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Executives

Patricia Armstrong - Senior Vice President, Investor Relations

James L. Dolan - President & Chief Executive Officer

Gregg Seibert - Executive Vice President and Chief Financial Officer

Analysts

Craig Moffett – Sanford Bernstein

Marci Ryvicker – Wells Fargo Securities, LLC.

Phil Cusick – JPMorgan

Jessica Reif Cohen – Bank of America

Jason Bazinet – Citigroup

Mike McCormack – Nomura Securities

James M. Ratcliffe – Barclays Capital

Thomas Eagan – Collins Stewart

Cablevision Systems Corporation (CVC) Q4 2011 Earnings Call February 28, 2012 10:00 AM ET

Operator

Good morning. My name is Kristy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cablevision's Fourth Quarter and Year End 2011 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

I would now like to turn the call over to Pat Armstrong, Senior Vice President of Investor Relations. Pat, please go ahead.

Patricia Armstrong

Thank you. Good morning and welcome to Cablevision's fourth quarter 2011 earnings conference call. Joining me this morning are Jim Dolan, President and CEO of Cablevision and Gregg Seibert, Executive Vice President and Chief Financial Officer.

Following a discussion of the Company's fourth quarter 2011 results, we will open the call for questions. If you don't have a copy of today's earnings release, it is available on our website at cablevision.com. Please take note of the following. Today's discussion may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigations Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ.

Please refer to the Company's filings with the Securities and Exchange Commission for a discussion of risks and uncertainties. The Company disclaims any obligation to update the forward-looking statements that may be discussed during this call.

Let me point out that on Page 6 of today's earnings release, we provide consolidated operations data and a reconciliation of adjusted operating cash flow, or AOCF, to operating income.

I would now like to introduce Jim Dolan, President and CEO of Cablevision.

James L. Dolan

Thank you, Pat and good morning. 2011 marked the substantial completion of a multi-year multistep process to enhance shareholder value. As most of you may recall, in August of 2008 we announced that our Board of Directors had authorized management to explore several options to enhance the value of Cablevision for its shareholders.

The spin-off of AMC last year marked another significant milestone in this process, which also included the spin-off of MSG, as well as the initiation of a quarterly dividend and a share repurchase program. Since that time we have also refinanced extended the maturities of much of our debt portfolio and completed the acquisition of the Bresnan Properties, an acquisition that we continue to believe will be accretive to shareholder value.

We remained focused on striking the right balance between returning capital to our shareholders and investing capital in the business as this balance is a critical component of our future success.

It is worth noting that since 2008, despite substantially reducing the size and cash flows of the Company by spinning off AMC and MSG, Cablevision has not only maintained its quarterly dividend, but we have increased it twice to its current level of $0.15 per share and last week, our Board of Directors approved another $0.15 per share dividend payable at the end of March.

In 2011, Cablevision also remained committed to its share repurchase program, buying back more than 20 million shares of Class A stock during the year.

Now turning to our operating results; despite a tough economy and competitive pressures, we continue to grow our high speed data and voice customers and our overall average revenue per subscriber. While we lost video subscribers in the quarter, we are taking steps to maintain or increase our video sub-base in the future.

For the fourth quarter of 2011 Cablevision's consolidated revenue grew at 7.3% and AOCF increased 21%. The Company's results reflect a number of unusual items which Gregg will talk more about shortly. Excluding these items revenue was up 1% and AOCF grew 0.8% for the quarter.

During our last call we talked about the emergence of some underlying trends with regard to certain subscriber metrics, including healthy increases in high speed data and voice customers as well as reduced video subscriber losses. This continued with our fourth quarter results. We also saw a positive momentum with our Bresnan properties which we are now calling Optimum West.

For the fourth quarter these properties reported subscriber increases across basic video, high speed data and voice services. Cablevision generated approximately $583 million in free cash flow in 2011 and an 8.7% improvement over 2010.

Over the course of the year we also continued to rollout new products and service offerings to enhance our customer's experience such as our in-home mobile apps and ultimate triple play offer. At the same time we remained focused on enhancing our existing products. As you know we were disappointed in the results of an SEC test conducted last spring on broadband speeds.

