e10v12bza
As filed with the Securities and Exchange Commission on May 4, 2011
File No. 001-35106
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
Amendment No. 2
to
 
Form 10
 
General Form for Registration of Securities
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
 
 
 
 
AMC Networks Inc.
(Exact Name of Registrant as Specified in its Charter)
 
 
 
 
     
Delaware
  27-5403694
(State or Other Jurisdiction of
Incorporation or Organization)
  (IRS Employer
Identification Number)
     
11 Penn Plaza
New York, NY
(Address of Principal
Executive Offices)
  10001
(Zip Code)
(212) 324-8500
(Registrant’s telephone number, including area code)
 
 
 
 
Securities to be Registered
Pursuant to Section 12(b) of the Act:
 
     
Title of Each Class
  Name of Each Exchange
to be so Registered
 
on Which Each Class is to be Registered
 
Class A Common Stock, par value $.01 per share
  The NASDAQ Stock Market LLC
 
Securities to be Registered Pursuant to Section 12(g) of the Act:
None
 


 

 
INFORMATION REQUIRED IN REGISTRATION STATEMENT
CROSS-REFERENCE SHEET BETWEEN ITEMS OF FORM 10
AND THE ATTACHED INFORMATION STATEMENT.
 
Item 1.   Business
 
The information required by this item is contained under the sections “Summary,” “Business,” “Available Information” and “AMC Networks Inc. Consolidated Financial Statements” of the Information Statement attached hereto as Exhibit 99.1 (the “Information Statement”). Those sections are incorporated herein by reference.
 
Item 1A.   Risk Factors
 
The information required by this item is contained under the section “Risk Factors” of the Information Statement. That section is incorporated herein by reference.
 
Item 2.   Financial Information
 
The information required by this item is contained under the sections “Summary,” “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Information Statement. Those sections are incorporated herein by reference.
 
Item 3.   Properties
 
The information required by this item is contained under the section “Business — Properties” of the Information Statement. That section is incorporated herein by reference.
 
Item 4.   Security Ownership of Certain Beneficial Owners and Management
 
The information required by this item is contained under the sections “Summary” and “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of the Information Statement. Those sections are incorporated herein by reference.
 
Item 5.   Directors and Executive Officers
 
The information required by this item is contained under the section “Corporate Governance and Management” of the Information Statement. That section is incorporated herein by reference.
 
Item 6.   Executive Compensation
 
The information required by this item is contained under the section “Executive Compensation” of the Information Statement. That section is incorporated herein by reference.
 
Item 7.   Certain Relationships and Related Transactions
 
The information required by this item is contained under the sections “Certain Relationships and Related Party Transactions” and “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of the Information Statement. Those sections are incorporated herein by reference.
 
Item 8.   Legal Proceedings
 
The information required by this item is contained under the section “Business — Legal Proceedings” of the Information Statement. That section is incorporated herein by reference.
 
Item 9.   Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
 
The information required by this item is contained under the sections “Risk Factors,” “The Distribution,” “Dividend Policy,” “Business,” “Corporate Governance and Management,” “Shares Eligible for Future Sale” and “Description of Capital Stock” of the Information Statement. Those sections are incorporated herein by reference.


 

 
Item 10.   Recent Sales of Unregistered Securities
 
On March 9, 2011, in connection with the incorporation of AMC Networks Inc., CSC Holdings, LLC, a subsidiary of Cablevision Systems Corporation, acquired 1,000 shares of common stock of AMC Networks Inc. for $10.00.
 
Item 11.   Description of Registrant’s Securities to be Registered
 
The information required by this item is contained under the sections “The Distribution” and “Description of Capital Stock” of the Information Statement. Those sections are incorporated herein by reference.
 
Item 12.   Indemnification of Directors and Officers
 
The information required by this item is contained under the section “Indemnification of Directors and Officers” of the Information Statement. That section is incorporated herein by reference.
 
Item 13.   Financial Statements and Supplementary Data
 
The information required by this item is contained under the sections “Selected Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “AMC Networks Inc. Consolidated Financial Statements” of the Information Statement. Those sections are incorporated herein by reference.
 
Item 14.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
None.
 
Item 15.   Financial Statements and Exhibits
 
(a) Financial Statements
 
The information required by this item is contained under the section “AMC Networks Inc. Consolidated Financial Statements” beginning on page F-1 of the Information Statement. That section is incorporated herein by reference.
 
(b) Exhibits
 
The following documents are filed as exhibits hereto:
 
         
Exhibit No.
 
Description
 
  2 .1*   Distribution Agreement between Cablevision Systems Corporation and AMC Networks Inc.
  2 .2*   Contribution Agreement among Cablevision Systems Corporation, CSC Holdings, LLC and AMC Networks Inc.
  3 .1†   Certificate of Incorporation of AMC Networks Inc.
  3 .2*   Form of Amended and Restated Certificate of Incorporation (as in effect immediately prior to Distribution).
  3 .3†   By-Laws of AMC Networks Inc.
  3 .4*   Form of Amended and Restated By-Laws (as in effect immediately prior to Distribution).
  3 .5*   Registration Rights Agreement between AMC Networks Inc. and The Charles F. Dolan Children Trusts.
  3 .6*   Registration Rights Agreement between AMC Networks Inc. and The Dolan Family Affiliates.
  8 .1*   Form of Tax Opinion of Sullivan & Cromwell LLP.
  10 .1*   Form of Transition Services Agreement between Cablevision Systems Corporation and AMC Networks Inc.
  10 .2*   Form of Tax Disaffiliation Agreement between Cablevision Systems Corporation and AMC Networks Inc.
  10 .3*   Form of Employee Matters Agreement between Cablevision Systems Corporation and AMC Networks Inc.
  10 .4*   Form of Employee Matters Agreement with Madison Square Garden, Inc.
  10 .5*   Standstill Agreement by and among AMC Networks Inc. and The Dolan Family Group.
  21 .1*   Subsidiaries of the Registrant.
  99 .1   Preliminary Information Statement dated May 4, 2011.
 
 
* To be filed by amendment.
 
Previously filed.


 

SIGNATURES
 
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Amc Networks Inc.
 
  By: 
/s/  Joshua W. Sapan
Name: Joshua W. Sapan
  Title:   President and Chief Executive Officer
 
Dated: May 4, 2011

exv99w1
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Exhibit 99.1
 
CABLEVISION SYSTEMS CORPORATION
1111 STEWART AVENUE
BETHPAGE, NEW YORK 11714
 
, 2011
 
Dear Stockholder:
 
I am pleased to report that the previously announced spin-off by Cablevision Systems Corporation of its AMC Networks Inc. subsidiary is expected to become effective on          , 2011. AMC Networks Inc., a Delaware corporation, will become a public company on that date and will own the cable programming networks and related businesses currently owned and operated by Cablevision’s Rainbow Media Holdings subsidiary. AMC Networks Inc.’s Class A Common Stock will be listed on The NASDAQ Stock Market LLC under the symbol “AMCX.”
 
Holders of record of Cablevision NY Group Class A Common Stock as of the close of business, New York City time, on          , 2011, which will be the record date, will receive one share of AMC Networks Inc. Class A Common Stock for every           shares of Cablevision NY Group Class A Common Stock held. Holders of record of Cablevision NY Group Class B Common Stock as of the close of business on the record date will receive one share of AMC Networks Inc. Class B Common Stock for every           shares of Cablevision NY Group Class B Common Stock held. No action is required on your part to receive your AMC Networks Inc. stock. You will not be required either to pay anything for the new shares or to surrender any shares of Cablevision stock.
 
No fractional shares of AMC Networks Inc. stock will be issued. If you otherwise would be entitled to a fractional share you will receive a check for the cash value thereof, which generally will be taxable to you. In due course you will be provided with information to enable you to compute your tax bases in both the Cablevision and the AMC Networks Inc. stock. Cablevision has received a private letter ruling from the Internal Revenue Service and expects to obtain an opinion from Sullivan & Cromwell LLP to the effect that, for U.S. Federal income tax purposes, the distribution of the AMC Networks Inc. stock will be tax-free to Cablevision and to you to the extent that you receive AMC Networks Inc. stock.
 
The enclosed Information Statement describes the distribution of shares of AMC Networks Inc. stock and contains important information about AMC Networks Inc., including financial statements. I suggest that you read it carefully. If you have any questions regarding the distribution, please contact Cablevision’s transfer agent, Wells Fargo Shareowner Services at 1-800-468-9716.
 
Sincerely,
 
Charles F. Dolan
Chairman
 


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PRELIMINARY INFORMATION STATEMENT
SUBJECT TO COMPLETION, DATED MAY 4, 2011
 
INFORMATION STATEMENT
 
AMC NETWORKS INC.
 
Distribution of
Class A Common Stock
Par Value, $0.01 Per Share

Class B Common Stock
Par Value, $0.01 Per Share
 
This Information Statement is being furnished in connection with the distribution by Cablevision Systems Corporation to holders of its common stock of all the outstanding shares of AMC Networks Inc. common stock. We expect to complete a series of transactions with Cablevision pursuant to which we will own the cable programming networks and related businesses currently owned and operated by the Rainbow Media Holdings subsidiary of Cablevision, as described in this Information Statement.
 
Shares of our Class A Common Stock will be distributed to holders of Cablevision NY Group Class A Common Stock of record as of the close of business, New York City time, on          , 2011, which will be the record date. Each such holder will receive one share of our Class A Common Stock for every           shares of Cablevision NY Group Class A Common Stock held on the record date. Shares of our Class B Common Stock will be distributed to holders of Cablevision NY Group Class B Common Stock as of the close of business on the record date. Each holder of Cablevision NY Group Class B Common Stock will receive one share of our Class B Common Stock for every           shares of Cablevision NY Group Class B Common Stock held on the record date. The distribution will be effective at 11:59 p.m. on          , 2011. For Cablevision stockholders who own common stock in registered form, in most cases the transfer agent will credit their shares of AMC Networks Inc. common stock to book entry accounts established to hold their Cablevision common stock. Our distribution agent will mail these stockholders a statement reflecting their AMC Networks Inc. common stock ownership shortly after          , 2011. For stockholders who own Cablevision common stock through a broker or other nominee, their shares of AMC Networks Inc. common stock will be credited to their accounts by the broker or other nominee. Stockholders will receive cash in lieu of fractional shares, which generally will be taxable. See “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.”
 
No stockholder approval of the distribution is required or sought. We are not asking you for a proxy and you are requested not to send us a proxy. Cablevision stockholders will not be required to pay for the shares of our common stock to be received by them in the distribution, or to surrender or to exchange shares of Cablevision common stock in order to receive our common stock, or to take any other action in connection with the distribution. There is currently no trading market for our common stock. We will apply to have our Class A Common Stock listed on The NASDAQ Stock Market LLC under the symbol “AMCX.” We will not list our Class B Common Stock on any stock exchange.
 
IN REVIEWING THIS INFORMATION STATEMENT, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED UNDER THE CAPTION “RISK FACTORS” BEGINNING ON PAGE 22.
 
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS INFORMATION STATEMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
 
THIS INFORMATION STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES.
 
 
Stockholders of Cablevision with inquiries related to the distribution should contact Cablevision’s transfer agent, Wells Fargo Shareowner Services at 1-800-468-9716.
 
The date of this Information Statement is          , 2011.


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SUMMARY
 
The following is a summary of some of the information contained in this Information Statement. This summary is included for convenience only and should not be considered complete. This summary is qualified in its entirety by the more detailed information contained elsewhere in this Information Statement, which should be read in its entirety.
 
Unless the context otherwise requires, all references to “we,” “our,” “us,” “AMC Networks” or the “Company” refer to AMC Networks Inc., together with its direct and indirect subsidiaries. “AMC Networks Inc.” refers to AMC Networks Inc. individually as a separate entity. Where we describe in this Information Statement our business activities, we do so as if the transfer of the Rainbow Media Holdings subsidiary of Cablevision Systems Corporation to AMC Networks Inc. has already occurred.
 
Our Company
 
AMC Networks owns and operates several of cable television’s most recognized brands delivering high quality content to audiences and a valuable platform to distributors and advertisers. Since our founding in 1980, we have been a pioneer in the cable television programming industry, having created or developed some of the leading programming networks. We have, since our inception, focused on programming of film and original productions, including through our creation of Bravo and AMC in 1980 and 1984, respectively. Bravo, which we sold to NBC Universal in 2002, was the first network dedicated to film and the performing arts. We have continued this dedication to quality programming and storytelling through our creation of The Independent Film Channel (today known as IFC) in 1994 and WE tv (which we launched as Romance Classics in 1997), and our acquisition of Sundance Channel in 2008.
 
We manage our business through two reportable operating segments: (i) National Networks, which includes AMC, WE tv, IFC and Sundance Channel; and (ii) International and Other, which includes AMC/Sundance Channel Global, our international programming business; IFC Entertainment, our independent film distribution business; and AMC Network Communications (formerly Rainbow Network Communications), our network technical services business. Our National Networks are distributed throughout the United States via cable and other multichannel distribution platforms, including direct broadcast satellite (“DBS”) and platforms operated by telecommunications providers (we refer collectively to these cable and other multichannel distributors as “multichannel video distributors” or “distributors”). In addition to our extensive U.S. distribution, AMC, IFC and Sundance Channel are available in Canada and Sundance Channel and WE tv are available in other countries throughout Europe and Asia. We earn revenue principally from the affiliation fees paid by distributors to carry our programming networks and from advertising sales. In 2010, affiliation fees and advertising sales accounted for 57% and 37%, respectively, of our total net revenues.
 
National Networks
 
We own four nationally distributed entertainment programming networks: AMC, WE tv, IFC and Sundance Channel, each of which are available to our distributors in high-definition and standard-definition formats. Our programming networks principally generate their revenues from affiliation fees paid by multichannel video distributors and from the sale of advertising, although we also earn ancillary revenues from sources such as digital and international program sales. As of December 31, 2010, AMC, WE tv and IFC had 96.4 million, 76.8 million and 62.7 million Nielsen subscribers, respectively, and Sundance Channel had 39.9 million viewing subscribers (for a discussion of the difference between Nielsen subscribers and viewing subscribers, see “Business — Subscriber and Viewer Measurement”). Our National Networks segment also includes Wedding Central, a wedding-themed programming network available through a small number of distributors.
 
AMC.  AMC is a television network focused on the highest quality storytelling — both originally produced and curated, and delivered in series and feature-film form. AMC’s programming includes Emmy and Golden Globe Award-winning or nominated original scripted dramatic television series such as Mad Men, Breaking Bad and The Walking Dead, occasional mini-series such as Broken Trail and The Prisoner, and unscripted series and packaged movie events such as Storymakers, DVDtv and AMC News. In addition, with a comprehensive library of popular films, AMC also offers movie-based entertainment.
 
WE tv.  WE tv offers compelling, entertaining stories and focuses on programming of particular interest to women, with an emphasis on life events such as weddings, having children and raising a family. The programming


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features original series and specials, as well as feature films. WE tv’s schedule includes original series such as Bridezillas, My Fair Wedding with David Tutera, Joan and Melissa: Joan Knows Best? and Downsized. Additionally, WE tv’s programming includes series such as Ghost Whisperer, Charmed and Golden Girls.
 
IFC.  IFC is a network dedicated to presenting an independent, alternative mindset through programming focused on independent film and original alternative comedy series. Since its launch in 1994, IFC has developed television programming that challenges the conventions of storytelling and provides a unique perspective to its audiences through its original series, notable independent film collection and cult television shows. The network’s original content includes the David Cross comedy The Increasingly Poor Decisions of Todd Margaret, The Onion News Network and Portlandia.
 
Sundance Channel.  Sundance Channel is the television destination for independent-minded viewers. Benefitting from its relationship with the Sundance Institute and the renowned Sundance Film Festival, the network features independent films and original series showcasing innovative people and ideas in areas like invention, design, travel, enterprise and fashion. Launched in 1996 and acquired by us in 2008, Sundance Channel’s programming celebrates fresh talent and seeks to champion new ideas.
 
International and Other
 
In addition to our National Networks, we also operate AMC/Sundance Channel Global, which is our international programming business; IFC Entertainment, our independent film distribution business; and AMC Network Communications, our network technical services business. Our International and Other segment also includes VOOM HD, an international programming service that we are in the process of winding-down.
 
AMC/Sundance Channel Global.  AMC/Sundance Channel Global’s business principally consists of four distinct channels in six languages spread across eight countries, focusing primarily on AMC in Canada and global versions of the Sundance and WE tv brands. Principally generating revenues from affiliation fees, AMC/Sundance Channel Global reached approximately 8 million viewing subscribers in Canada, Europe and Asia as of December 31, 2010, and has broad availability to distributors in Europe and Asia.
 
IFC Entertainment.  IFC Entertainment encompasses our independent film distribution business, making independent films available to a national audience by initially releasing them in theaters as well as on video-on-demand platforms. IFC Entertainment operates multiple sub-brands, including Sundance Selects, IFC Films and IFC Midnight, which distribute critically acclaimed independent films across virtually all available media platforms, including theatrically and via video-on-demand, DVDs, cable television and streaming to computers and other electronic devices. IFC Entertainment also operates the IFC Center and SundanceNow.
 
AMC Network Communications.  AMC Network Communications is a full-service network programming feed origination and distribution company, supplying an array of services to the network programming industry. AMC Network Communications has nearly 30 years experience across its network services groups, including affiliate engineering, network operations, traffic and scheduling, that provide day-to-day delivery of any programming network, in high definition or standard definition.
 
Our Strengths
 
Our strengths include:
 
Strong Industry Presence and Portfolio of Brands.  We have operated in the cable programming industry for more than 30 years and over this time we have continually enhanced the value of our network portfolio. Our programming network brands are well known and well regarded by our key constituents — our viewers, distributors and advertisers — and have developed strong followings within their respective targeted demographics, increasing our value to distributors and advertisers. AMC (which targets adults aged 25 to 54), WE tv (which targets women aged 18 to 49), IFC (which targets men aged 18 to 49) and Sundance Channel (which targets adults aged 25 to 54) have established themselves as important within their respective markets. Our deep and established presence in the industry lends us a high degree of credibility with distributors and content producers, and helps provide us with stable affiliate and studio relationships, advantageous channel placements and heightened viewer engagement.
 
Broad Distribution and Penetration of our National Networks.  Our national networks are broadly distributed in the United States. AMC, WE tv, IFC and Sundance Channel are each carried by all major


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multichannel video distributors. Our national networks are available to a significant percentage of subscribers in these distributors’ systems. This broad distribution and penetration provides us with a strong national platform on which to maintain, promote and grow our business.
 
Compelling Programming.  We continually refine our mix of programming and, in addition to our popular film programming, have increasingly focused on highly visible, critically acclaimed original programming, including the award-winning Mad Men, Breaking Bad and other popular series and shows, such as The Walking Dead, Bridezillas, Portlandia, The Onion News Network and Brick City. Our focus on quality original programming, targeted towards the audiences we seek to reach, has allowed us to increase in recent years our programming networks’ ratings and their viewership within their respective targeted demographics.
 
Recurring Revenue from Affiliation Agreements.  Our affiliation agreements with multichannel video distributors generate a recurring source of revenue. We generally seek to structure these agreements so that they are long-term in nature and to stagger their expiration dates, thereby increasing the predictability and stability of our affiliation fee revenues.
 
Desirable Advertising Platform.  Our national networks have a strong connection with each of their respective targeted demographics, which makes our programming networks an attractive platform to advertisers. Although all of our programming networks were originally operated without advertising, we have been incrementally migrating our portfolio to an advertiser-supported model. We have experienced significant growth in our advertising revenues in recent years, which has allowed us to develop high-quality programming.
 
Attractive Financial Profile.  We have a portfolio that includes higher-margin programming networks and faster-growing programming networks, through which we seek to grow both revenue and operating income. Our revenues, net, operating income and adjusted operating cash flow (“AOCF”) increased at annual growth rates in 2010 versus the prior year of 10.7%, 17.7% and 10.2%, respectively. We achieved operating income margins and AOCF margins of 13.5%, 24.4% and 26.0%, and 32.0%, 37.4%, and 37.2%, respectively, in 2008, 2009 and 2010. For a reconciliation of AOCF, a non-GAAP financial measure, to operating income see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Statement of Operations Data.”
 
Our Strategy
 
Our strategy is to maintain and improve our position as a leading programming and entertainment company by owning and operating several of the most popular and award-winning brands in cable television that create engagement with audiences globally across multiple media platforms. The key focuses of our strategy are:
 
Continued Development of High-Quality Original Programming.  We intend to continue developing strong original programming across all of our programming networks to enhance our brands, strengthen our relationship with our viewers, distributors and advertisers, and increase distribution and audience ratings. We believe that our continued investment in original programming supports future growth in our two principal revenue streams — affiliation fee revenue from our distributors and advertising revenue. We also intend to expand the deployment of our original programming across multiple distribution platforms.
 
Increased Distribution of our Programming Networks.  Of our four national networks, only AMC is fully distributed in the United States. We intend to seek increased distribution of our other national networks to grow affiliate and advertising revenues. In addition, we have begun to expand the distribution of our programming networks around the globe.
 
Continued Growth of Advertising Revenue.  We have a proven track record of significantly increasing revenue by introducing advertising on networks that were previously not advertiser supported. We first accomplished this in 2002, when we moved AMC and WE tv to an advertiser-supported model. Most recently, in December 2010, we moved IFC to such a model. We seek to continue to evolve the programming on each of our networks to achieve even stronger viewer engagement within their respective core targeted demographics, thereby increasing the value of our programming to advertisers and allowing us to obtain higher advertising rates. For example, we have begun to refine the programming mix on IFC to include


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alternative comedy programming, such as The Onion News Network and Portlandia, in order to increase IFC’s appeal to its targeted demographic of men aged 18 to 49. We are also continuing to seek additional advertising revenue at AMC and WE tv through higher Nielsen ratings in desirable demographics.
 
Increased Control of Content.  We believe that control (including long-term contract arrangements) and ownership of content is becoming increasingly important, and we intend to increase our control position over our programming content. We already control, own or have long-term license agreements covering significant portions of our content across our programming networks as well as in our independent film distribution business operated by IFC Entertainment. We intend to continue to focus on obtaining the broadest possible control rights (both as to territory and platforms) for our content.
 
Exploitation of Emerging Media Platforms.  The technological landscape surrounding the distribution of entertainment content is continuously evolving as new digital platforms emerge. We intend to distribute our content across as many of these new platforms as possible, when it makes business sense to do so, so that our viewers can access our content where, when and how they want it. To that end, our programming networks are allowing many of our distributors to offer our content to subscribers on computers and other digital devices, and on video-on-demand platforms, all of which permit subscribers to access programs at their convenience. We also have launched our own direct-to-consumer digital platform, SundanceNow, which makes our IFC Entertainment library of independent films available to consumers in the United States and around the globe, and have made some of our content available on third-party digital platforms like iTunes and Netflix. Our national networks each host dedicated websites that promote their brands, provide programming information and provide access to content. In addition, AMC has acquired the film-focused websites filmsite.org and filmcritic.com, which together with amctv.com deliver over 5 million unique visitors each month.
 
Key Challenges
 
Following the Distribution, we may face a number of challenges, both pre-existing and as a result of the Distribution, including:
 
  •  intense competition in the markets in which we operate;
 
  •  a limited number of distributors for our programming networks;
 
  •  substantially higher debt and leverage than we have historically maintained, as a result of the financing transactions described under “Description of Financing Transactions and Certain Indebtedness”;
 
  •  volatility in the market price and trading volume of our common stock; and
 
  •  lack of operating history as a public company.
 
See “Risk Factors” for a discussion of these and other matters our stockholders should carefully consider in connection with the Distribution.
 
Company Information
 
We are a Delaware corporation with our principal executive offices at 11 Penn Plaza, New York, NY 10001. Our telephone number is (212) 324-8500. AMC Networks Inc. is a holding company and conducts substantially all of its operations through its subsidiaries.
 
AMC Networks Inc. was incorporated on March 9, 2011 as an indirect, wholly-owned subsidiary of Cablevision Systems Corporation (“Cablevision”). Cablevision’s board of directors approved the Distribution (as defined below) on          , 2011 and the Company thereafter acquired 100% of the limited liability company interests in Rainbow Media Holdings LLC (“RMH”), the subsidiary of Cablevision through which Cablevision has historically owned the businesses described in this Information Statement. Certain businesses historically conducted by Cablevision through RMH, including News 12 Networks (“News 12”) and Rainbow Advertising Sales Corporation (“RASCO”), have not been transferred to us and will remain as part of Cablevision following the Distribution.


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The Distribution
 
Please see “The Distribution” for a more detailed description of the matters described below.
 
Distributing Company Cablevision Systems Corporation, which is one of the largest cable television operators in the United States. In addition to the business of AMC Networks, Cablevision also provides telecommunication services and operates regional programming networks and other businesses, including a newspaper publishing business and a chain of movie theaters.
 
Distributed Company AMC Networks Inc., which will own and operate the programming networks and related businesses (other than the regional programming and advertising sales businesses discussed under “— Our Company”) currently owned by RMH, a wholly-owned indirect subsidiary of Cablevision, each of which is described in this Information Statement.
 
Distribution Ratio Each holder of Cablevision NY Group Class A Common Stock will receive a distribution of one share of our Class A Common Stock for every          shares of Cablevision NY Group Class A Common Stock held on the record date and each holder of Cablevision NY Group Class B Common Stock will receive a distribution of one share of our Class B Common Stock for every           shares of Cablevision NY Group Class B Common Stock held on the record date.
 
Securities to be Distributed Based on           shares of Cablevision NY Group Class A Common Stock and           shares of Cablevision NY Group Class B Common Stock outstanding on          , 2011, approximately          shares of our Class A Common Stock and           shares of our Class B Common Stock will be distributed. We refer to this distribution of securities as the “Distribution.” The shares of our common stock to be distributed will constitute all of the outstanding shares of our common stock immediately after the Distribution. Cablevision stockholders will not be required to pay for the shares of our common stock to be received by them in the Distribution, or to surrender or exchange shares of Cablevision common stock in order to receive our common stock, or to take any other action in connection with the Distribution.
 
Fractional Shares Fractional shares of our common stock will not be distributed. Fractional shares of our Class A Common Stock will be aggregated and sold in the public market by the distribution agent and stockholders will receive a cash payment in lieu of a fractional share. Similarly, fractional shares of our Class B Common Stock will be aggregated, converted to Class A Common Stock, and sold in the public market by the distribution agent. The aggregate net cash proceeds of these sales will be distributed ratably to the stockholders who would otherwise have received fractional interests. These proceeds generally will be taxable to those stockholders.
 
Distribution Agent, Transfer Agent and Registrar for the Shares Wells Fargo Shareowner Services will be the distribution agent, transfer agent and registrar for the shares of our common stock.


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Record Date The record date is the close of business New York City time, on           , 2011.
 
Distribution Date 11:59 p.m. on          , 2011.
 
