Charter 2011 Annual Report Download - page 95

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CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011, 2010 AND 2009
(dollars in millions, except share or per share data or where indicated)
F- 11
The Company’s revenues by product line are as follows:
Video
High-speed Internet
Telephone
Commercial
Advertising sales
Other
Successor
Year Ended December 31,
2011
$ 3,602
1,706
858
583
292
163
$ 7,204
2010
$ 3,689
1,606
823
494
291
156
$ 7,059
One Month
Ended
December 31,
2009
$ 306
127
65
39
22
13
$ 572
Predecessor
Eleven
Months Ended
November 30,
2009
$ 3,380
1,349
685
407
227
135
$ 6,183
Programming Costs
The Company has various contracts to obtain basic, digital and premium video programming from programming vendors whose
compensation is typically based on a flat fee per customer. The cost of the right to exhibit network programming under such
arrangements is recorded in operating expenses in the month the programming is available for exhibition. Programming costs are
paid each month based on calculations performed by the Company and are subject to periodic audits performed by the programmers.
Certain programming contracts contain incentives to be paid by the programmers. The Company receives these payments and
recognizes the incentives on a straight-line basis over the life of the programming agreement as a reduction of programming
expense. This offset to programming expense was $7 million, $17 million, $2 million and $24 million for the years ended
December 31, 2011 and 2010 (Successor), one month ended December 31, 2009 (Successor) and eleven months ended November
30, 2009 (Predecessor), respectively. As of December 31, 2011 and 2010 (Successor), the deferred amounts of such economic
consideration, included in other long-term liabilities, were $6 million and $12 million, respectively. Programming costs included
in the accompanying statements of operations were $1.9 billion, $1.8 billion, $146 million and $1.6 billion for the years ended
December 31, 2011 and 2010 (Successor), one month ended December 31, 2009 (Successor) and eleven months ended November
30, 2009 (Predecessor), respectively.
Advertising Costs
Advertising costs associated with marketing the Company’s products and services are generally expensed as costs are incurred.
Such advertising expense was $284 million, $266 million, $19 million and $212 million for the years ended December 31, 2011
and 2010 (Successor), one month ended December 31, 2009 (Successor) and eleven months ended November 30, 2009
(Predecessor), respectively.
Multiple-Element Transactions
In the normal course of business, the Company enters into multiple-element transactions where it is simultaneously both a customer
and a vendor with the same counterparty or in which it purchases multiple products and/or services, or settles outstanding items
contemporaneous with the purchase of a product or service from a single counterparty. Transactions, although negotiated
contemporaneously, may be documented in one or more contracts. The Company’s policy for accounting for each transaction
negotiated contemporaneously is to record each element of the transaction based on the respective estimated fair values of the
products or services purchased and the products or services sold. In determining the fair value of the respective elements, the
Company refers to quoted market prices (where available), historical transactions or comparable cash transactions.