

Cash Flows

During 2007, 2006 and 2005, the Company’s non-cash investing and financing activities and other supplemental data were as follows:

	Years Ended December 31,
	2007		2006		2005
Non-Cash Investing and Financing Activities:
Continuing Operations
Acquisition of the 40% minority interest in certain Regional Programming Partners entities in exchange for the Company’s interests in Fox Sports Net Ohio, Fox Sports Net Florida, National Sports Partners and National Advertising Partners	$	—	$	—	$	604,080
Notes payable, including interest, contributed by News Corporation to Regional Programming Partners for no consideration	—		—		152,907
Capital lease obligations	11,234		11,751		180
Asset retirement obligations	29		136		10,870
Leasehold improvements paid by landlord	7,892		1,960		—
Redemption of collateralized indebtedness with restricted cash and related prepaid forward contracts	—		—		116,544
Redemption of collateralized indebtedness with related prepaid forward contracts and stock	102,469		290,943		247,647

II-15

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Redemption of collateralized indebtedness with related prepaid forward contracts	—	31,385	43,604
Rights payments offset with repayment of a note receivable	—	—	40,000
Discontinued Operations
Make whole payment obligation, including interest, to Loral	—	50,898	—
Supplemental Data:
Cash interest paid – continuing operations	813,494	704,542	581,158
Cash interest paid – discontinued operations	—	8	59
Income taxes paid (refunded), net - continuing operations	28,686	11,184	(4,005	)
Income taxes paid (refunded), net - discontinued operations	—	—	18

Derivative Financial Instruments

The Company accounts for derivative financial instruments in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended (“Statement No. 133”).  Statement No. 133 requires that an entity recognize all derivatives, as defined, as either assets or liabilities measured at fair value.  The Company uses derivative instruments to manage its exposure to market risks from changes in certain equity prices and interest rates and does not hold or issue derivative instruments for speculative or trading purposes.  These derivative instruments are not designated as hedges, and changes in the fair values of these derivatives are recognized in earnings as gains (losses) on derivative contracts.

Concentrations of Credit Risk

Financial instruments that may potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents and trade receivables.  The Company did not have a single customer that represented 10% or more of its consolidated net revenues for the years ended December 31, 2007, 2006 and 2005, respectively, or 10% or more of its consolidated net trade receivables at December 31, 2007 and 2006, respectively.

Use of Estimates in Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

II-16

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Recently Adopted Accounting Pronouncements

EITF No. 06-3

In June 2006, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 06-3, How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross Versus Net Presentation) (“EITF No. 06-3”), which addressed the income statement disclosures for taxes assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer, and may include, but are not limited to, sales, use, value added, and some excise taxes.  The presentation of taxes on either a gross (included in revenues and costs) or a net (excluded from revenues) basis is an accounting policy decision that should be disclosed pursuant to Accounting Principles Board Opinion No. 22.  In addition, for any such taxes that are reported on a gross basis, a company should disclose the amounts of those taxes in interim and annual financial statements for each period for which an income statement is presented if those amounts are significant and can be done on an aggregate basis.  EITF No. 06-3 was effective January 1, 2007 for the Company.  See “Gross Versus Net Revenue Recognition” discussion above.

Accounting for Registration Payment Arrangements

In December 2006, the FASB issued Staff Position No. EITF 00-19-2, Accounting for Registration Payment Arrangements (“FSP 00-19-2”).  FSP 00-19-2 provides guidance related to the accounting for registration payment arrangements and specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate arrangement or included as a provision of a financial instrument or arrangement, should be separately recognized and measured in accordance with SFAS No. 5, Accounting for Contingencies (“Statement No. 5”).  FSP 00-19-2 required that if the transfer of consideration under a registration payment arrangement is probable and can be reasonably estimated at inception, the contingent liability under such arrangement shall be included in the allocation of proceeds from the related financing transaction using the measurement guidance in Statement No. 5.  FSP 00-19-2 applied immediately to any registration payment arrangement entered into subsequent to the issuance of FSP 00-19-2.  For such arrangements entered into prior to the issuance of FSP 00-19-2, the guidance was effective for the Company as of January 1, 2007.  As a condition to the initial sale of CSC Holdings’ 6-3/4% Senior Notes due 2012, the Company entered into a registration rights agreement with the initial purchasers under which the Company agreed that it would file an exchange offer registration statement under the Securities Act with the Securities and Exchange Commission (“SEC”) and use its commercially reasonable best efforts to cause the exchange offer registration statement to be declared effective under the Securities Act.  If the exchange offer was not completed by May 11, 2005, the agreement provided for an increase of 1/4% per annum in the interest rate for the first 90 days after May 11, 2005 and an additional 1/4% per annum, up to a maximum of 1/2% per annum, at the beginning of each subsequent 90 day period that the exchange offer was not completed. Upon the completion of the exchange, the interest rate would revert to 6-3/4%.  In March 2007, the Company offered to exchange these notes for substantially identical publicly registered 6-3/4% Series B Senior Notes due 2012.  This exchange was completed on April 26, 2007.  In connection with the adoption of FSP 00-19-2 as of January 1, 2007, the Company recorded a charge of $443, net of taxes, as a cumulative effect of a change in accounting principle representing the estimated fair value of the 1/2% penalty interest expected to be incurred under the registration rights agreement subsequent to January 1, 2007.

II-17

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Accounting for Uncertainty in Income Taxes

On January 1, 2007, the Company adopted FIN 48, Accounting for Uncertainty in Income Taxes - an interpretation of SFAS No. 109. This Interpretation clarified the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109.  FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of an income tax position taken or expected to be taken in an income tax return.  The change in the net assets and liabilities recognized as a result of adopting the provisions of FIN 48 has been recorded as a charge of $442 to the opening balance of accumulated deficit.

Defined Benefit Pension and Other Postretirement Plans

In September 2006, the FASB issued Statement No. 158 which required companies to recognize in their statement of financial position an asset for a postretirement benefit plan’s overfunded status or a liability for a plan’s underfunded status and to measure a plan’s assets and its obligations that determine its funded status as of the end of the company’s fiscal year.  Additionally, Statement No. 158 required companies to recognize changes in the funded status of a defined benefit postretirement plan in the year in which the changes occur and to report those changes in comprehensive income (loss).  The provisions of Statement No. 158 have two separate effective dates.  The provision of Statement No. 158 that required a company (with a calendar year-end) to recognize the funded status of its pension plan, and the disclosure requirements, was effective as of December 31, 2006, and the provision of Statement No. 158 that required a company (with a calendar year-end) to measure plan assets and benefit obligations as of the date of its fiscal year-end balance sheet is effective as of December 31, 2008.  See Note 14 for a discussion regarding the adoption of the provisions of Statement No. 158 effective December 31, 2006.  As the Company has historically measured it plan assets and benefit obligations as of December 31, the provisions of Statement No. 158 effective as of December 31, 2008 will have no impact on the Company’s financial position or results of operations upon adoption.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2007, the SEC published Staff Accounting Bulletin (“SAB”) No. 110, which amends SAB No. 107 to allow for the continued use, under certain circumstances, of the “simplified” method in developing an estimate of the expected term of so-called “plain vanilla” stock options accounted for under Statement No. 123R beyond December 31, 2007.  Companies can use the simplified method if they conclude that their stock option exercise experience does not provide a reasonable basis upon which to estimate expected term. SAB No. 110 will not have a significant impact on the Company’s future financial position or results of operations.  Beginning in 2008, for any stock option awards granted, the Company’s computation of expected life will be based on its historical stock option exercise experience as outlined in Statement No. 123R.

In December 2007, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 141 (revised 2007), Business Combinations (“Statement No. 141R”).  Statement No. 141R requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date.  Statement No. 141R is effective for the Company for business combinations for which the acquisition date is on or after January 1, 2009.  The provisions of Statement No. 141R will not impact the Company’s financial statements for prior periods.

II-18

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (“Statement No. 160”).  Statement No. 160 clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.  Statement No. 160 is effective as of January 1, 2009 for the Company.  The Company has not yet determined the impact that the adoption of Statement No. 160 will have on its financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115 (“Statement No. 159”).  Statement No. 159 permits entities to elect, at specified election dates, to measure eligible financial instruments and certain other items at fair value.  An entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date, and recognize upfront costs and fees related to those items in earnings as incurred.  Statement No. 159 is effective as of January 1, 2008 for the Company.  The Company has not yet determined the impact that the adoption of Statement No. 159 will have on its financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“Statement No. 157”).  Statement No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements.  Under Statement No. 157, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts.  It also clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability.  This Statement applies under other accounting pronouncements that require or permit fair value measurements.  Accordingly, this Statement does not require any new fair value measurements, however, for some entities, the application of Statement No. 157 could change current practices.  Statement No. 157 will be effective for the Company on January 1, 2008.  The FASB has deferred the adoption of Statement No. 157 for nonfinancial assets and nonfinancial liabilities to be effective for the Company on January 1, 2009.  The Company has not yet determined the impact that the adoption of Statement No. 157 will have on its financial statements.

In November 2007, the EITF reached a consensus on Issue No. 07-1 Accounting for Collaboration Arrangements Related to the Development and Commercialization of Intellectual Property (“EITF 07-1”). EITF 07-1 provides guidance on how the parties to a collaborative agreement should account for costs incurred and revenue generated on sales to third parties, how sharing payments pursuant to a collaboration agreement should be presented in the income statement and certain related disclosure questions. EITF No. 07-1 will be effective for the Company as of January 1, 2009.  An entity will report the effects of applying EITF No. 07-1 as a change in accounting principle through retrospective application to all prior periods presented for all arrangements existing as of the effective date.  The Company has not yet determined the impact that the adoption of EITF No. 07-1 will have on its financial statements.

II-19

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

NOTE 2.                STAFF ACCOUNTING BULLETIN NO. 108

On September 13, 2006, the SEC issued SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.  SAB No. 108 was issued in order to eliminate the diversity in practice surrounding how public companies quantify financial statement misstatements.  SAB No. 108 requires that registrants quantify errors using both a balance sheet (“iron curtain”) and income statement (“rollover”) approach (“dual approach”) and evaluate whether either approach results in a misstated amount that, when all relevant quantitative and qualitative factors are considered, is material.  SAB No. 108 was effective for the Company’s year ended December 31, 2006.  In accordance with the guidance set forth in SAB No. 108, the Company corrected certain identified historical uncorrected balance sheet differences aggregating $121,668, net of taxes, which arose prior to January 1, 2006, as a cumulative effect adjustment to opening accumulated deficit as of January 1, 2006 in accordance with the “dual approach” set forth in SAB No. 108.  Historically, the Company evaluated uncorrected differences utilizing the “rollover” approach.  The Company believes its prior period assessments of uncorrected differences utilizing the “rollover” approach and the conclusions reached regarding its quantitative and qualitative assessments of materiality of such uncorrected differences, individually and in the aggregate, were appropriate.

The following table summarizes the impact of applying the guidance set forth in SAB No. 108 on the Company’s 2006 opening accumulated deficit balance:

	Additional Income (Expense)
	Period in which the Uncorrected Differences Originated
	Cumulative Uncorrected Differences as of December 31,			Year Ended December 31,			Adjustment Recorded as of January 1, 2006 to Accumulated
	2004			2005			Deficit
Excess accrual balances and other items, net of taxes (a)	$	104,396		$	(1,952	)	$	102,444
Tax adjustment relating to disability insurance (b)	361			9,734			10,095
Rent expense, net of taxes (c)	(7,670		)	(766		)	(8,436		)
Revenue related to promotional rates, net of taxes (d)	5,636			4,845			10,481
Video on demand revenue, net of related expenses and taxes (e)	836			54			890
Programmer audit accruals, net of taxes (f)	1,564			373			1,937
Disability and life insurance accruals, net of taxes (g)	1,953			254			2,207
Goodwill amortization, net of taxes (h)	2,076			(26		)	2,050
Impact on accumulated deficit	$	109,152		$	12,516		$	121,668

(a)In periods prior to 2000, the Company had determined that certain accounts payable and accrued liability account balances (including accruals for programming costs, non-income based taxes, worker’s compensation, franchise fees, health and dental, and pensions, among others) which had accumulated over a number of years to an aggregate $109,433, net of taxes, as of December 31, 2004, were not supportable as liabilities that the Company would be required to satisfy.  These amounts were substantially “frozen” as of December 31, 1999.  Historically, the Company had concluded that such prior year uncorrected differences were quantitatively and qualitatively immaterial to the Company’s prior year financial statements using the rollover method.  This adjustment also includes $2,190, net of taxes, as of December 31, 2004, representing an excess reserve for unreturned analog converters that was not adjusted in prior periods to reflect actual losses and $(3,933), net of taxes, as of December 31, 2004, relating to unreconciled cash receipts.  Additionally, this adjustment includes goodwill aggregating $3,292, net of taxes, as of December 31, 2004, and $1,994, net of taxes, for the year ended December 31, 2005,

II-20

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

relating primarily to businesses that were sold where such goodwill was not included in their cost basis at the time of their sale for purposes of computing the associated gain on sale.

(b)In calculating the Company’s tax provision for periods through December 31, 2005, the Company incorrectly treated tax-exempt disability insurance proceeds as taxable and non-deductible disability insurance premiums as tax deductible with regard to disability insurance arrangements associated with players of certain of the Company’s professional sports teams.

(c)The Company historically recorded rent expense related to certain of its operating leases based on the contractual terms of the respective lease agreements instead of on a straight-line basis over the lease term as required by U.S. generally accepted accounting principles.  This adjustment represents the impact of correcting the recognition of rent expense to the straight-line basis.

(d)The Company determined that it did not recognize in the appropriate period a portion of revenue earned related to certain cable television customers with promotional rates. This revenue was recognized when the promotional rates expired, generally occurring one year after the promotion commenced.  This adjustment represents the revenue that should have been recognized in the respective periods when the services were provided, net of related tax effects.

(e)Prior to 2006, the Company recorded certain revenue from video on demand services as the services were billed to the customer instead of when the services were provided.  Such revenue was historically recorded in the subsequent month’s billing cycle.  This adjustment reflects the recognition of revenue, net of related expenses and taxes, which should have been recorded in the respective periods when the services were provided.

(f)The Company’s contracts with programming content providers typically allow for periodic audits of the programming payments made by the Company to these providers.  The Company records an accrual for a loss contingency related to the associated potential underpayment of programming fees if such amounts are deemed probable and estimable.  Based on the Company’s review of this accrual balance, it determined that the accrual was overstated in previous years based upon the occurrence of historical events.  This adjustment reflects the reduction of the accrual balance, net of taxes, in the appropriate periods.

(g)The Company determined that its accrual for disability and life insurance premiums for one of the Company’s segments was based on an estimate that was not adjusted on a quarterly basis to reflect actual premiums paid.  This adjustment reflects the reduction of the accrual, net of taxes, for the respective periods.

(h)In 2002, the Company inappropriately amortized goodwill of $2,076, net of taxes.  This adjustment reflects the reversal of the amortization recognized in 2002.  U.S. generally accepted accounting principles required the Company to cease amortization of goodwill effective January 1, 2002.

II-21

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The following table summarizes the impact of applying the guidance in SAB No. 108 related to the adjustments described above on the Company’s 2006 opening accumulated deficit by segment:

	Additional Income (Expense)
	Cumulative Uncorrected Differences as of January 1, 2006
	Tele- communications			Rainbow			Madison Square Garden		Other			Total
Excess accrual balances and other items	$	70,045		$	22,671		$	4,958	$	29,737		$	127,411
Rent expense	(10,040		)	(1,380		)	—		(2,920		)	(14,340		)
Revenue related to promotional rates	17,768			—			—		—			17,768
Video on demand revenue, net of related expenses	1,509			—			—		—			1,509
Programmer audit accruals	3,284			—			—		—			3,284
Disability and life insurance accruals	—			3,683			136		—			3,819
Goodwill amortization	—			—			3,474		—			3,474
	$	82,566		$	24,974		$	8,568	$	26,817		142,925
Income tax expense*												(31,352		)
Tax adjustment relating to disability insurance												10,095
Impact on accumulated deficit												$	121,668

*The income tax expense impact presented above is less than the amount that would be derived by applying the statutory rate to the aggregate pre-tax adjustment due to an income tax benefit of $28,553 resulting from a decrease in the required amount of the valuation allowance at the beginning of 2002 due to the decrease in deferred tax assets recognized in connection with the adjustments related to the excess accrual balances.  The valuation allowance was eliminated later in 2002 in connection with the application of purchase accounting associated with an acquisition.

NOTE 3.                TRANSACTIONS

2007 Transactions

Sale of Fox Sports Net Bay Area and Fox Sports Net New England

In June 2007, Rainbow Media Holdings completed the sale to Comcast Corporation (“Comcast”) of (i) its 60% interest in Fox Sports Net Bay Area, for a purchase price of $366,750 (the “Bay Area Sale”) and (ii) its 50% interest in Fox Sports Net New England, for a purchase price of $203,250 (the “New England Sale”), for an aggregate purchase price of $570,000, plus certain additional consideration to Rainbow Media Holdings, and customary working capital adjustments.