Material U.S. Federal Income Tax Consequences of the Distribution Cablevision has received a private letter ruling from the Internal Revenue Service (“IRS”) to the effect that, among other things, the Distribution, and certain related transactions, including (i) the contribution by CSC Holdings, LLC (“CSC Holdings”) of certain assets to the Company, (ii) the receipt by CSC Holdings of Company common stock, a portion of the New AMC Networks Debt (as defined below), and the potential assumption of certain liabilities by the Company and (iii) the expected exchange transaction with           whereby Cablevision or CSC Holdings will transfer such portion of the New AMC Networks Debt to           in return for the transfer to Cablevision or CSC Holdings of $      of outstanding Cablevision or CSC Holdings debt, will qualify for tax-free treatment under the Internal Revenue Code of 1986, as amended (the “Code”) to Cablevision, the Company, and holders of Cablevision common stock. In addition, Cablevision expects to obtain an opinion from Sullivan & Cromwell LLP substantially to the effect that, among other things, the Distribution and certain related transactions will qualify for tax-free treatment under the Code to Cablevision, the Company, and holders of Cablevision common stock, and that accordingly, for U.S. federal income tax purposes, no gain or loss will be recognized by, and no amount will be included in the income of, a holder of Cablevision common stock upon the receipt of shares of our common stock pursuant to the Distribution, except to the extent such holder receives cash in lieu of fractional shares of our common stock.
 
Although a private letter ruling from the IRS generally is binding on the IRS, if the factual representations or assumptions made in the letter ruling request are untrue or incomplete in any material respect, we will not be able to rely on the ruling. Furthermore, the IRS will not rule on whether a distribution satisfies certain requirements necessary to obtain tax-free treatment under the Code. Rather, the ruling is based upon representations by Cablevision that these conditions have been satisfied, and any inaccuracy in such representations could invalidate the ruling. The opinion discussed above addresses all of the requirements necessary for the Distribution and certain related transactions to obtain tax-free treatment under the Code and is based on, among other things, certain assumptions and representations made by Cablevision and us, which if incorrect or inaccurate in any material respect would jeopardize the conclusions reached by counsel in such opinion. The opinion will not be binding on the IRS or the courts. See “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.”
 
Stock Exchange Listing There is not currently a public market for our common stock. We will apply to have our Class A Common Stock listed on The NASDAQ Stock Market LLC (“NASDAQ”) under the symbol “AMCX.” It is anticipated that trading will commence on a when-


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issued basis prior to the Distribution. On the first trading day following the Distribution date, when-issued trading in respect of our Class A Common Stock will end and regular-way trading will begin. Our Class B Common Stock will not be listed on a securities exchange.
 
Financing Transactions As part of the Distribution, we will incur approximately $      of new debt (the “New AMC Networks Debt”), consisting of $      aggregate principal amount of senior secured term loans and $      aggregate principal amount of senior unsecured notes. A portion of the proceeds of the New AMC Networks Debt will be used to repay all outstanding Company debt (excluding capital leases) and approximately $1,250,000,000 of the New AMC Networks Debt will be issued to Cablevision or CSC Holdings, which will use such New AMC Networks Debt to repay outstanding Cablevision or CSC Holdings debt.
 
Cablevision or CSC Holdings will accomplish such repayment of outstanding debt by entering into a transaction with          , whereby Cablevision or CSC Holdings will exchange a portion of the New AMC Networks Debt for outstanding Cablevision or CSC Holdings debt, a substantial portion of which will have been acquired from Cablevision’s lenders by          for this purpose. Following the exchange, we expect that          , in an unrelated transaction, will syndicate our senior secured term loans to several lenders and distribute our senior unsecured notes in an exempt offering. See “Description of Financing Transactions and Certain Indebtedness.”
 
Relationship between Cablevision and Us after the Distribution Following the Distribution, we will be a public company and Cablevision will have no continuing stock ownership interest in us. In connection with the Distribution, we and Cablevision will enter into a Distribution Agreement and have or will enter into several ancillary agreements for the purpose of accomplishing the distribution of our common stock to Cablevision’s common stockholders. These agreements also will govern our relationship with Cablevision subsequent to the Distribution and provide for the allocation of employee benefit, tax and some other liabilities and obligations attributable to periods prior to the Distribution. These agreements also will include arrangements with respect to transition services and a number of on-going commercial relationships. The Distribution Agreement includes an agreement that we and Cablevision agree to provide each other with appropriate indemnities with respect to liabilities arising out of the businesses being transferred to us by Cablevision. We are also party to other arrangements with Cablevision and its subsidiaries, such as affiliation agreements covering our programming. See “Certain Relationships and Related Party Transactions.”
 
Following the Distribution,          of the members of our Board of Directors will also be directors of Cablevision, and several of our directors will continue to serve as officers and/or employees of Cablevision concurrently with their service on our Board of Directors.


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See “Certain Relationships and Related Party Transactions — Relationship Between Cablevision and Us After the Distribution” for a discussion of the policy that will be in place for dealing with potential conflicts of interest that may arise from our ongoing relationship with Cablevision.
 
Control by Dolan Family Following the Distribution, we will be controlled by Charles F. Dolan, members of his family and certain related family entities. We have been informed that Charles F. Dolan, these family members and the related entities will enter into a stockholders agreement relating, among other things, to the voting of their shares of our Class B Common Stock.
 
See “Risk Factors — Risks Related to the Distribution and the Financing Transactions — We are controlled by the Dolan family, which may create certain conflicts of interest and which means certain stockholder decisions can be taken without the consent of the majority of the holders of our Class A Common Stock.” Immediately following the Distribution,          of the members of our Board of Directors will be members of the Dolan family.
 
Post-Distribution Dividend Policy We do not anticipate paying any cash dividends on our common stock in the foreseeable future.
 
Risk Factors Stockholders should carefully consider the matters discussed under “Risk Factors.”


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Selected Financial Data
 
The operating and balance sheet data included in the following selected financial data as of December 31, 2010 and 2009 and for each year in the three-year period ended December 31, 2010 have been derived from the audited annual consolidated financial statements of AMC Networks Inc. included elsewhere in this Information Statement, and the data as of December 31, 2008, 2007 and 2006 and for the years ended December 31, 2007 and 2006 have been derived from the unaudited annual consolidated financial statements of AMC Networks Inc., which are not included in this Information Statement. The financial information does not necessarily reflect what our results of operations and financial position would have been if we had operated as a separate publicly-traded entity during the periods presented. The selected financial data presented below should be read in conjunction with the annual financial statements included elsewhere in this Information Statement and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Unaudited Pro Forma Consolidated Financial Information.”
 
                                         
    Year Ended December 31,  
    2010     2009     2008     2007     2006  
    (Dollars in thousands)  
 
Operating Data(1):
                                       
Revenues, net
  $ 1,078,300     $ 973,644     $ 893,557     $ 754,447     $ 646,476  
                                         
Operating expenses:
                                       
Technical and operating (excluding depreciation, amortization and impairments shown below)
    366,093       310,365       314,960       276,144       246,166  
Selling, general and administrative
    328,134       313,904       302,474       256,995       242,674  
Restructuring (credits) expense
    (2,218 )     5,162       46,877       2,245        
Depreciation and amortization (including impairments)
    106,455       106,504       108,349       81,101       83,984  
                                         
      798,464       735,935       772,660       616,485       572,824  
                                         
Operating income
    279,836       237,709       120,897       137,962       73,652  
                                         
Other income (expense):
                                       
Interest expense, net
    (73,412 )     (75,705 )     (97,062 )     (113,841 )     (133,202 )
(Loss) gain on investments, net
                (103,238 )     (1,812 )     27,417  
Gain (loss) on equity derivative contracts
                66,447       24,183       (15,708 )
Loss on interest rate swap contracts, net
          (3,237 )     (2,843 )            
Loss on extinguishment of debt and write-off of deferred financing costs
                (2,424 )     (22,032 )     (6,084 )
Miscellaneous, net
    (162 )     187       379       3,140       1,998  
                                         
      (73,574 )     (78,755 )     (138,741 )     (110,362 )     (125,579 )
                                         
Income (loss) from continuing operations before income taxes
    206,262       158,954       (17,844 )     27,600       (51,927 )
Income tax (expense) benefit
    (88,073 )     (70,407 )     (2,732 )     (12,227 )     21,043  
                                         
Income (loss) from continuing operations
    118,189       88,547       (20,576 )     15,373       (30,884 )
Loss from discontinued operations, net of income taxes
    (38,090 )     (34,791 )     (26,866 )     (25,867 )     (62,808 )
                                         
      80,099       53,756       (47,442 )     (10,494 )     (93,692 )
Cumulative effect of a change in accounting principle, net of taxes
                            (155 )
                                         
Net income (loss)
  $ 80,099     $ 53,756     $ (47,442 )   $ (10,494 )   $ (93,847 )
                                         
 


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    December 31,  
    2010     2009     2008     2007     2006  
    (Dollars in thousands)  
 
Balance Sheet Data(1):
                                       
Program rights, net
  $ 783,830     $ 683,306     $ 649,020     $ 553,555     $ 495,449  
Investment securities pledged as collateral
                      472,347       474,131  
Total assets
    1,853,896       1,934,362       1,987,917       2,423,442       2,474,883  
Program rights obligations
    454,825       435,638       465,588       416,960       432,429  
Note payable/advances to affiliate
          190,000       190,000       130,000        
Credit facility debt(2)
    475,000       580,000       700,000       500,000       510,000  
Collateralized indebtedness
                      402,965       388,183  
Senior notes(2)
    299,552       299,283       299,014       298,745       298,476  
Senior subordinated notes(2)
    324,071       323,817       323,564       323,311       497,011  
Capital lease obligations
    20,252       24,611       21,106       24,432       18,905  
Total debt
    1,118,875       1,227,711       1,343,684       1,549,453       1,712,575  
Stockholder’s equity (deficiency)
    24,831       (236,992 )     (278,502 )     (570,665 )     (996,541 )
 
 
(1) The Company acquired Sundance Channel in June 2008. The results of Sundance Channel’s operations have been included in the consolidated financial statements from the date of acquisition. See Note 3 in the accompanying consolidated financial statements.
 
(2) As part of the Distribution, we will incur approximately $      of New AMC Networks Debt, consisting of $      aggregate principal amount of senior secured term loans and $      aggregate principal amount of senior unsecured notes. A portion of the proceeds of the New AMC Networks Debt will be used to repay all outstanding Company debt (excluding capital leases) and approximately $1,250,000 of the New AMC Networks Debt will be issued to Cablevision or CSC Holdings, which will use such New AMC Networks Debt to repay outstanding Cablevision or CSC Holdings debt. See “Description of Financing Transactions and Certain Indebtedness — Financing Transactions in Connection with the Distribution.”

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QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION
 
The following is a brief summary of the terms of the Distribution. Please see “The Distribution” for a more detailed description of the matters described below.
 
Q: What is the Distribution?
 
A: The Distribution is the method by which Cablevision will separate the business of our Company from Cablevision’s other businesses, creating two separate, publicly-traded companies. In the Distribution, Cablevision will distribute to its stockholders all of the shares of our Class A Common Stock and Class B Common Stock that it owns. Following the Distribution, we will be a separate company from Cablevision, and Cablevision will not retain any ownership interest in us. The number of shares of Cablevision common stock you own will not change as a result of the Distribution.
 
Q: What is being distributed in the Distribution?
 
A: Approximately      million shares of our Class A Common Stock and      million shares of our Class B Common Stock will be distributed in the Distribution, based upon the number of shares of Cablevision NY Group Class A Common Stock and Cablevision NY Group Class B Common Stock outstanding on the record date. The shares of our Class A Common Stock and Class B Common Stock to be distributed by Cablevision will constitute all of the issued and outstanding shares of our Class A Common Stock and Class B Common Stock immediately after the Distribution. For more information on the shares being distributed in the Distribution, see “Description of Capital Stock — Class A Common Stock and Class B Common Stock.”
 
Q: What will I receive in the Distribution?
 
A: Holders of Cablevision NY Group Class A Common Stock will receive a distribution of one share of our Class A Common Stock for every           shares of Cablevision NY Group Class A Common Stock held by them on the record date, and holders of Cablevision NY Group Class B Common Stock will receive a distribution of one share of our Class B Common Stock for every          shares of Cablevision NY Group Class B Common Stock held by them on the record date. As a result of the Distribution, your proportionate interest in Cablevision will not change and you will own the same percentage of equity securities and voting power in AMC Networks as you did in Cablevision on the record date. For a more detailed description, see “The Distribution.”
 
Q: What is the record date for the Distribution?
 
A: Record ownership will be determined as the close of business New York City time, on          , 2011, which we refer to as the record date. The person in whose name shares of Cablevision common stock are registered at the close of business on the record date is the person to whom shares of the Company’s common stock will be issued in the Distribution. As described below, the Cablevision NY Group Class A Common Stock will not trade on an ex-dividend basis with respect to our common stock and, as a result, if a record holder of Cablevision NY Group Class A Common Stock sells those shares after the record date and on or prior to the Distribution date, the seller will be obligated to deliver to the purchaser the shares of our common stock that are issued in respect of the transferred Cablevision NY Group Class A Common Stock.
 
Q: When will the Distribution occur?
 
A: We expect that shares of our Class A Common Stock and Class B Common Stock will be distributed by the Distribution agent, on behalf of Cablevision, at 11:59 p.m. on          , 2011, which we refer to as the Distribution date.
 
Q: What will the relationship between Cablevision and us be following the Distribution?
 
A: Following the Distribution, we will be a public company and Cablevision will have no continuing stock ownership interest in us. In connection with the Distribution, we and Cablevision will enter into a Distribution Agreement and have entered or will enter into several other agreements for the purpose of


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accomplishing the distribution of our common stock to Cablevision’s common stockholders. These agreements also will govern our relationship with Cablevision subsequent to the Distribution and provide for the allocation of employee benefit, tax and some other liabilities and obligations attributable to periods prior to the Distribution. These agreements will also include arrangements with respect to transition services and a number of ongoing commercial relationships. The Distribution Agreement will provide that we and Cablevision agree to provide each other with appropriate indemnities with respect to liabilities arising out of the businesses being transferred to us by Cablevision. We are also party to other arrangements with Cablevision and its subsidiaries, such as affiliation agreements covering our programming networks. See “Certain Relationships and Related Party Transactions.” Following the Distribution, both we and Cablevision will both be controlled by Charles F. Dolan, members of his family and certain related family entities.
 
Following the Distribution,          of the members of our Board of Directors will also be directors of Cablevision, and several of our directors will continue to serve as officers or employees of Cablevision concurrently with their service on our Board of Directors.
 
See “Certain Relationships and Related Party Transactions — Relationship Between Cablevision and Us After the Distribution” for a discussion of the policy that will be in place for dealing with potential conflicts of interest that may arise from our ongoing relationship with Cablevision.
 
Q: What do I have to do to participate in the Distribution?
 
A: No action is required on your part. Shareholders of Cablevision on the record date for the Distribution are not required to pay any cash or deliver any other consideration, including any shares of Cablevision common stock, for the shares of our common stock distributable to them in the Distribution.
 
Q: If I sell, on or before the Distribution date, shares of Cablevision NY Group Class A Common Stock that I held on the record date, am I still entitled to receive shares of AMC Networks Inc. Class A Common Stock distributable with respect to the shares of Cablevision NY Group Class A Common Stock I sold?
 
A: No. No ex-dividend market will be established for our Class A Common Stock until the first trading day following the Distribution date. Therefore, if you own shares of Cablevision NY Group Class A Common Stock on the record date and thereafter sell those shares on or prior to the Distribution date, you will also be selling the shares of our Class A Common Stock that would have been distributed to you in the Distribution with respect to the shares of Cablevision NY Group Class A Common Stock you sell. Conversely, a person who purchases shares of Cablevision NY Group Class A Common Stock after the record date and on or prior to the Distribution date will be entitled to receive, from the seller of those shares, the shares of our Class A Common Stock issued in the Distribution with respect to the transferred Cablevision NY Group Class A Common Stock.
 
Q: How will fractional shares be treated in the Distribution?
 
A: If you would be entitled to receive a fractional share of our Class A Common Stock in the Distribution, you will instead receive a cash payment. See “The Distribution — Manner of Effecting the Distribution” for an explanation of how the cash payments will be determined.
 
Q: How will Cablevision distribute shares of AMC Networks Inc. common stock to me?
 
A: Holders of shares of Cablevision’s NY Group Class A Common Stock or NY Group Class B Common Stock on the record date will receive shares of the same class of our common stock, in book-entry form. See “The Distribution — Manner of Effecting the Distribution” for a more detailed explanation.
 
Q: What is the reason for the Distribution?
 
A: The potential benefits considered by Cablevision’s board of directors in making the determination to consummate the Distribution included the following:


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  •  to enhance the credit profile of Cablevision by accessing its RMH subsidiary’s additional debt capacity to effectuate a reduction of Cablevision’s indebtedness, thereby providing Cablevision with greater financial and strategic flexibility to pursue acquisitions following the Distribution; and
 
  •  to increase the aggregate stock price of Cablevision and the Company relative to the pre-Distribution value of outstanding Cablevision stock, so as to allow each company to (i) issue equity in connection with acquisitions on more favorable terms and (ii) increase the long term attractiveness of equity compensation programs, in both cases with less relative dilution to existing equityholders.
 
Cablevision’s board of directors believes that the aggregate stock price of Cablevision and the Company could potentially increase relative to the pre-Distribution value of outstanding Cablevision stock because the Distribution will permit investors to invest separately in AMC Networks and in the remaining businesses of Cablevision. This may make AMC Networks and Cablevision common stock more attractive to investors, as compared to Cablevision common stock before the Distribution, because the common stock of each of AMC Networks and Cablevision will become available to classes of investors who seek an investment that offers the growth, risk and sector exposure of either AMC Networks or Cablevision, but not that of the combined company. There can be no assurance, however, as to the future market price of AMC Networks or Cablevision common stock. See “Risk Factors — The combined post-Distribution value of Cablevision and AMC Networks shares may not equal or exceed the pre-Distribution value of Cablevision shares.”
 
Cablevision’s board of directors also considered several factors that might have a negative effect on Cablevision as a result of the Distribution. Cablevision’s board of directors considered that the Distribution would result in substantial reductions to the restricted payments baskets under various debt instruments of Cablevision and its subsidiary, CSC Holdings. Moreover, the Distribution would separate from Cablevision the businesses of the Company, which represent significant value, in a transaction that produces no direct economic consideration for Cablevision, other than the debt reduction noted above. Because the Company will no longer be a wholly-owned subsidiary of Cablevision, the Distribution also will affect the terms of, or limit the incentive for, or the ability of Cablevision to pursue, cross-company business transactions and initiatives with AMC Networks since, as separate public companies, such transactions and initiatives will need to be assessed by each company from its own business perspective. Finally, following the Distribution, Cablevision and its remaining businesses will need to absorb corporate and administrative costs previously allocated to its Rainbow reportable segment.
 
Cablevision’s board of directors considered certain aspects of the Distribution that may be adverse to the Company. The Company’s common stock may come under initial selling pressure as certain Cablevision stockholders sell their shares in the Company because they are not interested in holding an investment in the Company’s businesses. Moreover, certain factors such as a lack of historical financial and performance data as an independent company may limit investors’ ability to appropriately value the Company’s common stock. Furthermore, because the Company will no longer be a wholly-owned subsidiary of Cablevision, the Distribution also will limit the ability of the Company to pursue cross-company business transactions and initiatives with other businesses of Cablevision.
 
Q: What are the U.S. federal income tax consequences to me of the Distribution?
 
A: Cablevision has received a private letter ruling from the IRS and expects to obtain an opinion from Sullivan & Cromwell LLP to the effect that, among other things, the Distribution and certain related transactions will qualify as tax-free under the Code. See “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution,” and “Risk Factors — Risks Related to the Distribution and the Financing Transactions — The Distribution could result in significant tax liability” and “Risk Factors — Risks Related to the Distribution and the Financing Transactions — The tax rules applicable to the Distribution may restrict us from engaging in certain corporate transactions or from raising equity capital beyond certain thresholds for a period of time after the Distribution.”
 
Q: Does AMC Networks intend to pay cash dividends?
 
A: No. We currently intend to retain future earnings, if any, to finance the expansion of our businesses, repay indebtedness and fund ongoing operations. As a result, we do not expect to pay any cash dividends for the


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foreseeable future. All decisions regarding the payment of dividends will be made by our Board of Directors from time to time in accordance with applicable law.
 
Q: How will AMC Networks Inc. common stock trade?
 
A: There is not currently a public market for our common stock. We will apply to list our Class A Common Stock on NASDAQ under the symbol “AMCX.” It is anticipated that trading will commence on a when-issued basis prior to the Distribution. On the first trading day following the Distribution date, when-issued trading in respect of our Class A Common Stock will end and regular-way trading will begin. Our Class B Common Stock will not be listed on a securities exchange.
 
Q: Will the Distribution affect the trading price of my Cablevision NY Group Class A Common Stock?
 
A: Yes. After the distribution of our Class A Common Stock, the trading price of Cablevision NY Group Class A Common Stock may be lower than the trading price of the Cablevision NY Group Class A Common Stock immediately prior to the Distribution. Moreover, until the market has evaluated the operations of Cablevision without the operations of AMC Networks, the trading price of Cablevision NY Group Class A Common Stock may fluctuate significantly. Cablevision believes the separation of AMC Networks from Cablevision offers its stockholders the greatest long-term value. However, the combined trading prices of Cablevision NY Group Class A Common Stock and AMC Networks Inc. Class A Common Stock after the Distribution may be lower than the trading price of Cablevision NY Group Class A Common Stock prior to the Distribution. See “Risk Factors” beginning on page 22.
 
Q: What financing transactions will AMC Networks undertake in connection with the Distribution?
 
A: As part of the Distribution, we will incur approximately $      of New AMC Networks Debt, consisting of $      aggregate principal amount of senior secured term loans and $      aggregate principal amount of senior unsecured notes. A portion of the proceeds of the New AMC Networks Debt will be used to repay all outstanding Company debt (excluding capital leases) and approximately $1,250,000,000 of the New AMC Networks Debt will be issued to Cablevision or CSC Holdings, which will use such New AMC Networks Debt to repay outstanding Cablevision or CSC Holdings debt.
 
Cablevision or CSC Holdings will accomplish such repayment of outstanding debt by entering into a transaction with          , whereby Cablevision or CSC Holdings will exchange a portion of the New AMC Networks Debt for outstanding Cablevision or CSC Holdings debt, a substantial portion of which will have been acquired from Cablevision’s lenders by           for this purpose. Following the exchange, we expect that          , in an unrelated transaction, will syndicate our senior secured term loans to several lenders and distribute our senior unsecured notes in an exempt offering. See “Description of Financing Transactions and Certain Indebtedness.”
 
Q: Do I have appraisal rights?
 
A: No. Holders of Cablevision common stock are not entitled to appraisal rights in connection with the Distribution.
 
Q: Who is the transfer agent for AMC Networks Inc. common stock?
 
A: Wells Fargo Shareowner Services, 161 North Concord Exchange, South St. Paul, Minnesota 55075-1139.
 
Q: Where can I get more information?
 
A: If you have questions relating to the mechanics of the Distribution of shares of AMC Networks Inc. common stock, you should contact the distribution agent:
 
Wells Fargo Shareowner Services
161 North Concord Exchange
South St. Paul, Minnesota 55075-1139
Telephone: 1-800-468-9716


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Before the Distribution, if you have questions relating to the Distribution, you should contact:
 
Cablevision Systems Corporation
Investor Relations Dept.
1111 Stewart Ave.
Bethpage, NY 11714-3581
Telephone: 1-516-803-2300
 
After the Distribution, if you have questions relating to AMC Networks Inc., you should contact:
 
AMC Networks Inc.
Investor Relations Dept.
11 Penn Plaza
New York, NY 10001
Telephone: 1-212-324-8500


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THE DISTRIBUTION
 
General
 
All of our outstanding shares of Class A Common Stock will be distributed to the holders of Cablevision NY Group Class A Common Stock and all of the outstanding shares of our Class B Common Stock will be distributed to the holders of Cablevision NY Group Class B Common Stock. We refer to this distribution of securities as the “Distribution.” In the Distribution, each holder of Cablevision common stock will receive a distribution of one share of our common stock for every          shares of Cablevision common stock held as of the close of business, New York City time, on          , 2011, which will be the record date.
 
Manner of Effecting the Distribution
 
The general terms and conditions relating to the Distribution will be set forth in the Distribution Agreement between us and Cablevision. Under the Distribution Agreement, the Distribution will be effective at 11:59 p.m. on          , 2011. For most Cablevision stockholders who own Cablevision common stock in registered form on the record date, our transfer agent will credit their shares of our common stock to book entry accounts established to hold these shares. Our distribution agent will send these stockholders a statement reflecting their ownership of our common stock. Book entry refers to a method of recording stock ownership in our records in which no physical certificates are used. For stockholders who own Cablevision common stock through a broker or other nominee, their shares of our common stock will be credited to these stockholders’ accounts by the broker or other nominee. As further discussed below, fractional shares will not be distributed. Following the Distribution, stockholders whose shares are held in book entry form may request that their shares of our common stock be transferred to a brokerage or other account at any time, as well as delivery of physical stock certificates for their shares, in each case without charge.
 
CABLEVISION STOCKHOLDERS WILL NOT BE REQUIRED TO PAY FOR SHARES OF OUR COMMON STOCK RECEIVED IN THE DISTRIBUTION, OR TO SURRENDER OR EXCHANGE SHARES OF CABLEVISION COMMON STOCK IN ORDER TO RECEIVE OUR COMMON STOCK, OR TO TAKE ANY OTHER ACTION IN CONNECTION WITH THE DISTRIBUTION. NO VOTE OF CABLEVISION STOCKHOLDERS IS REQUIRED OR SOUGHT IN CONNECTION WITH THE DISTRIBUTION, AND CABLEVISION STOCKHOLDERS HAVE NO APPRAISAL RIGHTS IN CONNECTION WITH THE DISTRIBUTION.
 
Fractional shares of our common stock will not be issued to Cablevision stockholders as part of the Distribution or credited to book entry accounts. In lieu of receiving fractional shares, each holder of Cablevision common stock who would otherwise be entitled to receive a fractional share of our common stock will receive cash for the fractional interest, which generally will be taxable to such holder. An explanation of the tax consequences of the Distribution can be found below in the subsection captioned “— Material U.S. Federal Income Tax Consequences of the Distribution.” The distribution agent will, as soon as practicable after the Distribution date, aggregate fractional shares of our Class A Common Stock into whole shares and sell them in the open market at the prevailing market prices and distribute the aggregate proceeds, net of brokerage fees, ratably to Cablevision NY Group Class A stockholders otherwise entitled to fractional interests in our Class A Common Stock. Similarly, fractional shares of our Class B Common Stock will be aggregated, converted to Class A Common Stock, and sold in the public market by the distribution agent. The amount of such payments will depend on the prices at which the aggregated fractional shares are sold by the distribution agent in the open market shortly after the Distribution date.
 
See “Executive Compensation — Treatment of Outstanding Options, Rights, Restricted Stock, Restricted Stock Units and Other Awards,” for a discussion of how outstanding Cablevision options, restricted shares, restricted stock units and performance awards will be affected by the Distribution.
 
In order to be entitled to receive shares of our common stock in the Distribution, Cablevision stockholders must be stockholders of record of Cablevision common stock at the close of business New York City time, on the record date,          , 2011.


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Concurrent Financing Transactions
 
As part of the Distribution, we will incur approximately $      of New AMC Networks Debt, consisting of $      aggregate principal amount of senior secured term loans and $      aggregate principal amount of senior unsecured notes. A portion of the proceeds of the New AMC Networks Debt will be used to repay all outstanding Company debt (excluding capital leases) and approximately $1,250,000,000 of the New AMC Networks Debt will be issued to Cablevision or CSC Holdings, which will use such New AMC Networks Debt to repay outstanding Cablevision or CSC Holdings debt.
 