Since then we have invested the necessary time and resources to make significant improvements. As a result according to a recent test conducted by the same broadband testing firm our broadband speeds now exceed our advertised speeds throughout all periods of the day. Maintaining an industry leading level of service is critical for Cablevision.

Today, our customers expect more from us than ever before, and in 2012 we will strive to do two things. One, meet and more importantly, exceed the expectations of our existing customers. Two, prove to those who are making choices about a new provider that no one offers better products or better service than Cablevision. We will achieve this by continuing to focus on improving the product experience for our customers. Whether it's adding more content to our VoD offering or rolling out our RS-DVR product, we have one goal to ensure that our products are better than anything else on the market.

Looking ahead, one very important product for the Company is Wi-Fi. Wireless data usage is growing as more and more of our customers want to take their television and computer experience to mobile with devices such as iPads and smartphones. We think our Wi-Fi network is better equipped to handle this usage and that this wireless extension of our Optimum online service will provide a real advantage for the Company as we continue to expand our Wi-Fi coverage.

Another product that has experienced increased usages is our Optimum app for iPad, iPad touch and iPhone devices. In the fourth quarter alone, users of the app increased 70% and now exceed 500,000. Cablevision will soon launch the HBO GO and Max GO products throughout our footprint, which will allow our customers to enjoy this programming on mobile devices in or out of the home and we expect more and more programming services to be added in the coming months.

In addition to improving our products, we want to improve our relationship with our existing customers and ensure that they know that we value them in their business. We will also continue to explore fresh ways to attract new customers.

One quick example of this is a new program that offers people who are moving into Cablevision areas the opportunity for next day installation. The early results from the pilot test reflect higher completed sales than the prior Company average. This program will be rolled out across our east footprint by the end of the first quarter.

I wanted to emphasize that at its core our business is strong. Our suite of products is in high demand and we will work to continue to grow these products to meet our customers' evolving needs. This means that 2012 will be a year of investment, both in capital spending and in operating execution. In fact, we expect to accelerate certain 2013 projects into this current year resulting in higher capital expenditures in 2012. We will be smart and efficient in this process which should set us on a path towards a stronger 2013 and beyond.

We will also remain focused on pricing, packaging and the overall quality of our service. Cablevision has not announced the 2012 rate increase. While in the short term this is expected to impact our revenue and AOCF growth, we believe that actions like this will not go unnoticed by our customers and ultimately are healthy for the long term.

Our intention is to maintain discipline in our pricing and packaging, so though you may not have a rate increase this year, we have eliminated the very low price offers that have been in the market in the past few years.

Cablevision has been in the business for nearly 40 years. Our ability to change and adapt with the times has ensured our position as a leading media and telecommunications company. Looking ahead we have an excellent management team with decades of cable experience and I have tremendous confidence that together we will build on this already strong foundation to continue delivering value for both our customers and our shareholders.

I will now like to turn the call over to our Chief Financial Officer, Gregg Seibert.

Gregg Seibert

Thank you, Jim, and good morning everyone. In the fourth quarter we gained 20,300 high speed data customers some 30,500 voice customers, while basic video customers declined by 14,000. Of these amounts the Optimum West contribution was 7,000 high-speed data customers, 8,000 voice customers, and 600 basic video customers. All of these quarterly changes in total company customer counts compared favorably with both third quarter of 2011, as well as the fourth quarter of 2010. The average revenue per video customer across all properties was $154.10 in the fourth quarter, a sequential increase of $2.39. RPS in the eastern properties rose by more $2 in the quarter and the west property saw an increase in RPS of over $5.

Turning to our financials, most of you will recall that we acquired Bresnan Communications in December of 2010. As a result, while our 2011 fourth quarter numbers contain results from these properties for the entire quarter, the 2010 fourth quarter reflects approximately 2 weeks of their results. That said cable revenue for the quarter was up 8% over the prior year 1.2% after excluding Bresnan. AOCF for the Cable segment grew by 17% versus the prior year and would have been up 8% excluding Bresnan.

