Summary of CABLEVISION SYSTEMS CORP /NY

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations

All dollar amounts, except per subscriber, per unit, per share data, and tender prices per note, included in the following discussion under this Item 2 are presented in thousands.

Summary

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

Continued market disruptions from the world-wide financial crisis could cause broader economic downturns, which may lead to lower demand for our products, such as cable television services and entertainment, as well as lower levels of television and newspaper advertising, and increased incidence of customer's inability to pay for the services we provide. We have experienced some of the effects of this economic downturn. Continuation of events such as these may adversely impact our results of operations, cash flows and financial position.

Telecommunications Services

Our Telecommunications Services segment, which accounted for 72% of our condensed consolidated revenues, net of inter-segment eliminations, for the nine months ended September 30, 2009, derives revenues principally through monthly charges to subscribers of our video, high-speed data and Voice over Internet Protocol ("VoIP") services and its commercial data and voice services operations (Optimum Lightpath). These monthly charges include fees for cable television programming, as well as, in many cases, equipment rental, pay-per-view and video-on-demand, high-speed data and voice services. Revenue increases are derived from rate increases, increases in the number of subscribers to these services, including additional services sold to our existing subscribers, acquisition transactions that result in the addition of new subscribers, and upgrades by video customers in the level of programming package to which they subscribe. Our ability to increase the number of subscribers to our services is significantly related to our penetration rates (the number of subscribers to our services as a percentage of homes passed). As penetration rates increase, the number of available homes to which we can market our services generally decreases, which may contribute to a slower rate of customer and revenue growth in future periods. We also derive revenues from the sale of advertising time available on the programming carried on our cable television systems. Programming costs are the most significant part of our operating expenses and are expected to increase primarily as a result of contractual rate increases and additional service offerings.

Our cable television video services, which accounted for 43% of our consolidated revenues, net of inter-segment eliminations, for the nine months ended September 30, 2009, face competition from the direct broadcast satellite ("DBS") business and the delivery systems of incumbent telephone companies. There are two major providers of DBS service in the United States, each with significantly higher numbers of subscribers than we have. We compete with these DBS competitors by "bundling" our service offerings with products that the DBS companies cannot efficiently provide at this time, such as high-speed data service and voice service carried over the cable distribution plant, as well as by providing interactive services that are currently unavailable to a DBS subscriber. As discussed in greater detail below, we face intense competition from incumbent telephone companies, Verizon and AT&T, which offer video programming in addition to their voice and high-speed Internet access services, evidencing their commitment to compete across all of the Company's telecommunications products. To the extent the incumbents, who have financial resources that exceed those of the Company, decide to meet our pricing

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and/or features or reduce their pricing, our future growth may be negatively impacted. Historically, we have made substantial investments in the development of new and innovative programming options and other product enhancements for our customers as a way of differentiating ourselves from our competitors. We likely will continue to do so in order to remain an effective competitor, which could increase our operating expenses and capital expenditures.

Verizon and AT&T offer video programming as well as voice and high-speed Internet access services to residential customers in our service area. Verizon has constructed fiber to the home network plant that passes a significant number of households in our service area (currently about one-third of the households according to our estimates). Verizon has obtained authority to provide video service for a majority of these homes passed, on a statewide basis in New Jersey, in numerous local franchises in New York and in all of New York City. Verizon has so far not indicated any plans to offer video service in Connecticut. AT&T offers such service in competition with us in most of our Connecticut service area. Competition from incumbent telephone companies has contributed to slower video revenue growth rates in 2009 and this competition may continue to negatively impact our video revenue and our video revenue growth rates in the future.

Our high-speed data services business, which accounted for 15% of our consolidated revenues, net of inter-segment eliminations, for the nine months ended September 30, 2009, faces competition from other providers of high-speed Internet access, including DSL and fiber-based services offered by incumbent telephone companies such as Verizon and AT&T. In addition, DBS providers have tested the use of certain spectrum to offer satellite-based high-speed data services and are offering broadband data services via partnerships and marketing arrangements with other providers such as Verizon, AT&T and Earthlink. Our growth rate in cable modem customers and revenues has slowed from the growth rates we have experienced in the past due to our high penetration (52.5% of homes passed at September 30, 2009). Growth rates have also been negatively impacted, although to a lesser extent, by intensifying competition.
Accordingly, the growth rate of both customers and revenues may continue to slow in the future.