Cablevision or CSC Holdings will accomplish such repayment of outstanding debt by entering into a transaction with          , whereby Cablevision or CSC Holdings will exchange a portion of the New AMC Networks Debt for outstanding Cablevision or CSC Holdings debt, a substantial portion of which will have been acquired from Cablevision’s lenders by           for this purpose. Following the exchange, we expect that          , in an unrelated transaction, will syndicate our senior secured term loans to several lenders and distribute our senior unsecured notes in an exempt offering. See “Description of Financing Transactions and Certain Indebtedness.”
 
Reasons for the Distribution
 
Cablevision’s board of directors has determined that separation of our businesses from Cablevision’s other businesses is in the best interests of Cablevision and its stockholders. The potential benefits considered by Cablevision’s board of directors in making the determination to consummate the Distribution included the following:
 
  •  to enhance the credit profile of Cablevision by accessing its RMH subsidiary’s additional debt capacity to effectuate a reduction of Cablevision’s indebtedness, thereby providing Cablevision with greater financial and strategic flexibility to pursue acquisitions following the Distribution; and
 
  •  to increase the aggregate stock price of Cablevision and the Company relative to the pre-Distribution value of outstanding Cablevision stock, so as to allow each company to (i) issue equity in connection with acquisitions on more favorable terms and (ii) increase the long term attractiveness of equity compensation programs, in both cases with less relative dilution to existing equityholders.
 
Cablevision’s board of directors believes that the aggregate stock price of Cablevision and the Company could potentially increase relative to the pre-Distribution value of outstanding Cablevision stock because the Distribution will permit investors to invest separately in AMC Networks and in the remaining businesses of Cablevision. This may make AMC Networks and Cablevision common stock more attractive to investors, as compared to Cablevision common stock before the Distribution, because the common stock of each of AMC Networks and Cablevision will become available to classes of investors who seek an investment that offers the growth, risk and sector exposure of either AMC Networks or Cablevision, but not that of the combined company. There can be no assurance, however, as to the future market price of AMC Networks or Cablevision common stock. See “Risk Factors — The combined post-Distribution value of Cablevision and AMC Networks shares may not equal or exceed the pre-Distribution value of Cablevision shares.”
 
Cablevision’s board of directors also considered several factors that might have a negative effect on Cablevision as a result of the Distribution. Cablevision’s board of directors considered that the Distribution would result in substantial reductions to the restricted payments baskets under various debt instruments of Cablevision and its subsidiary, CSC Holdings. Moreover, the Distribution would separate from Cablevision the businesses of the Company, which represent significant value, in a transaction that produces no direct economic consideration for Cablevision, other than the debt reduction noted above. Because the Company will no longer be a wholly-owned subsidiary of Cablevision, the Distribution also will affect the terms of, or limit the incentive for, or the ability of Cablevision to pursue, cross-company business transactions and initiatives with AMC Networks since, as separate public companies, such transactions and initiatives will need to be assessed by each company from its own business perspective. Finally, following the Distribution, Cablevision and its remaining businesses will need to absorb corporate and administrative costs previously allocated to its Rainbow segment.


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Cablevision’s board of directors considered certain aspects of the Distribution that may be adverse to the Company. The Company’s common stock may come under initial selling pressure as certain Cablevision stockholders sell their shares in the Company because they are not interested in holding an investment in the Company’s businesses. Moreover, certain factors such as a lack of historical financial and performance data as an independent company may limit investors’ ability to appropriately value the Company’s common stock. Furthermore, because the Company will no longer be a wholly-owned subsidiary of Cablevision, the Distribution also will limit the ability of the Company to pursue cross-company business transactions and initiatives with other businesses of Cablevision.
 
Results of the Distribution
 
After the Distribution, we will be a public company owning and operating the network programming and related businesses (other than the regional programming and advertising sales businesses discussed under “Summary — Our Company”) historically owned by Cablevision through RMH, a wholly-owned indirect subsidiary of Cablevision. Immediately after the Distribution, we expect to have approximately          holders of record of our Class A Common Stock and           holders of record of our Class B Common Stock and approximately      million shares of Class A Common Stock and          million shares of Class B Common Stock outstanding, based on the number of record stockholders and outstanding shares of Cablevision common stock on          , 2011 and after giving effect to the delivery to stockholders of cash in lieu of fractional shares of our common stock. The actual number of shares to be distributed will be determined on the record date. You can find information regarding options to purchase our common stock that will be outstanding after the Distribution in the section captioned, “Executive Compensation — Treatment of Outstanding Options, Rights, Restricted Stock, Restricted Stock Units and Other Awards.” We and Cablevision will both be controlled by Charles F. Dolan, members of his family and certain related family entities.
 
Prior to the Distribution, we have entered or will enter into several agreements with Cablevision (and certain of its subsidiaries and affiliates) in connection with, among other things, employee matters, tax, transition services and a number of ongoing commercial relationships, including affiliation agreements with respect to our programming networks.
 
The Distribution will not affect the number of outstanding shares of Cablevision common stock or any rights of Cablevision stockholders.
 
Material U.S. Federal Income Tax Consequences of the Distribution
 
The following is a summary of the material U.S. federal income tax consequences of the Distribution to us, Cablevision and Cablevision stockholders. This summary is based on the Code, the Treasury regulations promulgated under the Code, and interpretations of such authorities by the courts and the IRS, all as in effect as of the date of this Information Statement and all of which are subject to change at any time, possibly with retroactive effect. This summary is limited to holders of Cablevision common stock that are U.S. holders, as defined below, that hold their shares of Cablevision common stock as capital assets within the meaning of section 1221 of the Code. Further, this summary does not discuss all tax considerations that may be relevant to holders of Cablevision common stock in light of their particular circumstances, nor does it address the consequences to holders of Cablevision common stock subject to special treatment under the U.S. federal income tax laws, such as tax-exempt entities, partnerships (including entities treated as partnerships for U.S. federal income tax purposes), persons who acquired such shares of Cablevision common stock pursuant to the exercise of employee stock options or otherwise as compensation, financial institutions, insurance companies, dealers or traders in securities, and persons who hold their shares of Cablevision common stock as part of a straddle, hedge, conversion, constructive sale, synthetic security, integrated investment or other risk-reduction transaction for U.S. federal income tax purposes. This summary does not address any U.S. federal estate, gift or other non-income tax consequences or any applicable state, local, foreign, or other tax consequences. Each stockholder’s individual circumstances may affect the tax consequences of the Distribution.


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For purposes of this summary, a “U.S. holder” is a beneficial owner of Cablevision common stock that is, for U.S. federal income tax purposes:
 
  •  an individual who is a citizen or a resident of the United States;
 
  •  a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States or any state or political subdivision thereof;
 
  •  an estate, the income of which is subject to United States federal income taxation regardless of its source; or
 
  •  a trust, if (i) a court within the United States is able to exercise primary jurisdiction over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or (ii) it has a valid election in place under applicable Treasury regulations to be treated as a U.S. person.
 
If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) holds shares of Cablevision common stock, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership. A partner of a partnership holding shares of Cablevision common stock should consult its tax advisor regarding the tax consequences of the Distribution.
 
Cablevision has received a private letter ruling from the IRS to the effect that, among other things, the Distribution, and certain related transactions, including (i) the contribution by CSC Holdings of certain assets to the Company, (ii) the receipt by CSC Holdings of Company common stock, a portion of the New AMC Networks Debt, and the potential assumption of certain liabilities by the Company and (iii) the expected exchange transaction with           whereby Cablevision or CSC Holdings will transfer such portion of the New AMC Networks Debt to           in return for the transfer to Cablevision or CSC Holdings of $      of outstanding Cablevision or CSC Holdings debt, will qualify for tax-free treatment under the Code to Cablevision, the Company, and holders of Cablevision common stock. In addition, Cablevision expects to obtain an opinion from Sullivan & Cromwell LLP substantially to the effect that, among other things, the Distribution and certain related transactions will qualify for tax-free treatment under the Code to Cablevision, the Company, and holders of Cablevision common stock, and that accordingly, for U.S. federal income tax purposes, no gain or loss will be recognized by, and no amount will be included in the income of, a holder of Cablevision common stock upon the receipt of shares of our common stock pursuant to the Distribution, except to the extent such holder receives cash in lieu of fractional shares of our common stock.
 
Although a private letter ruling from the IRS generally is binding on the IRS, if the factual representations or assumptions made in the letter ruling request are untrue or incomplete in any material respect, we will not be able to rely on the ruling. Furthermore, the IRS will not rule on whether a distribution satisfies certain requirements necessary to obtain tax-free treatment under the Code. Rather, the ruling is based upon representations by Cablevision that these conditions have been satisfied, and any inaccuracy in such representations could invalidate the ruling. The opinion discussed above addresses all of the requirements necessary for the Distribution and certain related transactions to obtain tax-free treatment under the Code and is based on, among other things, certain assumptions and representations made by Cablevision and us, which if incorrect or inaccurate in any material respect would jeopardize the conclusions reached by counsel in such opinion. The opinion will not be binding on the IRS or the courts.
 
On the basis of the ruling and the opinion we expect to receive, and assuming that Cablevision common stock is a capital asset in the hands of a Cablevision stockholder on the Distribution date:
 
  •  Except for any cash received in lieu of a fractional share of our common stock, a Cablevision stockholder will not recognize any income, gain or loss as a result of the receipt of our common stock in the Distribution.
 
  •  A Cablevision stockholder’s holding period for our common stock received in the Distribution will include the period for which that stockholder’s Cablevision common stock was held.


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  •  A Cablevision stockholder’s tax basis for our common stock received in the Distribution will be determined by allocating to that common stock, on the basis of the relative fair market values of Cablevision common stock and our common stock at the time of the Distribution, a portion of the stockholder’s basis in his or her Cablevision common stock. A Cablevision stockholder’s basis in his or her Cablevision common stock will be decreased by the portion allocated to our common stock. Within a reasonable period of time after the Distribution, Cablevision will provide its stockholders who receive our common stock pursuant to the Distribution a worksheet for calculating their tax bases in our common stock and their Cablevision common stock.
 
  •  The receipt of cash in lieu of a fractional share of our common stock generally will be treated as a sale of the fractional share of our common stock, and a Cablevision stockholder will recognize gain or loss equal to the difference between the amount of cash received and the stockholder’s basis in the fractional share of our common stock, as determined above. The gain or loss will be long-term capital gain or loss if the holding period for the fractional share of our common stock, as determined above, is greater than one year.
 
  •  Neither we nor Cablevision will recognize a taxable gain or loss as a result of the Distribution.
 
If the Distribution does not qualify for tax-free treatment for U.S. federal income tax purposes then, in general, Cablevision would recognize taxable gain in an amount equal to the excess of the fair market value of the common stock of our Company over Cablevision’s tax basis therein, i.e., as if it had sold the common stock of our Company in a taxable sale for its fair market value. In addition, the receipt by Cablevision’s stockholders of common stock of our Company would be a taxable distribution, and each U.S. holder that participated in the Distribution would recognize a taxable distribution as if the U.S. holder had received a distribution equal to the fair market value of our common stock that was distributed to him or her, which generally would be treated first as a taxable dividend to the extent of Cablevision’s earnings and profits, then as a non-taxable return of capital to the extent of each U.S. holder’s tax basis in his or her Cablevision common stock, and thereafter as capital gain with respect to any remaining value.
 
Even if the Distribution otherwise qualifies for tax-free treatment under the Code, the Distribution may be disqualified as tax-free to Cablevision and would result in a significant U.S. federal income tax liability to Cablevision (but not to holders of Cablevision common stock) under Section 355(e) of the Code if the Distribution were deemed to be part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, stock representing a 50% or greater interest by vote or value, in Cablevision or us. For this purpose, any acquisitions of Cablevision’s stock or our stock within the period beginning two years before the Distribution and ending two years after the Distribution are presumed to be part of such a plan, although Cablevision or we may be able to rebut that presumption. The process for determining whether a prohibited acquisition has occurred under the rules described in this paragraph is complex, inherently factual and subject to interpretation of the facts and circumstances of a particular case. Cablevision or we might inadvertently cause or permit a prohibited change in the ownership of Cablevision or us to occur, thereby triggering tax to Cablevision, which could have a material adverse effect. If such an acquisition of our stock or Cablevision’s stock triggers the application of Section 355(e), Cablevision would recognize taxable gain equal to the excess of the fair market value of the common stock of our Company held by it immediately before the Distribution over Cablevision’s tax basis therein, but the Distribution would remain tax-free to each Cablevision stockholder. In certain circumstances, under the Tax Disaffiliation Agreement between Cablevision and us, it is expected that we would be required to indemnify Cablevision against that taxable gain if it were triggered by an acquisition of our stock. See “Certain Relationships and Related Party Transactions — Relationship Between Cablevision and Us After the Distribution — Tax Disaffiliation Agreement” for a more detailed discussion of the Tax Disaffiliation Agreement between Cablevision and us.
 
Payments of cash in lieu of a fractional share of any common stock of our Company made in connection with the Distribution may, under certain circumstances, be subject to backup withholding, unless a holder provides proof of an applicable exception or a correct taxpayer identification number, and otherwise complies with the applicable requirements of the backup withholding rules. Any amounts withheld under the backup


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withholding rules are not additional tax and may be refunded or credited against the holder’s U.S. federal income tax liability, provided that the holder furnishes the required information to the IRS.
 
U.S. Treasury regulations require certain Cablevision stockholders with significant ownership in Cablevision that receive shares of our stock in the Distribution to attach to their U.S. federal income tax return for the year in which such stock is received a detailed statement setting forth such data as may be appropriate to show that the Distribution is tax-free under the Code. Within a reasonable period of time after the Distribution, Cablevision will provide its stockholders who receive our common stock pursuant to the Distribution with the information necessary to comply with such requirement.
 
Cablevision and the Company have determined that the Company will not be deemed to be a United States real property holding corporation as of the Distribution date, as defined in section 897(c)(2) of the Code.
 
EACH CABLEVISION STOCKHOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR ABOUT THE PARTICULAR CONSEQUENCES OF THE DISTRIBUTION TO SUCH STOCKHOLDER, INCLUDING THE APPLICATION OF STATE, LOCAL AND FOREIGN TAX LAWS, AND POSSIBLE CHANGES IN TAX LAW THAT MAY AFFECT THE TAX CONSEQUENCES DESCRIBED ABOVE.
 
Listing and Trading of Our Common Stock
 
There is not currently a public market for our common stock. We will apply to list our Class A Common Stock on NASDAQ under the symbol “AMCX.” It is anticipated that trading will commence on a when-issued basis prior to the Distribution. On the first trading day following the Distribution date, when-issued trading in our Class A Common Stock will end and regular-way trading will begin. “When-issued trading” refers to trading which occurs before a security is actually issued. These transactions are conditional with settlement to occur if and when the security is actually issued and NASDAQ determines transactions are to be settled. “Regular-way trading” refers to normal trading transactions, which are settled by delivery of the securities against payment on the third business day after the transaction.
 
We cannot assure you as to the price at which our Class A Common Stock will trade before, on or after the Distribution date. Until our Class A Common Stock is fully distributed and an orderly market develops in our Class A Common Stock, the price at which such stock trades may fluctuate significantly. In addition, the combined trading prices of our Class A Common Stock and Cablevision NY Group Class A Common Stock held by stockholders after the Distribution may be less than, equal to or greater than the trading price of the Cablevision NY Group Class A Common Stock prior to the Distribution. Our Class B Common Stock will not be listed on a securities exchange or publicly traded.
 
The shares of our common stock distributed to Cablevision stockholders will be freely transferable, except for shares received by people who may have a special relationship or affiliation with us or shares subject to contractual restrictions. People who may be considered our affiliates after the Distribution generally include individuals or entities that control, are controlled by, or are under common control with us. This may include certain of our officers, directors and significant stockholders. Persons who are our affiliates will be permitted to sell their shares only pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), or an exemption from the registration requirements of the Securities Act, or in compliance with Rule 144 under the Securities Act. As described under “Shares Eligible for Future Sale — Registration Rights Agreements,” certain persons will have registration rights with respect to our stock.
 
Reason for Furnishing this Information Statement
 
This Information Statement is being furnished by Cablevision solely to provide information to stockholders of Cablevision who will receive shares of our common stock in the Distribution. It is not, and is not to be construed as, an inducement or encouragement to buy or sell any of our securities. We will not update the information in this Information Statement except in the normal course of our respective public disclosure obligations and practices.


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RISK FACTORS
 
You should carefully consider the following risk factors and all the other information contained in this Information Statement in evaluating us and our common stock.
 
Risks Relating to Our Business
 
Our business depends on the appeal of our programming to our distributors and our viewers, which may be unpredictable and volatile.
 
Our business depends in part upon viewer preferences and audience acceptance of the programming on our networks. These factors are often unpredictable and volatile, and subject to influences that are beyond our control, such as the quality and appeal of competing programming, general economic conditions and the availability of other entertainment activities. We may not be able to anticipate and react effectively to shifts in tastes and interests in our markets. A change in viewer preferences could cause our programming to decline in popularity, which could cause a reduction in advertising revenues and jeopardize renewal of our contracts with distributors. In addition, our competitors may have more flexible programming arrangements, as well as greater amounts of available content, distribution and capital resources, and may be able to react more quickly than we can to shifts in tastes and interests.
 
To an increasing extent, the success of our business depends on original programming, and our ability to predict accurately how audiences will respond to our original programming is particularly important. Because original programming often involves a greater degree of commitment on our part, as compared to acquired programming that we license from third parties, and because our network branding strategies depend significantly on a relatively small number of original programs, a failure to anticipate viewer preferences for such programs could be especially detrimental to our business.
 
In addition, feature films constitute a significant portion of the programming on our AMC, IFC and Sundance Channel programming networks. In general, the popularity of feature-film content on linear television is declining, due in part to the broad availability of such content through an increasing number of distribution platforms. Should the popularity of feature-film programming suffer significant further declines, we may lose viewership or be forced to rely more heavily on original programming, which could increase our costs.
 
If our programming does not gain the level of audience acceptance we expect, or if we are unable to maintain the popularity of our programming, our ratings may suffer, which will negatively affect advertising revenues, and we may have a diminished bargaining position when dealing with distributors, which could reduce our affiliation fee revenues. We cannot assure you that we will be able to maintain the success of any of our current programming, or generate sufficient demand and market acceptance for our new programming.
 
If economic instability persists in the United States or in other parts of the world, our results of operations could be adversely affected.
 
Our business is significantly affected by prevailing economic conditions. We derive substantial revenues from advertising spending by U.S. businesses, and these expenditures are sensitive to general economic conditions and consumer buying patterns. Financial instability or a general decline in economic conditions in the United States could adversely affect advertising rates and volume, resulting in a decrease in our advertising revenues.
 
Decreases in U.S. consumer discretionary spending may affect cable television and other video service subscriptions, in particular with respect to digital service tiers on which certain of our programming networks are carried. This could lead to a decrease in the number of subscribers receiving our programming from multichannel video distributors, which could have a negative impact on our viewing subscribers and affiliation fee revenues. Similarly, a decrease in viewing subscribers would also have a negative impact on the number of viewers actually watching the programs on our programming networks, which could also impact the rates we are able to charge advertisers.


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Furthermore, world-wide financial instability may affect our ability to penetrate new markets. Because our networks are highly distributed in the United States, our ability to expand the scope of our operations internationally is important to the continued growth of our business. Our inability to negotiate favorable affiliation agreements with foreign distributors or to secure advertisers for those markets could negatively affect our results of operations.
 
Because a limited number of distributors account for a large portion of our business, the loss of any significant distributor would adversely affect our revenues.
 
Our programming networks depend upon agreements with a limited number of cable television system operators and other multichannel video distributors. In 2010, Comcast and DirecTV each accounted for at least 10% of our net revenues. The loss of any significant distributor could have a material adverse effect on our revenues.
 
In addition, we have in some instances made upfront payments to distributors in exchange for additional subscribers or have agreed to waive or accept lower affiliation fees if certain numbers of additional subscribers are provided. We also may help fund our distributors’ efforts to market our programming networks or we may permit distributors to offer promotional periods without payment of subscriber fees. As we continue our efforts to add viewing subscribers, our net revenues may be negatively affected by these deferred carriage fee arrangements, discounted subscriber fees or other payments.
 
If we are unable to renew our programming networks’ affiliation agreements, some of which expire in 2011 and 2012, our revenues will be negatively affected.
 
Our programming networks have affiliation agreements that will expire in 2011 and 2012. As of December 31, 2010, these affiliation agreements covered approximately 11%, 26%, 19% and 33%, respectively, of the subscribers of AMC, WE tv, IFC and Sundance Channel. Failure to renew these affiliation agreements, or other agreements expiring after this time, could have a material adverse effect on our business. A reduced distribution of our programming networks would adversely affect our affiliation fee revenue, and impact our ability to sell advertising or the rates we charge for such advertising. Even if affiliation agreements are renewed, we cannot assure you that the renewal rates will equal or exceed the rates that we currently charge these distributors.
 
Furthermore, the largest multichannel video distributors have significant leverage in their relationship with programming networks. The two largest cable distributors provide service to approximately 35 percent of U.S. households receiving cable or DBS service, while the two largest DBS distributors provide service to an additional 33 percent of such households. Further consolidation among multichannel video distributors could increase this leverage.
 
In some cases, if a distributor is acquired, the affiliation agreement of the acquiring distributor will govern following the acquisition. In those circumstances, the acquisition of a distributor that is party to one or more affiliation agreements with our programming networks on terms that are more favorable to us could adversely impact our financial condition and results of operations.
 
We are subject to intense competition, which may have a negative effect on our profitability or on our ability to expand our business.
 
The cable programming industry is highly competitive. Our programming networks compete with other programming networks and other types of video programming services for marketing and distribution by cable and other multichannel video distribution systems. In distributing a programming network, we face competition with other providers of programming networks for the right to be carried by a particular cable or other multichannel video distribution system and for the right to be carried by such system on a particular “tier” of service.
 
Certain programming networks affiliated with broadcast networks like NBC, ABC, CBS or Fox may have a competitive advantage over our programming networks in obtaining distribution through the “bundling” of


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carriage agreements for such programming networks with a distributor’s right to carry the affiliated broadcasting network. In addition, our ability to compete with certain programming networks for distribution may be hampered because the cable television or other multichannel video distributors through which we seek distribution may be affiliated with these programming networks. Because such distributors may have a substantial number of subscribers, the ability of such programming networks to obtain distribution on the systems of affiliated distributors may lead to increased affiliation and advertising revenue for such programming networks because of their increased penetration compared to our programming networks. Even if the affiliated distributors carry our programming networks, they may place their affiliated programming network on a more desirable tier, thereby giving their affiliated programming network a competitive advantage over our own. In addition, following the Distribution, we will no longer be owned by Cablevision, which could impact the competitive landscape in which we operate because some of our distributors have other commercial relationships with Cablevision. Because of these other relationships, the Company has from time to time in the past achieved greater distribution or more favorable terms than it might have achieved as a standalone company. Following the Distribution, our ability to pursue cross-company initiatives that might provide such benefits will be limited, since as separate public companies, we and Cablevision will each need to assess any such initiatives from our own business perspective.
 
In addition to competition for distribution, we also face intense competition for viewing audiences with other cable and broadcast programming networks, home video products and Internet-based video content providers, some of which are part of large diversified entertainment or media companies that have substantially greater resources than us. To the extent that our viewing audiences are eroded by competition with these other sources of programming content, our ratings would decline, negatively affecting advertising revenues, and we may face difficulty renewing affiliation agreements with distributors on acceptable terms, which could cause affiliation fee revenues to decline. In addition, competition for advertisers with these content providers, as well as with other forms of media (including print media, Internet websites and radio), could affect the amount we are able to charge for advertising time on our programming networks, and therefore our advertising revenues.
 
An important part of our strategy involves exploiting identified markets of the cable television viewing audience that are generally well defined and limited in size. Our programming networks have faced and will continue to face increasing competition obtaining distribution and attracting advertisers as other programming networks seek to serve the same or similar markets.
 
Our programming networks’ success depends upon the availability of programming that is adequate in quantity and quality, and we may be unable to secure or maintain such programming.
 
Our programming networks’ success depends upon the availability of quality programming, particularly original programming and films, that is suitable for our target markets. While we produce some of our original programming, we obtain most of the programming on our networks (including original programming, films and other acquired programming) through agreements with third parties that have produced or control the rights to such programming. These agreements expire at varying times and may be terminated by the other party if we are not in compliance with their terms.
 
We compete with other programming networks to secure desired programming. Competition for programming has increased as the number of programming networks has increased. Other programming networks that are affiliated with programming sources such as movie or television studios or film libraries may have a competitive advantage over us in this area. In addition to other cable programming networks, we also compete for programming with national broadcast television networks, local broadcast television stations, video-on-demand services and Internet-based content delivery services, such as Netflix, iTunes and Hulu. Some of these competitors have exclusive contracts with motion picture studios or independent motion picture distributors or own film libraries.
 
We cannot assure you that we will ultimately be successful in negotiating renewals of our programming rights agreements or in negotiating adequate substitute agreements in the event that these agreements expire or are terminated.


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Our programming networks have entered into long-term programming acquisition contracts that require substantial payments over long periods of time, even if we do not use such programming to generate revenues.
 
Our programming networks have entered into numerous contracts relating to the acquisition of programming, including rights agreements with film companies. These contracts typically require substantial payments over extended periods of time. We must make the required payments under these contracts even if we do not use the programming.
 
Increased programming costs may adversely affect our profits.
 
We incur costs for the creative talent, including actors, writers and producers, who create our original programming. Some of our original programming has achieved significant popularity and critical acclaim, which could increase the costs of such programming in the future. An increase in the costs of programming may lead to decreased profitability or otherwise adversely affect our business.
 
We may not be able to adapt to new content distribution platforms and to changes in consumer behavior resulting from these new technologies, which may adversely affect our business.
 
We must successfully adapt to technological advances in our industry, including the emergence of alternative distribution platforms. Our ability to exploit new distribution platforms and viewing technologies will affect our ability to maintain or grow our business. Additionally, we must adapt to changing consumer behavior driven by advances such as digital video recorders (or “DVRs”), video-on-demand, Internet-based content delivery and mobile devices. Such changes may impact the revenues we are able to generate from our traditional distribution methods, either by decreasing the viewership of our programming networks on cable and other multichannel video distribution systems or by making advertising on our programming networks less valuable to advertisers. If we fail to adapt our distribution methods and content to emerging technologies, our appeal to our targeted audiences might decline and there could be a negative effect on our business.
 
Our business is limited by regulatory constraints, both domestic and foreign, which may adversely impact our operations.
 
Although our business generally is not directly regulated by the Federal Communications Commission (the “FCC”), under the Communications Act of 1934, there are certain FCC regulations that govern our business either directly or indirectly. See “Business — Regulation.” Furthermore, to the extent that regulations and laws, either presently in force or proposed, hinder or stimulate the growth of the cable television and satellite industries, our business will be affected.
 
The U.S. Congress and the FCC currently have under consideration, and may in the future adopt, new laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect our operations.
 
The regulation of cable television services and satellite carriers is subject to the political process and has been in constant flux over the past two decades. Further material changes in the law and regulatory requirements must be anticipated. We cannot assure you that our business will not be adversely affected by future legislation, new regulation or deregulation.
 
An important aspect of our growth strategy involves the expansion of our programming networks and brands into markets outside the United States. The distribution of our programming networks in foreign markets is subject to laws and regulations specific to those countries. Changes in laws and regulations of foreign jurisdictions could adversely affect our business and ability to access new foreign markets.
 
If our technology facility fails or its operations are disrupted, our performance could be hindered.
 