The Company recorded a pretax gain of $183,286 ($107,369, net of taxes) in connection with the New England Sale and a pretax gain of $317,995 ($186,281, net of taxes), relating to the Bay Area Sale.  The net operating results of Fox Sports Net Bay Area have been classified as discontinued operations for all periods presented.  The net operating results of Fox Sports Net Bay Area were previously reported in the Rainbow segment.

II-22

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Contemporaneously with the execution of the agreement relating to the Bay Area Sale and the New England Sale, subsidiaries of the Company and Comcast entered into or extended affiliation agreements relating to (i) the carriage of the Versus and Golf Channel programming services on the Company’s cable television systems and (ii) the carriage of AMC, Fuse, IFC, WE tv, Lifeskool, sportskool, Madison Square Garden Network and Fox Sports Net New York on Comcast’s cable television systems.

2006 Transactions

CSC Holdings Stock

On April 20, 2006, CSC Holdings issued 2.1 million shares of its common stock, $0.01 par value, to Cablevision in consideration of previous contributions of cash and assets by acquired Cablevision and were assigned to CSC Holdings in prior years.

2005 Transactions

CSC Holdings Stock

In December 2005, CSC Holdings issued 3.1 million shares of common stock, $0.01 par value, to Cablevision in consideration for certain cable systems that Cablevision had acquired and were assigned to CSC Holdings in 1999.  The issuance was approved at the time of the assignment but the shares were not issued and delivered until December 2005.

Regional Programming Partners Restructuring

In April 2005, the Company and News Corporation restructured their ownership of Regional Programming Partners.  Prior to the April 2005 transaction, Regional Programming Partners was owned 60% by the Company and 40% by News Corporation.  As a result of the restructuring, the Company indirectly owns 100% of Madison Square Garden, L.P., 100% of Fox Sports Net Chicago (which was shut down in June 2006) and through June 2007, 50% of Fox Sports Net New England and therefore, no portion of the results of operations of these businesses is allocated to minority interests after the acquisition.  In connection with the restructuring, these businesses extended the terms of their long-term affiliation agreements with National Sports Partners and their advertising representation agreements with National Advertising Partners.

In connection with its December 2003 purchase of the interests that it did not own in Fox Sports Net Chicago and Fox Sports Net Bay Area, subsidiaries of Regional Programming Partners issued promissory notes in the aggregate amount of $150,000 to News Corporation.  As part of the restructuring, those promissory notes and accrued interest of $2,907 were contributed by News Corporation to Regional Programming Partners for no additional consideration and were cancelled without any payment being made on them.

National Sports Partners and National Advertising Partners were owned 50% by the Company and 50% by News Corporation.  As a result of the restructuring, the Company no longer owns any interest in National Sports Partners, National Advertising Partners, Fox Sports Net Ohio or Fox Sports Net Florida.

II-23

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The Company and News Corporation continued to own 60% and 40%, respectively, of Fox Sports Net Bay Area through a separate partnership.  The Company continued to manage that network.  In connection with the restructuring, Fox Sports Net Bay Area extended the terms of its long-term affiliation agreement with National Sports Partners and its advertising representation agreement with National Advertising Partners.  See “2007 Transactions” above for a discussion regarding the sale of Fox Sports Net Bay Area.

The Company accounted for this exchange in accordance with APB Opinion No. 29, Accounting for Nonmonetary Transactions and, accordingly, the Company recorded the transaction with News Corporation at fair value at the date of the restructuring.  The Company recorded a gain in discontinued operations of $266,810, net of taxes, in connection with the transfer of the Company’s interests in Fox Sports Net Ohio and Fox Sports Net Florida.  The Company recorded a gain in continuing operations of $66,558 in connection with the transfer of National Sports Partners and National Advertising Partners.  In addition, the excess of the net book value of the assets acquired over the purchase price of $94,320 was allocated to specific assets and liabilities based on fair values as follows:

	Useful Life
Land and development rights	Indefinite	$	37,573
Property and equipment, net	2 to 27.5 years	12,396
Amortizable intangible assets:
Affiliation agreements	4 years	17,951
Affiliation relationships	24 years	85,824
Advertiser relationships	7 years	6,004
Season ticket holder relationships	12 to 15 years	73,124
Suite holder contracts and relationships	3 to 11 years	21,167
Indefinite-lived intangible assets:
Trademarks		53,880
Sports franchises		96,215
Excess costs over fair value of net assets acquired		(460,853		)
Other assets and liabilities, net		9,399
Unfavorable contracts		(47,000		)
Net step-down to historical carrying values		$	(94,320	)

The Regional Programming Partners restructuring transaction was substantially tax deferred.

The unaudited pro forma revenue, loss from continuing operations, and net income, of the Company, as if the Company’s acquisition of the interests in entities exchanged with News Corporation had occurred on January 1, 2005 are as follows:

	Year Ended December 31, 2005
Revenues	$	5,082,045
Loss from continuing operations	$	(73,216	)
Net income	$	153,058

II-24

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Agreements with EchoStar

In 2005, subsidiaries of the Company entered into agreements with EchoStar Communications Corporation (“EchoStar”) by which EchoStar acquired a 20% interest in VOOM HD Holdings LLC (“VOOM HD”) and agreed to distribute VOOM on its DISH Network for a 15-year term.  The affiliation agreement with EchoStar for such distribution provides that if VOOM HD fails to spend $100,000 per year (subject to reduction to the extent that the number of offered channels is reduced to fewer than 21), up to a maximum of $500,000 in the aggregate, on VOOM, EchoStar may seek to terminate the agreement under certain circumstances.  On January 30, 2008, EchoStar purported to terminate the affiliation agreement, effective February 1, 2008, based on its assertion that VOOM HD had failed to comply with this spending provision in 2006.  On January 31, 2008, VOOM HD sought and obtained a temporary restraining order from New York Supreme Court for New York County prohibiting EchoStar from terminating the affiliation agreement.  In conjunction with its request for a temporary restraining order, VOOM HD filed a lawsuit against EchoStar asserting that EchoStar did not have the right to terminate the affiliation agreement.  That lawsuit is pending, as is the court’s decision on VOOM HD’s motion for a preliminary injunction.  Separately, on February 1, 2008, EchoStar began to distribute VOOM in a manner that the Company believes violates EchoStar’s obligations under the affiliation agreement.  On February 4, 2008, VOOM HD notified EchoStar of its position that this new distribution constitutes a material breach of the affiliation agreement and reserved all its rights and remedies.

The agreements resulted in a non-monetary exchange whereby the Company provided EchoStar a 20% interest in VOOM HD Holdings in exchange for deferred carriage fees.  Accordingly, in 2005, the Company recorded deferred carriage fees for the fair value of the 20% interest in VOOM HD Holdings LLC surrendered of $18,101, which resulted in a gain on the issuance of member’s interest by a subsidiary of $10,397 (net of transaction costs of $295 and taxes of $7,409).  Since VOOM HD Holdings LLC is a start-up company, the gain was recorded as an increase to paid-in capital.

NOTE 4.                RESTRUCTURING CHARGES

In 2007, the Company recorded net restructuring charges aggregating $4,733 which included $2,902 of severance and other costs related to the elimination of approximately 77 positions, at certain programming businesses within the Rainbow segment and $221 of severance and other costs related to the elimination of two positions within the Madison Square Garden segment (these costs are expected to be fully paid in 2008), and $479, $277 and $854 relating to changes to the Company’s previous estimates recorded in connection with the Company’s 2001, 2002 and 2006 facility realignment plans, respectively.

In 2006, the Company recorded net restructuring credits aggregating $3,484 which consisted of $4,521 and $23 relating to changes to the Company’s previous estimates recorded in connection with the Company’s 2001 facility realignment plan and 2005 employee severance plan, respectively.  These credits were partially offset by charges of $143 related to the elimination of approximately ten positions at a programming business within the Madison Square Garden segment (which was fully paid as of December 31, 2006), charges associated with facility realignment and other related costs of $392 and charges of $525 relating to changes to the Company’s previous estimates recorded in connection with the Company’s 2002 facility realignment plan.

II-25

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

In 2005, the Company recorded net restructuring credits of $537 which consisted of $1,480 and $578 relating to changes to the Company’s previous estimates recorded in connection with the Company’s 2001 and 2002 facility realignment plans.  These credits were partially offset by a charge of $1,024 associated with the elimination of certain positions in various business units of the Company and restructuring charges of $234 and $263 relating to changes to the Company’s previous estimates recorded in connection with the Company’s 2003 and 2004 severance plans, respectively.

At December 31, 2007, restructuring liabilities of $2,344 and $151 were classified as a current liability and long-term liability, respectively, in the consolidated balance sheet.

NOTE 5.                IMPAIRMENT CHARGES

As part of its periodic review of expected programming usefulness, the Company recorded an impairment loss of $3,160, $1,640 and $663 in 2007, 2006 and 2005, respectively.  Approximately $1,123 and $663 of the impairment losses in 2007 and 2005, respectively, represent primarily the write-off of the carrying value of certain film and programming contracts of the Company’s Rainbow segment and are included in technical and operating expense.  Approximately $2,037 and $1,640 of the impairment losses in 2007 and 2006, respectively, represent primarily the write-off of the carrying value of certain film and programming contracts of the Company’s Madison Square Garden segment and are also included in technical and operating expense.

In addition, the Company recorded impairment charges of $1,804, $2,104 and $7,697 in 2007, 2006 and 2005, respectively, included in depreciation and amortization.  The charges in 2007 and 2005 related primarily to certain other long-lived assets and goodwill related to certain businesses in the Company’s theater operations and Rainbow segment, and the charges in 2006 related to the Company’s theater operations and PVI Virtual Media business.

In June 2006, the operations of the Fox Sports Net Chicago programming business were shut down.  In connection with the shut down, the Company recorded a goodwill impairment charge of $5,121 which was classified in discontinued operations.

II-26

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

NOTE 6.DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE

In June 2007, the Company completed the sale of its 60% interest in Fox Sports Net Bay Area, to Comcast (see Note 3).  In addition, in June 2006 and April 2005, respectively, the operations of the Fox Sports Net Chicago programming business and the Rainbow DBS satellite distribution business were shut down.  In connection with the Regional Programming Partners Restructuring in April 2005, the Company no longer owns any interest in Fox Sports Net Ohio and Fox Sports Net Florida.  As a result, the operating results of these businesses, net of taxes, have been classified in the consolidated statements of operations as discontinued operations for all periods presented.  Operating results of discontinued operations for the years ended December 31, 2007, 2006 and 2005 are summarized below:

	Year Ended December 31, 2007
	Fox Sports Net Bay Area			Rainbow DBS Distribution Business			Total
Revenues, net	$	53,892		$	—		$	53,892
Income before income taxes, including gain on sale of Fox Sports Net Bay Area of $317,995	$	326,166		$	7,114		$	333,280
Income tax expense	(135,098		)	(2,947		)	(138,045		)
Net income, including gain on sale of Fox Sports Net Bay Area of $186,281, net of taxes	$	191,068		$	4,167		$	195,235

	Year Ended December 31, 2006
	Fox Sports Net Bay Area			Fox Sports Net Chicago (a)			Rainbow DBS Distribution Business (b)			Other			Total
Revenues, net	$	98,969		$	79,204		$	—		$	—		$	178,173
Income (loss) before income taxes	$	15,227		$	72,985		$	(56,741	)	$	(62	)	$	31,409
Income tax benefit (expense)	(6,245		)	(32,030		)	23,269			25			(14,981		)
Net income (loss)	$	8,982		$	40,955		$	(33,472	)	$	(37	)	$	16,428

(a)Revenues, net includes $77,996 representing the collection in June 2006 of affiliate revenue from a cable affiliate, including $71,396 relating to periods prior to 2006, that had not been previously recognized due to a contractual dispute.  The underlying contract was terminated in June 2006 and no further payments will be received under this contract.

(b)Income (loss) before income taxes includes the recognition of the Make Whole Payment obligation due to Loral Space and Communications Holding Corporation (see discussion below).

II-27

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

	Year Ended December 31, 2005
	Fox Sports Net Bay Area			Fox Sports Net Chicago			Fox Sports Net Ohio and Fox Sports Net Florida			Rainbow DBS Satellite Distribution Business			Other			Total
Revenues, net	$	90,433		$	3,433		$	40,018		$	8,776		$	—		$	142,660
Income (loss) before income taxes	$	15,949		$	2,743		$	466,460		$	(102,983	)	$	4,405		$	386,574
Income tax benefit (expense)	(6,528		)	(1,123		)	(192,998		)	42,151			(1,802		)	(160,300		)
Net income (loss) including gain on restructuring of Regional Programming Partners of $266,810, and other gain of $2,618, net of taxes	$	9,421		$	1,620		$	273,462		$	(60,832	)	$	2,603		$	226,274

For the year ended December 31, 2005, the Company recorded a gain, net of taxes, of $2,521, primarily representing the transfer of the Company’s ownership interest in a subsidiary of PVI to PVI’s minority partner for the minority partner’s remaining ownership interest in PVI.  In addition, the Company recorded a gain, net of taxes, of $97 for the year ended December 31, 2005 that related primarily to a reduction of health and welfare expenses in connection with the transfer of the retail electronics business.

Rainbow DBS

In April 2005, the operations of the Rainbow DBS satellite distribution business were shut down.  In connection with the shut down, certain assets of the business, including the Rainbow 1 direct broadcast satellite and certain other related assets were sold to a subsidiary of EchoStar for $200,000 in cash.  This transaction closed in November 2005.  In addition, Rainbow DBS had FCC licenses to construct, launch and operate five fixed service Ka-band satellites and had entered into a contract in November 2004 for the construction by Lockheed Martin of these five Ka-band satellites at a cost of $740,000.  Rainbow DBS had the right to terminate the contract at any time, subject to certain maximum termination liabilities.  Rainbow DBS exercised this right on November 21, 2005, and the amount paid to Lockheed Martin in excess of the termination liability was repaid to the Company in March 2006.

In 2006, the Company accrued $50,898, including interest, reflected as an expense in discontinued operations, as a result of the judgment entered against Cablevision and Rainbow DBS in the Loral contract dispute (see Note 17).  The Company has posted a cash collateralized bond in the amount of $52,159, which is reflected as restricted cash in the Company’s consolidated balance sheet at December 31, 2007.

II-28

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

In the first quarter of 2006, the Company recorded an impairment loss of $7,179 relating to certain assets of the Rainbow DBS satellite distribution business which was classified in discontinued operations.  In the second quarter of 2006, these assets were sold.

In March 2007, the Federal Communications Commission (“FCC”) waived the bond requirement previously submitted by Rainbow DBS Company LLC with respect to five Ka-band licenses.  These bonds were originally cash collateralized by the Company.  In connection with the shut down of the Rainbow DBS satellite distribution business in 2005, the Company recorded a loss related to the outstanding bonds since the Company believed it was not probable that Rainbow DBS would meet the required FCC milestones.  As a result of the waiver from the FCC, the Company recorded a gain of $6,638, net of taxes, in the quarter ended March 31, 2007.  The Company received the cash collateral of $11,250 in the quarter ended June 30, 2007.

Fox Sports Net Chicago

In June 2006, the operations of the Fox Sports Net Chicago programming business were shut down.  In connection with the shut down, the Company recorded a goodwill impairment charge of $5,121 which was classified in discontinued operations.

Fox Sports Net Bay Area

As a result of the sale of the Company’s interest in Fox Sports Net Bay Area to Comcast in June 2007 (see Note 3), the assets and liabilities attributable to Fox Sports Net Bay Area have been classified in the consolidated balance sheet as of December 31, 2006 as assets and liabilities held for sale and consist of the following:

Cash and cash equivalents	$	24,461
Accounts receivable, prepaid and other current assets	24,728
Property and equipment, net and other long-term assets	15,950
Intangible assets, net	63,162
Total assets held for sale	$	128,301
Accounts payable and accrued expenses	$	5,059
Other current liabilities	965
Other long-term liabilities	19
Total liabilities held for sale	$	6,043

NOTE 7.                PROPERTY, PLANT AND EQUIPMENT

Costs incurred in the construction of the Company’s cable television system, including line extensions to, and upgrade of, the Company’s hybrid fiber-coaxial infrastructure and headend facilities are capitalized.  These costs consist of materials, subcontractor labor, direct consulting fees, and internal labor and related costs associated with the construction activities.  The internal costs that are capitalized consist of salaries and benefits of the Company’s employees and the portion of facility costs, including rent, taxes, insurance and utilities, that supports the construction activities.  These costs are depreciated over the estimated life of the plant (12-25 years), and headend facilities (4-15 years).  Costs of operating the plant and the technical facilities, including repairs and maintenance, are expensed as incurred.

II-29

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Costs incurred to connect businesses or residences that have not been previously connected to the infrastructure or digital platform are also capitalized.  These costs include materials, subcontractor labor, internal labor to connect, provision and provide on-site and remote technical assistance and other related costs associated with the connection activities.  In addition, on-site and remote technical assistance during the provisioning process for new digital product offerings are capitalized.  The departmental activities supporting the connection process are tracked through specific metrics, and the portion of departmental costs that is capitalized is determined through a time weighted activity allocation of costs incurred based on time studies used to estimate the average time spent on each activity.  New connections are amortized over 5 years or 12 years for residence wiring and feeder cable to the home, respectively.  The portion of departmental costs related to reconnection, programming service up- and down- grade, repair and maintenance, and disconnection activities are expensed as incurred.