As Jim mentioned, there were a number of unusual items which affected the quarter. Page 4 of the earnings release contains these details, which include the impacts from the October snowstorm, compensation and executive separation adjustments and the favorable programming adjustment.

If we were to exclude each of these items, as well as the impact of Optimum West, the Cable segment AOCF would have reflected a decline of 1.8% in the quarter and the total Company consolidated AOCF would have been higher by 0.8%. The cable operating margin after adjusting for these items was 39.1%, down slightly from prior year primarily due to programming cost increases.

Advertising revenue in the fourth quarter was flat compared with last year’s fourth quarter. Ad sales in the east were down by roughly 7%, reflecting the strong political advertising market in the fourth quarter of 2010. Non-political ad sales were up 8% in the quarter in the core Cablevision footprint.

The SME business continues to withstand pressure from a tough economy as well as competition. The SME product bundle typically includes data and voice services and today’s new SME customer is taking both products to pay more than a $140 per month on average.

Our small business customers are enjoying more and more benefits in their product bundle. We have developed partnerships with top suppliers such as FedEx, Sprint and ADP to provide pre-negotiated offers on services that are essential to small businesses. In doing so we have enhanced what was already considered an attractive proposition to our small business customers.

At Optimum Lightpath, we reached the milestone in the fourth quarter by connecting to our 5,000th building. Revenue in the quarter was up 9.6% and AOCF increased 24% over the prior year period. Excluding the unusual items I referenced earlier, AOCF was up 12% versus the prior year period. Optimum West is making progress.

At year-end, digital penetration reached 77% of basic subs, high speed data subs as a percent of passings reached 40% and voice subs ended the year at 23% of passings. The average revenue per sub for the west properties was $134.60 in the fourth quarter, which as I mentioned, is up over $5 sequentially. So, we are seeing progress, but believe that there is potential for more top line growth as we continue to sell in more products to existing customers, as well as add new customers.

The AOCF margin for the west properties was 31.1% in the fourth quarter. As we have mentioned in the past, we are currently disputing a property tax assessment, but have to make certain protest payments in the meantime. We made a $5.5 million protest payment in the fourth quarter, which adversely affected our margins.

Capital spending for the west was $24 million in the quarter, as we purchased CPE to support our unit growth and extended a fiber ring, which now connects about 85% of our Optimum West customers. Cable capital spending in the fourth quarter was a $177 million including the Optimum West properties. For the full year, total cable capital spending was $654 million.

Embedded in our 2011 capital amounts are expenditures needed to pursue more and better products for our customers as well as a better customer experience. Certain of these expenditures are expected to continue into 2012, including the all digital rollout in the east, which is currently scheduled to be complete by this summer, the continuing rollout of DVR Plus, our broadband network augmentation project intended to enhance broadband speeds, which should be completed by the end of the first quarter.

And Jim mentioned our focus on Wi-Fi. We have the largest Wi-Fi network in the country with 35,000 locations throughout our footprint. Usages increased by over 300% in the past year and over 1 million devices have been registered through automatic sign in.

So, as Jim noted, 2012 will be a year of investment for Cablevision. I will reiterate that we are accelerating several capital projects and expect to see higher capital spending in 2012 than we incurred in 2011. And we expect that free cash flow will be lower in 2012 than what was generated in 2011.

Now, turning to the company’s financial position; free cash flow from continuing operations for the 12 months ended December 31, was $583 million and compares with the 2010 full year free cash flow of $536 million, an increase of 8.7%.

Free cash flow per share for the 12 months ended December 31, 2011 was $2.05, a 15% increase compared with free cash flow per share of $1.78 in the prior year period. At year end, the company’s consolidated cash position was $612 million and net debt was $10.1 billion. We have $1.35 billion undrawn and available under the $1.41 billion revolving credit facility at CSC Holdings.