Our programming is transmitted by our subsidiary, AMC Network Communications. AMC Network Communications uses its technology facility for a variety of purposes, including signal processing, program editing, promotions, creation of programming segments to fill short gaps between featured programs, quality


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control, and live and recorded playback. Like other facilities, this facility is subject to interruption from fire, lightning, adverse weather conditions and other natural causes. Equipment failure, employee misconduct or outside interference could also disrupt the facility’s services. Although we have an arrangement with a third party to re-broadcast the previous 48 hours of our networks’ programming in the event of a disruption, we currently do not have a backup operations facility for our programming.
 
In addition, we rely on third-party satellites in order to transmit our programming signals to our distributors. As with all satellites, there is a risk that the satellites we use will be damaged as a result of natural or man-made causes, or will otherwise fail to operate properly. Although we maintain in-orbit protection providing us with back-up satellite transmission facilities should our primary satellites fail, there can be no assurance that such back-up transmission facilities will be effective or will not themselves fail.
 
Any significant interruption at AMC Network Communications’ technology facility affecting the distribution of our programming, or any failure in satellite transmission of our programming signals, could have an adverse effect on our operating results and financial condition.
 
The loss of any of our key personnel and artistic talent could adversely affect our business.
 
We believe that our future success will depend to a significant extent upon the performance of our senior executives. We do not maintain “key man” insurance. In addition, we depend on the availability of a number of writers, directors, producers and others, who are employees of third-party production companies that create our original programming. The loss of any significant personnel or talent could have an adverse effect on our business.
 
Risks Related to the Distribution and the Financing Transactions
 
Our substantial debt and high leverage could adversely affect our business.
 
Following this offering, we will have a significant amount of debt. On the pro forma basis described under “Unaudited Pro Forma Consolidated Financial Information,” assuming we had completed the Distribution and the financing transactions described in this Information Statement (including incurrence of the New AMC Networks Debt) as of December 31, 2010, we would have had $      million of total debt, $      million of which would have been senior secured debt under our new senior secured credit facilities and $      million of which would have been senior unsecured debt.
 
Our substantial amount of debt could have important consequences. For example, it could:
 
  •  increase our vulnerability to general adverse economic and industry conditions;
 
  •  require us to dedicate a substantial portion of our cash flow from operations to make interest and principal payments on our debt, thereby limiting the availability of our cash flow to fund future programming investments, capital expenditures, working capital, business activities and other general corporate requirements;
 
  •  limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
 
  •  place us at a competitive disadvantage compared with our competitors; and
 
  •  limit our ability to borrow additional funds, even when necessary to maintain adequate liquidity.
 
In addition, as described under “Description of Financing Transactions and Certain Indebtedness,” we will incur, in connection with the Distribution, a significant amount of debt for which we will not receive any cash proceeds, but which will instead be issued to Cablevision in partial consideration for the transfer to us of the cable programming networks and related businesses described in this Information Statement and currently owned by Cablevision’s RMH subsidiary. As a result, we will significantly increase the amount of leverage in our business. This will increase the riskiness of our business and of an investment in our common stock. Furthermore, in the long-term, we do not expect to generate sufficient cash from operations to repay at maturity the debt that will be incurred as part of the Distribution. As a result, we will be dependent upon our


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ability to access the capital and credit markets. Failure to raise significant amounts of funding to repay these obligations at maturity could adversely affect our business. If we are unable to raise such amounts, we would need to take other actions including selling assets, seeking strategic investments from third parties or reducing other discretionary uses of cash.
 
A substantial portion of our debt will bear interest at variable rates. If market interest rates increase, variable rate debt will create higher debt service requirements, which could adversely affect our cash flow. While we may enter into hedging agreements limiting our exposure to higher interest rates, any such agreements may not offer complete protection from this risk.
 
Because there has not been any public market for our common stock, the market price and trading volume of our Common Stock may be volatile and you may not be able to resell your shares at or above the initial market price of our stock following the Distribution.
 
Prior to the Distribution, there will have been no trading market for our common stock. We cannot predict the extent to which investors’ interest will lead to a liquid trading market or whether the market price of our common stock will be volatile. The market price of our common stock could fluctuate significantly for many reasons, including in response to the risk factors listed in this Information Statement or for reasons unrelated to our specific performance, such as reports by industry analysts, investor perceptions, or negative developments for our customers, competitors or suppliers, as well as general economic and industry conditions.
 
The combined post-Distribution value of Cablevision and AMC Networks shares may not equal or exceed the pre-Distribution value of Cablevision shares.
 
After the Distribution, Cablevision NY Group Class A Shares will continue to be listed and traded on the New York Stock Exchange. We will apply for AMC Networks Inc. Class A Common Stock to be listed on NASDAQ under the symbol “AMCX.” We cannot assure you that the combined trading prices of Cablevision NY Group Class A Shares and AMC Networks Inc. Class A Common Stock after the Distribution, as adjusted for any changes in the combined capitalization of these companies, will be equal to or greater than the trading price of Cablevision NY Group Class A Shares prior to the Distribution. Until the market has fully evaluated the business of Cablevision without the business of AMC Networks, the price at which Cablevision NY Group Class A Shares trade may fluctuate significantly. Similarly, until the market has fully evaluated the business of AMC Networks, the price at which shares of AMC Networks Inc. Class A Common Stock trade may fluctuate significantly.
 
The agreements governing our debt, including our new senior secured credit facilities and the indenture governing our senior unsecured notes, contain various covenants that impose restrictions on us that may affect our ability to operate our business.
 
The agreement governing our new senior secured credit facilities and the indenture governing our senior unsecured notes will contain covenants that, among other things, limit our ability to:
 
  •  borrow money or guarantee debt;
 
  •  create liens;
 
  •  pay dividends on or redeem or repurchase stock;
 
  •  make specified types of investments;
 
  •  enter into transactions with affiliates; and
 
  •  sell assets or merge with other companies.
 
Our new senior secured credit facility will also require us to comply with specified financial ratios and tests, including, but not limited to, leverage ratios limiting the amount of our total debt and our senior debt to multiples of our annualized cash flow, an interest coverage ratio requiring that our trailing six-month cash


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flow exceed a multiple of our interest expense, and a debt service coverage ratio requiring that our annualized cash flow exceed a multiple of our debt service requirements.
 
See “Description of Financing Transactions and Certain Indebtedness — Senior Secured Credit Facilities” and “— Senior Notes” for details of these financial ratios and tests.
 
Various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants and maintain these financial tests and ratios. Failure to comply with any of the covenants in our existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions. A default would permit lenders to accelerate the maturity for the debt under these agreements and to foreclose upon any collateral securing the debt. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations, including our obligations under the notes. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing.
 
The Distribution could result in significant tax liability.
 
Cablevision has received a private letter ruling from the IRS to the effect that, among other things, the Distribution, and certain related transactions, including (i) the contribution by CSC Holdings of certain assets to the Company, (ii) the receipt by CSC Holdings of Company common stock, a portion of the New AMC Networks Debt, and the potential assumption of certain liabilities by the Company and (iii) the expected exchange transaction with           whereby Cablevision or CSC Holdings will transfer such portion of the New AMC Networks Debt to           in return for the transfer to Cablevision or CSC Holdings of $      of outstanding Cablevision or CSC Holdings debt, will qualify for tax-free treatment under the Code to Cablevision, the Company, and holders of Cablevision common stock. In addition, Cablevision expects to obtain an opinion from Sullivan & Cromwell LLP substantially to the effect that, among other things, the Distribution and certain related transactions will qualify for tax-free treatment under the Code to Cablevision, the Company, and holders of Cablevision common stock, and that accordingly, for U.S. federal income tax purposes, no gain or loss will be recognized by, and no amount will be included in the income of, a holder of Cablevision common stock upon the receipt of shares of our common stock pursuant to the Distribution, except to the extent such holder receives cash in lieu of fractional shares of our common stock.
 
Although a private letter ruling from the IRS generally is binding on the IRS, if the factual representations or assumptions made in the letter ruling request are untrue or incomplete in any material respect, we will not be able to rely on the ruling. Furthermore, the IRS will not rule on whether a distribution satisfies certain requirements necessary to obtain tax-free treatment under the Code. Rather, the ruling is based upon representations by Cablevision that these conditions have been satisfied, and any inaccuracy in such representations could invalidate the ruling. The opinion discussed above addresses all of the requirements necessary for the Distribution and certain related transactions to obtain tax-free treatment under the Code and is based on, among other things, certain assumptions and representations made by Cablevision and us, which if incorrect or inaccurate in any material respect would jeopardize the conclusions reached by counsel in such opinion. The opinion will not be binding on the IRS or the courts. See “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.”
 
If the Distribution does not qualify for tax-free treatment for U.S. federal income tax purposes, then, in general, Cablevision would be subject to tax as if it had sold the common stock of our Company in a taxable sale for its fair market value. Cablevision’s stockholders would be subject to tax as if they had received a distribution equal to the fair market value of our common stock that was distributed to them, which generally would be treated first as a taxable dividend to the extent of Cablevision’s earnings and profits, then as a non-taxable return of capital to the extent of each stockholder’s tax basis in his or her Cablevision stock, and thereafter as capital gain with respect to the remaining value. It is expected that the amount of any such taxes to Cablevision’s stockholders and Cablevision would be substantial. See “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.”


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We may have a significant indemnity obligation to Cablevision if the Distribution is treated as a taxable transaction.
 
We will enter into a Tax Disaffiliation Agreement with Cablevision, which will set out each party’s rights and obligations with respect to deficiencies and refunds, if any, of federal, state, local or foreign taxes for periods before and after the Distribution and related matters such as the filing of tax returns and the conduct of IRS and other audits. Pursuant to the Tax Disaffiliation Agreement, we will be required to indemnify Cablevision for losses and taxes of Cablevision resulting from the breach of certain covenants and for certain taxable gain recognized by Cablevision, including as a result of certain acquisitions of our stock or assets. If we are required to indemnify Cablevision under the circumstances set forth in the Tax Disaffiliation Agreement, we may be subject to substantial liabilities, which could materially adversely affect our financial position.
 
The tax rules applicable to the Distribution may restrict us from engaging in certain corporate transactions or from raising equity capital beyond certain thresholds for a period of time after the Distribution.
 
To preserve the tax-free treatment of the Distribution to Cablevision and its stockholders, under the Tax Disaffiliation Agreement with Cablevision, for the two-year period following the Distribution, we will be subject to restrictions with respect to:
 
  •  entering into any transaction pursuant to which 50% or more of our equity securities or assets would be acquired, whether by merger or otherwise, unless certain tests are met;
 
  •  issuing equity securities, if any such issuances would, in the aggregate, constitute 50% or more of the voting power or value of our capital stock;
 
  •  certain repurchases of our common shares;
 
  •  ceasing to actively conduct our business;
 
  •  amendments to our organizational documents (i) affecting the relative voting rights of our stock or (ii) converting one class of our stock to another;
 
  •  liquidating or partially liquidating; and
 
  •  taking any other action that prevents the Distribution and related transactions from being tax-free.
 
These restrictions may limit our ability during such period to pursue strategic transactions of a certain magnitude that involve the issuance or acquisition of our stock or engage in new businesses or other transactions that might increase the value of our business. These restrictions may also limit our ability to raise significant amounts of cash through the issuance of stock, especially if our stock price were to suffer substantial declines, or through the sale of certain of our assets. For more information, see the sections entitled “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution” and “Certain Relationships and Related Party Transactions — Relationship Between Cablevision and Us After the Distribution — Tax Disaffiliation Agreement.”
 
Our historical financial results as a business segment of Cablevision and our unaudited pro forma consolidated financial statements may not be representative of our results as a separate, stand-alone company.
 
The historical financial information we have included in this Information Statement has been derived from the consolidated financial statements and accounting records of Cablevision and does not necessarily reflect what our financial position, results of operations or cash flows would have been had we operated as a separate, stand-alone company during the periods presented. Although Cablevision accounted for our Company as a business segment, we were not operated as a separate, stand-alone company for the historical periods presented. The historical costs and expenses reflected in our consolidated financial statements include an allocation for certain corporate functions historically provided by Cablevision, including general corporate


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expenses and employee benefits and incentives. These allocations were based on what we and Cablevision considered to be reasonable reflections of the historical utilization levels of these services required in support of our business. Our historical costs have also included a management fee paid to Cablevision based upon certain of our revenues. The historical information does not necessarily indicate what our results of operations, financial position, cash flows or costs and expenses will be in the future. Our pro forma financial information set forth under “Unaudited Pro Forma Consolidated Financial Information” reflects changes that may occur in our funding and operations as a result of the separation. However, there can be no assurances that this unaudited pro forma consolidated financial information will reflect our costs as a separate, stand-alone company.
 
Our ability to operate our business effectively may suffer if we do not, quickly and effectively, establish our own financial, administrative and other support functions in order to operate as a separate, stand-alone company, and we cannot assure you that the transition services Cablevision has agreed to provide us will be sufficient for our needs.
 
Historically, we have relied on financial, administrative and other resources of Cablevision to support the operation of our business. In conjunction with our separation from Cablevision, we will need to expand our financial, administrative and other support systems or contract with third parties to replace certain of Cablevision’s systems. We will also need to maintain our own credit and banking relationships and perform our own financial and operational functions. We cannot assure you that we will be able to successfully put in place the financial, operational and managerial resources necessary to operate as a public company or that we will be able to be profitable doing so. Any failure or significant downtime in our own financial or administrative systems or in Cablevision’s financial or administrative systems during the transition period could impact our results or prevent us from performing other administrative services and financial reporting on a timely basis and could materially harm our business, financial condition and results of operations.
 
We may incur material costs and expenses as a result of our separation from Cablevision, which could adversely affect our profitability.
 
We may incur costs and expenses greater than those we currently incur as a result of our separation from Cablevision. These increased costs and expenses may arise from various factors, including financial reporting, costs associated with complying with federal securities laws (including compliance with the Sarbanes-Oxley Act of 2002), tax administration, and legal and human resources related functions. Although Cablevision will continue to provide certain of these services to us under a transition services agreement, such services are for a limited period of time. We cannot assure you that these costs will not be material to our business.
 
If, following the Distribution, we are unable to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or our internal control over financial reporting is not effective, the reliability of our financial statements may be questioned and our stock price may suffer.
 
Section 404 of the Sarbanes-Oxley Act of 2002 requires any company subject to the reporting requirements of the U.S. securities laws to do a comprehensive evaluation of its and its consolidated subsidiaries’ internal control over financial reporting. To comply with this statute, we will eventually be required to document and test our internal control procedures, our management will be required to assess and issue a report concerning our internal control over financial reporting, and our independent auditors will be required to issue an opinion on their audit of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act of 2002. If our management cannot favorably assess the effectiveness of our internal control over financial reporting or our auditors identify material weaknesses in our internal controls, investor confidence in our financial results may weaken, and our stock price may suffer.


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We are controlled by the Dolan family, which may create certain conflicts of interest and which means certain stockholder decisions can be taken without the consent of the majority of the holders of our Class A Common Stock.
 
We have two classes of common stock:
 
  •  Class B Common Stock, which is generally entitled to ten votes per share and is entitled collectively to elect 75% of our Board of Directors, and
 
  •  Class A Common Stock, which is entitled to one vote per share and is entitled collectively to elect the remaining 25% of our Board of Directors.
 
As of the Distribution date, the Dolan family, including trusts for the benefit of members of the Dolan family, will collectively own all of our Class B Common Stock, less than     % of our outstanding Class A Common Stock and approximately     % of the total voting power of all our outstanding common stock. Of this amount, Cablevision’s Chairman, Charles F. Dolan, and his spouse will control approximately     % of our outstanding Class B Common Stock, less than     % of our outstanding Class A Common Stock and approximately     % of the total voting power of all our outstanding common stock. The members of the Dolan family holding Class B Common Stock will execute prior to the Distribution a stockholders agreement pursuant to which, among other things, the voting power of the holders of our Class B Common Stock will be cast as a block with respect to all matters to be voted on by holders of Class B Common Stock. The Dolan family is able to prevent a change in control of our Company and no person interested in acquiring us will be able to do so without obtaining the consent of the Dolan family.
 
Charles F. Dolan, members of his family and certain related family entities, by virtue of their stock ownership, have the power to elect all of our directors subject to election by holders of Class B Common Stock and are able collectively to control stockholder decisions on matters on which holders of all classes of our common stock vote together as a single class. These matters could include the amendment of some provisions of our certificate of incorporation and the approval of fundamental corporate transactions.
 
In addition, the affirmative vote or consent of the holders of at least 662/3% of the outstanding shares of the Class B Common Stock, voting separately as a class, is required to approve:
 
  •  the authorization or issuance of any additional shares of Class B Common Stock, and
 
  •  any amendment, alteration or repeal of any of the provisions of our certificate of incorporation that adversely affects the powers, preferences or rights of the Class B Common Stock.
 
As a result, Charles F. Dolan, members of his family and certain related family entities also collectively have the power to prevent such issuance or amendment.
 
Prior to the Distribution, we will adopt a written policy whereby an independent committee of our Board of Directors will review and approve or take such other action as it may deem appropriate with respect to certain transactions involving the Company and its subsidiaries, on the one hand, and certain related parties, including Charles F. Dolan and certain of his family members and related entities on the other hand. See “Certain Relationships and Related Party Transactions — Related Party Transaction Approval Policy.” This policy will not address all possible conflicts which may arise, however, and there can be no assurance that this policy will be effective in dealing with conflict scenarios.
 
The members of the Dolan family group will enter into an agreement with the Company in which they agree that during the 12-month period beginning on the Distribution date, the Dolan family group must obtain the prior approval of a majority of the Company’s independent directors prior to acquiring common stock of the Company through a tender offer that results in members of the Dolan family group owning more than 50% of the total number of outstanding shares of common stock of the Company. For purposes of this agreement, the term “independent directors” means the directors of the Company who have been determined by our Board of Directors to be independent directors for purposes of NASDAQ corporate governance standards.


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We will be a “controlled company” for NASDAQ purposes, which allows us not to comply with certain of the corporate governance rules of NASDAQ.
 
We have been informed that prior to the Distribution, Charles F. Dolan, members of his family and certain related family entities will enter into a stockholders agreement relating, among other things, to the voting of their shares of our Class B Common Stock. As a result, following the Distribution, we will be a “controlled company” under the corporate governance rules of NASDAQ. As a controlled company, we will have the right to elect not to comply with the corporate governance rules of NASDAQ requiring: (i) a majority of independent directors on our Board of Directors, (ii) an independent compensation committee and (iii) an independent corporate governance and nominating committee. We expect our Board of Directors to elect for the Company to be treated as a “controlled company” under NASDAQ corporate governance rules because of our status as a controlled company.
 
Future stock sales could adversely affect the trading price of our Class A Common Stock following the Distribution.
 
All of the shares of Class A Common Stock will be freely tradable without restriction or further registration under the Securities Act unless the shares are owned by our “affiliates” as that term is defined in the rules under the Securities Act. Shares held by “affiliates” may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 which is summarized under “Shares Eligible for Future Sale.” Further, we plan to file a registration statement to cover the shares issued under our equity-based benefit plans.
 
As described under “Shares Eligible for Future Sale — Registration Rights Agreements,” certain parties have registration rights covering a portion of our shares. We will enter into registration rights agreements with Charles F. Dolan, members of his family, certain Dolan family interests and the Dolan Family Foundations that provide them with “demand” and “piggyback” registration rights with respect to approximately           shares of Class A Common Stock, including shares issuable upon conversion of shares of Class B Common Stock. Sales of a substantial number of shares of Class A Common Stock could adversely affect the market price of the Class A Common Stock and could impair our future ability to raise capital through an offering of our equity securities.
 
We share certain directors with Cablevision and Madison Square Garden, Inc., which may give rise to conflicts.
 
Following the Distribution,          members of our Board of Directors will also be directors of Cablevision and/or Madison Square Garden, Inc. (“MSG”), an affiliate of Cablevision. These directors may have actual or apparent conflicts of interest with respect to matters involving or affecting each company. For example, there will be the potential for a conflict of interest when we on one hand, and Cablevision or MSG on the other hand, consider acquisitions and other corporate opportunities that may be suitable for us and either or both of them. Also, conflicts may arise if there are issues or disputes under the commercial arrangements that will exist between Cablevision or MSG and us. In addition, after the Distribution, certain of our directors and officers will continue to own Cablevision or MSG stock and options to purchase Cablevision or MSG stock, as well as cash performance awards with any payout based on Cablevision’s or MSG’s performance, which they acquired or were granted prior to the Distribution, including          . These ownership interests could create actual, apparent or potential conflicts of interest when these individuals are faced with decisions that could have different implications for our Company, Cablevision or MSG. See “Certain Relationships and Related Party Transactions — Certain Relationships and Potential Conflicts of Interest” for a discussion of certain procedures we will institute to help ameliorate such potential conflicts that may arise.
 
Our overlapping directors with Cablevision and Madison Square Garden may result in the diversion of corporate opportunities to and other conflicts with Cablevision or Madison Square Garden and provisions in our amended and restated certificate of incorporation may provide us no remedy in that circumstance.
 
The Company’s amended and restated certificate of incorporation will acknowledge that directors and officers of the Company may also be serving as directors, officers, employees, consultants or agents of


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Cablevision and its subsidiaries or MSG and its subsidiaries and that the Company may engage in material business transactions with such entities. The Company will renounce its rights to certain business opportunities and the Company’s amended and restated certificate of incorporation will provide that no director or officer of the Company who is also serving as a director, officer, employee, consultant or agent of Cablevision and its subsidiaries or MSG and its subsidiaries will be liable to the Company or its stockholders for breach of any fiduciary duty that would otherwise exist by reason of the fact that any such individual directs a corporate opportunity (other than certain limited types of opportunities set forth in our certificate of incorporation) to Cablevision or any of its subsidiaries or MSG or any of its subsidiaries instead of the Company, or does not refer or communicate information regarding such corporate opportunities to the Company. These provisions in our amended and restated certificate of incorporation will also expressly validate certain contracts, agreements, assignments and transactions (and amendments, modifications or terminations thereof) between the Company and Cablevision or any of its subsidiaries or MSG or any of its subsidiaries and, to the fullest extent permitted by law, provide that the actions of the overlapping directors or officers in connection therewith are not breaches of fiduciary duties owed to the Company, any of its subsidiaries or their respective stockholders. See “Description of Capital Stock — Certain Corporate Opportunities and Conflicts.”


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BUSINESS
 
AMC Networks Inc. was incorporated on March 9, 2011 as an indirect, wholly-owned subsidiary of Cablevision Systems Corporation (“Cablevision”). Our principal executive offices are located at 11 Penn Plaza, New York, NY 10001, and our telephone number is (212) 324-8500.
 
Cablevision’s board of directors approved the Distribution on          , 2011 and the Company thereafter acquired 100% of the limited liability company interests in RMH, the subsidiary of Cablevision through which Cablevision has historically owned the businesses described in this Information Statement. Where we describe in this Information Statement our business activities, we do so as if the transfer of RMH to AMC Networks Inc. had already occurred. Unless the context otherwise requires, all references to “we,” “our,” “us,” “AMC Networks” or the “Company” refer to AMC Networks Inc., together with its direct and indirect subsidiaries. “AMC Networks Inc.” refers to AMC Networks Inc. individually as a separate entity.
 
Our Company
 
AMC Networks owns and operates several of cable television’s most recognized brands delivering high quality content to audiences and a valuable platform to distributors and advertisers. Since our founding in 1980, we have been a pioneer in the cable television programming industry, having created or developed some of the leading programming networks. We have, since our inception, focused on programming of film and original productions, including through our creation of Bravo and AMC in 1980 and 1984, respectively. Bravo, which we sold to NBC Universal in 2002, was the first network dedicated to film and the performing arts. We have continued this dedication to quality programming and storytelling through our creation of The Independent Film Channel (today known as IFC) in 1994 and WE tv (which we launched as Romance Classics in 1997), and our acquisition of Sundance Channel in 2008.
 
We manage our business through two reportable operating segments: (i) National Networks, which includes AMC, WE tv, IFC and Sundance Channel; and (ii) International and Other, which includes AMC/Sundance Channel Global, our international programming business; IFC Entertainment, our independent film distribution business; and AMC Network Communications, our network technical services business. Our National Networks are distributed throughout the United States via cable and other multichannel distribution platforms, including DBS and platforms operated by telecommunications providers. In addition to our extensive U.S. distribution, AMC, IFC and Sundance Channel are available in Canada and Sundance Channel and WE tv are available in other countries throughout Europe and Asia. We earn revenue principally from the affiliation fees paid by distributors to carry our programming networks and from advertising sales. In 2010, affiliation fees and advertising sales accounted for 57% and 37%, respectively, of our total net revenues.
 
Our Strengths
 
Our strengths include:
 
Strong Industry Presence and Portfolio of Brands.  We have operated in the cable programming industry for more than 30 years and over this time we have continually enhanced the value of our network portfolio. Our programming network brands are well known and well regarded by our key constituents — our viewers, distributors and advertisers — and have developed strong followings within their respective targeted demographics, increasing our value to distributors and advertisers. AMC (which targets adults aged 25 to 54), WE tv (which targets women aged 18 to 49), IFC (which targets men aged 18 to 49) and Sundance Channel (which targets adults aged 25 to 54) have established themselves as important within their respective markets. Our deep and established presence in the industry lends us a high degree of credibility with distributors and content producers, and helps provide us with stable affiliate and studio relationships, advantageous channel placements and heightened viewer engagement.
 
Broad Distribution and Penetration of our National Networks.  Our national networks are broadly distributed in the United States. AMC, WE tv, IFC and Sundance Channel are each carried by all major multichannel video distributors. Our national networks are available to a significant percentage of


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subscribers in these distributors’ systems. This broad distribution and penetration provides us with a strong national platform on which to maintain, promote and grow our business.
 
Compelling Programming.  We continually refine our mix of programming and, in addition to our popular film programming, have increasingly focused on highly visible, critically acclaimed original programming, including the award-winning Mad Men, Breaking Bad and other popular series and shows, such as The Walking Dead, Bridezillas, Portlandia, The Onion News Network and Brick City. Our focus on quality original programming, targeted towards the audiences we seek to reach, has allowed us to increase in recent years our programming networks’ ratings and their viewership within their respective targeted demographics.
 
Recurring Revenue from Affiliation Agreements.  Our affiliation agreements with multichannel video distributors generate a recurring source of revenue. We generally seek to structure these agreements so that they are long-term in nature and to stagger their expiration dates, thereby increasing the predictability and stability of our affiliation fee revenues.
 
Desirable Advertising Platform.  Our national networks have a strong connection with each of their respective targeted demographics, which makes our programming networks an attractive platform to advertisers. Although all of our programming networks were originally operated without advertising, we have been incrementally migrating our portfolio to an advertiser-supported model. We have experienced significant growth in our advertising revenues in recent years, which has allowed us to develop high-quality programming.
 
Attractive Financial Profile.  We have a portfolio that includes higher-margin programming networks and faster-growing programming networks, through which we seek to grow both revenue and operating income. Our revenues, net, operating income and AOCF increased at annual growth rates in 2010 versus the prior year of 10.7%, 17.7% and 10.2%, respectively. We achieved operating income margins and AOCF margins of 13.5%, 24.4% and 26.0%, and 32.0%, 37.4%, and 37.2%, respectively, in 2008, 2009 and 2010. For a reconciliation of AOCF, a non-GAAP financial measure, to operating income see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Statement of Operations Data.”
 