Property, plant and equipment (including equipment under capital leases) consist of the following assets, which are depreciated or amortized on a straight-line basis over the estimated useful lives shown below:

	December 31,				Estimated
	2007		2006		Useful Lives
Customer equipment	$	1,671,235	$	1,565,089	3 to 5 years
Headends and related equipment	652,933		610,563		4 to 15 years
Central office equipment	514,636		456,670		5 to 10 years
Infrastructure	4,755,756		4,599,159		3 to 25 years
Program, service and data processing equipment	1,289,623		1,252,570		2 to 13 years
Microwave equipment	38,081		35,667		5 to 8 years
Construction in progress (including materials and supplies)	65,353		68,136		—
Furniture and fixtures	169,413		171,062		2 to 12 years
Transportation equipment	240,106		228,414		3 to 15 years
Buildings and building improvements	398,766		368,921		2 to 40 years
Leasehold improvements	547,968		531,300		Term of lease
Land	85,032		79,989		—
	10,428,902		9,967,540
Less accumulated depreciation and amortization	6,956,699		6,254,510
	$	3,472,203	$	3,713,030

Depreciation expense on property, plant and equipment (including capital leases) for the years ended December 31, 2007, 2006 and 2005 amounted to $1,035,050, $1,034,127 and $980,608 (including impairments of $1,424, $1,205 and $2,734 in 2007, 2006 and 2005), respectively.

At December 31, 2007 and 2006, the gross amount of equipment and related accumulated amortization recorded under capital leases were as follows:

	December 31,
	2007		2006
Equipment	$	125,931	$	122,400
Less accumulated amortization	77,549		75,817
	$	48,382	$	46,583

II-30

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

NOTE 8.                INTANGIBLE ASSETS

The following table summarizes information relating to the Company’s acquired intangible assets at December 31, 2007 and 2006:

	December 31,				Estimated
	2007		2006		Useful Lives
Gross carrying amount of amortizable intangible assets
Affiliation relationships and affiliation agreements	$	742,416	$	742,416	4 to 24 years
Broadcast rights and other agreements	45,590		45,590		10 years
Season ticket holder relationships	75,005		75,005		10 to 15 years
Suite holder contracts and relationships	21,167		21,167		3 to 11 years
Advertiser relationships	103,524		103,524		7 to 10 years
Other intangibles	57,590		40,819		1 to 20 years
	1,045,292		1,028,521
Accumulated amortization
Affiliation relationships and affiliation agreements	409,870		353,518
Broadcast rights and other agreements	38,522		36,806
Season ticket holder relationships	15,476		10,027
Suite holder contracts and relationships	9,136		5,815
Advertiser relationships	53,745		42,274
Other intangibles	24,130		19,139
	550,879		467,579
Indefinite-lived intangible assets
Franchises	731,848		731,848
Sports franchises	96,215		96,215
FCC licenses and other intangibles	11,936		11,936
Trademarks	53,880		53,880
Excess costs over the fair value of net assets acquired	1,023,480		1,024,168
	1,917,359		1,918,047
Total intangible assets, net	$	2,411,772	$	2,478,989
Aggregate amortization expense
Years ended December 31, 2007 and 2006 (excluding impairment charges of $380 and $899, respectively)	$	83,458	$	84,803
Estimated amortization expense
Year ending December 31, 2008	$	83,675
Year ending December 31, 2009	77,266
Year ending December 31, 2010	74,260
Year ending December 31, 2011	73,510
Year ending December 31, 2012	65,372

II-31

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The changes in the carrying amount of excess costs over the fair value of net assets acquired for the years ended December 31, 2007 and 2006 are as follows:

	Tele- communications		MSG			Rainbow			Other			Total
Balance as of December 31, 2005	$	206,971	$	727,754		$	36,931		$	14,457		$	986,113
Cumulative effect of adjustments resulting from the adoption of SAB No. 108 (Note 2)	—		15,319			28,756			—			44,075
Adjusted balance at January 1, 2006	206,971		743,073			65,687			14,457			1,030,188
Impairment loss- continuing operations	—		—			—			(899		)	(899		)
Impairment loss- discontinued operations (Note 5)	—		—			(5,121		)	—			(5,121		)
Balance as of December 31, 2006	206,971		743,073			60,566			13,558			1,024,168
Sale of affiliate interest	—		—			(308		)	—			(308		)
Impairment loss - continuing operations	—		—			(380		)	—			(380		)
Other	—		(581		)	581			—			—
Balance as of December 31, 2007	$	206,971	$	742,492		$	60,459		$	13,558		$	1,023,480

NOTE 9.                DEBT

Bank Debt

The Company’s outstanding bank debt at December 31, 2007 and 2006 is as follows:

	December 31,
	2007		2006
Restricted Group:
Term A-1 loan facility	$	950,000	$	1,000,000
Term B loan facility	3,438,750		3,482,500
	4,388,750		4,482,500
Rainbow National Services:
Term A loan facility	500,000		500,000
Revolving loan facility	—		10,000
	500,000		510,000
Total bank debt	$	4,888,750	$	4,992,500

II-32

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Restricted Group

On February 24, 2006, the Restricted Group (comprised primarily of CSC Holdings’ cable television subsidiaries and its commercial data and voice services subsidiary) entered into a $2,400,000 credit facility with a group of banks consisting of three components:  a $1,000,000 revolver, a $1,000,000 term A-1 loan facility and a $400,000 term A-2 loan facility that has since been refinanced and repaid in full, as described below.  Approximately $1,300,000 of the $1,400,000 proceeds received from the term loans under the new credit facility was used to repay the outstanding borrowings and accrued interest under the prior Restricted Group credit facility that was scheduled to mature in June 2006, and fees and expenses.  On March 29, 2006, the Restricted Group entered into a new $3,500,000 term B loan facility, of which approximately $400,000 of the proceeds was used to prepay the outstanding borrowings of the term A-2 loan facility, including accrued interest, and fees and expenses.  The balance of the outstanding term B loan facility borrowings was invested in short-term AAA rated funds until approval of the special dividend by Cablevision’s Board of Directors.  On April 24, 2006 the approved special dividend was paid (see Note 1).

The Restricted Group credit facilities are direct obligations of CSC Holdings, guaranteed by most Restricted Group subsidiaries and secured by the pledge of the stock of most Restricted Group subsidiaries.  As of December 31, 2007, $52,994 of the $1,000,000 revolving credit facility was restricted for certain letters of credit issued on behalf of CSC Holdings and $947,006 of the revolver was undrawn.  The revolving credit facility and the term A-1 loan facility mature in February 2012 and the term B loan facility matures in March 2013.  The revolver has no required interim repayments, the $1,000,000 term A-1 loan facility requires quarterly repayments of $12,500 in 2008, $62,500 in 2009 and 2010 and $100,000 in 2011 and the $3,500,000 term B loan facility is subject to quarterly repayments of $8,750 through March 31, 2012 and $822,500 beginning on June 30, 2012 through its maturity date in March 2013.  The interest rate on the term A-1 loan facility varies, depending on the Restricted Group’s cash flow ratio (as defined), from .75% to 1.75% over the Eurodollar Rate for Eurodollar-based borrowings and from zero to .75% over the Base Rate for Base Rate Borrowings (as defined).  The interest rate on the borrowings under the term B loan facility is the Eurodollar Rate (as defined) plus 1.75% or prime rate plus .75%, at the Company’s election.  The interest rates as of December 31, 2007 on borrowings under the term A-1 loan facility and term B loan facility was 6.40% and 6.90%, respectively.

The principal financial covenants, which are not identical for the revolving credit facility and the term A-1 loan facility, on the one hand, and the term B loan facility, on the other, include (i) under the revolving credit facility and the term A-1 loan facility, maximum total leverage (as defined in the term A-1 loan facility) of 5.50 times cash flow through December 31, 2008 with subsequent stepdowns over the life of the revolving credit facility and the term A-1 loan facility until reaching 4.50 times cash flow for periods beginning on and after January 1, 2010, (ii) under the revolving credit facility and the term A-1 loan facility, maximum senior secured leverage (as defined in the term A-1 loan facility) of 3.50 times cash flow through December 31, 2008 with annual stepdowns thereafter over the life of the revolving credit facility and the term A-1 loan facility until reaching 3.00 times cash flow for periods beginning on and after January 1, 2010, (iii) under the revolving credit facility and the term A-1 loan facility, a minimum ratio for cash flow to interest expense (as defined in the term A-1 loan facility) of 2.00 to 1, and (iv) under the revolving credit facility and the term A-1 loan facility, a minimum ratio of cash flow less cash taxes to total debt expense (as defined in the term A-1 loan facility to include interest expense, certain payments of principal and dividends paid by CSC Holdings to Cablevision to permit Cablevision to pay interest and certain principal payments on its debt) of 1.50 to 1.  These covenants and restrictions

II-33

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

on the permitted use of borrowed funds in the revolving credit facility may limit the Company’s ability to utilize all of the undrawn revolver funds.  Additional covenants include limitations on liens and the issuance of additional debt.

Under the term B loan facility, the Company is limited in its ability to incur additional indebtedness based on a maximum total leverage ratio (as defined in the term B loan facility) of 6.00 times cash flow through December 31, 2008 with subsequent stepdowns over the life of the term B loan facility until reaching 5.00 times cash flow for periods beginning on and after January 1, 2010 and a maximum senior secured leverage ratio (as defined in the term B loan facility) of 4.50 times cash flow.

Under the revolving credit facility and the term A-1 and term B loan facilities, there are generally no restrictions on investments that the Restricted Group may make, provided it is not in default; however, CSC Holdings must also remain in compliance with the maximum ratio of total indebtedness to cash flow and the maximum senior secured leverage ratio (each as defined in the term A-1 loan facility).  The Company’s ability to make restricted payments is also limited by provisions in the term B loan facility and the indentures covering the Company’s notes and debentures.

The Restricted Group was in compliance with all of its financial covenants under its various credit agreements as of December 31, 2007.

The Company is obligated to pay fees of 0.25% to 0.50% per annum based on undrawn revolver commitment balances.

In connection with the Restricted Group credit facility, the Company incurred deferred financing costs of $42,004, which are being amortized to interest expense over the term of the Restricted Group credit facility.  In connection with the repayment of the term A-2 loan facility and the prior Restricted Group credit facility, the Company wrote-off $4,587 of unamortized deferred financing costs in 2006.

Rainbow National Services

On July 5, 2006, Rainbow National Services LLC (“RNS”), an indirect wholly-owned subsidiary of the Company entered into a replacement bank facility (the “RNS Credit Facility”) providing for an $800,000 senior secured facility which consists of a $500,000 term A loan facility and a $300,000 revolving credit facility which was used primarily to refinance its then existing credit facility.  The term A loan facility matures June 30, 2013 and the revolving credit facility matures June 30, 2012.  The RNS Credit Facility allows RNS to utilize up to $50,000 of the revolving credit facility for letters of credit and up to $5,000 for a swing loan.  Further, the RNS Credit Facility provides for an incremental facility of up to $925,000, provided that it be for a minimum amount of $100,000.  If an incremental facility is established, RNS and the lenders will enter into a supplement to the RNS Credit Facility with terms and conditions that are no more restrictive than those of the RNS Credit Facility.  There are no commitments from the lenders to fund an incremental facility.

On July 5, 2006, RNS borrowed the entire $500,000 term A loan facility and $10,000 under the revolving credit facility.  RNS used the $510,000 borrowed under the RNS Credit Facility and $88,048 of additional available cash to repay all of its outstanding borrowings, accrued interest and fees due under its August 2004 $950,000 senior secured credit facility of which $592,500 was outstanding under a term loan at July 5, 2006 and to pay certain fees and expenses incurred in connection with the RNS Credit Facility. 

II-34

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

RNS may use future borrowings under the credit agreement to make investments, distributions, and other payments permitted under the RNS Credit Facility and for general corporate purposes.  The borrowings under the RNS Credit Facility may be repaid without penalty at any time.

Borrowings under the RNS Credit Facility are direct obligations of RNS which are guaranteed jointly and severally by substantially all of its subsidiaries and by Rainbow Programming Holdings LLC (“RPH”), the direct parent of RNS, and are secured by the pledge of the stock of RNS and substantially all of its subsidiaries and all of the other assets of RNS and substantially all of its subsidiaries (subject to certain limited exceptions).  Borrowings under the RNS Credit Facility bear interest based on either the Base Rate (the greater of the Federal Funds Rate plus 0.5% and the prime rate (as defined in the RNS Credit Facility)), or the Eurodollar Rate (as defined in the RNS Credit Facility).  The interest rate under the RNS Credit Facility varies, depending on RNS’ cash flow ratio (as defined in the RNS Credit Facility) from 1.0% to 1.5% over the Eurodollar Rate for Eurodollar-based borrowings and from zero to 0.5% over the Base Rate for Base Rate borrowings.  At December 31, 2007, the interest rate on the term A loan facility was 6.15%.  The term A loan is to be repaid in quarterly installments of $6,250 from March 31, 2008 until December 31, 2010, $12,500 from March 31, 2011 until December 31, 2012, and $162,500 on March 31, 2013 and June 30, 2013, the term A loan maturity date.  Any amounts outstanding under the revolving credit facility are due at maturity on June 30, 2012.

As defined in the RNS Credit Facility, thefinancial covenants consist of (i) a minimum ratio of operating cash flow to total interest expense for each quarter of 1.75 to 1, (ii) a maximum cash flow ratio of total indebtedness to operating cash flow of 6.75 to 1 through June 30, 2008, decreasing thereafter to 6.25 to 1, and (iii) a maximum senior secured leverage ratio of senior secured debt to operating cash flow of 5.50 to 1.  Additional covenants include restrictions on indebtedness, guarantees, liens, investments, dividends and distributions and transactions with affiliates.

RNS was in compliance with all of its financial covenants under its credit agreement as of December 31, 2007.

RNS is obligated to pay fees of 0.375% per annum on any undrawn revolver commitment.

In connection with the RNS Credit Facility, RNS incurred deferred financing costs of $5,536, which are being amortized to interest expense over the term of the RNS Credit Facility.  The Company recorded $6,084 as a write-off of deferred financing costs associated with the repayment of the August 2004 credit facility in 2006.

II-35

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Senior Notes and Debentures

The following table summarizes the Company’s senior notes and debentures:

							Carrying Amount at
	Date	Maturity			Face		December 31,
Issuer	Issued	Date	Rate		Amount		2007		2006
CSC Holdings (a)	December 1997	December 2007	7.875	%	$	500,000	$	—	$	499,952
CSC Holdings (b)	July 1998	July 2008	7.25	%	500,000		500,000		500,000
CSC Holdings (b)	July 1999	July 2009	8.125	%	500,000		499,650		499,423
CSC Holdings (b)	August 1997	August 2009	8.125	%	400,000		399,793		399,668
CSC Holdings (b)	March 2001	April 2011	7.625	%	1,000,000		998,957		998,635
CSC Holdings (c) (e)	April 2004	April 2012	6.75	%	500,000		500,000		500,000
RNS (d)	August 2004	September 2012	8.75	%	300,000		298,745		298,476
CSC Holdings (b)	February 1998	February 2018	7.875	%	300,000		298,264		298,088
CSC Holdings (b)	July 1998	July 2018	7.625	%	500,000		499,739		499,714
							$	3,995,148	$	4,493,956

(a)In December 2007, the Company redeemed these senior notes utilizing cash on hand.

(b)These notes are not redeemable by the Company prior to maturity.

(c)The Company may redeem some or all of the notes at any time at a make-whole redemption price calculated by reference to market interest rates for comparable maturity treasury notes plus a spread.

(d)The senior notes are redeemable, in whole or in part, at a redemption price equal to 104.375% of face value at any time on or after September 1, 2008, 102.188% of face value on or after September 1, 2009, and 100% of face value on or after September 1, 2010.

(e)During 2007 these notes were exchanged for registered notes as required by the purchase agreement under which the notes were sold and consequently, the interest rate decreased from 7.25% to 6.75%.

The indentures under which the senior notes and debentures were issued contain various covenants, which are generally less restrictive than those contained in the credit agreement of the issuer.

Senior Subordinated Notes and Debentures

In August 2004, RNS issued $500,000 face amount of 10 3/8% senior subordinated notes due September 1, 2014.  These senior subordinated notes were discounted $3,915, upon original issuance.  These notes are guaranteed by substantially all of the subsidiaries of RNS.  RNS may redeem the senior subordinated notes, in whole or in part, at a redemption price equal to 105.188% of face value on or after September 1, 2009, 103.458% on or after September 1, 2010, 101.729% on or after September 1, 2011, and 100% on or after September 1, 2012.  The notes are redeemable at the redemption price plus accrued and unpaid interest through the redemption date.

On July 24, 2007, RNS entered into an equity commitment agreement with its sole member, RPH), an indirect wholly-owned subsidiary of Rainbow Media Holdings, pursuant to which RPH agreed to purchase additional membership interests in RNS for an aggregate purchase price of $203,000.  RNS used the proceeds of the investment by RPH to redeem $175,000 in aggregate principal amount of its senior subordinated notes due 2014, representing 35% of the outstanding notes, at the redemption price of 110.375% of the principal amount of the notes plus accrued and unpaid interest to August 31, 2007, the redemption date.  In connection with the redemption, the Company recognized a loss on extinguishment

II-36

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

of debt of $19,113, representing primarily the redemption premium, and wrote-off the related unamortized deferred financing costs of $2,919.  The carrying value of these notes at December 31, 2007 was $323,311.