In the fourth quarter we executed a number of successful financing transactions that continue to expand our debt maturity profile. First, we entered into an extended term loan A facility, which provided $600 million of term loans priced at LIBOR plus 200 basis points for the final maturity date of December 2016. The proceeds from the term loan A facility were used to make a voluntary prepayment of $339 million of the un-extended term loan A and B loans maturing during the 2012, 2013 timeframe.

We then issued $1 billion of 6.75% senior notes to 2021. Proceeds from this issuance were used to tender for approximately $682 million of CSC Holdings' senior notes due in 2012, 2014 and 2015. In addition to the tender transaction, we repurchased approximately $86 million of the 6.75% senior notes in an open market transaction.

In calculating our total Company leverage ratio, annual AOCF is determined using the latest quarter annualized. There are no exclusions for the items which I addressed earlier. As a result, at December 31, the Company's consolidated net leverage ratio was 4.1 times. Without the usual items, the consolidated ratio would have been approximately 4.5 times, which we consider to be a more representative measure of our total Company financial leverage. The CSC Holdings restricted group leverage ratio was 3.6 times.

At year end, Bresnan net debt was approximately $1 billion, $75 million undrawn and available on its revolving credit facility. The leverage ratio for the quarter were 6.9 times, down from the third quarter ratio of 7 times. We have mentioned in the past that our target leverage ratio for the total Company has been roughly 4.5 times going [a size] 5 times under certain circumstances.

As we look at our 2012 initiatives, coupled with higher programming costs, we do not anticipate AOCF growth in 2012. As a result at times we could see leverage in 2012 exceeding five times. While this is higher than our previous target, we are confident that we can manage our operations with this level of debt and will continue to monitor our debt levels closely.

The Cablevision NOL was $1.7 billion at December 31. We have taken advantage of the bonus depreciations provision in 2010 and 2011 and intend to do so again in 2012 to the extend we can, which lengthens the timing for our NOL utilization.

Turning to the company’s stock repurchase program, in the fourth quarter, we repurchased approximately 4.6 million shares of Cablevision stock, totaling $67.4 million. This represents approximately 2% of the company’s outstanding Class A shares. From inception of the program through the end of 2011, we have repurchased 31.7 million shares and our total outstanding Class A shares have decreased from $251 million to $220 million, or roughly 12.6%. At December 31, we had a $144 million remaining under our existing repurchase authorization. We currently expect to continue our repurchase program in the coming quarter.

Operator, we’d now like to open the call for questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Your first question comes from the line of Craig Moffett of Sanford Bernstein.

Craig Moffett – Sanford Bernstein

Hi, good morning. Can you give us some color on what happened with Tom Rutledge and how the separation occurred and what your succession plan is at the moment for replacing both Tom and John Bickham?

James L. Dolan

Sure. I think as we announced before Tom resigned, and as far as succession plan goes, I’m currently running the operations as Jim Dolan and we’ll continue to deep do so for the foreseeable future, while we work on to improving our operations.

Craig Moffett – Sanford Bernstein

Can you give any additional color into what led up to Tom’s departure, as it certainly a surprise to those of us who follow the company?

James L. Dolan

No.

Craig Moffett – Sanford Bernstein

Thanks Jim.

Operator

Thank you. Our next question comes from Marci Ryvicker of Wells Fargo.

Marci Ryvicker – Wells Fargo Securities, LLC.

Hi, thanks. Question on the financials, it looks like the telecom expenses were down significantly in the quarter. Can you touch on what’s going on and just also comment on the – I guess it is related to the programming item that you talked about. Can you just give us a little bit more color on what’s going on and what we can expect going forward?

James L. Dolan

Sure in terms of long-term expectations Marci, I think on the programming side, we face some of the same pressures that the rest of the cable industry faces, in terms of increasing programming costs. So going forward, obviously expect programming costs to be going up, certainly mid-to-high single-digit percentages. And this year in particular, and I’ll walk you through the programming amortization adjustment we had. This year in particular, our programming expenses for 2011 are reduced by the amount of the programming adjustment of $42.9 million. So that will make the year-to-year comparisons seem more draconian than they actually are, and the programming adjustment is very simple. We were out of contract with several programmers and we entered into new agreements with those programmers this year. Over the period of time that we were out of contract, we accrued our programming expenses at higher rates than we actually ultimately ended up paying for that programming. So that resulted in the reversal of $42.9 million.

