Comcast 2014 Annual Report Download - page 55

Table of Contents
the closing date. The Time Warner Cable merger was approved by both Comcast shareholders and Time Warner Cable
stockholders in October 2014. The Time Warner Cable merger remains subject to regulatory approval and other customary
conditions and is expected to close in early 2015.
Divestiture Transactions
The terms of the merger agreement contemplated that we would divest systems serving up to approximately 3 million of our video
customers following the Time Warner Cable merger in order to obtain applicable regulatory approvals. As a result of this
commitment, on April 25, 2014, we entered into an agreement with Charter that, if consummated, would satisfy the divestiture
undertaking. Under this agreement, following the close of the Time Warner Cable merger and subject to various conditions, we
agreed to divest cable systems which would result in a net disposition of approximately 3.7 million video customers through three
transactions: (1) a spin-
off of certain of our existing cable systems serving approximately 2.5 million of our video customers (the
“spin-off transaction”) into a newly formed public entity (“SpinCo”), (
2) an exchange of certain former Time Warner Cable cable
systems serving approximately 1.5 million video customers for Charter cable systems serving approximately 1.6 million video
customers, and (3) a sale to Charter of certain former Time Warner Cable cable systems serving approximately 1.4 million video
customers for cash (collectively, the “divestiture transactions”).
In connection with and prior to the spin-
off transaction, it is expected that SpinCo would incur new debt. The debt would consist of
credit facilities to fund cash distributions to us and notes which SpinCo would issue to us. These notes would enable us to complete
a debt-for-
debt exchange where financial institutions would exchange a portion of our debt securities for the new SpinCo notes,
which would effectively retire a portion of our debt. In the spin
-
off transaction, we would distribute the common stock of SpinCo pro
rata to the holders of all of our outstanding common stock as of the record date, which would occur following the close of the Time
Warner Cable merger. After the spin-
off transaction, a newly formed, wholly owned indirect subsidiary of Charter would merge with
and into Charter, with the effect that all shares of Charter would be converted into shares of a new holding company, which would
survive as the publicly traded parent company of Charter (“New Charter”).
New Charter would then acquire an interest in SpinCo by
issuing New Charter stock in exchange for a portion of the outstanding SpinCo stock, following which it is expected that Comcast
shareholders would own approximately 67% of SpinCo and New Charter would own approximately 33% of SpinCo. In addition,
Comcast shareholders would own New Charter stock as a result of the exchange of outstanding SpinCo stock with New Charter,
although the actual number of shares would depend on a number of factors, some of which would not be determinable until the
completion of the divestiture transactions. Following the close of the divestiture transactions, we would no longer have any
ownership interest in SpinCo.
The close of the divestiture transactions is subject to the completion of the Time Warner Cable merger, the SpinCo financing
transactions, approval by Charter’
s stockholders, regulatory approvals and other customary conditions. The Time Warner Cable
merger and the divestiture transactions are subject to separate conditions, and the Time Warner Cable merger can be completed
regardless of whether the divestiture transactions are ultimately completed. The closing of the divestiture transactions is expected
to occur 30 to 60 days following the close of the Time Warner Cable merger.
Competition
The results of operations of our reportable business segments are affected by competition, as all of our businesses operate in
intensely competitive, consumer-
driven and rapidly changing environments and compete with a growing number of companies that
provide a broad range of communications products and services and entertainment, news and information content to consumers.
Competition for our bundled cable services that include video, high-
speed Internet and/or voices services consists primarily of direct
broadcast satellite (“DBS”) providers, which have a national footprint and compete
Comcast 2014 Annual Report on Form 10
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