Comcast 2014 Annual Report Download - page 99

Table of Contents
Comcast Corporation
The amount of potential common shares related to our share-
based compensation plans that were excluded from diluted EPS
because their effect would have been antidilutive was not material for 2014, 2013 and 2012.
Note 5: Significant Transactions
2014
Time Warner Cable Merger
On February 12, 2014, we entered into the merger agreement with Time Warner Cable. Time Warner Cable is among the largest
providers of video, high-
speed Internet and voice services in the United States, located mainly in five geographic areas: New York
State (including New York City), the Carolinas, the Midwest (including Ohio, Kentucky and Wisconsin), Southern California
(including Los Angeles) and Texas. Time Warner Cable stockholders will receive, in exchange for each share of Time Warner
Cable common stock owned immediately prior to the Time Warner Cable merger, 2.875 shares of our Class A common stock.
Because the exchange ratio was fixed at the time of the merger agreement and the market value of our Class A common stock will
continue to fluctuate, the number of shares of Class A common stock to be issued and the total value of the consideration
exchanged will not be determinable until 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 certain cable systems through three transactions: (1) a spin-off of certain of our existing cable systems (the “spin-
off transaction”) into a newly formed public entity (“SpinCo”), (
2) an exchange of certain former Time Warner Cable cable systems
for Charter cable systems, and (3) a sale to Charter of certain former Time Warner Cable cable systems 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
Comcast 2014 Annual Report on Form 10-K
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