CWA-CVC Investor Briefing Presentation 4-15-13

7/28/2019 CWA-CVC Investor Briefing Presentation 4-15-13

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Presented by

Communications Workers of AmericaandLocker Associates, Inc.

.

April 15, 2013


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The largest telecommunications union in the world, representingover 700,000 men and women in both the private and public sectors

Represents workers at Verizon, Verizon Wireless, T-Mobile, AT&T,AT&T Mobility and many other telecommunications companies

On January 26, 2012, an overwhelming majority of the 282

Cablevision technicians in Brooklyn, NY voted to join CWA

CVC technicians have unique insight into Field Service Operations,including physical plant weaknesses, inefficiencies in operations,and daily interaction with customers

By leveraging their front-line workforce, management should utilizetheir knowledge, skill and customer relations to help turn thingsaround

CWA & Locker Associates| 2


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But instead, over the past year, management has engaged in an escalating

conflict with its Brooklyn techs to thwart their ability to win a union contract

Numerous Unfair Labor Practices against its Brooklyn and Bronx workforce,most recently illegally firing 22 Brooklyn workers who sought a meeting withmanagement

The National Labor Relations Board announced on April 5th and April 10th

that it would file complaints against CVC alleging illegal worker intimidation& other violations

NYC Council investigating possible violation of CVCs cable televisionfranchise agreements

Top NYC elected leaders demand CVC cease its illegal behavior and negotiate

a contract with CWA

CVC management can easily end this dispute by negotiating a labor contractat very little expense

CWA & Locker Associates| 3


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Flawed business model too small a customer base to cover rising costs

Mounting challenges threaten the companys future stiff competition

ongoing recovery from Superstorm Sandy

escalating programming costs

subscriber losses

significant capex needs

shrinking cash flow

burdensome debt load regulatory scrutiny in NYC

Cablevision continues to exemplify pressure on the MSO Model

-Brean Capital, March 3rd, 2013

4CWA & Locker Associates| 4


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An expanding labor dispute in New York City, CVCs largestcustomer base, makes it difficult to deal with these pressingproblems

Investors and lenders need a coherent strategy to boost cash flowand protect shareholder value by:

improving customer service increasing product offerings stabilizing, if not growing market share

This growing [labor] conflict should cause concern and attention among

investors. If left unresolved, the company risks facing an increased threat oflabor disruptions, increased legal and regulatory scrutiny, and a negativebrand impact for Dolan-associated companies, all of which could have amaterial impact on thecompanysfinancialperformance.

-- Bill de Blasio, New York City Public Advocate



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Fierce competition, especially from Verizon FiOS

58% penetration rate for CVC subscribers

continues attractive promotions seeking 150-170K new subscribersper quarter

aggressive in CVC's NYC footprint with triple play offers as low as$69.95

expects to complete FiOS build-out to all of CVCs NYC service areaby 2014

2012: Miserable results 2012 annual operating income was a mere $33.3 million

- down significantly from $238 million in 2011

4Q12 operating loss of $83.7 million- compared to a profit of $60.5 million a year earlier

CVC only able to post a 4Q'12 profit due to a one-time $350m Dish Networkpayment



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Q412: Subscriber loss 50,000 video customers lost - Wall Street expected 12,000

10,000 voice customers lost

5,000 high-speed Internet subscribers lost

- first time Cablevision has ever reported a loss of internet subscribers

analysts predict that $2.98 RSN surcharge and $5 monthly broadband

price increase could undermine customer retention

Weakening cash flow

2012 AOCF declined $395m year-over-year

Sandy accounted for only $110m of this bad news

Significant capex needs 2012 capex was $1.08b

- up significantly from $814.8m in 2011

2013 capex projected to remain at elevated levels



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Ballooning programming costs 12% increase in 2012

anticipates a similar number in 2013 driven by new contracts withCBS, Disney, NBCU, NFL Network and an 8% hike in 2014

Similar to peers, programming costs are the biggest pressure point, withabsolute growth expected to remain in the low-double digits.

-- Jason Armstrong, Goldman Sachs, 2/28/13

Cablevision reported a significant deterioration in operating and financialresults in 4Q12. While Hurricane Sandy was a material issue during thequarter, excluding the impact of the storm underlying results continue todeteriorate due to higher programming costs, competitive pressures, andan increase in capital expenditures.

-- Todd Mitchell,Brean Capital, 3/1/138CWA & Locker Associates| 8


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Stock repurchases suspended in 4Q12 purchased $188.6 million during the previous three quarters

management indicated share repurchases suspended until 1Q13

Questions about dividend payments

continuing cash pressure could force a reduction or even suspension

Analysts downgrade the stock

over the past year major equity research firms have downgraded theirratings and estimates

"While Sandy impacted the quarter, the stock is reflecting some of thecommentary about operating fundamentals.

-- Vijay Jayant, ISI



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Excessive executive turnover undermines stability 8 top executives left the company in last 2 years, including former

COO Tom Rutledge

-- after Rutledge resigned in Dec 2011, CVCs stock price dropped 13%

-- Rutledges departure was described as a bombshell by ISIs Vijay Jayant

This is a staggering loss, said Craig Moffett, an analyst at Sanford C.Bernstein. Tom Rutledge is the hands-down-best executive in thecable business.