Our Strategy
 
Our strategy is to maintain and improve our position as a leading programming and entertainment company by owning and operating several of the most popular and award-winning brands in cable television that create engagement with audiences globally across multiple media platforms. The key focuses of our strategy are:
 
Continued Development of High-Quality Original Programming.  We intend to continue developing strong original programming across all of our programming networks to enhance our brands, strengthen our relationship with our viewers, distributors and advertisers, and increase distribution and audience ratings. We believe that our continued investment in original programming supports future growth in our two principal revenue streams — affiliation fee revenue from our distributors and advertising revenue. We also intend to expand the deployment of our original programming across multiple distribution platforms.
 
Increased Distribution of our Programming Networks.  Of our four national networks, only AMC is fully distributed in the United States. We intend to seek increased distribution of our other national networks to grow affiliate and advertising revenues. In addition, we have begun to expand the distribution of our programming networks around the globe. We first expanded beyond the U.S. market with the launch in Canada of IFC (in 2001) and AMC (in 2006), and we have recently also launched Sundance Channel in the Canadian market. We are building on this base by distributing an international version of Sundance Channel, which is currently distributed in four countries in Europe and two countries in Asia, with additional expansion planned in 2011 and future years. We have also launched an international version of WE tv in three countries in Asia, with further expansion planned in other Asian markets.


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Continued Growth of Advertising Revenue.  We have a proven track record of significantly increasing revenue by introducing advertising on networks that were previously not advertiser supported. We first accomplished this in 2002, when we moved AMC and WE tv to an advertiser-supported model. Most recently, in December 2010, we moved IFC to such a model. We seek to continue to evolve the programming on each of our networks to achieve even stronger viewer engagement within their respective core targeted demographics, thereby increasing the value of our programming to advertisers and allowing us to obtain higher advertising rates. For example, we have begun to refine the programming mix on IFC to include alternative comedy programming, such as The Onion News Network and Portlandia, in order to increase IFC’s appeal to its targeted demographic of men aged 18 to 49. We are also continuing to seek additional advertising revenue at AMC and WE tv through higher Nielsen ratings in desirable demographics.
 
Increased Control of Content.  We believe that control (including long-term contract arrangements) and ownership of content is becoming increasingly important, and we intend to increase our control position over our programming content. We already control, own or have long-term license agreements covering significant portions of our content across our programming networks as well as in our independent film distribution business operated by IFC Entertainment. We intend to continue to focus on obtaining the broadest possible control rights (both as to territory and platforms) for our content.
 
Exploitation of Emerging Media Platforms.  The technological landscape surrounding the distribution of entertainment content is continuously evolving as new digital platforms emerge. We intend to distribute our content across as many of these new platforms as possible, when it makes business sense to do so, so that our viewers can access our content where, when and how they want it. To that end, our programming networks are allowing many of our distributors to offer our content to subscribers on computers and other digital devices, and on video-on-demand platforms, all of which permit subscribers to access programs at their convenience. We also have launched our own direct-to-consumer digital platform, SundanceNow, which makes our IFC Entertainment library of independent films available to consumers in the United States and around the globe, and have made some of our content available on third-party digital platforms like iTunes and Netflix. Our national networks each host dedicated websites that promote their brands, provide programming information and provide access to content. In addition, AMC has acquired the film-focused websites filmsite.org and filmcritic.com, which together with amctv.com deliver over 5 million unique visitors each month.
 
National Networks
 
We own four nationally distributed entertainment programming networks: AMC, WE tv, IFC and Sundance Channel (which we acquired in June 2008), each of which are available to our distributors in high-definition and standard-definition formats. Our programming networks principally generate their revenues from affiliation fees paid by multichannel video distributors and from the sale of advertising, although we also earn ancillary revenues from sources such as digital and international program sales. As of December 31, 2010, AMC, WE tv and IFC had 96.4 million, 76.8 million and 62.7 million Nielsen subscribers, respectively, and Sundance Channel had 39.9 million viewing subscribers (for a discussion of the difference between Nielsen subscribers and viewing subscribers, see “— Subscriber and Viewer Measurement”). Our National Networks segment also includes Wedding Central, a wedding-themed programming network available through a small number of distributors.
 
AMC
 
AMC is a television network focused on the highest quality storytelling — both originally produced and curated, and delivered in series and feature-film form. AMC’s programming includes Emmy and Golden Globe Award-winning or nominated original scripted dramatic television series such as Mad Men, Breaking Bad and The Walking Dead, occasional mini-series such as Broken Trail and The Prisoner, and unscripted series and packaged movie events such as Storymakers, DVDtv and AMC News. In addition, with a comprehensive library of popular films, AMC also offers movie-based entertainment.


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We launched AMC in 1984, and over the past several years it has garnered many of the industry’s highest honors, including 23 Emmy Awards, 4 Golden Globe Awards, 2 Screen Actors Guild Awards, 2 Peabody Awards, and 4 consecutive American Film Institute (AFI) Awards for Top 10 Most Outstanding Television Programs of the Year. AMC is the only cable network in history to win the Emmy Award for Outstanding Drama Series three years in a row, as well as the Golden Globe Award for Best Television Series — Drama for three consecutive years.
 
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. AMC generally structures its contracts for the exclusive cable television right to air the films during identified windows.
 
AMC Subscribers and Affiliation Agreements.  As of December 31, 2010, AMC had affiliation agreements with all major multichannel video distributors and reached approximately 96 million Nielsen subscribers.
 
Historical Subscribers — AMC
 
                         
    2010     2009     2008  
    (In millions)  
 
Nielsen Subscribers (at year-end)
    96.4       95.2       94.5  
Growth from Prior Year-end
    1.3 %     0.7 %     0.6 %
 
Approximately 89% of AMC’s subscribers are under affiliation agreements that expire after December 31, 2012.
 
WE tv
 
WE tv offers compelling, entertaining stories and focuses on programming of particular interest to women, with an emphasis on life events such as weddings, having children and raising a family. The programming features original series and specials, as well as feature films. WE tv’s schedule includes original series such as Bridezillas, My Fair Wedding with David Tutera, Joan and Melissa: Joan Knows Best? and Downsized. Additionally, WE tv’s programming includes series such as Ghost Whisperer, Charmed and Golden Girls. WE tv has the exclusive license rights to certain films from studios such as Paramount, Sony and Warner Bros.
 
WE tv Subscribers and Affiliation Agreements.  As of December 31, 2010, WE tv had affiliation agreements with all major multichannel video distributors and reached approximately 77 million Nielsen subscribers.
 
Historical Subscribers — WE tv
 
                         
    2010     2009     2008  
    (In millions)  
 
Nielsen Subscribers (at year-end)
    76.8       74.9       72.0  
Growth from Prior Year-end
    2.5 %     4.0 %     5.9 %
 
Approximately 74% of WE tv’s subscribers are under affiliation agreements that expire after December 31, 2012.
 
IFC
 
IFC is a network dedicated to presenting an independent, alternative mindset through programming focused on independent film and original alternative comedy series. Since its launch in 1994, IFC has developed television programming that challenges the conventions of storytelling and provides a unique perspective to its audiences through its original series, notable independent film collection and cult television shows. Its library includes films from the most significant independent film distributors including Fox


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Searchlight, Miramax, Sony Classics, IFC Entertainment and Lionsgate. The network’s original content includes the David Cross comedy The Increasingly Poor Decisions of Todd Margaret, The Onion News Network and Portlandia. In addition, IFC provides viewers with access to must-see festivals and events around the country, including the annual South-by-Southwest film and music festival and, for the past decade, IFC has been the exclusive home of The Independent Spirit Awards, the largest award show for independent movies.
 
IFC Subscribers and Affiliation Agreements.  As of December 31, 2010, IFC had affiliation agreements with all major multichannel video distributors and reached approximately 63 million Nielsen subscribers.
 
Historical Subscribers — IFC
 
                         
    2010     2009     2008  
    (In millions)  
 
Nielsen Subscribers (at year-end)
    62.7       60.4       58.7  
Growth from Prior Year-end
    3.8 %     2.9 %     7.6 %
 
Approximately 81% of IFC’s subscribers are under affiliation agreements that expire after December 31, 2012.
 
Sundance Channel
 
Sundance Channel is the television destination for independent-minded viewers. Benefitting from its relationship with the Sundance Institute and the renowned Sundance Film Festival, the network features independent films and original series showcasing innovative people and ideas in areas like invention, design, travel, enterprise and fashion. Launched in 1996 and acquired by us in 2008, Sundance Channel’s programming celebrates fresh talent and seeks to champion new ideas.
 
Sundance Channel’s original series engage viewers across a number of platforms, and include unscripted shows such as the Peabody Award-winning franchise Brick City, innovative multi-platform fashion programming under the Full Frontal Fashion label, the celebrity vehicle Shoebox Sessions and other new series that highlight what’s just about to hit in the world of product-design, pop-culture, style and food. Sundance Channel’s first scripted mini-series Carlos aired in fall 2010 to great critical acclaim, including winning the 2011 Golden Globe Award for Best Mini-Series or Motion Picture Made for Television.
 
Sundance Channel Subscribers and Affiliation Agreements.  As of December 31, 2010, Sundance Channel had affiliation agreements with all major multichannel video distributors and reached approximately 40 million viewing subscribers. Sundance Channel currently generates advertising revenue from sponsorship arrangements and promotional breaks, rather than traditional advertising spots.
 
Historical Subscribers — Sundance Channel
 
                         
    2010     2009     2008  
    (In millions)  
 
Viewing Subscribers* (at year-end)
    39.9       37.9       30.8  
Growth from Prior Year-end
    5.3 %     23.1 %     9.8 %
 
 
* Subscriber counts are based on internal management reports and represent viewing subscribers. For a discussion of the differences between Nielsen subscribers and viewing subscribers, see “— Subscriber and Viewer Measurement.”
 
Approximately 67% of Sundance Channel’s subscribers are under affiliation agreements that expire after December 31, 2012.
 
International and Other
 
In addition to our National Networks, we also operate AMC/Sundance Channel Global, which is our international programming business; IFC Entertainment, our independent film distribution business; and


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AMC Network Communications, our network technical services business. Our International and Other segment also includes VOOM HD, an international programming service that we are in the process of winding-down.
 
AMC/Sundance Channel Global
 
AMC/Sundance Channel Global’s business principally consists of four distinct channels in six languages spread across eight countries, focusing primarily on AMC in Canada and global versions of the Sundance and WE tv brands. Principally generating revenues from affiliation fees, AMC/Sundance Channel Global reached approximately 8 million viewing subscribers in Canada, Europe and Asia as of December 31, 2010, and has broad availability to distributors in Europe and in Asia through satellite delivery that can facilitate future expansion.
 
Sundance Channel — International
 
An internationally-recognized brand, Sundance Channel’s global services provide not only the best of the independent film world but also feature certain content from AMC, IFC, Sundance, and IFC Films, as well as a unique pipeline of international content, in an effort to provide distinctive programming to an upscale audience.
 
The ability of Sundance Channel to offer content in standard definition and high definition across multiple platforms provides value to distributors and opportunity for expansion into additional international markets. The international version of Sundance Channel is available in France, Belgium, the Netherlands, Poland, South Korea and Singapore; and provides programming in French, Dutch, Polish, Korean, and Mandarin. The network is distributed via satellite in Asia, and has a substantial satellite footprint (which extends from the Philippines to the Middle East, and from Russia to Australia).
 
Canada
 
We provide programming to the Canadian market through our AMC and Sundance Channel brands, which are distributed through affiliation arrangements with the three major Canadian multichannel video distributors and through trademark license and content distribution arrangements with Canadian programming outlets. In 2006, we launched AMC Canada as a service that provides essentially the same programming as the U.S. version of the network. AMC Canada has today achieved near-full distribution in the Canadian market. In 2010, we launched a Sundance Channel-branded network in Canada.
 
WE tv Asia
 
Providing programming in the Korean and Mandarin languages, WE tv Asia provides a selection of the best domestic programming from the WE tv U.S. network with programs like Bridezillas and My Fair Wedding with David Tutera, and some of the best of other female-oriented networks in the United States, such as Tabatha’s Salon Takeover and Tori & Dean. With the same broad satellite footprint as Sundance Channel — International, WE tv Asia is available in South Korea, Singapore and Hong Kong and also presents significant opportunities for expansion into new Asian markets.
 
IFC Entertainment
 
IFC Entertainment encompasses our independent film distribution business, making independent films available to a national audience by initially releasing them in theaters and on video-on-demand platforms. IFC Entertainment consists of multiple brands, including Sundance Selects, IFC Films and IFC Midnight, which distribute critically acclaimed independent films across virtually all available media platforms, including theatrically and via video-on-demand, DVDs, cable television, and streaming to computers and other electronic devices. IFC Entertainment also operates the IFC Center, the DOC NYC festival and SundanceNow. Most IFC Films, IFC Midnight and Sundance Selects titles are available on-demand on the same day that they are first distributed theatrically. The on-demand services are currently offered to IFC’s distributors as well as being carried by other multichannel video distributors throughout the United States. Recently released films include


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The Killer Inside Me, The Human Centipede, Joan Rivers: A Piece of Work, The Art of the Steal and Tiny Furniture. IFC Entertainment has a film library consisting of more than 400 titles.
 
As part of its strategy to encourage the growth of the marketplace for independent film, IFC Entertainment also operates the IFC Center, DOC NYC and SundanceNow. The IFC Center, a five-screen cinema with HD digital and 35mm projection capabilities, shows art-house films in the heart of New York’s Greenwich Village, while DOC NYC is a festival celebrating documentary storytelling in film, photography, prose and other media. IFC Entertainment is also focusing on new distribution platforms for our content, and recently launched SundanceNow, our direct-to-consumer digital platform, which makes our IFC Entertainment library of independent films available to consumers in the United States and around the globe.
 
AMC Network Communications
 
AMC Network Communications is a full-service network programming feed origination and distribution company, supplying an array of services to the network programming industry. AMC Network Communications’ operations are housed in Bethpage, New York, where AMC Network Communications consolidates origination and satellite communications functions in a 55,000 square-foot facility designed to keep AMC Networks at the forefront of network origination and distribution technology. AMC Network Communications has nearly 30 years experience across its network services groups, including affiliate engineering, network operations, traffic and scheduling that provide day-to-day delivery of any programming network, in high definition or standard definition.
 
Currently, AMC Network Communications is responsible for the origination of 38 programming feeds for national and international distribution. AMC Network Communications’ current clients include AMC Networks’ own national networks, as well as third-party and affiliated clients including fuse, MSG Network, MSG Plus, MSG Varsity, two Comcast Sports networks, an FSN regional sports network, SNY and Mid Atlantic Sports Network.
 
Content Rights and Development
 
The programming on our networks includes original programming that we control, either through outright ownership or through long-term licensing arrangements, and acquired programming that we license from studios and other rights holders.
 
Original Programming
 
We contract with independent production companies, including Lionsgate Entertainment, Sony Productions, September Films and Pilgrim Films and Television, to produce most of the original programming that appears on our programming networks. These contractual arrangements either provide us with outright ownership of the programming, in which case we hold all programming and other rights to the content, or they consist of a long-term license, which provides us with exclusive rights to exhibit the content on our programming networks, but may be limited in terms of specific geographic markets or distribution platforms. We currently self produce one of our original series — AMC’s The Walking Dead.
 
In addition to The Walking Dead, the original programming that we own outright includes My Fair Wedding with David Tutera, Downsized, Joan and Melissa: Joan Knows Best?, Iconoclasts and Brick City. We may freely exhibit this programming on our networks or through other distribution platforms, both in the United States and in international markets. We may also license this content to other programming networks or distribution platforms.
 
We hold long-term licenses for original programming that includes Mad Men, Breaking Bad and Bridezillas. These licensing arrangements give us the exclusive right for certain periods of time to exhibit the shows on our programming networks within the United States and, in some cases, in international markets. These licenses may also give us the right to exploit the programming on additional distribution platforms (such as video-on-demand and mobile devices) within our licensed territory. The license agreements are


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typically of multi-season duration and provide us with a right of first negotiation or a right of first refusal on the renewal of the license for additional programming seasons.
 
Acquired Programming
 
The majority of the content on our programming networks consists of existing films, episodic series and specials that we acquire pursuant to rights agreements with film studios, production companies or other rights holders. This acquired programming includes episodic series such as Golden Girls and Arrested Development, as well as an extensive film library. The rights agreements for this content are of varying duration and generally permit our programming networks to carry these series, films and other programming during certain window periods.
 
Affiliation Agreements
 
Affiliation Agreements and Significant Customers.  Our programming networks are distributed to our viewing audience pursuant to affiliation agreements with multichannel video distributors. These agreements, which typically have durations of several years, require us to deliver programming that meets certain standards set forth in the agreement. We earn affiliation fees under these agreements, generally based upon the number of each distributor’s subscribers who receive our programming or, in some cases, based on a fixed contractual monthly fee. Our affiliation agreements also give us the right to sell a specific amount of national advertising time on our programming networks.
 
Our programming networks’ existing affiliation agreements expire at various dates, and some are due to expire in 2011 and 2012. Failure to renew important affiliation agreements, or the termination of those agreements, could have a material adverse effect on our business, and, even if affiliation agreements are renewed, there can be no assurance that renewal rates will equal or exceed the rates that are currently being charged. We have never failed to renew an agreement with any of our top ten distributors, although agreements have sometimes expired before the renewal was fully negotiated and finalized (in such cases, carriage of our programming networks continued unaffected during the periods in which the agreements were being negotiated).
 
In 2010, Comcast and DirecTV each accounted for at least 10% of our total net revenues.
 
We frequently negotiate with distributors in an effort to increase their subscriber base for our networks. We have in some instances made upfront payments to distributors in exchange for these additional subscribers or agreed to waive or accept lower subscriber fees if certain numbers of additional subscribers are provided. We also may help fund the distributors’ efforts to market our programming networks or we may permit distributors 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 such deferred carriage fee arrangements, discounted subscriber fees and other payments; however, we believe that these transactions generate a positive return on investment over the contract period.
 
Advertising Arrangements
 
Under our affiliation agreements with our distributors, we have the right to sell a specified amount of national advertising time on certain of our programming networks. We sell advertising principally on a short-term basis, pursuant to sales arrangements with advertisers that specify a number of advertising units to air over a particular period of time at a negotiated price per unit. The popularity of our programming, as measured by The Nielsen Company, largely determines the price we receive. In certain sales arrangements, our programming networks guarantee minimum viewer ratings for their programming. If these guaranteed viewer ratings are not met, we are generally required to provide additional advertising units to the advertiser at no charge.
 
In 2010, our national programming networks had more than 900 advertisers representing companies in a broad range of sectors, including the food, health, retail and automotive industries. Our AMC and WE tv programming networks use a traditional advertising sales model, while Sundance Channel principally sells


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sponsorships. Prior to December 2010, IFC principally sold sponsorships, but since then it has migrated to a traditional advertising sales model.
 
Subscriber and Viewer Measurement
 
The number of subscribers receiving our programming from multichannel video distributors generally determines the affiliation fees we receive. We refer to these subscribers as “viewing subscribers.” These numbers are reported monthly by the distributor and are reported net of certain excluded categories of subscribers set forth in the relevant affiliation agreement. These excluded categories include delinquent and complimentary accounts and subscribers receiving our programming networks during promotional periods. For most day-to-day management purposes, we use a different measurement, Nielsen subscribers, when that measurement is available. Nielsen subscribers represent the number of subscribers receiving our programming from multichannel video distributors as reported by The Nielsen Company, based on their sampling procedures. Because Nielsen subscribers are reported without deduction for certain classes of subscribers, Nielsen subscriber figures tend to be higher than viewing subscribers for a given programming network. Nielsen subscriber figures are available for our AMC, WE tv and IFC programming networks.
 
For purposes of the advertising rates we are able to charge advertisers, the relevant measurement is the Nielsen rating, which measures the number of viewers actually watching the commercials within programs we show on our programming networks. This measurement is calculated by The Nielsen Company using their sampling procedures and reported daily, although advertising rates are adjusted less frequently. In addition to the Nielsen rating, our advertising rates are also influenced by the demographic mix of our viewing audiences, since advertisers tend to pay premium rates for more desirable demographics.
 
Regulation
 
The FCC regulates our programming networks in certain respects because they are affiliated with a cable television operator like Cablevision. Other FCC regulations, although imposed on cable television operators and satellite operators, affect programming networks indirectly.
 
Closed Captioning
 
Certain of our networks must provide closed-captioning of programming for the hearing impaired. In the future, the 21st Century Communications and Video Accessibility Act of 2010 may require us to provide closed captioning on certain video programming that we offer on the Internet.
 
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 satellite delivered video programming in which a cable operator holds an attributable interest, as that term is defined by the FCC, to be made available to all multichannel video distributors, including DBS providers and telephone companies, on nondiscriminatory prices, terms and conditions, subject to certain exceptions specified in the statute and the FCC’s rules. For purposes of these rules, the common directors and five percent or greater voting stockholders of Cablevision and AMC Networks are deemed to be cable operators with attributable interests in us. As long as we continue to have common directors and major stockholders with Cablevision, our satellite-delivered video programming services will remain subject to the program access provisions. Until October 2012, unless extended, these rules also prohibit us from entering into exclusive contracts with cable operators for these services. The FCC recently extended the program access rules to terrestrially-delivered programming created by cable operator-affiliated programmers such as us. The new rules would compel the licensing of such programming in response to a complaint by a multichannel video distributor, if the complainant can demonstrate that the lack of such programming, undue influence by the cable operator affiliate, or


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discrimination in the price, terms, or conditions for such programming significantly hinders or prevents the distributor from providing satellite cable programming. These new rules could require us to make any terrestrial programming services we create available to multichannel video distributors on nondiscriminatory prices, terms and conditions. The new rules have been challenged in federal court. We cannot predict how the court will act on the challenge.
 
In 2007, the FCC sought comment on a proposal to allow a cable operator to petition for 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 programming distributors; and is considering revisions to the program access complaint procedures. The FCC has taken no action on this proposal.
 
Wholesale “À La Carte”
 
In 2007, the FCC sought comment on whether cable programming networks require 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. The FCC has taken no action on this proposal. We do not currently require distributors to carry more than one of our national programming networks in order to obtain the right to carry a particular national programming network. However, we generally negotiate with a distributor for the carriage of all of our national networks concurrently.
 
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. In contrast, programming networks, such as ours, have no guaranteed right of carriage on cable television or DBS systems. This may reduce the amount of channel space that is available for carriage of our networks by cable television systems and DBS operators.
 
Satellite Carriage
 
All satellite carriers must under federal law offer their service to deliver our and our competitor’s 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.
 
Media Ownership Restrictions
 
FCC rules set media ownership limits that restrict, among other things, the number of daily newspapers and radio and TV stations in which a single entity may hold an attributable interest as that term is defined by the FCC. These rules have been challenged in federal court. We cannot predict how the court will rule on these challenges. The fact that the common directors and five percent or greater voting stockholders of Cablevision and AMC Networks will hold attributable interests in each of the companies after the Distribution for purposes of these rules means that these cross-ownership rules may have the effect of limiting the activities or strategic business alternatives available to us, at least for as long as we continue to have common directors and major stockholders with Cablevision. Although we have no plans or intentions to become involved in the businesses affected by these restrictions, we would need to be mindful of these rules if we were to consider engaging in any such business in the future.
 
Website Requirements
 
We maintain various websites that provide information regarding our businesses and offer content for sale. The operation of these websites may be subject to a range of federal, state and local laws such as privacy and consumer protection regulations.
 
Other Regulation
 
In 2007, the FCC recommended that Congress prohibit the availability of violent programming, including on cable programming networks, during the hours when children are likely to be watching. Congress has


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considered this proposal, but to date has not yet enacted such restrictions. The FCC also imposes rules regarding political broadcasts.
 
Competition
 
Our programming networks operate in two highly competitive markets. First, our programming networks compete with other programming networks to obtain distribution on cable television systems and other multichannel video distribution systems, such as DBS, and ultimately for viewing by each system’s subscribers. Second, our programming networks compete with other programming networks and other sources of video content, including broadcast networks, to secure desired entertainment programming. The success of our businesses depends on our ability to license and produce content for our programming networks that is adequate in quantity and quality and will generate satisfactory viewer ratings. In each of these cases, some of our competitors are large publicly held companies that have greater financial resources than we do. In addition, we compete with these entities for advertising revenue.
 
It is difficult to predict the future effect of technology on many of the factors affecting AMC Networks’ 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 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.
 
Distribution of Programming Networks
 
The business of distributing programming networks to cable television systems and other multichannel video distributors is highly competitive. Our programming networks face competition from other programming networks’ carriage by a particular multichannel video distributor, and for the carriage on the service tier that will attract the most subscribers. Once our programming network is selected by a distributor for carriage, that network competes for viewers not only with the other programming networks available on the distributor’s system, but also with over-the-air broadcast television, Internet-based video and other online services, mobile services, radio, print media, motion picture theaters, DVDs, and other sources of information and entertainment.
 
Important to our success in each area of competition we face 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 among advertiser supported networks is directly correlated with the competition for advertising revenues with each of our competitors.
 
Our ability to successfully compete with other networks may be hampered because the cable television systems or other multichannel video distributors through which we seek distribution may be affiliated with other programming networks. In addition, because such distributors may have a substantial number of subscribers, the ability of such programming networks to obtain distribution on the systems of affiliated distributors may lead to increased affiliation and advertising revenue for such programming networks because of their increased penetration compared to our programming networks. Even if such affiliated distributors carry our programming networks, such distributors may 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 that are affiliated with broadcasting networks like NBC, ABC, CBS or Fox may also have a competitive advantage over our programming networks in obtaining distribution through the “bundling” of agreements to carry those programming networks with agreements giving the distributor the right to carry a broadcast station affiliated with the broadcasting network.
 
An important part of our strategy involves exploiting identified markets of the cable television viewing audience that are generally well defined and limited in size. Our networks have faced and will continue to


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face increasing competition as other programming networks and online or other services seek to serve the same or similar niches.
 
Sources of Programming
 
We also compete with other programming networks to secure desired programming. Most of our original programming and all of our acquired 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 or film libraries may have a competitive advantage over us in this area.
 
With respect to the acquisition of entertainment programming, such as syndicated programs and movies that are not produced by or specifically for networks, our competitors include national broadcast television networks, local broadcast television stations, video-on-demand programs and other cable programming networks. Internet-based video content distributors have also emerged as competitors for the acquisition of content or the rights to distribute content. Some of these competitors have exclusive contracts with motion picture studios or independent motion picture distributors or own film libraries.
 
Competition for Advertising Revenue
 
Our programming networks must compete with other sellers of advertising time and space, including other cable programming networks, radio, newspapers, outdoor media and, increasingly, Internet sites. We compete for advertisers on the basis of rates we charge and also on the number and demographic nature of viewers who watch our programming. Advertisers will often seek to target their advertising content to those demographic categories they consider most likely to purchase the product or service they advertise. Accordingly, the demographic make-up of our viewership can be equally or more important than the number of viewers watching our programming.
 