Marci Ryvicker – Wells Fargo Securities, LLC.

Great. Thank you.

Operator

Thank you. Your next question comes from Phil Cusick of JPMorgan.

Phil Cusick – JPMorgan

Hi, guys. Thanks for taking my question. Can we talk about the sort of ARPU trend given the up shifts in customers sort of taking higher packages in your elimination of the low end plans versus the retention credits that you are giving as you sort of fight back against FiOS. How do you think about that going forward?

Gregg Seibert

You know, I think as we think about ARPU going forward, first we’ve had obviously results from Boost Plus and sort of customer self-selecting the ability to go to higher Internet speeds and paying more for those. I think the point that Jim made earlier in his comments where he noted both the fact that we at present have not done a 2012 rate increase and but at the same time we are eliminating some of the low price offers that have been in the market over the last few years.

We’re hopeful that we’re going to have offsetting impacts there, but we’re not prepared to make any type of prediction as to how those are going to work. The main theme that people should take away from the call today is that, we continue to be focused on moving the business in a direction where we both are retaining existing subscribers and have attractive economically sensible offers for new subscribers.

Phil Cusick - JPMorgan

And if you wouldn’t mind if I could expand on you mentioned something about steps to increase the video base going forward. Was that the quick installed that you mentioned on the call or was there something else going on there? Thanks.

James L. Dolan

No, no, I think overall effort that focuses both on product improvement and on the improvement in our customer relationships. It is pretty widespread throughout the entire organization we have approximately 18 different initiatives that we’re moving forward on, all designed to do those two things. We’re very hopeful that we can accomplish them all this year.

Phil Cusick – JPMorgan

Great, thank you.

Operator

Thank you. Your next question comes from Jessica Reif Cohen of Bank of America.

Jessica Reif Cohen – Bank of America

Thanks. I wanted to just [turn in] little bit on the revenue outlook for 2012. Heard what you said about pricing. I was just wondering can you give us any color on other kinds of new services besides adding more content, what are you guys thinking about in terms of home security, what do you think addressable advertising can do this year, what are you thinking about in terms of the EPG, did you guys looked at Comcast new guide, that’s just going to start rolling out the cloud-based guide? That would be helpful. Thanks.

James L. Dolan

Okay, I can cover all of those Jessica. I think, for today, the word is that we’re sticking to our knitting and working on our core products. It doesn’t mean that we don’t expect to see improvement in some of those areas that you talked about. EPG is one of the initiatives that we’re focused on for this year and anticipate launching a new EPG sometime in the third quarter I’m hoping.

Gregg Seibert

Jessica, I think additionally in terms of new products or improvements for our customers, we are continuing and in fact accelerating the pace of the RS-DVR rollout. We also have completed or virtually at the end of completing a network augmentation program, which in addition to the Internet speed work that we did last year will provide our customers with even greater speeds. So a lot of what’s happing this year particularly on the capital side is related to enhancing the customer experience and when you couple those with the success that that we pointed out in terms of the iPad app and other initiatives that we’ve had for our customers. I think that we are committed to providing the most compelling suite of services and best performing for our customers.

Jessica Reif Cohen – Bank of America

And just if I can just one moment, hand on for a minute.

Gregg Seibert

Go ahead.

Jessica Reif Cohen – Bank of America

I think it’s a little bit of a support the CapEx to increase.

Gregg Seibert

Yeah

Jessica Reif Cohen – Bank of America

If there is any color that you can give us on just kind of how much CapEx will increase this year and may be what we should be thinking about the 2013? And you know Gregg you’ve said that the buyback will continue in Q1, can you say anything you know should we assume it slowdown post Q1 because of this?