In June 2006, the Company redeemed its CSC Holdings 10 1/2% senior subordinated debentures due May 2016 at a redemption price of 105.25%.  In connection with the redemption, the Company recognized a loss on extinguishment of debt of $13,125, representing the redemption premiums paid and wrote-off the remaining deferred financing costs of $3,412.

The indentures under which the senior subordinated notes and debentures were issued contain various covenants, which are generally less restrictive than those contained in the credit agreement of the issuer.

Summary of Five Year Debt Maturities

Total amounts payable by the Company under its various debt obligations outstanding as of December 31, 2007, including collateralized indebtedness (see Note 10) and capital leases (including interest), during the five years subsequent to December 31, 2007, are as follows:

Years Ending December 31,
2008	$	843,378
2009	1,886,322
2010	318,867
2011	1,493,867
2012	3,331,517

NOTE 10.              COLLATERALIZED INDEBTEDNESS AND DERIVATIVES

To manage interest rate risk, the Company has from time to time entered into interest rate swap contracts to adjust the proportion of total debt that is subject to variable and fixed interest rates.  Such contracts fix the borrowing rates on floating rate debt to provide an economic hedge against the risk of rising rates and/or convert fixed rate borrowings to variable rates to provide an economic hedge against the risk of higher borrowing costs in a declining interest rate environment.  On December 31, 2007, all of the Company’s interest rate swap agreements to pay floating rates of interest with a total notional amount of $450,000 matured.  At December 31, 2006, the fair value of such contracts was $6,568, a net liability position.  These agreements were not designated as hedges for accounting purposes.

In addition, the Company has entered into prepaid interest rate swap agreements in connection with its monetization of certain of its stock holdings, discussed below.  These contracts require the Company to pay a floating rate of interest in exchange for fixed rate interest payments, the net present value of which was paid to the Company at the contract’s inception.  As of December 31, 2007 and 2006, the total notional value of such contracts was $105,061, and the fair values of such contracts aggregated $5,009 and $10,340, a net liability position, respectively.  These agreements have not been designated as hedges for accounting purposes.

II-37

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

In April 2006, CSC Holdings entered into several interest rate swap contracts in the notional amount of $3,700,000 to effectively fix borrowing rates on floating rate debt.  As a result of these transactions, the interest rate paid on approximately 84% of the Company’s debt as of December 31, 2007 is fixed.  The table below summarizes certain terms of these interest rate swap contracts as of December 31, 2007:

Maturity Date	Notional Amount		Weighted Average Fixed Rate Paid by the Company		Weighted Average Effective Floating Rate Received by the Company as of December 31, 2007
April 2008	$	500,000	5.24	%	5.09	%
April 2009	$	600,000	5.25	%	5.09	%
June 2010	$	2,600,000	5.34	%	4.83	%

As of December 31, 2007 and 2006, the interest rate swap contracts noted above had a fair value and carrying value of $108,141 and $31,398, a net liability position, respectively, as reflected under derivative contracts in the Company’s consolidated balance sheets.

The changes in the fair value of the Company’s swap agreements and the net realized losses as a result of net cash interest expense for the years ended December 31, 2007, 2006 and 2005 aggregating $(76,568), $(39,360) and $(16,497), respectively, are reflected in gain (loss) on derivative contracts in the accompanying consolidated statements of operations.

The Company has also entered into various transactions to provide an economic hedge against equity price risk on certain of its stock holdings.  The Company had monetized all of its stock holdings in Charter Communications, Inc., AT&T Inc., Comcast Corporation, General Electric Company and Leapfrog Enterprises, Inc. through the execution of prepaid forward contracts, collateralized by an equivalent amount of the respective underlying stock.  The contracts set a floor and cap on the Company’s participation in the changes in the underlying stock prices and at maturity are expected to offset declines in the fair values of the underlying stock below the hedge price per share, while allowing the Company to retain upside appreciation from the hedge price per share to the cap price.  At maturity, the contracts provide for the option to deliver cash or shares of AT&T, Comcast, Charter Communications, General Electric or Leapfrog stock (as the case may be) with a value determined by reference to the applicable stock price at maturity.

The Company received cash proceeds upon execution of the prepaid forward contracts discussed above which has been reflected as collateralized indebtedness in the accompanying consolidated balance sheets.  In addition, the Company separately accounts for the equity derivative component of the prepaid forward contracts.  These equity derivatives have not been designated as hedges for accounting purposes.  Therefore, the fair values of the equity derivatives of $51,162 and $(82,009), at December 31, 2007 and 2006, respectively, have been reflected in the accompanying consolidated balance sheets as an asset (liability) and the net increases (decreases) in the fair value of the equity derivative component of the prepaid forward contracts of $214,712, $(214,352) and $135,677, for the years ended December 31, 2007, 2006 and 2005, respectively, are included in gain (loss) on derivative contracts in the accompanying consolidated statements of operations.

II-38

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

For the years ended December 31, 2007, 2006 and 2005, the Company recorded a gain (loss) on investments of $(213,754), $284,096 and $(135,082) respectively, representing the net increases or decreases in the fair values of all investment securities pledged as collateral for the period.

2007 Settlements of Collateralized Indebtedness

The following table summarizes the settlement of the Company’s collateralized indebtedness for the year ended December 31, 2007.  The Company’s collateralized indebtedness obligations relating to shares of Charter Communications and Leapfrog common stock were settled by delivering the underlying securities and proceeds from the related equity derivative contracts.

	Charter			Leapfrog			Total
Number of shares	3,724,460			800,000
Collateralized indebtedness settled	$	(83,231	)	$	(19,238	)	$	(102,469	)
Prepaid forward contracts	70,903			10,638			81,541
Fair value of underlying securities delivered	12,328			8,600			20,928
Net cash payment	$	—		$	—		$	—

2006 Settlements of Collateralized Indebtedness

The following table summarizes the settlement of the Company’s collateralized indebtedness for the year ended December 31, 2006.  The Company’s collateralized indebtedness obligations relating to shares of Charter Communications and AT&T common stock were settled by delivering the underlying securities and proceeds from the related equity derivative contracts.  The Company’s collateralized indebtedness obligations relating to Comcast and General Electric shares were settled by delivering the cash equal to the collateralized loan value, net of the value of the related equity derivative contracts.  The cash was obtained from the proceeds of new monetization contracts covering an equivalent number of Comcast and General Electric shares, proceeds from a prepaid interest rate swap executed in conjunction with the equity derivative contract related to the Comcast shares and, in certain instances, cash from CSC Holdings.  The terms of the new contracts allow the Company to retain upside participation in both Comcast and General Electric shares up to each respective contract’s upside appreciation limit with downside exposure limited below the respective hedge price.

II-39

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

	Charter			AT&T			Comcast			General Electric			Total
Number of shares	5,586,687			3,449,785			7,159,206			12,742,033
Collateralized indebtedness settled	$	(125,907	)	$	(165,036	)	$	(266,224	)	$	(314,028	)	$	(871,195	)
Prepaid forward contracts	119,177			63,974			31,385			(50,864		)	163,672
Fair value of underlying securities delivered	6,730			101,062			—			—			107,792
Net cash payment	—			—			(234,839		)	(364,892		)	(599,731		)
Proceeds from new monetization contracts	—			—			212,774			382,261			595,035
Proceeds from prepaid interest rate swap contract	—			—			6,496			—			6,496
	—			—			219,270			382,261			601,531
Net cash receipt (payment)	$	—		$	—		$	(15,569	)	$	17,369		$	1,800

At December 31, 2007, the Company has principal collateralized indebtedness obligations of $219,073 relating to shares of Comcast and General Electric common stock that mature during the next twelve months.  The Company intends to settle such obligations by either delivering shares of the applicable stock and proceeds of the equity derivative contracts or delivering cash from the proceeds of new monetization transactions.  In the event of an early termination of any of these contracts, the Company would be obligated to repay the fair value of the collateralized indebtedness less the sum of the fair values of the underlying stock and equity collar, calculated at the termination date.  As of December 31, 2007, this settlement amount totaled $492.

II-40

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

NOTE 11.              INCOME TAXES

The Company and its 80% or more owned subsidiaries were included in the consolidated federal income tax returns of Cablevision for the years presented herein.  The income tax provision for the Company is determined on a stand-alone basis as if the Company filed separate consolidated income tax returns.

Income tax expense (benefit) attributable to the Company’s continuing operations consists of the following components:

	Years Ended December 31,
	2007		2006			2005
Current expense:
Federal	$	13,962	$	—		$	—
State and other	3,957		9,546			9,493
	17,919		9,546			9,493
Deferred expense (benefit):
Federal	62,124		(43,432		)	(23,724		)
State	42,253		(53,745		)	(16,995		)
	104,377		(97,177		)	(40,719		)
Tax expense, including accrued interest, recognized pursuant to FIN 48	12,333		—			—
Income tax expense (benefit)	$	134,629	$	(87,631	)	$	(31,226	)

The income tax benefit attributable to the Company’s continuing operations for 2005 excludes deferred federal and state tax benefits of $1,256, resulting from the exercise of stock options, which were credited directly to paid-in capital.   No income tax benefit has been recognized as an increase to paid in capital with regard to excess tax benefits occurring during 2007 and 2006.

The income tax expense attributable to the Company’s discontinued operations was classified as deferred income tax expense for all periods presented (see Note 6).

In connection with the tax allocation policy between the Company and Cablevision, the Company has recorded a payable due to Cablevision and Cablevision has recorded a receivable due from the Company, both in the amount of $13,969, representing the estimated federal income tax liability of the Company for the year ended December 31, 2007 as determined on a stand-alone basis as if the Company filed separate federal consolidated income tax returns.

II-41

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The income tax expense (benefit) attributable to the Company’s continuing operations differs from the amount derived by applying the statutory federal rate to pretax income principally due to the effect of the following items:

	Years Ended December 31,
	2007			2006			2005
Federal tax expense (benefit) at statutory federal rate	$	81,843		$	(53,783	)	$	(33,105	)
State income taxes, net of federal benefit	17,200			(17,489		)	(5,769		)
Changes in the valuation allowance	(536		)	(10,404		)	6,459
Change in the state rate used to determine deferred taxes, net of federal benefit	10,352			1,706			(6,701		)
Tax expense, including accrued interest, recognized pursuant to FIN 48, net of deferred tax benefits	8,849			—			—
Reduction of a tax contingency liability	—			(16,356		)	—
Favorable settlement of an issue with a taxing authority	—			(5,013		)	—
Nondeductible officers’ compensation	9,355			4,443			6,226
Other nondeductible expenses	6,285			6,768			10,637
Other	1,281			2,497			(8,973		)
Income tax expense (benefit)	$	134,629		$	(87,631	)	$	(31,226	)

II-42

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

For the Company, the tax effects of temporary differences which give rise to significant portions of deferred tax assets or liabilities and the corresponding valuation allowance at December 31, 2007 and 2006 are as follows:

	December 31,
	2007			2006
Deferred Tax Asset (Liability)
Current
Benefits of tax loss carryforwards	$	285,155		$	121,047
Compensation and benefit plans	21,516			62,201
Allowance for doubtful accounts	3,285			4,416
Restructuring liabilities	943			1,723
Investments	—			14,694
Other liabilities	42,554			37,368
Deferred tax asset	353,453			241,449
Valuation allowance	(9,778		)	(5,412		)
Net deferred tax asset, current	343,675			236,037
Investments	(60,192		)	—
Deferred tax liability, current	(60,192		)	—
Net deferred tax asset, current	283,483			236,037
Noncurrent
Benefits of tax loss and credit carryforwards	483,787			912,845
Compensation and benefit plans	109,819			87,992
Other	22,771			32,895
Deferred tax asset	616,377			1,033,732
Valuation allowance	(17,052		)	(23,076		)
Net deferred tax asset, noncurrent	599,325			1,010,656
Fixed assets and intangibles	(435,167		)	(461,372		)
Investments	(118,959		)	(221,902		)
Partnership investments	(596,827		)	(573,744		)
Other assets	(17,985		)	(16,481		)
Deferred tax liability, noncurrent	(1,168,938		)	(1,273,499		)
Net deferred tax liability, noncurrent	(569,613		)	(262,843		)
Total net deferred tax liability	$	(286,130	)	$	(26,806	)

At December 31, 2007, the Company had consolidated federal tax net operating loss carryforwards (“NOLs”) of $1,811,214, expiring on various dates through 2026.  The Company has recorded a deferred tax asset for such NOLs.

The Company’s NOLs expire as follows:

2019	$	276,052
2020	87,952
2021	364,501
2022	171,492
2023	338,904
2024	507,547
2026	64,766
Total	$	1,811,214

II-43

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The tax deduction resulting from the exercise and issuance of certain share-based awards exceeded the aggregate compensation expense for such awards by $79,588 and $11,866 in 2007 and 2006, respectively.  These ‘windfall’ deductions result in excess tax benefits that must be analyzed to determine whether realization has occurred.  The Company uses the ‘with-and-without’ approach to determine whether an excess tax benefit has been realized.  Upon realization, such excess tax benefits will be recognized as an increase to paid-in capital.  Given the Company’s NOL position, no income tax benefit has been recognized for such excess tax benefits.  Accordingly, the NOLs for the Company disclosed above exclude such windfall tax deductions occurring in 2007 and 2006.

As of December 31, 2007, the Company has $14,062 of alternative minimum tax credit carry forwards, which do not expire.

Deferred tax assets have resulted primarily from the Company’s future deductible temporary differences and NOLs.  In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax asset will not be realized.  The Company’s ability to realize its deferred tax assets depends upon the generation of sufficient future taxable income and tax planning strategies to allow for the utilization of its NOLs and deductible temporary differences.  If such estimates and related assumptions change in the future, the Company may be required to record additional valuation allowances against certain of its deferred tax assets resulting in additional income tax expense in the Company’s consolidated statement of operations.  Management evaluates the realizability of the deferred tax assets and the need for additional valuation allowances quarterly.  Management believes that it is more likely than not that the Company will realize benefit for its gross deferred tax assets, except for certain of its deferred tax assets against which a valuation allowance has been recorded relating to certain state NOLs.

The Company adopted the provisions of FIN 48 on January 1, 2007.  The cumulative effect of applying the provisions of FIN 48 resulted in a charge of $442 to the opening balance of the accumulated deficit.  A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at January 1, 2007	$	10,353
Increases related to prior year tax positions	9,532
Decreases related to prior year tax positions	(12		)
Increases related to current year tax positions	811
Settlements	(13,780		)
Lapse of statute of limitations	(182		)
Balance at December 31, 2007	$	6,722

As of December 31, 2007, if all uncertain tax positions were sustained at the amounts reported or expected to be reported in the Company’s tax returns, the Company’s income tax expense attributable to continuing operations would decrease by $5,599.

Interest expense related to income tax liabilities recognized in accordance with the provisions of FIN 48 is included in income tax expense, consistent with the Company’s historical policy.  Interest expense of $2,184 and the associated deferred tax benefit of $893 have been recognized during the year ended December 31, 2007 and are included in income tax expense attributable to continuing operations in the consolidated statement of operations.  At December 31, 2007, accrued interest on uncertain tax positions was $581 and was included in other noncurrent liabilities in the consolidated balance sheet.

II-44

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Management does not believe that it is reasonably possible that the total amount of unrecognized tax benefit for uncertain tax positions existing as of December 31, 2007, based on information available as of that date, will significantly increase or decrease within twelve months of December 31, 2007.

As of January 1, 2007, the Company had a liability recorded with regard to the Ohio income tax audit for the year ended December 31, 2000 of $10,937, including accrued interest.  In April 2007, the Company settled the Ohio income tax audit for the tax year ended December 31, 2000 for $18,000, inclusive of interest.  In 2007, the Company recognized additional income tax expense of $7,063, excluding the related deferred tax benefit.

In July 2007, the IRS completed its audit of the Company’s consolidated federal income tax returns for 2002 and 2003.  The completion of this audit did not have a significant effect on the Company’s consolidated financial statements.  In October 2007, the IRS began an audit of the Company’s consolidated federal income tax returns for 2004 and 2005.

With a few exceptions, the Company is no longer subject to state and local income tax audits by taxing authorities for years prior to 2003.  The most significant jurisdictions in which the Company is required to file income tax returns include the state of New York, New Jersey and Connecticut and the city of New York.  In September 2007, the state of New York started an audit of 2003 through 2005.

Management does not believe that the resolution of the ongoing income tax examinations described above will have a material adverse impact on the financial position of the Company.  Changes in the liabilities for uncertain tax positions will be recognized in the interim period in which the positions are effectively settled or there is a change in factual circumstances.

NOTE 12.              OPERATING LEASES

The Company leases certain office, production, transmission, theater and event facilities under terms of leases expiring at various dates through 2027.  The leases generally provide for escalating rentals over the term of the lease plus certain real estate taxes and other costs or credits.  Costs associated with such operating leases are recognized on a straight-line basis over the initial lease term.  The difference between rent expense and rent paid is recorded as deferred rent.  Rent expense for the years ended December 31, 2007, 2006 and 2005 amounted to $92,522, $81,642 and $78,984, respectively.