Our VoIP offering, which accounted for 10% of our consolidated revenues, net of inter-segment eliminations, for the nine months ended September 30, 2009, is competitive with incumbent offerings primarily on the basis of pricing, where unlimited United States, Canada and Puerto Rico long distance, regional and local calling, together with certain features for which the incumbent providers charge extra, are offered at one low price. Our growth rate in VoIP customers and revenues has slowed from the growth rates we have experienced in the past due to our increasing penetration (41.7% of homes passed at September 30, 2009). Growth rates have also been negatively impacted, although to a lesser extent, by intensifying competition. Accordingly, the growth rate of both customers and revenues may continue to slow in the future.

The regulatory framework for cable modem service and voice service is being developed and changes in how we, and our competitors, are regulated, including increased regulation, may affect our competitive position. In October 2009, the FCC proposed so-called "net neutrality" rules that could affect the terms and conditions under which we operate our high-speed data service and manage our broadband network. We cannot predict whether or when the FCC will adopt such rules, the final form of any such rules, or whether they could have a material adverse effect on our high-speed data service or other businesses.

Our advertising and other revenues accounted for 1% of our consolidated revenues, net of inter-segment eliminations, for the nine months ended September 30, 2009.

Optimum Lightpath, which accounted for 3% of our consolidated revenues, net of inter-segment eliminations, for the nine months ended September 30, 2009, operates in the most competitive business telecommunications market in the country and competes against the very largest telecommunications companies - incumbent local exchange companies such as Verizon and AT&T, other competitive local exchange companies and long distance companies. To the extent that dominant market leaders decide to reduce their prices, future success of our Optimum Lightpath business may be negatively impacted. The

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trend in business communications has been shifting from a wired voice medium to a wireless data medium. This could also negatively impact the future growth of Optimum Lightpath if this trend were to accelerate.

Rainbow

In our Rainbow segment, which accounted for 13% of our consolidated revenues, net of inter-segment eliminations, for the nine months ended September 30, 2009, we earn revenues in two principal ways. First, we receive affiliation fee payments from cable television system operators (including our cable television systems), DBS operators and telephone companies (collectively referred to as "operators"). These revenues are generally earned on a per subscriber basis under multi-year contracts with those operators referred to as "affiliation agreements". The specific affiliation fee revenues we earn vary from period to period, operator to operator and also vary among our networks, but are generally based upon the number of each operator's subscribers who receive our programming, referred to as "viewing subscribers", or are a fixed contractual monthly fee.

The second principal source of revenues in this segment is from advertising. Under our affiliation agreements, we have the right to sell a specific amount of national advertising time on our programming networks. Our advertising revenues are more variable than affiliation fee revenues because most of our advertising is sold on a short-term basis, not under long-term contracts. Also, most of our advertising revenues vary based upon the popularity of our programming as measured by rating services.

We seek to grow our revenues in the Rainbow segment by increasing the number of operators that carry our services and the number of viewing subscribers. We refer to this as our "penetration." AMC, which is widely distributed, has less ability to increase its penetration than our less penetrated services. Our revenues may also increase over time through contractual rate increases stipulated in certain of our affiliation agreements. In negotiating for increased or extended carriage, we may be subject to requests by operators to make upfront payments in exchange for additional subscribers or extended carriage, which we record as deferred carriage fees and which are amortized as a reduction to revenue over the period of the related affiliation agreements, or to waive for a specified period or accept lower per subscriber fees if certain additional subscribers are provided. We also may help fund the operators' efforts to market our channels. As we continue our efforts to add subscribers, our subscriber revenue may be negatively affected by subscriber acquisition fees (deferred carriage), discounted subscriber fees and other payments; however, we believe that these transactions generate a positive return on investment over the contract period. We seek to increase our advertising revenues by increasing the number of minutes of national advertising sold 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 rating services.