Gregg Seibert

You know with the pace we’ve been going Jessica we have enough under the existing authorization to continue and obviously dependent upon the stock price to repurchase shares of the type of pace we’ve been doing it, around 2% of the A shares a quarter. I think that is a very nice compounding effect for our shareholders over time.

And on the capital expenditure side, while we are not providing guidance, I think that this year you should certainly look to significant increases in the scalable infrastructure relating primarily to our RS-DVR and the Wi-Fi roll out. And again these increases in capital expenditures are primarily in [Cable East] to a lesser extent we expect the increases to be in CPE, it’s a continuation of the digitization process purchasing boxes and routers, our box inventories got quite low at the end of last year and we’re just investing in the business for growth.

Jessica Reif Cohen – Bank of America

But would your expectation to decrease in 2013?

Gregg Seibert

If we can accomplish what we intend to accomplish in 2012, I would anticipate that capital expenditures will go down.

James L. Dolan

Right, but let me reiterate it. We have a lot to accomplish in 2012 that they are anticipate that we’re going to be able to do it. And if we are, then we should have a decrease, yes, but we have much to get done in this year.

Jessica Reif Cohen – Bank of America

Okay. Thank you.

Operator

Thank you. Your next question comes from Jason Bazinet from Citi.

Jason Bazinet – Citigroup

Yeah, I just. Do you mind if we go back just for one second on these five adjustment items that you sort of referred to and elaborated on a bit, how in terms of modeling AOCF going forward? Am I right that the $38 million that’s just the Bresnan ACOF, so that’s going to be recurring the storm costs, executive comp, and the compensation adjustment all truly one-time, is that the right way to think about it?

Gregg Seibert

And the programming, I don’t know Jason, if you included the programming adjustment and that would be yes.

Jason Bazinet – Citigroup

Okay. Thank you very much.

Gregg Seibert

They are in effect one-time items that the accounts don’t let us classify as non-one-time item. So, Jim’s looking at me and I’m sure the comment he’s make is that we have storms all falling in the winter, so I shouldn’t count on every storm...

James L. Dolan

Yeah, there will be no storms this fall as part of our plan.

Gregg Seibert

But other than that they are non-recurring.

Jason Bazinet – Citigroup

Okay.

James L. Dolan

Okay. We can anticipate that they will be non-recurring.

Jason Bazinet – Citigroup

I appreciate it. Okay. Thank you.

Operator

Thank you. The next question comes from Mike McCormack of Nomura Securities.

Mike McCormack – Nomura Securities

Hey guys thanks. Can you just walk through a couple of levers when you talked about obviously no price increase in 2012? I think all pay-TV operators are facing the same issues on programming costs, inflationary increases, but you already kept AOCF flat. What are the levers you have to pull there? And then secondly, in the Lightpath business, picking up some data points from the telecom providers that we’re seeing better activity, sort of your demand picking up, are you guys seeing that same thing in for Lightpath? Thanks.

Gregg Seibert

In terms of Lightpath, where we don’t provide guidance, but I’ll say that the Lightpath business has continued to be a strong business for us. In terms of some of the levers here, we certainly look to retaining more subscribers this year than we did last year and potentially even growing subscribers, but again, we’re not providing guidance on that. And I’m sorry, I missed the third part of the question?

Mike McCormack – Nomura Securities

No, there wasn’t a third part, just sort of trying to get to levers of keeping AOCF flat with no price increase.

James L. Dolan

Mike, the other one is that the introductory offers that have been in the marketplace we feel have been low. And so we think that will be – that you won’t see those again, probably I don’t think ever at the rates that they were. So you’ll see a rise in the introductory rates, which should also be a lever that helps us with that.

Mike McCormack – Nomura Securities

Great. Thanks, guys.

Operator

Thank you. Your next question comes from James Ratcliffe of Barclays Capital.

James M. Ratcliffe – Barclays Capital

Good morning. Thanks for taking the question. Couple if I could. First off all, how much of the net compensation adjustment was actually in cash?

Gregg Seibert

You know, I think in terms of any compensation details, you’ll be able to see those when our proxy is filed.