In addition, the Company rents space on utility poles for its operations.  The Company’s pole rental agreements are for varying terms, and management anticipates renewals as they expire.  Pole rental expense for the years ended December 31, 2007, 2006 and 2005 amounted to $14,467, $13,777 and $12,325, respectively.

Madison Square Garden operates Radio City Music Hall under a long-term lease.  Under the terms of the lease agreement, Madison Square Garden is required to meet certain net worth, cash flow, and building utilization requirements.  In the event Madison Square Garden were to fail to meet the lease requirements and was unable to remedy such defaults, the landlord could have the option of terminating the lease.

II-45

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The minimum future annual payments for all operating leases for continuing operations (with initial or remaining terms in excess of one year) during the next five years and thereafter, including pole rentals from January 1, 2008 through December 31, 2012, at rates now in force are as follows:

2008	$	106,626
2009	104,258
2010	99,033
2011	93,744
2012	88,852
Thereafter	502,041

NOTE 13.              AFFILIATE AND RELATED PARTY TRANSACTIONS

Equity Method Investments

The following table reflects the Company’s ownership percentages and balances of equity method investments as of December 31, 2007 and 2006:

	Ownership Percentages				Investment Balances
	December 31,
	2007		2006		2007		2006
Fox Sports Net New England (a)	—		50.0	%	$	—	$	47,656
Other	22.2	%	22.2	%	—		2,294
Net investment in affiliates					$	—	$	49,950

The Company’s share of the net income (loss) of these affiliates for the years ended December 31, 2007, 2006 and 2005 is as follows:

	Years Ended December 31,
	2007			2006		2005
Fox Sports Net New England (a)	$	4,467		$	6,698	$	6,645
National Sports Partners (b)	—			—		(3,379		)
National Advertising Partners (b)	—			—		(47		)
Other	(90		)	—		—
	$	4,377		$	6,698	$	3,219

(a)   See Note 3 for a discussion regarding the sale of the Company’s ownership interest in Fox Sports Net New England in June 2007.

(b)See Note 3 for a discussion of the Regional Programming Partners restructuring in 2005 which eliminated the Company’s ownership interest in these entities.

II-46

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The following table includes certain unaudited financial information for Fox Sports Net New England as of December 31, 2006:

	December 31, 2006
	(unaudited)
Total assets (a)	$	85,861
Total liabilities	13,502

(a)   Includes $477 due to Fox Sports New England from the Company at December 31, 2006.

Prior to sale of the Company’s interest in Fox Sports Net New England in 2007 and National Sports Partners and National Advertising Partners in 2005, the Company had provided certain transmission and production services to these affiliates.  For the years ended December 31, 2007, 2006 and 2005, $741, $1,358 and $1,608, respectively, of revenues were earned from services provided to these entities.  Costs incurred by the Company for these programming, entertainment and advertising services provided by these affiliates and included in operating expenses for the years ended December 31, 2007, 2006 and 2005 amounted to $325, $342 and $3,509, respectively.

Other Affiliates and Related Parties

During 2007, 2006 and 2005, the Company provided services to or incurred costs on behalf of other affiliates, primarily with the Company’s parent, Cablevision and, including from time to time, members of the Dolan family or to entities owned by members of the Dolan family.  All costs incurred on behalf of these affiliates are reimbursed to the Company.  Aggregate amounts due from and due to these affiliates at December 31, 2007 and 2006 are summarized below:

	December 31,
	2007		2006
Advances to affiliates	$	361,770	$	229,677
Accounts payable to affiliates	253		94

Dolan Family Group Transaction

On May 2, 2007, Cablevision entered into a merger agreement with Central Park Holding Company, LLC (“Dolan Family Acquisition Company”), an entity owned by the Dolan Family Group, and Central Park Merger Sub, Inc.  The terms of the merger agreement provided that Central Park Merger Sub, Inc. would be merged with and into Cablevision and, as a result, Cablevision would continue as the surviving corporation and a wholly-owned subsidiary of Dolan Family Acquisition Company (the “Proposed Merger”).

On October 24, 2007, the Proposed Merger was submitted to a vote of Cablevision’s shareholders and did not receive shareholder approval.  Subsequently, the parties terminated the merger agreement pursuant to its terms.

II-47

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Rainbow DBS

In February 2005, the Company signed a letter of intent under which VOOM HD, LLC, a private company formed by two of the Company’s Class B shareholders, Charles F. Dolan and Thomas C. Dolan, had planned to acquire from the Company the business, assets and liabilities of the Company’s Rainbow DBS satellite business not included in the agreement with EchoStar (see Note 3).  The letter of intent between the Company and VOOM HD, LLC expired on February 28, 2005 without a definitive agreement being reached.

Following the expiration of the letter of intent, the Company began shutting down the Rainbow DBS satellite distribution operations.  In March 2005, the Company entered into an agreement with Charles F. Dolan and Thomas C. Dolan (“March 2005 Agreement”) pursuant to which the parties agreed to work cooperatively to finalize the separation of Rainbow DBS from the Company.  The Company agreed that no new shutdown activities would be undertaken at Rainbow DBS during the term of the agreement.  In accordance with the March 2005 Agreement, Charles F. Dolan deposited $15,000 with the Company to fund any expenditures above those contemplated in the shutdown budget, net of March 2005 revenue earned.  This agreement terminated on March 31, 2005 and, in accordance with its terms, the distribution business of Rainbow DBS was shutdown effective April 30, 2005 and the Board of Directors confirmed such shutdown decision at a meeting on April 7, 2005.

Cash deposited by Charles F. Dolan under the March 2005 Agreement that was not used to fund costs or segregated to pay costs associated with new commitments or other agreements of $8,663 was returned to him prior to December 31, 2005.  Cash of $6,337 deposited by Charles F. Dolan which was used to fund the incremental costs less March 2005 revenue earned related to the Rainbow DBS satellite distribution business, net of the related discounted income tax benefit to the Company, was recorded as a deemed net equity contribution in 2005.

NOTE 14.              BENEFIT PLANS

Adoption of Statement No. 158

Effective December 31, 2006, the Company adopted the recognition and disclosure provisions of Statement No. 158 which requires employers to recognize in their balance sheets the overfunded or underfunded status of defined benefit postretirement plans, measured as the difference between the fair value of plan assets and the benefit obligation (the projected benefit obligation for pension plans and the accumulated postretirement benefit obligation for other postretirement plans).  Employers must recognize the change in the funded status of the plan in the year in which the change occurs through accumulated other comprehensive income. Statement No. 158 also requires plan assets and obligations to be measured as of the employers’ balance sheet date.  The measurement provision of Statement No. 158 will be effective on January 1, 2009 for the Company with early application encouraged.  This will not have an impact to the Company’s financial position or results of operations as its current measurement date is December 31 for all plans.

Prior to the adoption of the recognition provisions of Statement No. 158, the Company accounted for its defined benefit postretirement plans under Statement No. 87 and SFAS No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions (“Statement No. 106”). Statement No. 87 required that a liability (additional minimum pension liability or “AML”) be recorded when the accumulated benefit

II-48

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

obligation (“ABO”) liability exceeded the fair value of plan assets.  Any adjustment was recorded as a non-cash charge to accumulated other comprehensive income in shareholders’ equity (deficit). Statement No. 106 required that the liability recorded should represent the actuarial present value of all future benefits attributable to an employee’s service rendered to date.  Under both Statement No. 87 and Statement No. 106, changes in the funded status were not immediately recognized, rather they were deferred and recognized ratably over future periods.

Upon adoption of the recognition provisions of Statement No. 158, the Company recognized the amounts of prior changes in the funded status of their postretirement benefit plans through accumulated other comprehensive loss.  As a result, the Company recognized the following adjustments in individual line items of its consolidated balance sheet as of December 31, 2006:

	Prior to AML and Statement No. 158 Adjustments			Pretax 2006 AML Adjustment			Pretax Effect of Adopting Statement No. 158			Post AML and Statement No. 158 Adjustments
Accrued employee related costs	$	69,389		$	—		$	(69,389	)	$	—
Defined benefit obligations	—			2,516			81,092			83,608
Accumulated other comprehensive loss	(6,028		)	(2,516		)	(11,703		)	(20,247		)

Income tax benefits associated with the effect of adopting Statement No. 158 and the 2006 AML adjustment amounted to $4,799 and $1,032, respectively.

The adoption of Statement No. 158 had no effect on the Company’s consolidated statement of operations for the year ended December 31, 2006, or for any prior period presented and did not have a material impact to any of the Company’s debt covenants under its various credit agreements.

Plan Descriptions

Qualified and Non-qualified Defined Benefit Plans

Cablevision Retirement Plans (collectively, the “Cablevision Qualified and Non-qualified Defined Benefit Plans)

The Company sponsors a non-contributory qualified defined benefit Cash Balance Retirement Plan (the “Retirement Plan”) for the benefit of non-union employees other than those of the theater business.  Under the Retirement Plan, the Company credits a certain percentage of eligible base pay into an account established for each participant which is credited with a market based rate of return annually.

The Company also maintains an unfunded non-contributory non-qualified defined benefit excess cash balance plan (“Excess Cash Balance Plan”) covering certain employees of the Company who participate in the Retirement Plan, and an unfunded supplemental defined benefit plan (the “CSC Supplemental Benefit Plan”) for the benefit of certain officers and employees of the Company.  As part of the CSC Supplemental Benefit Plan, the Company established a nonqualified defined benefit pension plan, which provides that, upon attaining normal retirement age, a participant will receive a benefit equal to a

II-49

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

specified percentage of the participant’s average compensation, as defined.  All participants are 100% vested in the CSC Supplemental Benefit Plan.

Madison Square Garden Retirement Plans (collectively, the “Madison Square Garden Qualified and Non-qualified Defined Benefit Plans)

Madison Square Garden sponsors a non-contributory qualified defined benefit pension plan (“MSG Plan”) covering certain of its non-union employees hired prior to January 1, 2001.  Benefits payable to retirees under this plan are based upon years of service and participants’ compensation.

Madison Square Garden also maintains an unfunded, non-qualified defined benefit pension plan for the benefit of certain employees of Madison Square Garden who participate in the underlying qualified plan.  This plan provides that, upon retirement, a participant will receive a benefit based on a formula which reflects the participant’s compensation as defined by the plan.

As of December 31, 2007, both the MSG Plan and the non-qualified defined benefit pension plan for the benefit of certain employees of Madison Square Garden were amended.  The amendments “froze” all benefits earned through December 31, 2007 and eliminated the ability of participants to earn benefits for future service under these plans.  Effective January 1, 2008, the Retirement Plan and the Excess Cash Balance Plan were amended to permit affected MSG Plan participants to earn benefits under these plans.  The Retirement Plan and Excess Cash Balance Plan will provide incremental, but reduced benefits to affected participants for future services, from what they would have received under the MSG Plan and the Madison Square Garden non-qualified defined benefit pension plan. Accordingly, the Company has accounted for this transaction as a negative plan amendment which reduced the liability relating to these plans by $18,803 with the offset to accumulated other comprehensive income.  This amount will be amortized into income as a reduction of future periodic pension expense over the estimated remaining work lives of affected participants.

In addition, Madison Square Garden sponsors two non-contributory qualified defined benefit pension plans covering certain of its union employees (“MSG Union Plans”).  Benefits payable to retirees under these plans are based upon years of service and, for one plan, participants’ compensation, and are funded through trusts established under the plans.

Other Postretirement Benefit Plan

Madison Square Garden sponsors a contributory welfare plan (“Madison Square Garden Postretirement Benefit Plan”) which provides certain postretirement health care benefits to certain of its employees hired prior to January 1, 2001 and their dependents.

Defined Contribution Benefit Plans

The Company also maintains the Cablevision CHOICE 401(k) savings plan, a contributory qualified defined contribution plan for the benefit of non-union employees of the Company.  The Company also has four additional 401(k) plans covering various union employees, as well as employees of certain businesses.  Employees can contribute a percentage of eligible annual compensation and the Company will make a matching cash contribution or discretionary contribution, as defined in the respective plan.  In addition, the Company maintains an unfunded non-qualified excess savings plan for which the Company

II-50

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

provides a matching contribution similar to the Cablevision CHOICE 401(k) Savings Plan.  The cost associated with these plans was $18,155, $16,850 and $13,511 for the years ended December 31, 2007, 2006 and 2005, respectively.

Multi-employer Plans

Madison Square Garden also contributes to various multiemployer pension plans.  Contributions made to these multiemployer plans for the years ended December 31, 2007, 2006 and 2005 amounted to $6,323, $6,966 and $5,846, respectively.

II-51

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Plan Results for Defined Benefit Plans

Summarized below is the funded status and the amounts recorded on the Company’s consolidated balance sheets for all of the Company’s qualified and non-qualified defined benefit pension and other postretirement benefit plans at December 31, 2007 and 2006:

	Cablevision Qualified and Non-qualified Defined Benefit Plans						Madison Square Garden Qualified and Non-qualified Defined Benefit Plans						Madison Square Garden Postretirement Benefit Plan
	2007			2006			2007			2006			2007			2006
Change in benefit obligation:
Benefit obligation at beginning of year	$	177,656		$	142,922		$	99,809		$	93,670		$	6,907		$	7,494
Service cost	31,615			29,378			4,805			4,988			367			399
Interest cost	10,045			8,212			5,919			5,441			380			361
Amendments	207			—			(18,803		)	—			—			—
Actuarial loss (gain)	2,911			3,776			(10,241		)	(2,718		)	(1,170		)	(1,086		)
Benefits paid	(8,844		)	(6,632		)	(1,688		)	(1,572		)	(238		)	(261		)
Benefit obligation at end of year	213,590			177,656			79,801			99,809			6,246			6,907
Change in plan assets:
Fair value of plan assets at beginning of year	146,220			116,604			54,544			45,198			—			—
Actual return on plan assets	9,551			10,737			3,841			5,091			—			—
Employer contributions	28,447			25,511			12,216			5,827			—			—
Benefits paid	(8,844		)	(6,632		)	(1,688		)	(1,572		)	—			—
Fair value of plan assets at end of year	175,374			146,220			68,913			54,544			—			—
Unfunded status at end of year*	(38,216		)	(31,436		)	(10,888		)	(45,265		)	(6,246		)	(6,907		)
Unrecognized actuarial loss	12,811			7,697			3,183			12,806			(579		)	580
Unrecognized prior service cost (credit)	207			—			(18,569		)	258			(1,050		)	(1,182		)
Unrecognized transition asset	—			—			(2		)	(5		)	—			—
Net amount recognized	$	(25,198	)	$	(23,739	)	$	(26,276	)	$	(32,206	)	$	(7,875	)	$	(7,509	)

*The aggregate unfunded status at December 31, 2007 relating to the Madison Square Garden Qualified and Non-qualified Defined Benefit Plans was $14,766, net of aggregated plan assets in excess of plan obligations of $3,878.

The accumulated benefit obligations for the Cablevision Qualified and Non-qualified Defined Benefit Plans and Madison Square Garden Qualified and Non-qualified Defined Benefit Plans aggregated $292,562 and $252,952 for the years ended December 31, 2007 and 2006, respectively.