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

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Madison Square Garden

Madison Square Garden, which accounted for 10% of our consolidated revenues, net of inter-segment eliminations, for the nine months ended September 30, 2009, consists of three principal areas of operations: (i) a media business, which includes our regional sports programming networks (MSG network and MSG Plus), Fuse, a national music programming network, and an interactive business featuring certain targeted websites, (ii) an entertainment business, which principally includes the Radio City Christmas Spectacular, Wintuk and concerts and other live entertainment, and (iii) a sports business, which includes our professional sports teams (the New York Knicks of the National Basketball Association ("NBA"), the New York Rangers of the National Hockey League ("NHL"), the New York Liberty of the Women's National Basketball Association and the Hartford Wolf Pack of the American Hockey League and presents a variety of live sporting events. We also operate the Madison Square Garden Arena, The Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre in New York City, and The Chicago Theatre in Chicago. In addition, we have a booking arrangement relating to the Wang Theatre in Boston. In addition, Madison Square Garden has a minority ownership interest (purchased June 2008) in a musical artist management company whose controlling interest is owned by Ticketmaster Entertainment, Inc. Our investment in this minority interest is accounted for under the cost method.

Madison Square Garden faces competitive challenges in each of its business activities. We derive revenues in this segment primarily from our media business (see below), the sale of tickets to our teams' games and entertainment events where we act as promoter or co-promoter, from the sale of suite licenses, from rental fees paid to this segment by promoters that present events at our entertainment venues and the sports teams' share of league-wide distributions of national television rights fees and royalties. We also derive revenue from the sale of advertising at our owned and operated venues, from food, beverage and merchandise sales at these venues and from the licensing of our trademarks. Madison Square Garden's media business derives its revenues from affiliation fees paid by cable television operators (including our cable television systems), DBS operators and telephone companies that provide video service and from sales of advertising. Increases in affiliation fee revenues result from a combination of changes in rates and changes in the number of viewing subscribers. This segment's financial performance is affected by the continued popularity of the Knicks and Rangers and the attractiveness of its entertainment events and programming content.

Our sports teams' financial success is dependent on their ability to generate paid attendance, suite rentals, advertising sales, and food, beverage and merchandise sales. To a large extent, the ability of the teams to build excitement among fans, and therefore produce higher revenue streams, depends on the teams' popularity, which generates regular season and playoff attendance and suite licenses, and which also supports increases in prices charged for tickets, suite rentals, and advertising placement. Each team's success is dependent on its ability to acquire highly competitive personnel. The governing bodies of the NBA and the NHL may be empowered in certain circumstances to take certain actions that they deem to be in the best interest of their respective leagues, whether or not such actions would benefit our teams and whether or not we consent or object to those actions. Our sports business is also impacted by its ability to attract to our venues events such as boxing and college basketball as well as other sporting events.

Madison Square Garden's regional sports programming networks are affected by our ability to secure desired sports team programming of professional sports teams and other sports-related programming, in addition to our proprietary programming. The continued carriage and success of the teams that are telecast by us will impact our revenues from distribution and from the rates charged for affiliation and advertising, as well as the ability to attract advertisers. Fuse's business is affected by its ability to acquire or develop desired music related content for the network. While Madison Square Garden's regional sports programming networks are widely distributed in the New York metropolitan area, they, along with Fuse,

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face challenges in increasing affiliation fee revenues (including as a result of the concentration of subscribers in the hands of a few operators) and advertising revenues (including the impact of the economic slowdown on the demand for advertising).

Madison Square Garden's live entertainment business is largely dependent on the continued success of our Radio City Christmas Spectacular. Our entertainment business is further dependent on our venues' ability to attract concerts, family shows and other events. The entertainment business is also dependent on our ability to attract promoters of those types of events and, in the case of events we elect to promote or co-promote, our success is also dependent on our ability to attract customers.

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

Newsday

Newsday, which accounted for approximately 4% of our consolidated revenues, net of inter-segment eliminations, for the nine months ended September 30, 2009, consists of the Newsday daily newspaper, amNew York, Star Community Publishing Group, and online websites including newsday.com and exploreLI.com.

Since Newsday's acquisition on July 29, 2008, it has experienced a decline in consolidated revenues, earnings and operating income, as compared to the prior year periods, primarily due to decreased advertising revenues. The decrease in advertising revenues has resulted from the current economic environment and increased competition for advertising dollars from other media, particularly the Internet, and this decline has continued into 2009.