Legal Proceedings
 
DISH Network Contract Dispute
 
In 2005, subsidiaries of the Company entered into agreements with EchoStar Communications Corporation and its affiliates by which EchoStar Media Holdings Corporation acquired a 20% interest in VOOM HD Holdings LLC (“VOOM HD”) and EchoStar Satellite LLC (the predecessor to DISH Network, LLC (“DISH Network”)) agreed to distribute VOOM on DISH Network for a 15-year term. The affiliation agreement with DISH Network 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, DISH Network may seek to terminate the agreement under certain circumstances. On January 30, 2008, DISH Network 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 the New York Supreme Court for New York County prohibiting DISH Network from terminating the affiliation agreement. In conjunction with its request for a temporary restraining order, VOOM HD also requested a preliminary injunction and filed a lawsuit against DISH Network asserting that DISH Network did not have the right to terminate the affiliation agreement. In a decision filed on May 5, 2008, the court denied VOOM HD’s motion for a preliminary injunction. On or about May 13, 2008, DISH Network ceased distribution of VOOM on its DISH Network. On May 27, 2008, VOOM HD amended its complaint to seek damages for DISH Network’s improper termination of the affiliation agreement. On June 24, 2008, DISH Network answered VOOM HD’s amended complaint and EchoStar Satellite LLC asserted counterclaims alleging breach of contract and breach of the duty of good faith and fair dealing with respect to the affiliation agreement. On July 14, 2008, VOOM HD replied to DISH Network’s counterclaims. The Company believes that the counterclaims asserted by DISH Network are without merit. VOOM HD and DISH Network each filed cross-motions for summary judgment. In November 2010, the court denied both parties’ cross-motions for


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summary judgment. The court also granted VOOM HD’s motion for sanctions based on DISH Network’s spoliation of evidence and its motion to exclude DISH Network’s principal damages expert. The trial will be scheduled after DISH Network’s appeal of the latter two rulings.
 
Broadcast Music, Inc. Matter
 
Broadcast Music, Inc. (“BMI”), an organization that licenses the performance of musical compositions of its members, has alleged that certain of the Company’s subsidiaries require a license to exhibit musical compositions in its catalog. BMI agreed to interim fees based on revenues covering certain periods (generally the period from the launch or acquisition of each of our programming networks). The interim fees paid to BMI remain subject to retroactive adjustment until such time as a final agreement is reached by the parties. Subject to the execution of formal agreements, in 2010 the parties reached an agreement in principle with respect to the license fees for an amount that approximates amounts previously accrued, which were $7.0 million and $6.1 million at December 31, 2010 and 2009, respectively.
 
Other Legal Matters
 
On April 15, 2011, Thomas C. Dolan, a director and Executive Vice President, Strategy and Development, in the Office of the Chairman at Cablevision, filed a lawsuit against Cablevision and RMH, in New York Supreme Court. The lawsuit raises compensation-related claims (seeking approximately $11 million) related to events in 2005. The matter is being handled under the direction of an independent committee of the Board of Directors of Cablevision. It is expected that in the Distribution Agreement Cablevision will indemnify the Company and RMH against any liabilities and expenses related to this lawsuit. Based on the Company’s assessment of this possible loss contingency, no provision has been made for this matter in the accompanying financial statements.
 
In addition to the matters discussed above, the Company is party to various lawsuits and claims in the ordinary course of business. 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 matters 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.
 
Employees
 
As of February 28, 2011 we had 849 full-time employees. None of our employees are represented by unions.
 
Properties
 
We currently use approximately 200,000 square feet of office space that we lease at 11 Penn Plaza, New York, NY 10001, under lease arrangements with remaining terms of six and nine years. We use this space as our corporate headquarters and as the principal business location of our business. We also lease the 55,000 square-foot Broadcasting and Technology Center in Bethpage, New York, from which AMC Network Communications conducts its operations. In addition, we maintain leased sales offices in Santa Monica, Atlanta and Chicago.


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DIVIDEND POLICY
 
We do not expect to pay cash dividends on our common stock for the foreseeable future.


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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
 
The following unaudited pro forma condensed consolidated balance sheet as of December 31, 2010 and the unaudited pro forma consolidated statement of operations for the year ended December 31, 2010 are based on the historical consolidated financial statements of the Company. The unaudited pro forma consolidated financial statements presented below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated annual financial statements and corresponding notes thereto included elsewhere in this Information Statement. The unaudited pro forma consolidated financial statements reflect certain known impacts as a result of the Distribution and the separation of the Company from Cablevision. The unaudited pro forma consolidated financial statements have been prepared giving effect to the Distribution as if this transaction had occurred as of January 1, 2010 for the unaudited pro forma consolidated statement of operations for the year ended December 31, 2010 and as of December 31, 2010 for the unaudited pro forma condensed consolidated balance sheet.
 
The unaudited pro forma consolidated financial information set forth below has been derived from the consolidated annual financial statements of the Company including the consolidated balance sheet as of December 31, 2010 and the consolidated statement of operations for the year ended December 31, 2010 included elsewhere within this Information Statement and reflect certain assumptions that we believe are reasonable given the information currently available. While such adjustments are subject to change based upon the finalization of the underlying separation agreements, in management’s opinion, the pro forma adjustments have been developed on a reasonable and rational basis.
 
Following the Distribution, we will incur corporate costs to operate our business as a separate, stand-alone public entity, which are expected to be lower than our historical expenses, including corporate allocations and management fees from Cablevision, which will not continue to be charged to us subsequent to the Distribution. For the year ended December 31, 2010, our results of operations included corporate and administrative charges from Cablevision of approximately $32.4 million and management fees charged by Cablevision to certain subsidiaries of the Company of $26.5 million. Corporate costs to operate our business as a separate, stand-alone public entity principally relate to areas that include, but are not limited to:
 
  •  additional personnel including human resources, finance, accounting, compliance, tax, treasury, internal audit and legal;
 
  •  additional professional fees associated with audits, tax, legal and other services;
 
  •  insurance premiums;
 
  •  costs relating to board of directors’ fees;
 
  •  stock market listing fees, investor relations costs and fees for preparing and distributing periodic filings with the Securities and Exchange Commission (“SEC”); and
 
  •  other administrative costs and fees, including anticipated incremental executive compensation costs related to existing and new executive management.
 
Subsequent to the Distribution, the preliminary estimates for the net decrease in corporate expenses to operate our business range between approximately $14 million and $18 million on an annual basis prospectively. Actual expense reductions, if any, could vary from this range estimate and such variations could be material.
 
These unaudited pro forma consolidated financial statements reflect all other adjustments that, in the opinion of management, are necessary to present fairly the pro forma consolidated results of operations and consolidated financial position of the Company as of and for the period indicated. The unaudited pro forma consolidated financial information is for illustrative and informational purposes only and is not intended to represent or be indicative of what our financial condition or results of operations would have been had the Company operated historically as a company independent of Cablevision or if the Distribution had occurred on the dates indicated. The unaudited pro forma consolidated financial information also should not be considered representative of our future consolidated financial condition or consolidated results of operations.


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AMC NETWORKS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 2010
(Dollars in thousands)
 
                         
          Pro Forma
       
    Historical     Adjustments     Pro Forma  
 
ASSETS
Current Assets:
                       
Cash and cash equivalents
  $ 79,960               (1)              
Accounts receivable, trade (less allowance for doubtful accounts)
    242,699                  
Amounts due from affiliates, net
    6,840                  
Program rights, net
    186,475                  
Prepaid expenses and other current assets
    42,950                  
Deferred tax asset
    7,516       (7)        
                         
Total current assets
    566,440                  
Property and equipment, net of accumulated depreciation
    68,977                  
Program rights, net
    597,355                  
Amounts due from affiliates
    3,502                  
Note receivable from affiliate
    16,832                  
Deferred tax asset, net
    41,250       (7)        
Deferred carriage fees, net
    69,343                  
Amortizable intangible assets, net of accumulated amortization
    364,882                  
Indefinite-lived intangible assets
    19,900                  
Goodwill
    83,173                  
Other assets
    15,043                  
Deferred financing costs, net of accumulated amortization
    7,199       (2)        
                         
    $ 1,853,896                  
                         
 
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIENCY)
Current Liabilities:
                       
Accounts payable
  $ 46,459                  
Accrued liabilities
    90,730       (3)        
Amounts due to affiliates, net
    10,678       (4)        
Program rights obligations
    116,190                  
Deferred revenue
    17,859                  
Credit facility debt
    50,000       (3)        
Capital lease obligations
    4,575                  
                         
Total current liabilities
    336,491                  
Program rights obligations
    338,635                  
Senior notes
    299,552       (3)        
Senior subordinated notes
    324,071       (3)        
Credit facility debt
    425,000       (3)        
Capital lease obligations
    15,677                  
Other liabilities
    89,639       (5)        
                         
Total liabilities
    1,829,065                  
Commitments and contingencies
                       
Stockholder’s equity (deficiency)
    24,831       (6)        
                         
                         
    $ 1,853,896                  
                         


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AMC NETWORKS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2010
(Dollars in thousands)
 
                         
          Pro Forma
       
    Historical     Adjustments     Pro Forma  
 
Revenues, net
  $ 1,078,300                          
                         
Operating expenses:
                       
Technical and operating (excluding depreciation and amortization shown below)
    366,093                  
Selling, general and administrative
    328,134                  
Restructuring credits
    (2,218 )                
Depreciation and amortization
    106,455                  
                         
      798,464                  
                         
Operating income
    279,836                  
                         
Other income (expense):
                       
Interest expense
    (75,800 )     (8)        
Interest income
    2,388                  
Miscellaneous, net
    (162 )                
                         
      (73,574 )                
                         
Income from continuing operations before income taxes
    206,262                  
Income tax expense
    (88,073 )     (9)        
                         
Income from continuing operations
    118,189                  
Loss from discontinued operations, net of income taxes
    (38,090 )                
                         
Net income
  $ 80,099                  
                         
Pro forma basic and diluted income per share
                       
Pro forma basic and diluted common stock (in thousands)
                    (10)
                         


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The unaudited pro forma adjustments to the accompanying historical financial information as of December 31, 2010, and for the year ended December 31, 2010 are described below:
 
Balance Sheet
 
(1) Adjustments to cash and cash equivalents relating to (i) estimated net cash proceeds of $     that will be received from a portion of the New AMC Networks Debt to be issued as part of the Distribution, offset by (ii) the repayment of all of the Company’s outstanding debt (excluding capital leases), of $     . The remaining approximate $1,250,000 of New AMC Networks Debt will be issued directly to Cablevision or CSC Holdings, which will use such New AMC Networks Debt to repay outstanding Cablevision or CSC Holdings debt. Adjustments to cash and cash equivalents also include a payment to Cablevision for the unfunded account balances of the Company’s employees in the Cablevision Cash Balance Pension Plan of approximately $      and the receipt of approximately $      from Cablevision for the historic contributions (net of benefits paid) made by the Company on behalf of its employees in the Cablevision Excess Cash Balance Plan and the Cablevision Excess Savings Plan. For a discussion of the Cablevision Cash Balance Pension Plan, the Cablevision Excess Cash Balance Plan and the Cablevision Excess Savings Plan, see “Executive Compensation — Historical Compensation Information — Pension Benefits.”
 
(2) Adjustments to deferred financing costs include (i) the capitalization of the estimated financing costs of approximately $      expected to be incurred in connection with the New AMC Networks Debt, consisting of $      aggregate principal amount of senior secured term loans and $      aggregate principal amount of senior unsecured notes, partially offset by (ii) the write-off of the unamortized deferred financing costs of $7,199 relating to the Company’s outstanding debt that will be repaid in connection with the Distribution.
 
(3) Adjustments to credit facility debt, senior notes, senior subordinated notes and accrued interest represent the repayment, net of unamortized discount aggregating $1,377, of the Company’s outstanding credit facility debt, senior notes and senior subordinated notes, including interest, at the Distribution date of $475,056, $308,750 and $336,240, respectively, offset by the incurrence of the New AMC Networks Debt, consisting of $      aggregate principal amount of senior secured term loans and $      aggregate principal amount of senior unsecured notes, in connection with the Distribution.
 
(4) Adjustments to accrued employee-related costs represent an increase in the liability of approximately $      resulting from the transfer to the Company from Cablevision of the Company’s employees’ participant accounts in the Cablevision Excess Savings Plan.
 
(5) Adjustments to other liabilities represent the elimination of certain liabilities for uncertain tax positions and the related accrued interest aggregating $55,766 that will be retained by Cablevision pursuant to a Tax Disaffiliation Agreement between the Company and Cablevision, partially offset by an increase of $      in the liabilities resulting from the transfer to the Company from Cablevision of the Company’s employees’ participant accounts in the Cablevision Excess Cash Balance Plan.
 
(6) Adjustments to stockholder’s equity (deficiency) include (i) a decrease of approximately $1,250,000 from a portion of the New AMC Networks Debt that will be issued to Cablevision or CSC Holdings, which will use such New AMC Networks Debt to repay outstanding Cablevision or CSC Holdings debt, (ii) a decrease relating to a loss on extinguishment of debt of $      relating to an early tender premium in connection with the redemption of the senior subordinated notes, (iii) a decrease relating to the write-off of the unamortized deferred financing costs of $7,199 relating to the Company’s existing credit facility debt, senior notes and senior subordinated notes that will be repaid with a portion of the remaining proceeds from the issuance of the New AMC Networks Debt in connection with the Distribution, (iv) a decrease of approximately $1,377 related to the unamortized discount on the Company’s existing senior notes and senior subordinated notes that will be repaid with a portion of the proceeds from the issuance of the remaining New AMC Networks Debt in connection with the Distribution, (v) a decrease of approximately $      related to the transfer to the Company from Cablevision of the Company’s employees’ participant accounts in the Cablevision Excess Cash Balance Plan, (vi) a decrease of $      relating to the contribution to Cablevision for the unfunded account balances of the Company’s employees in the Cablevision Cash Balance Pension Plan, (vii) a decrease of $      in the Company’s aggregate net deferred tax asset relating to the impact of the tax


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adjustments discussed in (7) below, partially offset by (viii) an increase to stockholder’s equity of $55,766 relating to the elimination of certain liabilities for uncertain tax positions and the related accrued interest that will be retained by Cablevision pursuant to a Tax Disaffiliation Agreement between the Company and Cablevision.
 
(7) The pro forma adjustment recorded to current deferred tax asset and noncurrent deferred tax asset, net reflects adjustments that are currently expected to result from the Distribution to Cablevision’s stockholders. Deferred tax assets and liabilities presented have been measured using the applicable corporate tax rates historically used by Cablevision. However, primarily due to different state and local apportionment factors that will be applicable to the Company as of the Distribution date, the estimated applicable corporate tax rates used to measure deferred taxes will be lower on a stand-alone basis. The resulting reduction in the Company’s net deferred tax asset of approximately $      will be recorded as an adjustment in stockholder’s equity (deficiency) as of the Distribution date. At the Distribution date, a portion of the deferred tax asset for net operating loss and tax credit carry forwards is expected to be reclassified from noncurrent deferred tax asset and presented as a current deferred tax asset.
 
Statement of Operations
 
(8) Resulting from the repayment of outstanding debt discussed in note (1) above, the adjustment represents the (i) elimination of historical interest expense related to borrowings under the Company’s outstanding debt and the associated amortization of deferred financing costs, offset by an increase in (ii) interest expense on the New AMC Networks Debt, consisting of $     aggregate principal amount of senior secured term loans and $      aggregate principal amount of senior unsecured notes to be issued by the Company in connection with the Distribution and the related amortization of deferred financing costs associated with the New AMC Networks Debt. The deferred financing costs will be amortized over the applicable life of the senior secured term loans and senior unsecured notes. The interest rate on the $      aggregate principal amount of senior secured term loans and $      aggregate principal amount of senior unsecured notes will be a variable rate and a fixed rate, respectively, in each case to be determined. For purposes of the pro forma presentation, such rate is assumed to be      % per annum for the senior secured term loans and     % per annum for the senior unsecured notes. An increase of 1/4% in each of the assumed interest rates on this debt would increase the pro forma adjustment by approximately $      for the year ended December 31, 2010.
 
(9) Represents the pro forma adjustments of approximately $      for the year ended December 31, 2010 to reflect the change in the applicable corporate income tax rates that will be lower on a stand-alone basis as compared with the applicable corporate tax rates historically used by Cablevision.
 
(10) The number of shares used to compute basic and diluted income per share is          , which is the number of shares of AMC Networks Inc. common stock assumed to be outstanding on the Distribution date, based on a distribution ratio of one share of AMC Networks Inc. common stock for every           shares of Cablevision common stock outstanding. The actual number of our basic and diluted shares outstanding will not be known until the Distribution date. For purposes of the pro forma earnings per share information, the Company used the outstanding Cablevision New York Group Class A and Class B Common Stock at          , adjusted for the distribution ratio to compute basic and diluted earnings per share. There is no dilutive impact from common stock equivalents for periods prior to the Distribution, as the Company had no dilutive securities outstanding. The dilutive effect of the Company’s share-based awards that will be issued in connection with the conversion of Cablevision’s share-based payment awards upon the Distribution and for future Company grants will be included in the computation of diluted net income per share in periods subsequent to the Distribution.


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SELECTED FINANCIAL DATA
 
The operating and balance sheet data included in the following selected financial data as of December 31, 2010 and 2009 and for each year in the three-year period ended December 31, 2010 have been derived from the audited annual consolidated financial statements of AMC Networks Inc. included elsewhere in this Information Statement, and the data as of December 31, 2008, 2007 and 2006 and for the years ended December 31, 2007 and 2006 have been derived from the unaudited annual consolidated financial statements of AMC Networks Inc., which are not included in this Information Statement. The financial information does not necessarily reflect what our results of operations and financial position would have been if we had operated as a separate publicly-traded entity during the periods presented. The selected financial data presented below should be read in conjunction with the annual financial statements included elsewhere in this Information Statement and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Unaudited Pro Forma Consolidated Financial Information.”
 
                                         
    Year Ended December 31,  
    2010     2009     2008     2007     2006  
    (Dollars in thousands)  
 
Operating Data(1):
                                       
Revenues, net
  $ 1,078,300     $ 973,644     $ 893,557     $ 754,447     $ 646,476  
                                         
Operating expenses:
                                       
Technical and operating (excluding depreciation, amortization and impairments shown below)
    366,093       310,365       314,960       276,144       246,166  
Selling, general and administrative
    328,134       313,904       302,474       256,995       242,674  
Restructuring (credits) expense
    (2,218 )     5,162       46,877       2,245        
Depreciation and amortization (including impairments)
    106,455       106,504       108,349       81,101       83,984  
                                         
      798,464       735,935       772,660       616,485       572,824  
                                         
Operating income
    279,836       237,709       120,897       137,962       73,652  
                                         
Other income (expense):
                                       
Interest expense, net
    (73,412 )     (75,705 )     (97,062 )     (113,841 )     (133,202 )
(Loss) gain on investments, net
                (103,238 )     (1,812 )     27,417  
Gain (loss) on equity derivative contracts
                66,447       24,183       (15,708 )
Loss on interest rate swap contracts, net
          (3,237 )     (2,843 )            
Loss on extinguishment of debt and write-off of deferred financing costs
                (2,424 )     (22,032 )     (6,084 )
Miscellaneous, net
    (162 )     187       379       3,140       1,998  
                                         
      (73,574 )     (78,755 )     (138,741 )     (110,362 )     (125,579 )
                                         
Income (loss) from continuing operations before income taxes
    206,262       158,954       (17,844 )     27,600       (51,927 )
Income tax (expense) benefit
    (88,073 )     (70,407 )     (2,732 )     (12,227 )     21,043  
                                         
Income (loss) from continuing operations
    118,189       88,547       (20,576 )     15,373       (30,884 )
Loss from discontinued operations, net of income taxes
    (38,090 )     (34,791 )     (26,866 )     (25,867 )     (62,808 )
                                         
      80,099       53,756       (47,442 )     (10,494 )     (93,692 )
Cumulative effect of a change in accounting principle, net of taxes
                            (155 )
                                         
Net income (loss)
  $ 80,099     $ 53,756     $ (47,442 )   $ (10,494 )   $ (93,847 )
                                         


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    December 31,  
    2010     2009     2008     2007     2006  
    (Dollars in thousands)  
 
Balance Sheet Data(1):
                                       
Program rights, net
  $ 783,830     $ 683,306     $ 649,020     $ 553,555     $ 495,449  
Investment securities pledged as collateral
                      472,347       474,131  
Total assets
    1,853,896       1,934,362       1,987,917       2,423,442       2,474,883  
Program rights obligations
    454,825       435,638       465,588       416,960       432,429  
Note payable/advances to affiliate
          190,000       190,000       130,000        
Credit facility debt(2)
    475,000       580,000       700,000       500,000       510,000  
Collateralized indebtedness
                      402,965       388,183  
Senior notes(2)
    299,552       299,283       299,014       298,745       298,476  
Senior subordinated notes(2)
    324,071       323,817       323,564       323,311       497,011  
Capital lease obligations
    20,252       24,611       21,106       24,432       18,905  
Total debt
    1,118,875       1,227,711       1,343,684       1,549,453       1,712,575  
Stockholder’s equity (deficiency)
    24,831       (236,992 )     (278,502 )     (570,665 )     (996,541 )
 
 
(1) The Company acquired Sundance Channel in June 2008. The results of Sundance Channel’s operations have been included in the consolidated financial statements from the date of acquisition. See Note 3 in the accompanying consolidated financial statements.
 
(2) As part of the Distribution, we will incur approximately $      of New AMC Networks Debt, consisting of $      aggregate principal amount of senior secured term loans and $      aggregate principal amount of senior unsecured notes. A portion of the proceeds of the New AMC Networks Debt will be used to repay all outstanding Company debt (excluding capital leases) and approximately $1,250,000 of the New AMC Networks Debt will be issued to Cablevision or CSC Holdings, which will use such New AMC Networks Debt to repay outstanding Cablevision or CSC Holdings debt. See “Description of Financing Transactions and Certain Indebtedness — Financing Transactions in Connection with the Distribution.”


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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements that constitute forward-looking information involving risks and uncertainties. In this Management’s Discussion and Analysis of Financial Condition and Results of Operations there are statements concerning our future operating and future financial performance. Words such as “expects,” “anticipates,” “believes,” “estimates,” “may,” “will,” “should,” “could,” “potential,” “continue,” “intends,” “plans” and similar words and terms used in the discussion of future operating results and future financial performance identify forward-looking statements. 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;
 
  •  demand for advertising inventory;
 
  •  the cost of, and our ability to obtain or produce, desirable programming content for our networks and film distribution businesses;
 
  •  changes in the laws or regulations under which we operate;
 
  •  the outcome of litigation and other proceedings, including the matters described in the notes to our consolidated financial statements;
 
  •  general economic conditions in the areas in which we operate;
 
  •  the state of the market for debt securities and bank loans;
 
  •  the level of our expenses;
 
  •  the level of our capital expenditures;
 
  •  future acquisitions and dispositions of assets;
 
  •  the demand for our programming among multichannel video distributors and our ability to maintain and renew affiliation agreements with multichannel video distributors;
 
  •  market demand for new programming services;
 
  •  whether pending uncompleted transactions, if any, are completed on the terms and at the times set forth (if at all);
 
  •  other risks and uncertainties inherent in our programming businesses;
 
  •  financial community and rating agency perceptions of our business, operations, financial condition and the industry in which we operate, and the additional factors described herein.
 
We disclaim any obligation to update or revise the forward-looking statements contained herein, except as otherwise required by applicable federal securities laws.
 
All dollar amounts and subscriber data included in the following Management’s Discussion and Analysis of Financial Condition and Results of Operations are presented in thousands.
 
Introduction
 
Management’s discussion and analysis, or MD&A, of our results of operations and financial condition is provided as a supplement to the audited annual consolidated financial statements and notes thereto included elsewhere herein to help provide an understanding of our financial condition, changes in financial condition and results of our operations. The information included in MD&A should be read in conjunction with the annual consolidated financial statements included in this Information Statement as well as the financial data


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set forth under “Selected Financial Data” and the pro forma consolidated financial information set forth under “Unaudited Pro Forma Consolidated Financial Information.” Our MD&A is organized as follows:
 
Business Overview.  This section provides a general description of our business, as well as other matters that we believe are important in understanding our results of operations and financial condition and in anticipating future trends.
 
Critical Accounting Policies.  This section discusses accounting policies considered to be important to an understanding of our financial condition and results of operations, and which require significant judgment and estimates on the part of management in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are discussed in the notes to our annual consolidated financial statements included elsewhere in this Information Statement.
 
Consolidated Results of Operations.  This section provides an analysis of our results of operations for the years ended December 31, 2010, 2009 and 2008. Our discussion is presented on both a consolidated and segment basis. Our two segments are: (i) National Networks and (ii) International and Other.
 
Liquidity and Capital Resources.  This section provides a discussion of our financial condition as well as an analysis of our cash flows for the years ended December 31, 2010, 2009 and 2008. The discussion of our financial condition and liquidity includes summaries of (i) our primary sources of liquidity and (ii) our contractual obligations and off balance sheet arrangements that existed at December 31, 2010.
 
Recently Issued Accounting Pronouncements Not Yet Adopted.  This section provides a discussion of recently issued accounting pronouncements not yet adopted as of December 31, 2010.
 
Business Overview
 
We manage our business through two reportable segments: (i) National Networks, which includes our four national programming networks (AMC, WE tv, IFC and Sundance Channel), as well as Wedding Central; and (ii) International and Other, which includes AMC/Sundance Channel Global, our international programming business; IFC Entertainment, our independent film distribution business; AMC Network Communications, our network technical services business; and VOOM HD. Our national networks are distributed throughout the United States by multichannel video distributors. In addition to our extensive U.S. distribution, AMC, IFC and Sundance Channel are available in Canada and Sundance Channel and WE tv are available in certain other countries throughout Europe and Asia.
 
VOOM HD historically offered a suite of channels, produced exclusively in HD and marketed for distribution to DBS and cable television distributors (“VOOM”). VOOM was available in the United States only on Cablevision’s cable television systems and on DISH Network. On December 18, 2008, the Company decided to discontinue funding the domestic offerings of VOOM. Subsequently, VOOM HD terminated the domestic offerings of VOOM. VOOM HD discontinued the VOOM international channel as of December 31, 2009. As of December 31, 2010, VOOM HD internationally distributes the Rush HD channel, a network dedicated to action and adventure sports. VOOM HD ceased distributing the Rush HD channel in Europe in April 2011. See also “Business — Legal Proceedings — DISH Network Contract Dispute.”
 
We evaluate 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, share-based compensation expense or benefit and restructuring expense or credits). We have presented the components that reconcile adjusted operating cash flow to operating income. The table below sets forth, for the periods presented, certain historical financial information for our reportable segments. For more discussion of the historical financial information for our reportable segments, see “— Results of Operations — Business Segment Results” and Note 16 in the accompanying consolidated financial statements.
 


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    Years Ended December 31,  
    2010     2009     2008  
 
Revenues, net from continuing operations
                       
National Networks
  $ 994,573     $ 896,493     $ 776,462  
International and Other
    104,499       95,921       131,028  
Inter-segment eliminations
    (20,772 )     (18,770 )     (13,933 )
                         
    $ 1,078,300     $ 973,644     $ 893,557  
                         
Operating income (loss) from continuing operations
                       
National Networks
  $ 312,525     $ 278,816     $ 245,039  
International and Other
    (29,603 )     (37,934 )     (123,815 )
Inter-segment eliminations
    ( 3,086 )     (3,173 )     (327 )
                         
    $ 279,836     $ 237,709     $ 120,897  
                         
Adjusted operating cash flow (deficit) from continuing operations
                       
National Networks
  $ 419,051     $ 380,824     $ 328,992  
International and Other
    (14,686 )     (13,553 )     (42,283 )
Inter-segment eliminations
    (3,086 )     (3,173 )     (327 )
                         
    $ 401,279     $ 364,098     $ 286,382  
                         
 
National Networks
 
In our National Networks segment, which accounted for 92% of our consolidated revenues, net of inter-segment eliminations, for the year ended December 31, 2010, we earn revenues in two principal ways. First, we receive affiliation payments from distributors. These revenues are generally based on a per subscriber fee under multi-year contracts, commonly referred to as “affiliation agreements,” which generally provide for annual affiliation rate increases. The specific affiliation fee revenues we earn vary from period to period, distributor to distributor and also vary among our networks, but are generally based upon the number of each distributor’s subscribers who receive our programming, referred to as “viewing subscribers.” The terms of certain affiliation agreements provide that the affiliation fee revenues we earn are a fixed contractual monthly fee.
 