II-52

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost (credit) during the next fiscal year relating to the defined benefit and other post retirement benefit plans are as follows:

Prior service credit recognition	$	(1,726	)
Actuarial loss	116
Transition asset recognition	(2		)
Total	$	(1,612	)

The Company’s net unfunded liability relating to its defined benefit and other postretirement benefit plans at December 31, 2007 is as follows:

Cablevision Qualified and Non-qualified Defined Benefit Plans	$	(38,216	)
Madison Square Garden Qualified and Non-qualified Defined Benefit Plans	(14,766		)
Madison Square Garden Postretirement Benefit Plan	(6,246		)
	(59,228		)
Less: Current portion	1,632
Long-term defined benefit plan and other postretirement plan obligations	$	(57,596	)
Long-term defined benefit plan asset	$	3,878

Components of the net periodic pension cost, recorded primarily in selling, general and administrative expenses, for the Company’s qualified and non-qualified defined benefit and other postretirement plans for the years ended December 31, 2007, 2006 and 2005, are as follows:

	Cablevision Qualified and Non-qualified Defined Benefit Plans									Madison Square Garden Qualified and Non-qualified Defined Benefit Plans									Madison Square Garden Postretirement Benefit Plan
	2007			2006			2005			2007			2006			2005			2007			2006			2005
Service cost	$	31,615		$	29,378		$	26,593		$	4,805		$	4,988		$	4,205		$	367		$	399		$	415
Interest cost	10,045			8,212			6,727			5,919			5,441			4,508			380			361			361
Expected return on plan assets	(11,745		)	(9,882		)	(8,046		)	(4,569		)	(3,686		)	(3,032		)	—			—			—
Recognized prior service cost (credit)	—			11			62			25			25			29			(133		)	(133		)	(156		)
Recognized actuarial loss (gain)	—			—			93			111			627			117			(10		)	(4		)	17
Recognized transition asset	—			—			—			(3		)	(3		)	(3		)	—			—			—
Net periodic benefit cost	$	29,915		$	27,719		$	25,429		$	6,288		$	7,392		$	5,824		$	604		$	623		$	637

II-53

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Plan Assumptions for Defined Benefit Plans

Weighted-average assumptions used to determine net periodic cost and benefit obligations for the Cablevision Qualified and Non-qualified Defined Benefit Plans are as follows:

	Weighted-Average Assumptions
	Net Periodic Benefit Cost for the Years Ended December 31,						Benefit Obligations at December 31,
	2007		2006		2005		2007		2006
Discount rate	5.80	%	5.80	%	6.05	%	5.75	%	5.80	%
Rate of increase in future compensation levels	4.40	%	4.15	%	4.12	%	4.50	%	4.40	%
Rate of return on plan assets (qualified plans only)	8.00	%	8.00	%	8.00	%	N/A		N/A

Weighted-average assumptions used to determine net periodic benefit cost and benefit obligations for the Madison Square Garden Qualified and Non-qualified Defined Benefit Plans are as follows:

	Weighted-Average Assumptions
	Net Periodic Benefit Cost for the Years Ended December 31,						Benefit Obligations at December 31,
	2007		2006		2005		2007		2006
Discount rate	6.14	%	5.75	%	6.00	%	6.15	%	6.14	%
Rate of increase in future compensation levels	4.39	%	4.00	%	3.16	%	3.00	%	4.39	%
Rate of return on plan assets (qualified plans only)	8.00	%	8.00	%	8.00	%	N/A		N/A

In 2007, 2006 and 2005, the discount rate used by the Company was determined (based on the expected duration of the benefit payments for the pension plan) by referring to applicable bond yields (such as Moody’s Aaa Corporate Bonds) and the Buck Consultants’ Discount Rate Model (which is developed by examining the yields on selected highly rated corporate bonds), to select a rate at which the Company believed the pension benefits could be effectively settled.  The Company’s expected long-term return on plan assets is based on a periodic review and modeling of the plan’s asset allocation structure over a long-term horizon.  Expectations of returns for each asset class are the most important of the assumptions used in the review and modeling and are based on comprehensive reviews of historical data and economic/financial market theory.  The expected long-term rate of return was selected from within the reasonable range of rates determined by (a) historical real returns, net of inflation, for the asset classes covered by the investment policy, and (b) projections of inflation over the long-term period during which benefits are payable to plan participants.

II-54

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Weighted-average assumptions used to determine net periodic benefit cost and benefit obligations for the Madison Square Garden Postretirement Benefit Plan are as follows:

	Weighted-Average Assumptions
	Net Periodic Benefit Cost for the Years Ended December 31,						Benefit Obligations at December 31,
	2007		2006		2005		2007		2006
Discount rate	6.05	%	5.75	%	6.00	%	6.05	%	6.05	%
Health care trend rate assumed for next year	9.00	%	9.00	%	8.00	%	10.00	%	9.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	5.00	%	5.00	%	5.00	%	5.00	%	5.00	%
Year that the rate reaches the ultimate trend rate	2013		2012		2009		2014		2013

Assumed healthcare cost trend rates have a significant effect on the amounts reported for the healthcare plans.  A one-percentage point change in the assumed health care cost trend rates would have the following effects:

	Increase (Decrease) in net Periodic Benefit Cost for the Years Ended December 31,									Increase (Decrease) in Benefit Obligations at December 31,
	2007			2006			2005			2007			2006
One percentage point increase	$	121		$	129		$	137		$	772		$	1,001
One percentage point decrease	$	(101	)	$	(107	)	$	(114	)	$	(663	)	$	(840	)

Plan Assets and Investment Policy

The weighted average asset allocation of Cablevision’s Retirement Plan at December 31, 2007 and 2006 was as follows:

	Plan Assets at December 31,
	2007		2006
Asset Category:
Equity securities	64	%	57	%
Fixed income securities	28		34
Other	8		9
	100	%	100	%

II-55

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The weighted average asset allocation of the MSG Plan at December 31, 2007 and 2006 was as follows:

	Plan Assets at December 31,
	2007		2006
Asset Category:
Equity securities	64	%	62	%
Fixed income securities	28		29
Other	8		9
	100	%	100	%

On January 1, 2007, the Cablevision and MSG qualified defined benefit plan assets were pooled together into the Cablevision Retirement Plan Master Trust (“Master Trust”).  Although assets of these plans are commingled in the Master Trust, the trustee maintains supporting records for the purpose of allocating the net gain or loss of the investment account to the participating plans.  The net investment income or loss of the investment assets is allocated by the trustee to each participating plan based on the relationship of the interest of each plan to the total of the interests of the plans.

The Master Trust’s investment objectives are to invest in portfolios that would obtain a market rate of return throughout economic cycles, commensurate with the investment risk and cash flow needs of the plans.  This requires the Master Trust to subject a portion of its assets to increased risk to generate a greater rate of return.  The investments held in the Master Trust are readily marketable and can be sold to fund benefit payment obligations of the plans as they become payable.

Benefit Payments and Contributions for Defined Benefit Plans

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid relating to Cablevision’s Qualified and Non-qualified Defined Benefit Plans:

2008	$	20,141
2009	27,401
2010	34,778
2011	29,223
2012	31,245
2013-2017	171,545

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid relating to the Madison Square Garden Qualified and Non-qualified Defined Benefit Plans:

2008	$	2,311
2009	2,574
2010	2,722
2011	2,816
2012	2,921
2013-2017	18,219

Of the amounts expected to be paid in 2008, the Company has recorded $1,632 as a current liability in its consolidated balance sheets at December 31, 2007, since this amount represents the aggregate benefit payment obligation payable in the next twelve months that exceeds the fair value of aggregate plan assets at December 31, 2007.

II-56

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The Company makes contributions to the Retirement Plan, the MSG Plan and MSG Union Plans, which are all qualified defined benefit plans.  The Company currently expects to contribute approximately $34,200 and $294 to the Retirement Plan and to the MSG Union Plans in 2008, respectively.

NOTE 15.              EQUITY AND LONG-TERM INCENTIVE PLANS

Equity Plans

Cablevision has employee stock plans under which it is authorized to grant incentive stock options, nonqualified stock options, restricted shares, stock appreciation rights, and bonus awards.  The exercise price of stock options cannot be less than the fair market value per share of Cablevision’s Class A common stock on the date the option is granted and the options expire no later than ten years from date of grant (or up to one additional year in the case of the death of a holder of nonqualified options).  Stock appreciation rights provide for the employee to receive a cash payment in an amount equal to the difference between the fair market value of the stock as of the date the right is exercised, and the exercise price.  Options and stock appreciation rights granted in 2006 and, 2005 and 2004 typically vest in 33-1/3 annual increments beginning one year from the date of grant.  Restricted shares granted in 2006, 2005 and 2004 were typically subject to four year cliff vesting.  Performance based options granted in 2007 and 2005 were typically subject to approximately three year or two year cliff vesting, with exercisability subject to performance criteria.

Cablevision adopted Statement No. 123R on January 1, 2006, using the modified prospective method.  The modified prospective method requires that share-based compensation expense be recorded for the unvested portion of the restricted shares, stock options and stock appreciation rights outstanding at December 31, 2005, over the remaining service periods related to such awards.  Cablevision will continue using the Black-Scholes valuation model in determining the fair value of share-based payments.  In accordance with the pro forma disclosure requirements of Statement No. 123, Cablevision recognized the majority of the share-based compensation costs using the accelerated recognition method.  Subsequent to January 1, 2006, Cablevision will continue to recognize the cost of previously granted share-based awards under the accelerated recognition method and will recognize the cost for new share-based awards on a straight-line basis over the requisite service period.  In connection with Cablevision’s adoption of Statement No. 123R, the Company recorded $862 as a cumulative change in accounting principle, net of taxes on the Company’s consolidated statement of operations.  Share-based compensation allocated to the Company by Cablevision for the years ended December 31, 2007, 2006 and, 2005 was $52,039, $80,587 and $26,706, respectively, and has been recorded as a component of selling, general and administrative expense.

Long-Term Incentive Plans

In April 2006, Cablevision’s Board of Directors approved the Cablevision Systems Corporation 2006 Cash Incentive Plan, which was approved by Cablevision’s stockholders at its annual stockholders meeting in May 2006.

Prior to the Cash Incentive Plan, Cablevision had a Long-Term Incentive Plan, under which certain executives had been granted cash awards, some of which were performance based, that vested over varying required service periods and were typically payable at the end of the vesting period or on specified dates.  One form of award received by certain executives under this plan was a performance

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CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

retention award, vesting over 7 years.  The terms of the performance retention awards provided that the executive could have requested a loan from the Company in the amount of the award prior to its vesting, subject to certain limitations, provided that such loan was secured by a lien in favor of the Company on property owned by the executive.  Effective July 30, 2002, such requests for advances on amounts of awards are no longer permitted.  Imputed interest to those executives on these interest free loans amounted to $687, $900 and $911, respectively for the years ended December 31, 2007, 2006 and 2005.  As of December 31, 2007 and 2006, $6,745 and $23,850 was outstanding in respect of advances made pursuant to this plan.

In connection with long-term incentive awards granted under the two plans, the Company has recorded expenses of $69,767, $59,144 and $41,857 for the years ended December 31, 2007, 2006 and 2005, respectively.  At December 31, 2007, the Company had accrued $47,562 for performance-based awards for which the performance criteria had not yet been met as of December 31, 2007 as such awards are based on achievement of certain performance criteria through December 31, 2009.  The Company has accrued the amount that it currently believes will ultimately be paid based upon the performance criteria established for these performance-based awards.  If the Company subsequently determines that the performance criteria for such awards is not probable of being achieved, the Company would reverse the accrual in respect of such award at that time.  In addition, as of December 31, 2007, the Company had approximately $53,500 accrued in connection with the 2005 awards discussed below.

On February 25, 2008, the Compensation Committee of the Company’s Board of Directors approved an amendment of the terms of the 2005 three-year cash performance awards (“2005 Awards”) awarded by the Company in 2005 to each of the Company’s executive officers at that time and 110 other members of management under the Company’s Long-Term Incentive Plan.  The 2005 Awards, which aggregated approximately $53,500, are payable in March 2008 if the Company has met certain compounded annual growth rate targets (“CAGR”) for both net revenues (“Net Revenue”) and adjusted operating cash flow (“AOCF”) over the 2005-2007 period.  The terms of the 2005 Awards required adjustment for divestitures of any operating entities during the plan period to eliminate the impact of such sales from the actual performance as well as the CAGR targets.  During the plan period, the Company sold and shutdown several businesses.  The original Net Revenue CAGR target, when adjusted for the dispositions, was achieved.  The original AOCF CAGR target, when adjusted for the dispositions, would have resulted in a 1.3 percentage point upward adjustment of the AOCF CAGR target causing the Company’s actual performance to fall short of the adjusted AOCF target.  The Compensation Committee approved the amendment of the 2005 Awards so that the original AOCF CAGR target for the 2005 Awards continued to apply without adjusting the target for the dispositions.  Accordingly, it is expected that payment of the 2005 Awards will be made in early March 2008.

As a result of this amendment, awards payable to the Company’s four most highly compensated executive officers will not be deemed to be performance based compensation and therefore not deductible for income tax purposes.  This will result in a loss of approximately $10,000 of deductible expense.  The Company’s NOL for federal income tax purposes was $1,811,214 at December 31, 2007.

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CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

NOTE 16.              CONTRACTUAL OBLIGATIONS

Future cash payments required under unconditional purchase obligations pursuant to contracts entered into by the Company in the normal course of business are as follows as of December 31, 2007:

	Payments Due by Period
	Total		Year 1		Years 2-3		Years 4-5		More than 5 years		Other
Off balance sheet arrangements:
Programming obligations (1)	$	2,652,556	$	869,731	$	1,151,002	$	605,136	$	26,687	$	—
Purchase obligations (2)	1,814,466		394,123		340,679		169,182		910,482		—
Guarantees (3)	518		518		—		—		—		—
Letters of credit (4)	55,199		3,367		559		—		51,273		—
Total	4,522,739		1,267,739		1,492,240		774,318		988,442		—
Contractual obligations reflected on the balance sheet:
Contract obligations (5)	37,065		12,993		4,019		6,283		13,770		—
Taxes (6)	3,763		—		—		—		—		3,763
Total	$	4,563,567	$	1,280,732	$	1,496,259	$	780,601	$	1,002,212	$	3,763

(1)Programming obligations represent contractual commitments with various programming vendors to provide video services to the Company’s video subscribers.  Future fees under such contracts are based on numerous factors, including the number of subscribers receiving the programming.  Amounts reflected above are based on the number of subscribers receiving the programming as of December 2007 multiplied by the per subscriber rates contained in the executed agreements in effect as of December 31, 2007.

(2)Purchase obligation amounts not reflected on the balance sheet consist primarily of (i) long-term rights agreements which provide Madison Square Garden with exclusive broadcast rights to certain live sporting events in exchange for minimum contractual payments, (ii) payments under employment agreements that the Company has with professional sports teams’ personnel that are generally guaranteed regardless of employee injury or termination, and (iii) minimum purchase requirements incurred in the normal course of to the Company’s operations.

(3)Consists principally of outstanding guarantees primarily by CSC Holdings in favor of certain financial institutions in respect of ongoing interest expense obligations and potential early termination events in connection with the monetization of the Company’s holdings of shares of Comcast Corporation common stock.

(4)Consists primarily of letters of credit obtained by CSC Holdings in favor of insurance providers and certain governmental authorities for the Telecommunications Services segment.

(5)Consist principally of amounts earned under employment agreements that the Company has with professional sports teams’ personnel.

(6)This amount represents tax liabilities, including accrued interest, recognized pursuant to FIN 48.

The future cash payments reflected above do not include the impact of potential insurance recoveries or amounts which may be due to the National Basketball Association (“NBA”) for luxury tax payments.

In addition, the future cash payments reflected above do not include the payments required under the Company’s agreements with EchoStar relating to VOOM, the Company’s high-definition television programming service.  EchoStar was issued a 20% interest in VOOM HD Holdings, the Company’s subsidiary operating VOOM, and that 20% interest will not be diluted until $500,000 in cash has been invested in VOOM HD Holdings by the Company.  The affiliation agreement with EchoStar providing for distribution of VOOM for a 15-year term provides that if VOOM HD fails to spend $100,000 per year (subject to reduction to the extent that the number of offered channels is reduced to fewer than 21), up to a maximum of $500,000 in the aggregate, on VOOM, EchoStar may seek to terminate the agreement

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CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

under certain circumstances (see Note 3).  VOOM HD also has the right to terminate the affiliation agreement if VOOM is discontinued in the future.  On the fifth or eighth anniversary of the effective date (April 2005) of the investment agreement, the termination of the affiliation agreement by EchoStar, or other specified events, EchoStar has a put right to require a wholly-owned subsidiary of Rainbow Media Holdings to purchase all of its equity interests in VOOM HD Holdings at fair value.  On the seventh or tenth anniversary of the effective date of the investment agreement, or the second anniversary date of the termination of the affiliation agreement by EchoStar, a wholly-owned subsidiary of Rainbow Media Holdings has a call right to purchase all of EchoStar’s ownership in VOOM HD Holdings at fair value.

An indirect subsidiary of Rainbow Media Holdings owns a 90% interest in DTV Norwich LLC.  The other investor has the right, for ten years, to put its remaining 10% interest to the Company at fair value to be determined by a process involving independent valuation experts.  The table above does not include any future payments that would be required upon the exercise of this put right.

Many of the Company’s franchise agreements and utility pole leases require the Company to remove its cable wires and other equipment upon termination of the respective agreements.  The Company has concluded that the fair value of these asset retirement obligations cannot be reasonably estimated since the range of potential settlement dates is not determinable.

NOTE 17.              LEGAL MATTERS

Tracking Stock Litigation

In August 2002, purported class actions naming as defendants Cablevision and each of its directors were filed in the Delaware Chancery Court.  The actions, which allege breach of fiduciary duties and breach of contract with respect to the exchange of the Rainbow Media Group tracking stock for Cablevision NY Group common stock, were purportedly brought on behalf of all holders of publicly traded shares of Rainbow Media Group tracking stock.  The actions sought to (i) enjoin the exchange of Rainbow Media Group tracking stock for Cablevision NY Group common stock, (ii) enjoin any sales of “Rainbow Media Group assets,” or, in the alternative, award rescissory damages, (iii) if the exchange is completed, rescind it or award rescissory damages, (iv) award compensatory damages, and (v) award costs and disbursements.  The actions were consolidated into one action on September 17, 2002, and on October 3, 2002, Cablevision filed a motion to dismiss the consolidated action.  The action was stayed by agreement of the parties pending resolution of a related action brought by one of the plaintiffs to compel the inspection of certain books and records of Cablevision.  On October 26, 2004, the parties entered into a stipulation dismissing the related action, and providing for Cablevision’s production of certain documents. On December 13, 2004, plaintiffs filed a consolidated amended complaint.  Cablevision filed a motion to dismiss the amended complaint.  On April 19, 2005, the court granted that motion in part, dismissing the breach of contract claim but declining to dismiss the breach of fiduciary duty claim on the pleadings.