Newsday Revenue

Newsday's revenue is derived primarily from the sale of advertising and the sale of newspapers ("circulation revenue"). For the nine months ended September 30, 2009, advertising revenues accounted for 75% of the total revenues of Newsday. Newsday's business model is largely dependent on advertising revenue. Advertising revenue is derived from printed ads that run in the newspaper, preprinted advertisements that are inserted into the newspaper, and preprinted sticky notes that are applied to the front of the paper. In addition, advertising revenue also includes online advertising consisting of banner ads, video ads, floating ads, expanding ads, search engine advertising and online classified advertising for auto, recruitment and real estate. Local economic conditions can affect the levels of retail and classified newspaper advertising revenue. General economic conditions, changes in consumer spending, auto sales, housing sales, unemployment rates, job creation, readership and circulation levels and rates all impact demand for advertising. All of these factors, along with the competitive and seasonal factors discussed below, contribute to a challenging advertising sales environment and have adversely impacted our ability to maintain our advertising revenues. Newsday's advertising categories most adversely impacted by the recent economic downturn include real estate, automotive, help wanted, home improvement and financial services.

Seasonal variations in consumer spending have historically caused quarterly advertising revenues to fluctuate. Second and fourth quarter advertising revenues have historically been higher than first and third quarter advertising revenues, reflecting the historically slower economic activity in the winter and summer and the stronger fourth quarter holiday season. The level of advertising sales in any period may also be affected by advertisers' decisions to increase or decrease their advertising expenditures in response to actual or anticipated consumer demand and general economic conditions.

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The economic downturn in the newspaper industry intensified in the fourth quarter of 2008 and has continued into the third quarter of 2009 as indicated by a number of newspapers that ceased operations and/or filed for federal bankruptcy protection. For the nine months ended September 30, 2009, Newsday experienced a significant decline in advertising revenues and operating income as compared to the comparable period in 2008. A continuing economic downturn or continuing decline in advertising and/or circulation revenue would have a material adverse effect on Newsday's future consolidated revenues, earnings and operating cash flows. If Newsday's results deteriorate further, it would adversely affect the Company's consolidated revenues, earnings and operating cash flows causing possible additional impairments of certain of its indefinite-lived trademarks.

For the nine months ended September 30, 2009, circulation revenues accounted for approximately 23% of the total revenues of Newsday. Newsday's circulation revenue is derived primarily from home delivery subscriptions of the Newsday daily newspaper, and single copy sales of Newsday at the newsstand or through local retail outlets. Approximately 70% of the circulation revenues were derived from subscription sales, which provide readers with the convenience of home delivery, and are an important component of Newsday's circulation base. For the nine months ended September 30, 2009, single copy rates for Newsday ranged from $0.50 to $0.75 per daily copy and $1.25 to $2.00 per Sunday copy. Newsday's single copy sales comprised approximately 30% of circulation revenue for the nine months ended September 30, 2009. In recent years, circulation has generally declined throughout the newspaper industry, and Newsday's newspapers have generally experienced this trend. A decrease in home delivery subscriptions and single copy sales of newspapers could adversely impact circulation revenue as well as advertising revenue.

In October 2009, Newsday transitioned to a subscriber access model for its website's content. This initiative is expected to have a negative impact on website traffic. The website is available for no additional charge to Newsday subscribers and to Optimum Online customers.

Newsday Expenses

The basic material used in publishing newspapers is newsprint. Management believes Newsday's source of newsprint, along with available alternate sources, are adequate for its current needs. Newsday's largest categories of operating expenses relate to the production and distribution of its print products. These costs are driven by volume (number of newspapers printed and number of pages printed) and the number of pages printed are impacted by the volume of advertising page counts. Certain other Newsday expenses fluctuate directly with advertising sales. The expense that is most directly linked to advertising sales is sales commissions, which represents a relatively small percentage of Newsday's operating expenses.

The majority of Newsday's other costs, such as editorial content creation, rent and general and administrative expenses do not directly fluctuate with changes in advertising and circulation revenue. Accordingly, when advertising sales decline, there is a significant and immediate adverse impact on revenue and operating cash flows, which Newsday, and the newspaper industry in general, has experienced in the recent economic downturn.

As a result of the economic deterioration, and the other factors discussed above and their impact on Newsday, including the intensified decline in the fourth quarter of 2008, the Company lowered its expectations related to Newsday's anticipated revenues and operating cash flows in 2009 and future periods. These revised expectations caused the Company to evaluate whether or not an impairment had occurred in the fourth quarter of 2008 and that evaluation resulted in the Company's determination that it was necessary to recognize certain impairment charges in the fourth quarter of 2008 as disclosed in our Annual Report on Form 10-K.

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Results of Operations - Cablevision Systems Corporation

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