James M. Ratcliffe – Barclays Capital

Okay, great. And secondly, talking about no EBITDA growth in 2012 is the baseline for that, that we should be looking at essentially the $2,105 million and then adding back the $146 million for Bresnan, so about $2,250 million, is the apples-to-apples numbers?

Gregg Seibert

Yeah. We are not going to provide guidance on numbers. I think what you should look at this year is you should assume, as we pointed out earlier that we will have the type of programming increases that are consistent with what’s happening in the rest of the business and obviously not raising rates this year. It doesn’t give us the type of offset for that that we have had in past years.

James M. Ratcliffe – Barclays Capital

Okay, understood. And I guess, third if you could just talk about where you are in terms of update on FiOS rollouts and what the pace of those rollouts in terms of areas that are being intensively marketed with new launches is and how that’s been changing if at all?

James L. Dolan

We’ve seen a significant slowdown in 2011 of FiOS rollouts. It looks like the only things that were really out there seeing are line extensions and things like that, but no significant new efforts.

James M. Ratcliffe – Barclays Capital

Are you seeing them at all in any of your New York City properties?

Gregg Seibert

Yeah but they are now, but I think your question was about whether they are growing and we don’t really see any future growth. They've indicated themselves that they are not looking to continue on with their expansion. So take them with their word may be.

James M. Ratcliffe – Barclays Capital

And if you could just give us finally an idea on you’ve noted $1.7 billion in NOL how much the sort of built-up deferred taxes related to accelerated depreciation that will presumably eventually reverse.

Gregg Seibert

I have my Head of Tax here I am going to ask him to answer that question for you.

James M. Ratcliffe – Barclays Capital

Okay.

Gregg Seibert

Okay. That’s great. And that’s your last question.

James M. Ratcliffe – Barclays Capital

(Inaudible) thanks.

James L. Dolan

When you look at the NOL position of $1.7 billion. There is approximately $400 million which reflects the net impact of bonus depreciation. So not only the initial write off, but also how it affects the normal churn on depreciation, so $400 million of $1.7 billion is a result of bonus depreciation.

James M. Ratcliffe – Barclays Capital

Got it. Thank you.

James L. Dolan

Great. Operator, we’re going to take one more question.

Operator

Thank you. Your final question comes from the line of Tom Eagan of Collin Stewart.

Thomas Eagan – Collins Stewart

(Inaudible) Thank you very much. I was hoping you could quantify a couple of the items, some of the individual items that affected Q4 and maybe how much they'll impact you going forward. Such as the state tax in Montana and any lower interconnection fees from Verizon, thanks.

James L. Dolan

In terms of state tax in Montana we actually ended up litigating that the trial has taken place we anticipate that we'll have a decision at some point during the first half of this year. The again we've made full payments of what the state has requested from us as we so called protest payments that we are making. We’re optimistic about the potential outcome, but obviously, it's a judicial proceeding, so we'll see what the outcome is when we have a verdict. But that is something that if we have a reversal – if our position is sustained, we'll have a reversal of some of those protest payment. So, that's something that could work into this year, but again we need the decision from the courts on that first.

Thomas Eagan – Collins Stewart

Right

James L. Dolan

And I am sorry the second question?

Thomas Eagan – Collins Stewart

And we just I know that in Q3 and I guess in Q4, you probably had lower fees from interconnection fees from Verizon. So, I was hoping that you can give us a sense of what that amount was?

Gregg Seibert

I don't have the specific amount handy. We can certainly get that to you supplementally. Obviously, as you know, we and several other cable operators have been engaged in discussions with Verizon about those types of payments. So, we're hopeful that we'll be able to reach resolution at some point in the not too distant future.

Thomas Eagan – Collins Stewart

Okay, thank you.

Gregg Seibert

Good.

Patricia Armstrong

Thank you all for joining us. That concludes our call.

Operator

Thank you, this does conclude today’s conference call. You know disconnect.

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Source: Cablevision Systems Corporation's CEO Discusses Q4 2011 Results - Earnings Call Transcript
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