In August 2003, a purported class action naming as defendants Cablevision, directors and officers of Cablevision and certain current and former officers and employees of the Company’s Rainbow Media Holdings and American Movie Classics subsidiaries was filed in New York Supreme Court by the Teachers Retirement System of Louisiana (“TRSL”).  The actions relate to the August 2002 Rainbow Media Group tracking stock exchange and allege, among other things, that the exchange ratio was based upon a price of the Rainbow Media Group tracking stock that was artificially deflated as a result of the improper recognition of certain expenses at the national services division of Rainbow Media Holdings. 

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CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The complaint alleges breaches by the individual defendants of fiduciary duties.  The complaint also alleges breaches of contract and unjust enrichment by Cablevision.  The complaint seeks monetary damages and such other relief as the court deems just and proper.  On October 31, 2003, Cablevision and other defendants moved to stay the action in favor of the previously filed actions pending in Delaware or, in the alternative, to dismiss for failure to state a claim.  On June 10, 2004, the court stayed the action on the basis of the previously filed action in Delaware.  TRSL subsequently filed a motion to vacate the stay in the New York action, and simultaneously filed a motion to intervene in the Delaware action and to stay that action.  Cablevision opposed both motions.  On April 19, 2005, the court in the Delaware action denied the motion to stay the Delaware action and granted TRSL’s motion to intervene in that action.  On June 22, 2005, the court in the New York action denied TRSL’s motion to vacate the stay in that action.

Cablevision reached an agreement in principle with respect to the settlement of the Delaware action in the quarter ended June 30, 2007.  In connection with the anticipated settlement, Cablevision expects to seek dismissal of the New York action as well as the Delaware action.  A hearing on the proposed settlement is scheduled to take place in April 2008.

The Wiz Bankruptcy

TW, Inc. (“TW”), a former subsidiary of the Company and operator of The Wiz consumer retail electronics business, is the subject of a Chapter 11 bankruptcy proceeding in the U.S. Bankruptcy Court for the District of Delaware.  In February 2005, TW filed a complaint in the bankruptcy proceeding against Cablevision and certain of its affiliates seeking recovery of alleged preferential transfers in the aggregate amount of $193,457.  Also in February 2005, the Official Committee of Unsecured Creditors of TW (the “Committee”) filed a motion seeking authority to assume the prosecution of TW’s alleged preference claims and to prosecute certain other causes of action.  The bankruptcy court granted the Committee’s motion on or about March 10, 2005, thereby authorizing the Committee, on behalf of TW, to continue the preference suit and to assert other claims.  On March 12, 2005, the Committee filed a complaint in the bankruptcy court against Cablevision, certain of its affiliates, and certain present and former officers and directors of Cablevision and of its former subsidiary Cablevision Electronics Investments, Inc. (“CEI”).  The Committee’s complaint, as amended, asserts preferential transfer claims allegedly totaling $193,858, breach of contract, promissory estoppel, and misrepresentation claims allegedly totaling $310,000, and fraudulent conveyance, breach of fiduciary duty, and other claims seeking unspecified damages.  On June 30, 2005, Cablevision filed a motion to dismiss several of the claims in the amended complaint.  On October 31, 2005, the bankruptcy court denied the motion to dismiss.  The bankruptcy court’s ruling on the motion to dismiss allowed the Committee to proceed with its claims against Cablevision and the other defendants.  A hearing on solvency issues was held November 29 and 30, 2007.  At that hearing, the court ruled that the Committee had failed to prove that CEI was insolvent at any point before 2003, a ruling that the Company believes will have the effect of significantly limiting many of the Committee’s claims.  Cablevision believes that the claims asserted by the Committee are without merit and is contesting them vigorously.

Dolan Family Group 2006 Proposal

In October 2006, a number of shareholder class action lawsuits (the “Transactions Lawsuits”) were filed against Cablevision and its individual directors in New York Supreme Court, Nassau County, relating to the October 8, 2006 offer by the Dolan Family Group to acquire all of the outstanding shares of Cablevision’s common stock, except for the shares held by the Dolan Family Group.  These lawsuits

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CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

allege breaches of fiduciary duty and seek injunctive relief to prevent consummation of the proposed transaction and compensatory damages.  (In addition, a similar claim was added to a shareholder derivative action involving claims for alleged options backdating that was pending in the District Court for the Eastern District of New York, which is described below under “Stock Option Related Matters.”)  The New York Supreme Court ordered expedited discovery, which began in November 2006.  On January 12, 2007, the Special Transaction Committee of the Board (“Special Transaction Committee”) received a revised proposal from the Dolan Family Group to acquire all of the outstanding shares of common stock of Cablevision, except for the shares held by the Dolan Family Group.  On January 16, 2007, the Special Transaction Committee delivered a letter to Charles F. Dolan and James L. Dolan, rejecting as inadequate the revised proposal.  As discussed in Note 18, on May 2, 2007, Cablevision entered into a merger agreement pursuant to which, if the merger contemplated thereby was consummated, the Dolan Family Group would obtain ownership of all of the common stock equity of Cablevision (the “Proposed Merger”).  Lawyers representing shareholders in certain of the Transactions Lawsuits, in consultation with lead counsel for the plaintiffs in the Nassau County Supreme Court options backdating litigations, participated in the negotiations to improve the financial terms of the Proposed Merger as well as to add certain contractual provisions designed to protect the rights of shareholders. Based upon the above events and circumstances, and the role that the lead counsel for the plaintiffs in the Transactions Lawsuits played in connection with the Proposed Merger, the parties subsequently reached a memorandum of understanding for the dismissal of the Transactions Lawsuits (and of the going-private claim in the cases pending in the U.S. District Court for the Eastern District of New York), subject to approval of a settlement by the Nassau County Supreme Court, and for the transfer to Cablevision, if the Proposed Merger were to be consummated, of the options-related derivative claims pending in the Nassau County Supreme Court and in the U.S. District Court for the Eastern District of New York.  Pursuant to the memorandum of understanding, the parties executed a stipulation of settlement as of September 18, 2007.  The stipulation of settlement was conditioned on, among other things, consummation of the Proposed Merger, and provided that the stipulation would become null and void and of no further force and effect in the event that this condition was not satisfied.  This condition was not satisfied.

Director Litigation

Cablevision was named as a nominal defendant in a purported shareholder derivative complaint filed in the Court of Chancery of the State of Delaware.  The action was brought derivatively on behalf of Cablevision and named as additional defendants Charles F. Dolan, the Chairman of Cablevision, and Rand Araskog, Frank Biondi, John Malone and Leonard Tow, each of whom was appointed as a director on March 2, 2005 by Mr. Dolan and certain other holders of the Company’s NY Group Class B common stock.  The complaint alleges that Charles F. Dolan, as the controlling Class B shareholder of Cablevision, by purporting to remove three Cablevision Board members (William J. Bell, Sheila Mahony and Steven Rattner) and replace them with the four new directors, wrongfully interfered with the Board’s role in managing the affairs of Cablevision and sought to substitute his judgment of how to proceed with the VOOM service of Cablevision’s Rainbow DBS subsidiary above that of the Board.  The action seeks, among other things, to preliminarily and permanently enjoin Charles F. Dolan from interfering with the managerial prerogatives of Cablevision’s Board; rescinding the purported appointment of the new directors; rescinding the removal of Mr. Bell, Ms. Mahony and Mr. Rattner as directors and restoring them to their positions as directors and directing Charles F. Dolan to account to Cablevision for its damages.  There have been no developments in the case since May 2005, when the parties agreed that defendants need not respond to the complaint until further notice from the plaintiff.

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CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Patent Litigation

Cablevision is named as a defendant in certain lawsuits claiming infringement of various patents relating to various aspects of the Company’s businesses.  In certain of these cases other industry participants are also defendants.  In certain of these cases the Company expects that any potential liability would be the responsibility of the Company’s equipment vendors pursuant to applicable contractual indemnification provisions.  To the extent that the allegations in these lawsuits have been analyzed by the Company at the current stage of their proceedings, the Company believes that the claims are without merit and intend to defend the actions vigorously.  The final disposition of these actions is not expected to have a material adverse effect on the Company’s consolidated financial position.

Contract Dispute

In September 2005, Loral filed an action against Cablevision and Rainbow DBS for breach of contract based on a letter agreement dated March 23, 2001 (“the Letter Agreement”) between Loral and Rainbow DBS.  Loral alleged that the sale of the Rainbow-1 satellite and related assets to EchoStar constituted a sale of “substantially all of the assets of Rainbow DBS” triggering a “Make Whole Payment” under the Letter Agreement of $33,000 plus interest.  A trial in this matter took place in January 2007 in New York Supreme Court for New York County.  On January 24, 2007, the jury returned a verdict finding that the EchoStar sale had triggered a Make Whole Payment under the Letter Agreement, requiring a payment to Loral of $50,898, including interest, which was accrued for in 2006 and reflected as an expense in discontinued operations.  On March 12, 2007, judgment was entered against Cablevision and Rainbow DBS in the amount of $52,159.  Cablevision and Rainbow DBS filed a motion for judgment as a matter of law, or in the alternative for a new trial, which was denied by the court on March 30, 2007.  The Company has posted a cash collateralized bond in the amount of $52,159, which is reflected as restricted cash in the Company’s consolidated balance sheet at December 31, 2007.  The Company filed an appeal with the New York Supreme Court Appellate Division, First Department, which affirmed the judgment on February 19, 2008.

Accounting Related Investigations

In June 2003, the Company reported that it had discovered certain improper expense accruals primarily at the national programming services of the Company’s Rainbow segment.  The improper expense recognition matter has been the subject of investigations by the SEC and the U.S. Attorney’s Office for the Eastern District of New York.  The SEC is continuing to investigate the improper expense recognition matter and the Company’s timing of recognition of launch support, marketing and other payments under affiliation agreements.  The Company continues to fully cooperate with such investigations.

Stock Option Related Matters

The Company announced on August 8, 2006 that, based on a voluntary review of its past practices in connection with grants of stock options and stock appreciation rights (“SARs”), it had determined that the grant date and exercise price assigned to a number of its stock option and SAR grants during the 1997-2002 period did not correspond to the actual grant date and the fair market value of Cablevision’s common stock on the actual grant date.  The review was conducted with a law firm that was not previously involved with the Company’s stock option plans.  The Company has advised the SEC and the U.S. Attorney’s Office for the Eastern District of New York of these matters and each has commenced an

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CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

investigation.  The Company received a grand jury subpoena from the U.S. Attorney’s Office for the Eastern District of New York seeking documents related to the stock options issues.  The Company received a document request from the SEC relating to its informal investigation into these matters.  The Company continues to fully cooperate with such investigations.

In addition, in August, September and October 2006, purported derivative lawsuits (including one purported combined derivative and class action lawsuit) relating to the Company’s past stock option and SAR grants were filed in New York State Supreme Court for Nassau County, the United States District Court for the Eastern District of New York, and Delaware Chancery Court for New Castle County, by parties identifying themselves as shareholders of Cablevision purporting to act on behalf of Cablevision.  These lawsuits named as defendants certain present and former members of Cablevision’s Board of Directors and certain present and former executive officers, alleging breaches of fiduciary duty and unjust enrichment relating to practices with respect to the dating of stock options, recordation and accounting for stock options, financial statements and SEC filings, and alleged violation of IRC 162(m).  In addition, certain of these lawsuits asserted claims under Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934 and Section 304 of the Sarbanes-Oxley Act.  The lawsuits sought damages from all defendants, disgorgement from the officer defendants, declaratory relief, and equitable relief, including rescission of the 2006 Employee Stock Plan and voiding of the election of the director defendants.  On October 27, 2006, the Board of Directors of Cablevision appointed Grover C. Brown and Zachary W. Carter as directors and, on the same date, appointed Messrs. Brown and Carter to a newly formed Special Litigation Committee (“SLC”) of the Board.  The SLC was directed by the Board to review and analyze the facts and circumstances surrounding these claims, which purport to have been brought derivatively on behalf of the Company, and to consider and determine whether or not prosecution of such claims is in the best interests of the Company and its shareholders, and what actions the Company should take with respect to the cases.  The SLC, through its counsel, filed motions in all three courts to intervene and to stay all proceedings until completion of the SLC’s independent investigation of the claims raised in these actions.  The Delaware action subsequently was voluntarily dismissed without prejudice by the plaintiff.  The actions pending in Nassau County have been consolidated and a single amended complaint has been filed in that jurisdiction. Similarly, the actions pending in the Eastern District of New York have been consolidated and a single amended complaint has been filed in that jurisdiction.  Both the Nassau County action and the Eastern District of New York action assert derivative claims on behalf of the Company as well as direct claims on behalf of Cablevision shareholders relating to the Company’s past stock option and SAR grants.  On November 14, 2006, the trial court in the Nassau County action denied the SLC’s motion for a stay of proceedings and ordered expedited discovery.  The Appellate Division of the New York State Supreme Court subsequently stayed all proceedings in the Nassau County action (including all discovery) pending the SLC’s appeal of the denial of its stay motion.  On October 9, 2007, the Appellate Division affirmed the trial court’s denial of the SLC’s motion to stay proceedings. The U.S. District Court for the Eastern District of New York granted the SLC’s motion for a stay and stayed the cases pending in that court.  That stay expired following the determination that the transaction contemplated by the Dolan Family Group 2006 Proposal would not close.  There have been a series of extensions and/or stays in the Nassau County and Eastern District actions, and both actions are currently stayed until March 14, 2008.

The Company has continued to incur substantial expenses for legal services in connection with the Company’s stock option related litigation and the investigations by the SEC and the U.S. Attorney’s Office for the Eastern District of New York.

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CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Antitrust Lawsuit

On September 20, 2007, an antitrust lawsuit was filed in the U.S. District Court for the Central District of California against Cablevision and several other defendants, including other cable and satellite providers and programming content providers.  The complaint alleges that the defendants have violated Section 1 of the Sherman Antitrust Act by agreeing to the sale and licensing of programming on a “bundled” basis and by offering programming in packaged tiers rather than on an “a la carte” basis.  The plaintiffs, purportedly on behalf of a nationwide class of cable and satellite subscribers, seek unspecified treble monetary damages and injunctive relief to compel the offering of channels to subscribers on an “a la carte” basis.  The Company intends to defend against this lawsuit vigorously.

Other Matters

In addition to the matters discussed above, the Company is party to various lawsuits, some involving claims for substantial damages.  Although the outcome of these other matters cannot be predicted with certainty and the impact of the final resolution of these other matters on the Company’s results of operations in a particular subsequent reporting period is not known, management does not believe that the resolution of these other lawsuits will have a material adverse effect on the financial position of the Company or the ability of the Company to meet its financial obligations as they become due.

NOTE 18.DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, Trade, Notes and Other Receivables, Prepaid Expenses and Other Assets, Advances to Affiliates, Accounts Payable, Accounts Payable to Affiliates and Accrued Liabilities.

The carrying amount approximates fair value due to the short-term maturity of these instruments.

Derivative Contracts and Liabilities Under Derivative Contracts

Derivative contracts are carried on the accompanying consolidated balance sheets at fair value based on dealer quotes.

Investment Securities and Investment Securities Pledged as Collateral

Marketable securities are carried on the accompanying consolidated balance sheets at their fair value based upon quoted market prices.

Bank Debt, Collateralized Indebtedness, Notes Payable, Senior Notes and Debentures and Senior Subordinated Notes

The fair values of each of the Company’s debt instruments are based on quoted market prices for the same or similar issues or on the current rates offered to the Company for instruments of the same remaining maturities.

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CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Interest Rate Swap Agreements

Interest rate swap agreements are carried on the accompanying consolidated balance sheets at fair value based on valuations provided by a derivative valuation system using current market interest rate data.  These values represent the estimated amount the Company would receive or pay to terminate agreements, taking into consideration current interest rates.

The fair value of the Company’s debt instruments are summarized as follows:

	December 31, 2007
	Carrying Amount		Estimated Fair Value
Debt instruments:
Bank debt	$	4,888,750	$	4,888,750
Collateralized indebtedness	847,154		847,581
Senior notes and debentures	3,995,148		3,933,500
Senior subordinated notes	323,311		341,250
Notes payable	1,017		1,017
	$	10,055,380	$	10,012,098

	December 31, 2006
	Carrying Amount		Estimated Fair Value
Debt instruments:
Bank debt	$	4,992,500	$	4,992,500
Collateralized indebtedness	921,574		901,035
Senior notes and debentures	4,493,956		4,545,089
Senior subordinated notes and debentures	497,011		551,682
Notes payable	18,843		19,165
	$	10,923,884	$	11,009,471

Fair value estimates related to the Company’s debt instruments and interest rate swap agreements discussed above are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

NOTE 19.SEGMENT INFORMATION

The Company classifies its business interests into three reportable segments: Telecommunications Services, consisting principally of its video, high-speed data, Voice over Internet Protocol and its commercial data and voice services operations; Rainbow, consisting principally of interests in national and regional cable television programming networks, including AMC, IFC, WE tv, News 12 and the VOOM HD Networks; and Madison Square Garden, consisting principally of its professional sports teams, a regional sports programming business and an entertainment business, as well as the operations of Fuse, a national programming network effective January 1, 2008.  Prior to January 1, 2008, Fuse was included in the Rainbow segment.  Prior period segment information has been reclassified and reported on a comparable basis.