The second principal source of revenues is from advertising. Under our affiliation agreements with our distributors, we have the right to sell a specified amount of national advertising time on certain of our programming networks. Our advertising revenues are more variable than affiliation fee revenues because virtually all of our advertising is sold on a short-term basis, not under long-term contracts. Our advertising arrangements with advertisers provide for a set number of advertising units to air over a specific period of time at a negotiated price per unit. In certain advertising sales arrangements, our programming networks guarantee specified viewer ratings for their programming. If these guaranteed viewer ratings are not met, we are generally required to provide additional advertising units to the advertiser at no charge. For these types of arrangements, a portion of the related revenue is deferred if the guaranteed viewer ratings are not met and is subsequently recognized either when we provide the required additional advertising time, the guarantee obligation contractually expires or performance requirements become remote. Most of our advertising revenues vary based upon the popularity of our programming as measured by The Nielsen Company. In 2010, our national programming networks had more than 900 advertisers representing companies in a broad range of sectors, including the food, health, retail and automotive industries. Our AMC and WE tv programming networks use a traditional advertising sales model, while Sundance Channel principally sells sponsorships. Prior to December 2010, IFC principally sold sponsorships, but since then it has migrated to a traditional advertising sales model.
 
We seek to grow our revenues by increasing the number of viewing subscribers of the distributors that carry our services. We refer to this as our “penetration.” AMC, which is widely distributed, has a more limited

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ability to increase its penetration than do WE tv, IFC and Sundance Channel. WE tv, IFC and Sundance Channel, although carried by all of the larger distributors, have higher growth opportunities due to their current penetration levels with those distributors. IFC and Sundance Channel are currently carried primarily on digital tiers, while WE tv is carried on either analog expanded basic or digital tiers. Therefore, WE tv, IFC and Sundance Channel penetration rates may increase if distributors are successful in converting their analog subscribers to digital tiers of service that include those networks. Our revenues may also increase over time through contractual rate increases stipulated in most of our affiliation agreements. In negotiating for increased or extended carriage, we have in some instances made upfront payments in exchange for additional subscribers or extended carriage, which we record as deferred carriage fees and which are amortized as a reduction to revenue over the period of the related affiliation agreements, or agreed to waive for a specified period or accept lower per subscriber fees if certain additional subscribers are provided. We also may help fund the distributors’ efforts to market our channels. We believe that these transactions generate a positive return on investment over the contract period. We seek to increase our advertising revenues by increasing the number of minutes of national advertising sold and by increasing the rates we charge for such advertising, but, ultimately, the level of our advertising revenues, in most cases, is directly related to the overall distribution of our programming, penetration of our services and the popularity (including within desirable demographic groups) of our services as measured by a rating service.
 
Our principal goals are to increase our affiliation fee revenues and our advertising revenues by increasing distribution and penetration of our services, and increasing our ratings. To do this, we must continue to contract for and produce high-quality, attractive programming. There is an increasing concentration of subscribers in the hands of a few distributors, which could create disparate bargaining power between the largest distributors and us by giving those distributors greater leverage in negotiating the price and other terms of affiliation agreements.
 
International and Other
 
Our International and Other segment includes the operations of AMC/Sundance Channel Global, our international programming business; IFC Entertainment, our independent film distribution business; AMC Network Communications, our network technical services business; and VOOM HD.
 
Although we view our international expansion as an important long-term strategy, international expansion is currently expected to represent only a small amount of our projected overall financial results over the next five years. However, international expansion could provide a benefit to our financial results if we were able to grow this portion of our business faster than expected. Similar to our domestic businesses, the most significant business challenges we expect to encounter in our international business include programming competition (from both foreign and domestic programmers), limited channel capacity on distributors’ platforms, the growth of subscribers on those platforms and economic pressures on affiliation fees. Other significant business challenges unique to international expansion include increased programming costs for international rights and translation (i.e. dubbing and subtitling), a lack of availability of international rights for our domestic programming content, increased distribution costs for cable, satellite or fiber feeds and a limited physical presence in each territory.
 
Corporate Expenses
 
Our historical results of operations reflected in our consolidated financial statements include management fee charges and the allocation of expenses related to certain corporate functions historically provided by Cablevision. These management fee charges and the expense allocations for providing certain management services to subsidiaries of the Company were based on what the Company and Cablevision considered to be reasonable reflections of the historical utilization levels of these services required in support of our business. As a separate, stand-alone public company, we will need to expand our financial, administrative and other staff to support these new requirements. In addition, we will need to add staff and systems to replace many of the functions previously provided by Cablevision. As a result, our corporate operating costs as a separate company, including those associated with being a publicly-traded company, are expected to be lower than the


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historical allocation of expenses related to certain corporate functions (including management fee charges) subsequent to the Distribution.
 
Cautionary Note Concerning Historical Financial Statements
 
Our financial information does not necessarily reflect what our results of operations and financial position would have been if we had operated as an entity separate from Cablevision, our indirect parent, during the periods presented herein.
 
Impact of Economic Conditions
 
Our future performance is dependent, to a large extent, on general economic conditions including 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.
 
Capital and credit market disruptions could cause economic downturns, which may lead to lower demand for our products, such as lower demand for television advertising and a decrease in the number of subscribers receiving our programming networks from our distributors. We have experienced some of the effects of recent market disruptions and the resulting economic instability, and continuation of events such as these may adversely impact our results of operations, cash flows and financial position.
 
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, 2010 include property and equipment, net of $68,977, other amortizable intangible assets, net of $364,882, identifiable indefinite-lived intangible assets of $19,900 and goodwill of $83,173. These assets accounted for approximately 29% of the Company’s consolidated total assets as of December 31, 2010.
 
The Company reviews its long-lived assets (property and equipment, and intangible assets subject to amortization that arose from acquisitions) 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.
 
Goodwill and indefinite-lived intangible assets, which represent Sundance Channel trademarks of $19,900, are tested annually for impairment during the first quarter (“annual impairment test date”) and upon the occurrence of certain events or substantive changes in circumstances.
 
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 utilizing an enterprise-value based premise approach. 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 goodwill 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. For the purpose of evaluating goodwill impairment at the annual impairment test date, the


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Company had five reporting units, which recognized goodwill. These reporting units are AMC, WE tv, IFC and Sundance Channel, which are included in the National Networks reportable segment, and AMC Network Communications, which is included in the International and Other reportable segment.
 
The goodwill balance as of December 31, 2010 by reporting unit is as follows:
 
         
Reporting Unit
     
 
AMC
  $ 34,251  
WE tv
    5,214  
IFC
    13,582  
Sundance Channel
    28,930  
AMC Network Communications
    1,196  
         
    $ 83,173  
         
 
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. Fair value estimates are made at a specific point in time, based on relevant information. 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. 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, and determination of appropriate market comparables and determination of whether a premium or discount should be applied to comparables. These valuations also include assumptions for the projected number of subscribers and the projected average rates per basic and viewing subscribers and growth in fixed price contractual arrangements used to determine affiliation fee revenue, access to program rights and the cost of such program 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 impairment charges related to our long-lived assets.
 
Based on the Company’s annual impairment test during the first quarter of 2010, the Company’s reporting units had significant safety margins, representing the excess of the estimated fair value of each reporting unit less its respective carrying value (including goodwill allocated to each respective reporting unit). In order to evaluate the sensitivity of the estimated fair value calculations of the Company’s reporting units on the annual impairment calculation for goodwill, the Company applied hypothetical 10%, 20% and 30% decreases to the estimated fair values of each reporting unit. These hypothetical decreases of 10%, 20% and 30% would have no impact on the goodwill impairment analysis for any of the Company’s reporting units with the exception of Sundance Channel. For Sundance Channel, which had a goodwill carrying value of $28,930 at December 31, 2010, a 23% reduction in its estimated fair value would result in a goodwill impairment test step one failure. A step one failure would require the Company to perform the second step of the goodwill impairment test to measure the amount of implied fair value of goodwill and, if required, the recognition of a goodwill impairment loss.
 
The impairment test for identifiable indefinite-lived intangible assets consists of a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
 
The Company’s indefinite-lived trademark intangible assets relate to the Company’s Sundance Channel trademarks, which were valued using a relief-from-royalty method in which the expected benefits are valued by discounting estimated royalty revenue over projected revenues covered by the trademarks. The Sundance Channel related trademarks were recorded in June 2008 when the Company completed transactions which resulted in the 100% acquisition of Sundance Channel L.L.C. Significant judgments inherent in a valuation


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include the selection of appropriate discount and royalty rates, estimating the amount and timing of estimated future cash flows and identification of appropriate continuing growth rate assumptions. The discount rates used in the analysis are intended to reflect the risk inherent in the projected future cash flows generated by the respective intangible assets.
 
Based on the Company’s annual impairment test during the first quarter of 2010, the Company’s Sundance Channel related trademarks identifiable indefinite-lived intangible assets had significant safety margins, representing the excess of the identifiable indefinite-lived intangible assets estimated fair value less their respective carrying values. In order to evaluate the sensitivity of the fair value calculations of the Company’s identifiable indefinite-lived intangible assets, the Company applied hypothetical 10%, 20% and 30% decreases to the estimated fair value of the Company’s identifiable indefinite-lived intangible assets. These hypothetical 10%, 20% and 30% decreases in estimated fair value would not have resulted in an impairment of the Company’s identifiable indefinite-lived intangible assets other than the hypothetical fair value decline at 30% would have resulted in an impairment charge of approximately $1,600.
 
During 2008, the Company recorded an impairment charge of $15,034, included in depreciation and amortization for the write-off of deferred carriage fees at VOOM HD after DISH Network ceased the distribution of VOOM in May 2008. See “Business — Legal Proceedings — DISH Network Contract Dispute.”
 
Useful Lives of Finite-Lived Intangible Assets
 
The Company has recognized intangible assets for affiliation agreements and affiliate relationships, advertiser relationships and other intangible assets as a result of purchase accounting. The Company has determined that such intangible assets have finite lives. The estimated useful lives and net carrying values of these intangible assets at December 31, 2010 are as follows:
 
                 
    Net Carrying
   
    Value at
   
    December 31,
  Estimated
    2010   Useful Lives
 
Affiliation agreements and affiliate relationships
  $ 345,464       4 to 25 years  
Advertiser relationships
  $ 19,039       3 to 10 years  
Other intangible assets
  $ 379       4 to 10 years  
 
The useful lives for the affiliation agreements and affiliate relationships were determined based upon an analysis of the weighted average remaining terms 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 major 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.
 
There have been periods when an existing affiliation 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 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 renewals. If an affiliate were to cease carrying a service on an other than temporary basis, the Company would record an impairment charge for the then remaining carrying value of that affiliation agreement and affiliate relationship 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 asset. The Company also would evaluate whether the remaining useful life of the affiliation agreement and affiliate relationship intangible asset remained appropriate. Based on December 31, 2010 carrying values, if the estimated remaining life of all affiliation agreements and affiliate


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relationships were shortened by 10%, the effect on amortization for the year ending December 31, 2011 would be to increase our annual amortization expense by approximately $7,944.
 
Program Rights
 
Rights to programming, including feature films and episodic series, acquired under license agreements are stated at the lower of amortized cost or net realizable value. Such licensed rights along with the related obligations are recorded at the contract value when a license agreement is executed, unless there is uncertainty with respect to either cost, acceptability or availability. If such uncertainty exists, those rights and obligations are recorded at the earlier of when the uncertainty is resolved or when the license period begins. Costs are amortized to technical and operating expense on a straight-line basis over a period not to exceed the respective license periods.
 
Our owned original programming is primarily produced by independent production companies, with the remainder produced by us. Owned original programming costs, including estimated participation and residual costs, qualifying for capitalization as program rights 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 attributable revenue can change based upon programming market acceptance, levels of affiliation 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 expense or result in an impairment charge.
 
We periodically review the programming usefulness of our licensed and owned original program rights based on a series of factors, including ratings, type and quality of program material, standards and practices, and fitness for exhibition. If it is determined that film or other program rights have no future programming usefulness, a write-off of the unamortized cost is recorded in technical and operating expense. Other than those recorded in connection with VOOM HD’s restructuring activities (see Note 4 in the accompanying consolidated financial statements), impairment charges of $1,122 and $7,778 were recorded for the years ended December 31, 2010 and 2009, respectively. There were no impairment charges recorded for the year ended December 31, 2008.
 
Valuation of Deferred Tax Assets:
 
Deferred tax assets have resulted primarily from the Company’s future deductible temporary differences and net operating loss carry forwards (“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 local tax credit carry forwards. The Company increased the valuation allowance by $1,398, $1,309 and $1,189 in 2010, 2009 and 2008, respectively.


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Certain Transactions
 
The following transactions occurred during the periods covered by this Management’s Discussion and Analysis of Financial Condition and Results of Operations:
 
2010 Transactions
 
On December 31, 2010, RMH transferred its membership interests in News 12 (regional news programming services), RASCO (a cable television advertising company), and certain other businesses to wholly-owned subsidiaries of Cablevision in contemplation of the Distribution. The operating results of these transferred entities through the date of transfer have been presented in discontinued operations for all periods presented in the accompanying consolidated financial statements.
 
2008 Transaction
 
In June 2008, the Company acquired a 100% interest in Sundance Channel L.L.C. for a purchase price, including transaction costs, of $482,416 and its results have been included in the accompanying consolidated financial statements from the date of acquisition.
 
Results of Operations
 
The following table sets forth on a historical basis certain items related to operations as a percentage of revenues, net for the periods indicated.
 
STATEMENT OF OPERATIONS DATA
 
                                         
    Years Ended December 31,        
    2010     2009        
          % of Net
          % of Net
    Favorable
 
    Amount     Revenues     Amount     Revenues     (Unfavorable)  
 
Revenues, net
  $ 1,078,300       100 %   $ 973,644       100 %   $ 104,656  
Operating expenses:
                                       
Technical and operating (excluding depreciation and amortization shown below)
    366,093       34       310,365       32       (55,728 )
Selling, general and administrative
    328,134       30       313,904       32       (14,230 )
Restructuring (credits) expense
    (2,218 )           5,162       1       7,380  
Depreciation and amortization
    106,455       10       106,504       11       49  
                                         
Operating income
    279,836       26       237,709       24       42,127  
Other income (expense):
                                       
Interest expense, net
    (73,412 )     (7 )     (75,705 )     (8 )     2,293  
Loss on interest rate swap contracts, net
                (3,237 )           3,237  
Miscellaneous, net
    (162 )           187             (349 )
                                         
Income from continuing operations before income taxes
    206,262       19       158,954       16       47,308  
Income tax expense
    (88,073 )     (8 )     (70,407 )     (7 )     (17,666 )
                                         
Income from continuing operations
    118,189       11       88,547       9       29,642  
Loss from discontinued operations, net of income taxes
    (38,090 )     4       (34,791 )     (4 )     (3,299 )
                                         
Net income
  $ 80,099       7 %   $ 53,756       6 %   $ 26,343  
                                         


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The following is a reconciliation of operating income to AOCF:
 
                         
    Years Ended December 31,        
    2010     2009     Favorable
 
    Amount     Amount     (Unfavorable)  
 
Operating income
  $ 279,836     $ 237,709     $ 42,127  
Share-based compensation
    17,206       14,723       2,483  
Depreciation and amortization
    106,455       106,504       (49 )
Restructuring (credits) expense
    (2,218 )     5,162       (7,380 )
                         
AOCF
  $ 401,279     $ 364,098     $ 37,181  
                         


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STATEMENT OF OPERATIONS DATA (continued)
 
                                         
    Years Ended December 31,        
    2009     2008        
          % of Net
          % of Net
    Favorable
 
    Amount     Revenues     Amount     Revenues     (Unfavorable)  
 
Revenues, net
  $ 973,644       100 %   $ 893,557       100 %   $ 80,087  
Operating expenses:
                                       
Technical and operating (excluding depreciation, amortization and impairments shown below)
    310,365       32       314,960       35       4,595  
Selling, general and administrative
    313,904       32       302,474       34       (11,430 )
Restructuring expense
    5,162       1       46,877       5       41,715  
Depreciation and amortization (including impairments)
    106,504       11       108,349       12       1,845  
                                         
Operating income
    237,709       24       120,897       14       116,812  
Other income (expense):
                                       
Interest expense, net
    (75,705 )     (8 )     (97,062 )     (11 )     21,357  
Loss on investments, net
                (103,238 )     (12 )     103,238  
Gain on equity derivative contracts
                66,447       7       (66,447 )
Loss on interest rate swap contracts, net
    (3,237 )           (2,843 )           (394 )
Loss on extinguishment of debt
                (2,424 )           2,424  
Miscellaneous, net
    187             379             (192 )
                                         
Income (loss) from continuing operations before income taxes
    158,954       16       (17,844 )     (2 )     176,798  
Income tax expense
    (70,407 )     (7 )     (2,732 )           (67,675 )
                                         
Income (loss) from continuing operations
    88,547       9       (20,576 )     (2 )     109,123  
Loss from discontinued operations, net of income taxes
    (34,791 )     (4 )     (26,866 )     (3 )     (7,925 )
                                         
Net income (loss)
  $ 53,756       6 %   $ (47,442 )     (5 )%   $ 101,198  
                                         
 
The following is a reconciliation of operating income to AOCF:
 
                         
    Years Ended December 31,        
    2009     2008     Favorable
 
    Amount     Amount     (Unfavorable)  
 
Operating income
  $ 237,709     $ 120,897     $ 116,812  
Share-based compensation
    14,723       10,259       4,464  
Depreciation and amortization (including impairments)
    106,504       108,349       (1,845 )
Restructuring expense
    5,162       46,877       (41,715 )
                         
AOCF
  $ 364,098     $ 286,382     $ 77,716  
                         


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Comparison of Consolidated Year Ended December 31, 2010 Versus Year Ended December 31, 2009
 
Consolidated Results — AMC Networks Inc.
 
We classify our operations into two reportable segments:
 
  •  National Networks, consisting of our four nationally distributed programming networks, AMC, WE tv, IFC and Sundance Channel, which are distributed throughout the United States by multichannel video distributors. The National Networks reportable segment also includes Wedding Central, a wedding-themed programming network available through a small number of distributors; and
 
  •  International and Other, consisting of AMC/Sundance Channel Global, our international programming business; IFC Entertainment, our independent film distribution business, and AMC Network Communications, our network technical services business, which supplies an array of services to the network programming industry, primarily on behalf of the programming networks of the Company. AMC and Sundance Channel are available in Canada and Sundance Channel and WE tv are available in other countries throughout Europe and Asia. The International and Other reportable segment also includes VOOM HD.
 
On December 31, 2010, RMH transferred its membership interests in News 12, RASCO and certain other businesses to wholly-owned subsidiaries of Cablevision in contemplation of the Distribution. The operating results of these transferred entities through the date of the transfer have been presented in the consolidated statements of operations as discontinued operations for all periods presented. Additionally, the net operating results following the sale of our ownership interests in the Lifeskool and Sportskool video-on-demand services in September and October 2008, respectively, which were recorded under the installment sales method, have been classified as discontinued operations for all periods presented.
 
We allocate certain amounts of our corporate overhead 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.
 
Pursuant to a management agreement with Cablevision, the Company pays a management fee calculated based on gross revenues (as defined under the terms of the management agreement) on a monthly basis. We will terminate the management agreement on the Distribution date and will not replace such agreement.
 
As a separate, stand-alone public company, we will need to expand our financial, administrative and other staff to support these new requirements. In addition, we will need to add staff and systems to replace many of the functions previously provided by Cablevision. However, our corporate operating costs as a separate company subsequent to the Distribution, including those associated with being a publicly-traded company, are expected to be lower than the historical allocation of expenses related to certain corporate functions (including management fee charges). See Note 12 of the accompanying annual consolidated financial statements for a detailed discussion of corporate expenses allocated by Cablevision.
 
We discuss our consolidated results below. This discussion focuses primarily on the relative performance of our two segments — National Networks and International and Other. Immediately following this discussion are sections that separately address the performance of each of our segments. In those sections, we provide more detailed analysis of the reasons for increases or decreases in the various line items at the segment level.
 
Revenues, net for the year ended December 31, 2010 increased $104,656 (11%) as compared to revenues, net for the prior year. The net increase is attributable to the following:
 
         
Increase (decrease) in:
       
Revenues of the National Networks segment
  $ 98,080  
Revenues of the International and Other segment
    8,578  
Inter-segment eliminations
    (2,002 )
         
    $ 104,656  
         


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Technical and operating expenses (excluding depreciation, amortization and impairments) include primarily:
 
  •  amortization of program rights, including those for feature films and non-film programming, participation and residual costs, and distribution and production related costs; and
 
  •  origination, transmission, uplinking, encryption and other operating costs.
 
Technical and operating expenses (excluding depreciation, amortization and impairments) in 2010 increased $55,728 (18%) as compared to 2009. The increase is attributable to the following:
 
         
Increase in:
       
Expenses of the National Networks segment
  $ 45,490  
Expenses of the International and Other segment
    11,910  
Inter-segment eliminations
    (1,672 )
         
    $ 55,728  
         
 
As a percentage of revenues, technical and operating expenses increased to 34% for the year ended December 31, 2010 as compared to 32% for the year ended December 31, 2009.
 
Selling, general and administrative expenses include primarily sales, marketing and advertising expenses, administrative costs, and costs of facilities. Selling, general and administrative expenses increased $14,230 (5%) for 2010 as compared to 2009. The net increase is attributable to the following:
 
         
Increase (decrease) in:
       
Expenses of the National Networks segment
  $ 15,749  
Expenses of the International and Other segment
    (1,102 )
Inter-segment eliminations
    (417 )
         
    $ 14,230  
         
 
As a percentage of revenues, selling, general and administrative expenses decreased to 30% for the year ended December 31, 2010 as compared to 32% for the year ended December 31, 2009.
 
Depreciation and amortization (including impairments) decreased $49 (less than 1%) for 2010 as compared to 2009. The net decrease is attributable to the following:
 
         
Increase (decrease) in:
       
Expenses of the National Networks segment
  $ 3,132  
Expenses of the International and Other segment
    (3,181 )
         
    $ (49 )
         
 
Adjusted operating cash flow increased $37,181 (10%) for the year ended December 31, 2010 as compared to the same period in 2009. The net increase is attributable to the following:
 
         
Increase (decrease) in:
       
AOCF of the National Networks segment
  $ 38,227  
AOCF of the International and Other segment
    (1,133 )
Inter-segment eliminations
    87  
         
    $ 37,181  
         


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Interest expense, net decreased $2,293 (3%) for 2010 as compared to 2009. The net decrease is attributable to the following:
 
         
Increase (decrease):
       
Due to higher average interest rates on our indebtedness
  $ 21  
Due to interest on the promissory note with MSG repaid in March 2010
    914  
Due to lower average debt balances
    (1,698 )
Due to an increase in interest income
    (1,552 )
Other
    22  
         
    $ (2,293 )
         
 
Loss on interest rate swap contracts, net was $3,237 for the year ended December 31, 2009. The interest rate swap contracts effectively fixed the borrowing rates on a substantial portion of the Company’s floating rate debt to limit the exposure against the risk of rising rates. The loss on interest rate swap contracts resulted from a shift in the yield curve over the life of the swap contracts. The interest rate swap contracts matured in November 2009.
 
Income tax expense attributable to continuing operations of $88,073 for the year ended December 31, 2010 resulted primarily from pretax income, state income tax expense of $10,937, tax expense of $1,398 resulting from an increase in the valuation allowance with regard to certain local income tax credit carry forwards, tax expense of $1,236 for the impact of a change in the state rate used to measure deferred taxes and tax expense of $1,890, including accrued interest, related to uncertain tax positions.
 
Income tax expense attributable to continuing operations of $70,407 for the year ended December 31, 2009 resulted primarily from pretax income, state income tax expense of $9,238, tax expense of $1,309 resulting from an increase in the valuation allowance with regard to certain local income tax credit carry forwards, tax expense of $638 for the impact of a change in the state rate used to measure deferred taxes and tax expense of $3,250, including accrued interest, related to uncertain tax positions.
 
Loss from discontinued operations
 
Loss from discontinued operations, net of income taxes, for the years ended December 31, 2010 and 2009 reflects the following items, net of related income taxes and noncontrolling interests:
 
                 
    Years Ended December 31,  
    2010     2009  
 
Net operating results of News 12, RASCO and other transferred entities, net of income taxes
  $ (38,555 )   $ (36,960 )
Other, net of income taxes
    465       2,169  
                 
    $ (38,090 )   $ (34,791 )
                 
 
Business Segment Results
 
National Networks
 
The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenues, net for our National Networks segment.
 


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    Years Ended December 31,        
    2010     2009        
          % of Net
          % of Net
    Favorable
 
    Amount     Revenues     Amount     Revenues     (Unfavorable)  
 
Revenues, net
  $ 994,573       100 %   $ 896,493       100 %   $ 98,080  
Technical and operating expenses (excluding depreciation and amortization)
    317,819       32       272,329       30       (45,490 )
Selling, general and administrative expenses
    271,494       27       255,745       29       (15,749 )
Depreciation and amortization
    92,735       9       89,603       10       (3,132 )
                                         
Operating income
  $ 312,525       31 %   $ 278,816       31 %   $ 33,709  
                                         
 
The following is a reconciliation of operating income to AOCF:
 
                         
    Years Ended December 31,        
    2010     2009     Favorable
 
    Amount     Amount     (Unfavorable)  
 
Operating income
  $ 312,525     $ 278,816     $ 33,709  
Share-based compensation
    13,791       12,405       1,386  
Depreciation and amortization
    92,735       89,603       3,132  
                         
AOCF
  $ 419,051     $ 380,824     $ 38,227  
                         
 
Revenues, net for the year ended December 31, 2010 increased $98,080 (11%) as compared to revenues, net for the prior year. The net increase is attributable to the following:
 
         
Increase (decrease) in:
       
Advertising revenues primarily at AMC and WE tv resulting from higher pricing per unit sold due to an increased demand for our programming by advertisers, and to a lesser extent sponsorship increases at IFC and Sundance due to an increased demand for our programming by sponsors
  $ 56,333  
Affiliation fee revenues primarily at AMC and WE tv and, to a lesser extent IFC and Sundance, resulting from increases in affiliation rates and subscribers (see below). 
    31,978  
Other revenues primarily at AMC resulting from increased foreign licensing revenues and digital download revenues derived from sales of our programming. 
    10,097  
Intra-segment eliminations
    (328 )
         
    $ 98,080  
         
 
Revenue increases discussed above are primarily derived from an increase in contractual affiliation rates charged for our services, an increase in the number of subscribers and an increase in the prices and level of advertising on our networks. These revenues are generally based on a per subscriber fee under multi-year contracts, commonly referred to as “affiliation agreements,” which generally provide for annual affiliation rate increases. The specific affiliation fee revenues we earn vary from period to period, distributor to distributor and also vary among our networks, but are generally based upon the number of each distributor’s subscribers who receive our programming. The terms of certain affiliation agreements provide that the affiliation fee revenues we earn are a fixed contractual monthly fee. Our advertising revenues are more variable than affiliation fee revenues because virtually all of our advertising is sold on a short-term basis. Our advertising arrangements with advertisers provide for a set number of advertising units to air over a specific period of time at a negotiated price per unit and, in certain advertising arrangements, guarantee specified viewer ratings. If these guaranteed viewer ratings are not met, we are generally required to provide additional advertising units to the advertiser, resulting in revenue being deferred until such time as the guarantee has been met. Most

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of our advertising revenues vary based on the popularity of our programming as measured by The Nielsen Company.
 