Share price remains depressed

CVCs stock price fell 9.6% in one day (after release of 4Q12 results)

share price has declined almost 60% since 2/11

Cablevisions quarterly egg-laying streak is unmatched in the U.S. pay-TVindustry. Bloomberg, 3/1/13



11/2011CWA & Locker Associates| 11


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For years CVC has been a rumored buyout target

The Dolans attempted a private buyout in 2007 for $36/share, but Class Ashareholders rejected this offer as inadequate

Rumors of a potential CVC buyout have re-emerged

Citigroup analyst predicts a buyout in 12-18 months (March, 2013)

Class A Shareholders could once again be asked to approve an offer

lack of independent board members could trigger Class A Shareholders concerns

Escalating labor confrontation could negatively impact a buyout effort

triggers additional regulatory scrutiny

franchise agreements require NYC approval of a merger or buyout

liabilities related to CVCs Unfair Labor Practices could transfer to new owner



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Since January 2012 CVC management has engaged in a confrontation withits Brooklyn unionized employees

282 technicians voted to join CWA over a year ago but company has stalled atthe bargaining table and refused to reach a fair contract

in 2012 CVC provided a unilateral wage increase of $2-9/hour to 10,000 of theirtechnicians -- outside of Brooklyn

management refuses to discuss a wage increase for Brooklyn technicians, ineffect punishing them for joining a union

in January of this year CVC illegally fired 22 Brooklyn union members after theyrequested a meeting with management in accordance with the companys opendoor policy

mounting support for the fired workers encouraged CVC to rehire the employees

The cost of settling this dispute is minimal, but rather than settle, seniormanagement has been distracted from more pressing matters



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The National Labor Relations Board (NLRB) announced on April 5th, 2013they will file a complaint alleging that CVC:

granted unlawful wage and benefit increases to Bronx technicians in the middleof a union election to discourage their support for CWA

threatened to withhold training on new technology to Bronx workers if theyvoted to join the union, as they did to Brooklyn workers

The NLRB announced on April 10, 2013 additional complaints alleging: Bad Faith Bargaining in Brooklyn with no intent to reach an agreement

- refusal to meet other than once a month for the first four-five months; refusal to discussunion security and dues check-off (both mandatory subjects); refusal to discuss seniorityand safety; delay in producing requested information

unlawful discharge of the 22 fired technicians

unlawful surveillance of employees

instructing employees not to engage in union activity

The NLRB moved to dismiss a company-driven effort to decertify the unionin Brooklyn



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Franchisee shall recognize the right of its employees to bargaincollectively through representatives of their own choosing inaccordance with applicable law.

ongoing violations of this franchise clause could cause Cablevision tolose its NYC franchises

NYC Council investigating possible franchise violation elected leaders including the NYC Council Speaker, Public Advocate and

the Comptroller demanded that CVC bargain in good faith with CWA, inaccordance with the franchise

on February 26th, The NYC Council held a hearing to investigate CVCsalleged violations of the franchise agreement

We will not stand for Cablevision-Optimums blatant disregard of New Yorkscollective bargaining (requirement). -- Council Speaker Christine Quinn, 2/7/13



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Brooklyn is a core CVC market 431,871 total subscribers, 13% of its total nationwide customers

Verizon FiOS, CVCs major competitor, to complete its Brooklyn build-out in 2014

In spite of digital conversion and WiFi expansion, Brooklyns networkrequires additional capex to remain competitive

CWA field reports indicate Brooklyn customers are faced with:

overstretched residential fiber network

antiquated plant and equipment

out of date home cable boxes 4200 HD

overburdened residential junction boxes


In June 2012, CEO James Dolan told a group of Bronx technicians the companywas leaving Brooklyn behind and the Brooklyn techs who voted to join CWA wouldnot be trained in the new technologies


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Random CWA survey of 700 Brooklyn customers in 3Q12 yields

overwhelmingly negative responses Service: 23% poor or terrible, 38% fair and 37% favorably Speed: 27% poor, 34% fair and 39% favorably Cost: 88% felt they paid too much

Survey also indicates CVC is falling behind NYC franchise service standards

over 33% report late service appointments

nearly 25% said it took longer than 7 days to install their cable

25% had their services improperly terminated in the last year

33% experienced improper bill charges

Another CWA survey found that CVC Brooklyn internet speeds were 25%

slower than CVC Bronx speeds



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Over reliance on third party contractors could lead to service deterioration

in reversal of company policy, shifting work from skilled in-house technicians tothird party contractors, including customer service appointments

-- contractors already perform nearly 100% of Brooklyn installation work

according to a 2003 internal company document, third party contractors had a 5.8%higher rate of missed appointments and a 14.1% higher rate of failed serviceappointments

low contractor pay, inadequate training and incentive structure leads to poor service

CVC needs to focus on customer service and expanded product offerings incore markets like Brooklyn in order to stem further customer erosion

We need answers about the quality of service Brooklyn customers are getting. And weneed Cablevision to do right by its workers and negotiate a fair contract in good faith.That what Brooklyn families, both customers and employees, deserve.

--Public Advocate Bill de Blasio, 1/3/13



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Since January 2012 have met 27times and spent 258 hoursattempting to bargain a first contract, but to no avail

CWA seeks wage parity with the rest of CVCs 10,000 technicians

Estimated economic impact of settlement: between $1 million and$3 million on an annualized basis



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CVC at a crossroads -- the company must adopt a coherent strategy todeal with its mounting challenges

Escalating conflict with its Brooklyn employees which is a majordistraction for management

CEO James Dolan has been personally involved in this labor dispute

Instead of agreeing to wage parity for its Brooklyn employees CVC hasspent millions on attorneys fees obstructing contract negotiations

CWAs contract demands do not represent a significant cost to thecompany, estimated at $1-$3 million annually

By settling this labor dispute, and partnering with its frontline employees,CVC can focus on overcoming its many challenges


CWA-CVC Investor Briefing Presentation 4-15-13

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