II-66

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

The Company’s reportable segments are strategic business units that are managed separately.  The Company evaluates segment performance based on several factors, of which the primary financial measure is business segment adjusted operating cash flow (defined as operating income (loss) before depreciation and amortization (including impairments), stock plan income or expense and restructuring charges or credits), a non-GAAP measure.  The Company has presented the components that reconcile adjusted operating cash flow to operating income (loss), an accepted GAAP measure.  Information as to the operations of the Company’s business segments is set forth below.

	Years Ended December 31,
	2007			2006			2005
Revenues, net from continuing operations
Telecommunications Services	$	4,721,169		$	4,237,707		$	3,606,765
Rainbow	843,548			736,887			692,915
Madison Square Garden	1,002,182			905,196			847,552
All other (a)	77,873			84,391			85,385
Inter-segment eliminations	(160,291		)	(135,688		)	(150,572		)
	$	6,484,481		$	5,828,493		$	5,082,045

Inter-segment eliminations are primarily affiliate revenues recognized by the Company’s Rainbow and Madison Square Garden segments from the sale of cable network programming to the Company’s Telecommunication Services segment.

	Years Ended December 31,
	2007		2006		2005
Inter-segment revenues
Telecommunications Services	$	1,839	$	1,529	$	2,420
Rainbow	53,408		39,248		49,280
Madison Square Garden	105,034		94,911		98,872
Other	10		—		—
	$	160,291	$	135,688	$	150,572

II-67

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

Reconciliation (by Segment and in Total) of Adjusted Operating Cash Flow to Operating Income (Loss) from Continuing Operations

	Years Ended December 31,
	2007			2006			2005
Adjusted operating cash flow from continuing operations
Telecommunications Services	$	1,828,407		$	1,668,554		$	1,412,199
Rainbow	193,382			137,653			133,239
Madison Square Garden	136,286			61,259			110,640
All other (b)	(71,347		)	(81,642		)	(80,632		)
	$	2,086,728		$	1,785,824		$	1,575,446

	Years Ended December 31,
	2007			2006			2005
Depreciation and amortization (including impairments) included in continuing operations
Telecommunications Services	$	(929,606	)	$	(915,724	)	$	(843,177	)
Rainbow	(89,117		)	(92,561		)	(100,221		)
Madison Square Garden	(62,399		)	(65,171		)	(67,110		)
All other (c)	(37,766		)	(46,373		)	(64,203		)
	$	(1,118,888	)	$	(1,119,829	)	$	(1,074,711	)

	Years Ended December 31,
	2007			2006			2005
Stock expense included in continuing operations
Telecommunications Services	$	(24,325	)	$	(39,485	)	$	(14,657	)
Rainbow	(14,734		)	(23,553		)	(5,937		)
Madison Square Garden	(11,715		)	(15,817		)	(4,323		)
All other (c)	(1,265		)	(1,732		)	(1,789		)
	$	(52,039	)	$	(80,587	)	$	(26,706	)

	Years Ended December 31,
	2007			2006			2005
Restructuring credits (charges) included in continuing operations
Telecommunications Services	$	—		$	17		$	(295	)
Rainbow	(2,820		)	—			—
Madison Square Garden	(221		)	(143		)	(366		)
All other (c)	(1,692		)	3,610			1,198
	$	(4,733	)	$	3,484		$	537

	Years Ended December 31,
	2007			2006			2005
Operating income (loss) from continuing operations
Telecommunications Services	$	874,476		$	713,362		$	554,070
Rainbow	86,711			21,539			27,081
Madison Square Garden	61,951			(19,872		)	38,841
All other (b)	(112,070		)	(126,137		)	(145,426		)
	$	911,068		$	588,892		$	474,566

II-68

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

A reconciliation of reportable segment amounts to the Company’s consolidated balances is as follows:

	Years Ended December 31,
	2007			2006			2005
Operating income (loss) from continuing operations before income taxes
Total operating income for reportable segments	$	1,023,138		$	715,029		$	619,992
Other operating loss (b)	(112,070		)	(126,137		)	(145,426		)
Operating income	911,068			588,892			474,566
Items excluded from operating income:
Interest expense	(806,406		)	(795,418		)	(640,041		)
Interest income	36,701			32,570			15,785
Equity in net income of affiliates	4,377			6,698			3,219
Gain on sale of programming and affiliate interests, net	183,286			––			64,968
Gain (loss) on investments, net	(214,257		)	290,052			(138,312		)
Gain (loss) on derivative contracts, net	138,144			(253,712		)	119,180
Write-off of deferred financing costs	(2,919		)	(14,083		)	—
Loss on extinguishment of debt	(19,113		)	(13,125		)	—
Minority interests	321			1,614			5,221
Miscellaneous, net	2,636			2,845			827
Income (loss) from continuing operations before income taxes	$	233,838		$	(153,667	)	$	(94,587	)

(a)Represents net revenues of Clearview Cinemas and PVI Virtual Media.

(b)Principally includes unallocated corporate general and administrative costs, in addition to the operating results of Clearview Cinemas and PVI Virtual Media.  It also includes costs allocated to Fox Sports Net Bay Area, Fox Sports Net Ohio, Fox Sports Net Florida, Fox Sports Net Chicago and Rainbow DBS (distribution operations) that were not eliminated as a result of the disposition or shut down of these businesses.

(c)Includes expenses and/or credits relating to Clearview Cinemas, PVI Virtual Media, certain corporate expenses/credits and certain costs allocated to Fox Sports Net Bay Area, Fox Sports Net Ohio, Fox Sports Net Florida, Fox Sports Net Chicago and Rainbow DBS (distribution operations) that were not eliminated as a result of the disposition or shut down of these businesses.

	December 31,
	2007			2006
Assets
Telecommunications Services	$	7,671,965		$	6,636,723
Rainbow (a)	2,194,370			2,239,141
Madison Square Garden	1,971,496			1,864,117
Corporate, other and inter-segment eliminations	(2,327,802		)	(895,054		)
Assets held for sale	––			128,301
	$	9,510,029		$	9,973,228

(a)Rainbow assets include amounts due from the Rainbow DBS distribution business of $266,210 and $276,245 at December 31, 2007 and 2006, respectively, which are eliminated in consolidation.

II-69

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

	Years Ended December 31,
	2007		2006		2005
Capital Expenditures
Telecommunications Services	$	678,384	$	819,747	$	695,327
Rainbow	26,172		20,281		27,037
Madison Square Garden	50,800		23,761		22,379
Corporate and other	25,950		22,044		23,909
	$	781,306	$	885,833	$	768,652

Substantially all revenues and assets of the Company’s reportable segments are attributed to or located in the United States and are primarily concentrated in the New York metropolitan area.

NOTE 20.INTERIM FINANCIAL INFORMATION (Unaudited)

The following is a summary of the Company’s selected quarterly financial data for the years ended December 31, 2007 and 2006:

	March 31,			June 30,			September 30,			December 31,			Total
	2007			2007			2007			2007			2007
2007:
Revenues, net	$	1,562,633		$	1,567,984		$	1,511,799		$	1,842,065		$	6,484,481
Operating expenses	(1,392,315		)	(1,359,595		)	(1,309,731		)	(1,511,772		)	(5,573,413		)
Operating income	$	170,318		$	208,389		$	202,068		$	330,293		$	911,068
Income (loss) from continuing operations	$	(14,656	)	$	147,278		$	(41,667	)	$	8,254		$	99,209
Income (loss) from discontinued operations, net of taxes	7,597			190,018			(440		)	(1,940		)	195,235
Income (loss) before cumulative effect of a change in accounting principle	(7,059		)	337,296			(42,107		)	6,314			294,444
Cumulative effect of a change in accounting principle, net of taxes	(443		)	––			––			––			(443		)
Net income (loss)	$	(7,502	)	$	337,296		$	(42,107	)	$	6,314		$	294,001

II-70

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

	March 31,			June 30,			September 30,			December 31,			Total
	2006			2006			2006			2006			2006
2006:
Revenues, net	$	1,387,668		$	1,396,789		$	1,381,716		$	1,662,320		$	5,828,493
Operating expenses	(1,288,221		)	(1,237,068		)	(1,254,744		)	(1,459,568		)	(5,239,601		)
Operating income	$	99,447		$	159,721		$	126,972		$	202,752		$	588,892
Income (loss) from continuing operations	$	(37,520	)	$	(10,586	)	$	(40,815	)	$	22,885		$	(66,036	)
Income (loss) from discontinued operations, net of taxes	(824		)	43,113			2,578			(28,439		)	16,428
Income (loss) before cumulative effect of a change in accounting principle	(38,344		)	32,527			(38,237		)	(5,554		)	(49,608		)
Cumulative effect of a change in accounting principle, net of taxes	(862		)	––			––			––			(862		)
Net income (loss)	$	(39,206	)	$	32,527		$	(38,237	)	$	(5,554	)	$	(50,470	)

NOTE 21.OTHER MATTERS

Settlement with Time Warner

On September 29, 2005, AMC and Time Warner Entertainment, L.P. settled existing litigation whereby the Company simultaneously entered into 11 separate affiliation agreements with Time Warner.  These agreements included amendments and enhancements to existing affiliation agreements for some of the Company’s programming services and new affiliation agreements and new distribution for other programming services of the Company.  The amendments included a long-term extension of Time Warner’s affiliation agreement with AMC with rate and positioning terms that are favorable to AMC.  Because of the long-term benefits to the Company from the extension and enhancement of the AMC agreement, the $74,000 of required payments, all of which have been paid to Time Warner over the 2005-2007 period, attributable to AMC were capitalized as deferred carriage fees and are being amortized as a reduction to revenue over the approximate 13 year life of the extended AMC affiliation agreement.

Resolutions of Contract Disputes

In June 2006, the Company collected $26,500 related to the resolution of a contractual programming dispute, $19,476 of which was due in periods prior to 2006 but not recognized as a reduction to programming costs because it was being disputed and was not being paid by the affiliate.  The underlying contract was terminated in June 2006 and no further payments will be received under the contract.

In connection with the resolution of another contract dispute, Fox Sports Net Chicago, which was shut down in June 2006, recorded $77,996 of affiliate revenue in June 2006 including $71,396, relating to periods prior to 2006, that had not been previously recognized due to the dispute.  Such affiliate revenue has been reported in discontinued operations.  The underlying contract was terminated in June 2006 and no further payments will be received under the contract.

II-71

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

NOTE 22.SUBSEQUENT EVENTS (Unaudited)

Sundance Channel L.L.C.

On May 6, 2008, Rainbow Media Holdings entered into an agreement to acquire Sundance Channel L.L.C. (“Sundance”) from General Electric Company’s NBC Universal, CBS Corporation’s Showtime Networks, and entities controlled by Robert Redford.  The purchase price of $496,000 (subject to customary working capital adjustments) will be paid through an exchange of approximately 12.7 million shares of common stock of General Electric Company held by Rainbow Media Holdings, with a cash adjustment at closing based upon the value of the General Electric Company shares in relation to the total purchase price.  Under the transaction structure, General Electric Company will receive all of the General Electric Company common stock and the CBS and Redford entities will receive cash in exchange for their interest in Sundance.  The transaction is expected to be an exchange of the General Electric Company shares that is tax free to the Company.  The Company also expects to receive a full step up in the tax basis of Sundance.  In connection with the exchange of the General Electric Company shares, the Company will repay the fair value of the monetization debt and settle the related equity derivative contracts associated with those shares.  The cash portion of the purchase price and the repayment of the monetization indebtedness and the settlement of the associated equity derivative contracts are expected to be satisfied with cash on hand and/or borrowings under either the Rainbow National Services LLC or CSC Holdings revolving credit agreements.

Consummation of the transaction is subject to customary closing conditions, including receipt of regulatory approvals.

Newsday LLC

On May 11, 2008, CSC Holdings entered into a Formation Agreement with Tribune Company to form a new limited liability company (“Newsday LLC”).  Under the terms of the Formation Agreement, Tribune Company, through its subsidiaries, will contribute the Newsday business (the “Newsday Media Group Business”) and CSC Holdings will contribute newly issued Senior Notes of Cablevision with a fair market value of $650,000 on the contribution date.

Also on the contribution date, Newsday LLC will borrow $650,000 under a new secured credit facility, and Tribune Company will receive $630,000 in cash from the proceeds of that financing (which includes the $18,000 of prepaid rent mentioned below).  CSC Holdings will provide funds to Newsday LLC to pay certain transaction costs.

As a result of these transactions, CSC Holdings, through a wholly-owned subsidiary, will own approximately 97% and Tribune Company, through a wholly-owned subsidiary, will own approximately 3% of the equity in Newsday LLC.  CSC Holdings will have operational control of Newsday LLC.

The Newsday Media Group Business was valued at $632,000 in the transaction, and Tribune Company will also receive $18,000 at closing as prepaid rent under certain leases of property used in the business, bringing the total transaction value to $650,000.

The debt securities contributed by CSC Holdings will have terms which mirror Cablevision’s 8% Senior Notes due 2012.  Bank of America has provided a firm financing commitment with respect to the $650,000 of financing to be raised by Newsday LLC.  Under the commitment letter from Bank of

II-72

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share amounts)

America, borrowings by Newsday LLC will be guaranteed by CSC Holdings and secured by a lien on the assets of Newsday LLC, including the Cablevision Senior Notes contributed by CSC Holdings.  Tribune Company has agreed to indemnify CSC Holdings with respect to any payments that CSC Holdings makes under its guarantee of the Newsday LLC financing.  Newsday LLC will generally be prohibited from using the proceeds received from any repayment of the Cablevision Senior Notes contributed by CSC Holdings to acquire non-publicly traded notes or debt instruments of Cablevision or CSC Holdings, and Newsday LLC will be required under the financing agreements to maintain cash or cash equivalents or publicly traded notes or debt instruments of Cablevision or CSC Holdings with an aggregate principal amount that exceeds the then-outstanding borrowings by Newsday LLC.

CSC Holdings and Tribune Company will enter into a Tax Matters Agreement pursuant to which, among other things, CSC Holdings will agree that it will indemnify Tribune Company for certain taxes incurred by Tribune Company if, prior to January 1, 2018, Newsday LLC sells or otherwise disposes of the Newsday Media Group Business contributed by Tribune Company or fails to maintain outstanding indebtedness in specified minimum amounts over time (reducing to $335,000 on January 1, 2018).

At any time after the tenth anniversary of the closing of the transaction and prior to the thirteenth anniversary of the closing, CSC Holdings will have the right to purchase Tribune Company’s entire interest in Newsday LLC.  At any time after the thirteenth anniversary of the closing and on or prior to the date that is six months after such anniversary, Tribune Company will have the right to require CSC Holdings to purchase Tribune Company’s entire interest in Newsday LLC.  In either case, the purchase price will be the fair market value of the interest.

Consummation of the transaction is subject to customary closing conditions, including receipt of regulatory approvals.

II-73

EX-99.4

Exhibit 99.4

Consent of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Cablevision Systems Corporation:

We consent to the incorporation by reference in the registration statements (Nos. 333-86789 and 333-71965) on Forms S-3 and in the registration statements (Nos. 333-79485, 333-57924, 333-36282-99, 333-41349-99, 333-57922, 333-134260 and 333-134259) on Forms S-8 of Cablevision Systems Corporation of our report dated February 28, 2008, except for Notes 2, 4, 5, 8 and 19 which are as of May 27, 2008, with respect to the consolidated balance sheets of Cablevision Systems Corporation and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholders’ deficiency and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2007 and the related financial statement schedule for each of the years in the three-year period ended December 31, 2007, and our report dated February 28, 2008, with respect to the effectiveness of internal control over financial reporting as of December 31, 2007, which reports appear in this combined report on Form 8-K of Cablevision Systems Corporation and CSC Holdings, Inc.

As discussed in our report dated February 28, 2008, the Company changed its method of quantifying errors in 2006 in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, adopted the provisions of Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment as of January 1, 2006, adopted the provisions of Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, as of December 31, 2006, and adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, as of January 1, 2007.

/s/ KPMG LLP

Melville, New York

May 27, 2008

EX-99.5

Exhibit 99.5

Consent of Independent Registered Public Accounting Firm

The Board of Directors and Stockholder

CSC Holdings, Inc.:

We consent to the incorporation by reference in the registration statement (No. 333-71965) on Form S-3 of CSC Holdings, Inc. of our report dated February 28, 2008, except for Notes 2, 4, 5, 8 and 19 which are as of May 27, 2008, with respect to the consolidated balance sheets of CSC Holdings, Inc. and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholder’s deficiency and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2007, and the related financial statement schedule for each of the years in the three-year period ended December 31, 2007, and our report dated February 28, 2008, with respect to the effectiveness of internal control over financial reporting as of December 31, 2007, which reports appear in this combined report on Form 8-K of CSC Holdings, Inc. and Cablevision Systems Corporation.

As discussed in our report dated February 28, 2008, the Company changed its method of quantifying errors in 2006 in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, adopted the provisions of Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment as of January 1, 2006, adopted the provisions of Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, as of December 31, 2006, and adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, as of January 1, 2007.

/s/ KPMG LLP

Melville, New York

May 27, 2008