The following table presents certain subscriber information at December 31, 2010 and 2009:
 
                 
    Estimated Domestic Subscribers  
    2010     2009  
 
National Programming Networks:
               
AMC(1)
    96,400       95,200  
WE tv(1)
    76,800       74,900  
IFC(1)
    62,700       60,400  
Sundance Channel(2)
    39,900       37,900  
 
 
(1) Estimated U.S. subscribers as measured by Nielsen Media Research (“Nielsen”).
 
(2) Subscriber counts are based on internal management reports and represent viewing subscribers.
 
The Company believes the WE tv, IFC and Sundance Channel programming services may benefit from increased distribution, especially on the digital tiers of cable television distributors as digital penetration increases, and increased advertising revenues as cable networks, including advertiser-supported niche programming networks (such as WE tv and IFC), attract a greater advertising market share. These increases could potentially be offset by lower net effective rates per viewing subscriber for our programming services due to the consolidation of distributors and limited opportunities for increases in distribution in the United States for our substantially fully penetrated AMC programming service. Changes in the viewership ratings of our AMC, WE tv and IFC programming services may also significantly affect future advertising revenues.
 
Technical and operating expenses (excluding depreciation and amortization and impairments) for the year ended December 31, 2010 increased $45,490 (17%) as compared to 2009. The net increase is attributable to the following:
 
         
Increase (decrease) in:
       
Amortization of program rights and series development/original programming costs
  $ 40,380  
Programming related costs
    5,438  
Intra-segment eliminations
    (328 )
         
    $ 45,490  
         
 
The increase in amortization of program rights and series development/original programming costs for the year ended December 31, 2010 as compared to the prior year is due primarily to increased amortization of program rights at AMC and, to a lesser extent increased amortization of program rights at WE tv and IFC. The increase in programming related costs resulted principally from increased presentation, interstitial and formatting related costs.
 
As a percentage of revenues, technical and operating expenses increased to 32% for the year ended December 31, 2010 as compared to 30% for the year ended December 31, 2009.
 
There may be significant changes in the level of our technical and operating expenses from quarter to quarter and/or changes from year to year due to content acquisition and/or original programming costs. As additional competition for programming increases from programming services and alternate distribution technologies continue to develop in the industry, costs for content acquisition and/or original programming may increase.


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Selling, general and administrative expenses increased $15,749 (6%) for 2010 compared to 2009. The net increase is attributable to the following:
 
         
Increase in:
       
Sales and marketing primarily at AMC due to an increase in marketing expense related to an increase in the number of original programming premieres, partially offset by a decrease in such costs at IFC
  $ 8,540  
Other general and administrative costs
    752  
Management fees
    2,738  
Share-based compensation expense and expenses relating to Cablevision’s long-term incentive plans
    3,719  
         
    $ 15,749  
         
 
As a percentage of revenues, selling, general and administrative expenses decreased to 27% for the year ended December 31, 2010 as compared to 29% for the year ended December 31, 2009.
 
The increase in sales and marketing costs is also due to an increase in advertising sales related expenses at AMC and WE tv due to increased advertising sales revenues in 2010 compared to 2009. Management fees of $26,511 in 2010 compared to $23,773 in 2009 increased due to the increased revenues at AMC and WE tv in 2010. Pursuant to a management agreement with Cablevision, the Company pays a management fee calculated based on gross revenues (as defined under the terms of the management agreement) on a monthly basis. We will terminate the management agreement on the Distribution date and will not replace such agreement.
 
There may be significant changes in the level of our selling, general and administrative expenses from quarter to quarter and year to year due to the timing of promotion and marketing of original programming.
 
Depreciation and amortization increased $3,132 in 2010 as compared to 2009. Depreciation expense increased $158 for the year ended December 31, 2010 as compared to 2009. Amortization expense increased $2,974 for 2010 as compared to 2009 primarily due to the increase in amortization resulting from a reduction in the estimated useful life of certain identifiable intangible assets acquired in connection with the acquisition of Sundance Channel in June 2008, partially offset by a decrease in amortization due to certain intangible assets of AMC, WE tv and IFC becoming fully amortized in the second quarter of 2009.
 
Adjusted operating cash flow increased $38,227 in 2010 compared to 2009 due to an increase in revenues, net of $98,080, partially offset by an increase in operating expenses resulting primarily from an increase in amortization of program rights expense and marketing expense due to the increase in the number of original programming premieres, excluding share-based compensation, and depreciation and amortization expense, as discussed above.


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International and Other
 
The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenues, net for our International and Other segment.
 
                                         
    Years Ended December 31,        
    2010     2009        
          % of Net
          % of Net
    Favorable
 
    Amount     Revenues     Amount     Revenues     (Unfavorable)  
 
Revenues, net
  $ 104,499       100 %   $ 95,921       100 %   $ 8,578  
Technical and operating expenses (excluding depreciation, amortization and impairments)
    65,635       63       53,725       56       (11,910 )
Selling, general and administrative expenses
    56,965       55       58,067       61       1,102  
Restructuring (credits) expense
    (2,218 )     (2 )     5,162       5       7,380  
Depreciation and amortization (including impairments)
    13,720       13       16,901       18       3,181  
                                         
Operating loss
  $ (29,603 )     (28 )%   $ (37,934 )     (40 )%   $ 8,331  
                                         
 
The following is a reconciliation of operating loss to AOCF deficit:
 
                         
    Years Ended December 31,        
    2010     2009     Favorable
 
    Amount     Amount     (Unfavorable)  
 
Operating loss
  $ (29,603 )   $ (37,934 )   $ 8,331  
Share-based compensation
    3,415       2,318       1,097  
Restructuring (credits) expense
    (2,218 )     5,162       (7,380 )
Depreciation and amortization (including impairments)
    13,720       16,901       (3,181 )
                         
AOCF deficit
  $ (14,686 )   $ (13,553 )   $ (1,133 )
                         
 
In January 2009, the domestic programming of VOOM was shut down. This decision had a favorable impact on the operating loss of our International and Other reportable segment of $20,089 for the year ended December 31, 2010 as the loss of revenues from our VOOM domestic business was more than offset by the elimination of most operating expenses of VOOM HD. The 2010 operating loss of VOOM HD of $9,303 included primarily legal fees, costs and related expenses of approximately $11,100 in connection with the DISH Network contract dispute, partially offset by restructuring credits of $2,218. The 2009 operating loss of VOOM HD of $29,392 represents primarily legal fees, costs and related expenses of approximately $16,800 in connection with the DISH Network contract dispute and restructuring expense of $5,162.


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Revenues, net for the year ended December 31, 2010 increased $8,578 (9%) as compared to revenues, net for the prior year. The net increase is attributable to the following:
 
         
Increase (decrease) in:
       
Affiliation fee revenues principally from an increase in foreign affiliation fee revenues from the AMC Canadian distribution channel due to strengthening of the Canadian dollar (affiliation agreements with Canadian distributors are primarily denominated in Canadian dollars) as well as an increase in subscribers and the number of Canadian distributors who carry the service and, to a lesser extent, increased film distribution revenues of IFC Entertainment due to an increased number of titles being distributed and increased affiliation revenues of our other international distribution channels
  $ 10,917  
Other revenues due primarily to increased foreign licensing revenue and digital download revenue of IFC Entertainment, partially offset by a decrease in origination fee revenue at AMC Network Communications due to the termination of the Fox Sports Florida transmission agreement in November 2009
    2,672  
Revenues, net due to the shutdown of the domestic programming of VOOM in January 2009 and VOOM’s lower foreign distribution revenue
    (3,548 )
Intra-segment eliminations
    (1,463 )
         
    $ 8,578  
         
 
The decrease in revenues of VOOM was due primarily to the loss of carriage by Cablevision effective January 20, 2009.
 
Technical and operating expenses (excluding depreciation and amortization) for the year ended December 31, 2010 increased $11,910 (22%) as compared to the prior year. The net increase is attributable to the following:
 
         
Increase (decrease) in:
       
Costs at our other services (excluding VOOM) resulting primarily from increased programming costs of certain AMC/Sundance Channel Global services as a result of launches in additional territories in Europe and Asia in 2010 and increased content acquisition costs at IFC Entertainment due to an increased number of titles being distributed, partially offset by other decreases at AMC Network Communications
  $ 7,269  
Programming costs at VOOM due to the shutdown of the domestic programming of VOOM in January 2009 and certain foreign programming of VOOM
    (5,133 )
Transmission and programming related expenses primarily at AMC/Sundance Channel Global as a result of launches in additional territories in Europe and Asia in 2010
    7,845  
Intra-segment eliminations
    1,929  
         
    $ 11,910  
         
 
As a percentage of revenues, technical and operating expenses increased to 63% for the year ended December 31, 2010 as compared to 56% for the year ended December 31, 2009.


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Selling, general, and administrative expenses decreased $1,102 (2%) for the year ended December 31, 2010 as compared to the prior year. The net decrease is attributable to the following:
 
         
Increase (decrease) in:
       
General and administrative costs primarily at AMC/Sundance Channel Global and at IFC Entertainment due to increased cost allocations from RMH
  $ 1,163  
Selling, marketing and advertising costs at AMC/Sundance Channel Global due to an increased distribution of our foreign services as a result of launches in additional territories in Europe and Asia in 2010 and at IFC Entertainment due to an increased number of titles being distributed
    4,363  
Selling, general and administrative expenses at VOOM due primarily to lower legal fees, costs and related expenses in connection with the DISH Network contract dispute
    (9,176 )
Share-based compensation expense and expenses relating to Cablevision’s long-term incentive plans
    2,017  
Intra-segment eliminations
    531  
         
    $ (1,102 )
         
 
As a percentage of revenues, selling, general and administrative expenses decreased to 55% for the year ended December 31, 2010 as compared to 61% for the year ended December 31, 2009.
 
Depreciation and amortization (including impairments) decreased $3,181 in 2010 as compared to 2009 due to a decrease in depreciation expense primarily related to VOOM HD, AMC Network Communications and corporate fixed assets.
 
Restructuring credits of $2,218 for the year ended December 31, 2010 represent primarily the negotiated reductions of contract termination costs originally recorded in 2008 following the Company’s decision to discontinue funding the domestic programming of VOOM HD.
 
Restructuring expense of $5,162 for the year ended December 31, 2009 represents primarily the impairment of program rights and contract termination costs due to the Company’s decision in 2009 to discontinue funding certain international VOOM HD programming.
 
Adjusted operating cash flow deficit increased $1,133 (8%) for the year ended December 31, 2010 as compared to 2009. The increase was due primarily to an increase in operating expenses (excluding depreciation and amortization and share-based compensation) due primarily to the launch of certain AMC/Sundance Channel Global services and an increased number of titles being distributed by IFC Entertainment, partially offset by an increase in revenues, net.
 
Comparison of Consolidated Year Ended December 31, 2009 Versus Year Ended December 31, 2008
 
Consolidated Results — AMC Networks Inc.
 
Revenues, net for the year ended December 31, 2009 increased $80,087 (9%) as compared to revenues, net for the prior year. The net increase is attributable to the following:
 
         
Increase (decrease) in:
       
Revenues of the National Networks segment
  $ 120,031  
Revenues of the International and Other segment
    (35,107 )
Inter-segment eliminations
    (4,837 )
         
    $ 80,087  
         


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Technical and operating expenses (excluding depreciation, amortization and impairments) in 2009 decreased $4,595 (1%) as compared to 2008. The net decrease is attributable to the following:
 
         
Increase (decrease) in:
       
Expenses of the National Networks segment
  $ 42,683  
Expenses of the International and Other segment
    (45,190 )
Inter-segment eliminations
    (2,088 )
         
    $ (4,595 )
         
 
As a percentage of revenues, technical and operating expenses decreased to 32% for the year ended December 31, 2009 as compared to 35% for the year ended December 31, 2008.
 
Selling, general and administrative expenses increased $11,430 (4%) for 2009 as compared to 2008. The net increase is attributable to the following:
 
         
Increase (decrease) in:
       
Expenses of the National Networks segment
  $ 29,561  
Expenses of the International and Other segment
    (18,228 )
Inter-segment eliminations
    97  
         
    $ 11,430  
         
 
As a percentage of revenues, selling, general and administrative expenses decreased to 32% for the year ended December 31, 2009 as compared to 34% for the year ended December 31, 2008.
 
Restructuring expense of $5,162 for the year ended December 31, 2009 represents primarily the impairment of program rights and contract termination costs due to the Company’s decision in 2009 to discontinue funding certain international VOOM HD programming.
 
Restructuring expense of $46,877 for the year ended December 31, 2008 represents primarily the impairment of program rights of $40,974 and employee severance and other costs of $5,821 due to the Company’s decision to discontinue the domestic programming of VOOM.
 
Depreciation and amortization (including impairments) decreased $1,845 (2%) for 2009 as compared to 2008. The net decrease is attributable to the following:
 
         
Increase (decrease) in:
       
Expenses of the National Networks segment
  $ 14,092  
Expenses of the International and Other segment
    (15,937 )
         
    $ (1,845 )
         
 
Adjusted operating cash flow increased $77,716 (27%) for the year ended December 31, 2009 as compared to the same period in 2008. The net increase is attributable to the following:
 
         
Increase (decrease) in:
       
AOCF of the National Networks segment
  $ 51,832  
AOCF of the International and Other segment
    28,730  
Inter-segment eliminations
    (2,846 )
         
    $ 77,716  
         


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Interest expense, net decreased $21,357 (22%) for 2009 as compared to 2008. The net decrease is attributable to the following:
 
         
Increase (decrease):
       
Due to lower average interest rates on our indebtedness
  $ (16,113 )
Due to higher average debt balances
    711  
Due to the settlement of our collateralized indebtedness in June 2008
    (6,766 )
Due to lower interest income
    746  
Other
    65  
         
    $ (21,357 )
         
 
Loss on investments, net for the year ended December 31, 2008 of $103,238 represents primarily the decrease in the fair value of General Electric common stock owned by the Company through its disposition in June 2008. The effects of these losses are partially offset by gains on the related equity derivative contracts, net described below.
 
Gain on equity derivative contracts for the year ended December 31, 2008 consists of a gain on equity derivative contracts of $66,447. The gain on equity derivative contracts consists of realized gains due to the change in fair value of the Company’s equity derivative contracts relating to the General Electric common stock which was disposed of in connection with the acquisition of Sundance Channel L.L.C. in June 2008. The effect of this gain is partially offset by losses on investment securities pledged as collateral, which are included in loss on investments, net discussed above.
 
Loss on interest rate swap contracts, net for the years ended December 31, 2009 and 2008 consist of the loss on interest rate swap contracts of $3,237 and $2,843, respectively. The interest rate swap contracts effectively fixed the borrowing rates on a substantial portion of the Company’s floating rate debt to limit the exposure against the risk of rising rates. The loss on interest rate swap contracts resulted from a shift in the yield curve over the life of the swap contracts. The interest rate swap contracts matured in November 2009.
 
Loss on extinguishment of debt of $2,424 for the year ended December 31, 2008 resulted from the repayment of the Company’s collateralized indebtedness relating to its holdings of General Electric common stock during the second quarter of 2008.
 
Income tax expense attributable to continuing operations of $70,407 for the year ended December 31, 2009 resulted primarily from pretax income, state income tax expense of $9,238, tax expense of $1,309 resulting from an increase in the valuation allowance with regard to certain local income tax credit carry forwards, tax expense of $638 for the impact of a change in the state rate used to measure deferred taxes and tax expense of $3,250, including accrued interest, related to uncertain tax positions.
 
Income tax expense attributable to continuing operations of $2,732 for the year ended December 31, 2008 resulted primarily from the pretax loss, state income tax benefit of $985, tax expense of $1,189 resulting from an increase in the valuation allowance with regard to certain local income tax credit carry forwards, tax expense of $2,604 for the impact of a change in the state rate used to measure deferred taxes, tax expense of $1,689, including accrued interest, related to uncertain tax positions and a reduction in tax benefit of $4,054 resulting from using a lower state tax rate to measure the deferred tax benefit on an unrealized loss on a stock investment.


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Loss from discontinued operations
 
Loss from discontinued operations, net of income taxes, for the years ended December 31, 2009 and 2008 reflects the following items, net of related income taxes and noncontrolling interests:
 
                 
    Years Ended December 31,  
    2009     2008  
 
Net operating results of News 12, RASCO and other transferred entities, net of income taxes
  $ (36,960 )   $ (29,991 )
Other, net of income taxes
    2,169       3,125  
                 
    $ (34,791 )   $ (26,866 )
                 
 
Business Segment Results
 
National Networks
 
The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenues, net for our National Networks.
 
                                         
    Years Ended December 31,        
    2009     2008        
          % of Net
          % of Net
    Favorable
 
    Amount     Revenues     Amount     Revenues     (Unfavorable)  
 
Revenues, net
  $ 896,493       100 %   $ 776,462       100 %   $ 120,031  
Technical and operating expenses (excluding depreciation and amortization)
    272,329       30       229,646       30       (42,683 )
Selling, general and administrative expenses
    255,745       29       226,184       29       (29,561 )
Restructuring expense
                82             82  
Depreciation and amortization
    89,603       10       75,511       10       (14,092 )
                                         
Operating income
  $ 278,816       31 %   $ 245,039       32 %   $ 33,777  
                                         
 
The following is a reconciliation of operating income to AOCF:
 
                         
    Years Ended December 31,        
    2009     2008     Favorable
 
    Amount     Amount     (Unfavorable)  
 
Operating income
  $ 278,816     $ 245,039     $ 33,777  
Share-based compensation
    12,405       8,360       4,045  
Restructuring expense
          82       (82 )
Depreciation and amortization
    89,603       75,511       14,092  
                         
AOCF
  $ 380,824     $ 328,992     $ 51,832  
                         


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Revenues, net for the year ended December 31, 2009 increased $120,031 (15%) as compared to the prior year. The net increase is attributable to the following:
 
         
Increase (decrease) in:
       
Revenues, net due to the acquisition of Sundance Channel in June 2008
  $ 46,363  
Affiliation fee revenues at AMC, WE tv and IFC due primarily to increases in affiliation rates and in subscribers (see below). 
    37,384  
Advertising revenues due primarily to higher units sold at AMC resulting from increased inventory, as well as improved program ratings and greater advertiser demand at WE tv
    35,570  
Other revenues, net
    853  
Intra-segment eliminations
    (139 )
         
    $ 120,031  
         
 
Revenue increases discussed above are primarily derived from increases in contractual affiliation rates charged for our services, an increase in the number of subscribers and an increase in the prices and level of advertising on our networks. These revenues are generally based on a per subscriber fee under multi-year contracts, commonly referred to as “affiliation agreements,” which generally provide for annual affiliation rate increases. The specific affiliation fee revenues we earn vary from period to period, distributor to distributor and also vary among our networks, but are generally based upon the number of each distributor’s subscribers who receive our programming. The terms of certain affiliation agreements provide that the affiliation fee revenues we earn are a fixed contractual monthly fee. Our advertising revenues are more variable than affiliation fee revenues because virtually all of our advertising is sold on a short-term basis. Our advertising arrangements with advertisers provide for a set number of advertising units to air over a specific period of time at a negotiated price per unit and, in certain advertising arrangements, guarantee specified viewer ratings. If these guaranteed viewer ratings are not met, we are generally required to provide additional advertising units to the advertiser, resulting in revenue being deferred until such time as the guarantee has been met. Most of our advertising revenues vary based on the popularity of our programming as measured by The Nielsen Company.
 
The following table presents certain subscriber information at December 31, 2009 and 2008:
 
                 
    Estimated Domestic
 
    Subscribers  
    2009     2008  
    (In thousands)  
 
National Programming Networks:
               
AMC(1)
    95,200       94,500  
WE tv(1)
    74,900       72,000  
IFC(1)
    60,400       58,700  
Sundance Channel(2)
    37,900       30,800  
 
 
(1) Estimated U.S. subscribers as measured by Nielsen.
 
(2) Subscriber counts are based on internal management reports and represent viewing subscribers.


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Technical and operating expenses (excluding depreciation and amortization) for the year ended December 31, 2009 increased $42,683 (19%) as compared to 2008. The net increase is attributable to the following:
 
         
Increase (decrease) in:
       
Amortization of program rights and series development/original programming costs and programming related costs (excluding the costs of Sundance Channel (acquired in June 2008)) due to increased amortization of non-film program rights
  $ 36,278  
Amortization of program rights and series development/original programming costs and programming related costs of Sundance Channel (acquired in June 2008)
    6,544  
Intra-segment eliminations
    (139 )
         
    $ 42,683  
         
 
The increase in amortization of program rights and series development/original programming costs for the year ended December 31, 2009 as compared to the prior year is due primarily to increased amortization of program rights at AMC and, to a lesser extent, increased amortization of program rights at WE tv and IFC.
 
As a percentage of revenues, technical and operating expenses was 30% for the years ended December 31, 2009 and 2008.
 
Selling, general and administrative expenses increased $29,561 (13%) in 2009 as compared to 2008. The net increase is attributable to the following:
 
         
Increase (decrease) in:
       
Selling, general and administrative costs due to the acquisition of Sundance Channel in June 2008
  $ 16,307  
Other general and administrative costs due primarily to a shift of cost allocations from the International and Other reportable segment to the National Networks reportable segment (excluding the costs of Sundance Channel (acquired in June 2008))
    6,382  
Selling and marketing costs due primarily to a decrease in costs for the marketing and promotion of original programming at IFC
    (1,153 )
Management fees due to increased revenues of AMC and WE tv
    2,260  
Share-based compensation expense and expenses relating to Cablevision’s long-term incentive plans
    5,765  
         
    $ 29,561  
         
 
As a percentage of revenues, selling, general and administrative expenses was 29% for the years ended December 31, 2009 and 2008.
 
Management fees of $23,773 in 2009 compared to $21,513 in 2008 increased due to the increased revenues at AMC and WE tv in 2009. Pursuant to a management agreement with Cablevision, the Company pays a management fee calculated based on gross revenues (as defined under the terms of the management agreement) on a monthly basis. We will terminate the management agreement on the Distribution date and will not replace such agreement.
 
Depreciation and amortization increased $14,092 (19%) in 2009 as compared to 2008. Amortization expense increased $13,554 for 2009 as compared to 2008 primarily due to an increase of $15,053 due to the amortization of identifiable intangible assets resulting from the acquisition of Sundance Channel in June 2008, partially offset by a decrease in amortization expense of $1,499 due to certain identifiable intangible assets at AMC, WE tv and IFC becoming fully amortized in the second quarter of 2009. Depreciation expense increased $538 in 2009 as compared to 2008.
 
Adjusted operating cash flow increased $51,832 in 2009 compared to 2008 due to an increase in revenues, net of $120,031, partially offset by an increase in operating expenses, excluding share-based compensation, restructuring and depreciation and amortization expenses, as discussed above.


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International and Other
 
The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenues, net for our International and Other segment.
 
                                         
    Years Ended December 31,        
    2009     2008        
          % of Net
          % of Net
    Favorable
 
    Amount     Revenues     Amount     Revenues     (Unfavorable)  
 
Revenues, net
  $ 95,921       100 %   $ 131,028       100 %   $ (35,107 )
Technical and operating expenses (excluding depreciation and amortization shown below)
    53,725       56       98,915       75       45,190  
Selling, general and administrative expenses
    58,067       61       76,295       58       18,228  
Restructuring expense
    5,162       5       46,795       36       41,633  
Depreciation and amortization (including impairments)
    16,901       18       32,838       25       15,937  
                                         
Operating loss
  $ (37,934 )     (40 )%   $ (123,815 )     (94 )%   $ 85,881  
                                         
 
In January 2009, the domestic programming of VOOM was shut down. This decision had a favorable impact on the operating loss of our International and Other reportable segment of $76,760 for the year ended December 31, 2009 compared to the year ended December 31, 2008 as the loss of revenues from our VOOM domestic business was more than offset by the elimination of a significant portion of the operating expenses of VOOM HD. The 2009 operating loss of VOOM HD of $29,392 included primarily legal fees, costs and related expenses of approximately $16,800 in connection with the DISH Network contract dispute and restructuring expense of $5,162. The 2008 operating loss of VOOM HD of $106,152 included revenues, net of $59,855, offset by operating expenses of $104,178, restructuring expense of $46,795 and an impairment charge of $15,034 for the write-off of deferred carriage fees at VOOM HD after DISH Network ceased the distribution of VOOM in May 2008.
 
The following is a reconciliation of operating loss to AOCF deficit:
 
                         
    Years Ended
       
    December 31,        
    2009     2008     Favorable
 
    Amount     Amount     (Unfavorable)  
 
Operating loss
  $ (37,934 )   $ (123,815 )   $ 85,881  
Share-based compensation
    2,318       1,899       419  
Restructuring expense
    5,162       46,795       (41,633 )
Depreciation and amortization (including impairments)
    16,901       32,838       (15,937 )
                         
AOCF deficit
  $ (13,553 )   $ (42,283 )   $ 28,730  
                         


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Revenues, net for the year ended December 31, 2009 decreased $35,107 (27%) as compared to revenues, net for the prior year. The net decrease is attributable to the following:
 
         
Increase (decrease) in:
       
Revenues, net primarily at IFC Entertainment due to an increase in the number of titles being distributed through cable television distributors as on demand offerings
  $ 3,796  
Other revenues due primarily to an increase in film distribution revenues at IFC Entertainment due to an increased number of titles being distributed and transmission revenue at AMC Network Communications, partially offset by a decrease in production studio leasing revenue
    10,808  
Revenues, net due to the Company’s decision in December 2008 to discontinue the domestic programming of VOOM (January 2009) (see below)
    (51,519 )
Intra-segment eliminations
    1,808  
         
    $ (35,107 )
         
 
The decrease in revenues of VOOM was due primarily to the loss of DISH Network’s carriage in May 2008 and the loss of carriage by Cablevision effective January 20, 2009.
 
Technical and operating expenses (excluding depreciation, amortization and impairments) for the year ended December 31, 2009 decreased $45,190 (46%) as compared to the prior year. The net decrease is attributable to the following:
 
         
Increase (decrease) in:
       
Programming costs at VOOM due to the shutdown of the domestic programming of VOOM in January 2009
  $ (54,892 )
Programming costs (excluding VOOM) resulting primarily from an increase in distribution related costs at IFC Entertainment due to an increased number of titles being distributed and an increase at AMC/Sundance Channel Global due to the launch of Sundance Channel in certain territories of Europe and Asia and the launch of WE tv in Asia in 2009, partially offset by a decrease in transmission expenses at AMC Network Communications
    1,032  
Program acquisition related expenses primarily at IFC Entertainment due to an increased number of titles being distributed and transmission and programming related expenses at AMC/Sundance Channel Global due to the launch of Sundance Channel in certain territories of Europe and Asia and the launch of WE tv in Asia in 2009
    4,715  
Intra-segment eliminations
    3,955  
         
    $ (45,190 )
         
 
As a percentage of revenues, technical and operating expenses decreased to 56% in 2009 as compared to 75% in 2008 due primarily to the decrease in programming costs at VOOM HD.


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Selling, general, and administrative expenses decreased $18,228 (24%) for the year ended December 31, 2009 as compared to the prior year. The net decrease is attributable to the following: