Time Warner Cable 2006 Annual Report Download - page 41

customers than those chosen by its competitors, or if TWC offers products or services that fail to appeal to
consumers, are not available at competitive prices or that do not function as expected, its competitive position could
deteriorate, and its business and financial results could suffer.
TWC’s competitive position also may be adversely affected by various timing factors, such as the ability of its
competitors to acquire or develop and introduce new technologies, products and services more quickly than it does.
Furthermore, advances in technology, decreases in the cost of existing technologies or changes in competitors’
product and service offerings also may require TWC in the future to make additional research and development
expenditures or to offer at no additional charge or at a lower price certain products and services it currently offers to
customers separately or at a premium. In addition, the uncertainty of the costs for obtaining intellectual property
rights from third parties could impact TWC’s ability to respond to technological advances in a timely manner.
The combination of increased competition, more technologically advanced platforms, products and services,
the increasing number of choices available to consumers and the overall rate of change in media and entertainment
industries requires companies such as TWC to become more responsive to consumer needs and to adapt more
quickly to market conditions than has been necessary in the past. TWC could have difficulty managing these
changes while at the same time maintaining its rates of growth and profitability.
TWC faces certain challenges relating to the integration of the systems acquired in the Transactions into
its existing systems and TWC may not realize the anticipated benefits of the Transactions.
The Transactions have combined cable systems that were previously owned and operated by three different
companies. TWC expects that it will realize cost savings and other financial and operating benefits as a result of the
Transactions. However, due to the complexity of and risks relating to the integration of these systems, among other
factors, TWC cannot predict with certainty when these cost savings and benefits will occur or the extent to which
they actually will be achieved, if at all.
The successful integration of the Acquired Systems will depend primarily on TWC’s ability to manage the
combined operations and integrate into its operations the Acquired Systems (including management information,
marketing, purchasing, accounting and finance, sales, billing, customer support and product distribution infrastructure,
personnel, payroll and benefits, regulatory compliance and technology systems). The integration of these systems,
including the upgrade of certain portions of the Acquired Systems, requires significant capital expenditures and may
require TWC to use financial resources it would otherwise devote to other business initiatives, including marketing,
customer care, the development of new products and services and the expansion of its existing cable systems. While
TWC has planned for certain capital expenditures for, among other things, improvements to plant and technical
performance and upgrading system capacity of the Acquired Systems, TWC may be required to spend more than
anticipated for those purposes. Furthermore, these integration efforts may require more attention from TWC’s
management and impose greater strains on its technical resources than anticipated. If TWC fails to successfully
integrate the Acquired Systems, it could have a material adverse effect on TWC’s business and financial results.
Additionally, to the extent TWC encounters significant difficulties in integrating systems or other operations,
TWC’s customer care efforts may be hampered. For instance, TWC may experience higher-than-normal call
volumes under such circumstances, which might interfere with its ability to take orders, assist customers not
impacted by the integration difficulties, and conduct other ordinary course activities. In addition, depending on the
scope of the difficulties, TWC may be the subject of negative press reports or customer perception.
TWC has transitional services arrangements with Comcast under which Comcast has agreed to assist TWC by
providing certain services to applicable Acquired Systems as TWC integrates those systems into its existing
systems. Any failure by Comcast to perform under its agreements may cause the integration of the applicable
Acquired Systems to be delayed and may increase the amount of time and money TWC needs to devote to the
integration of the applicable Acquired Systems.
TWC faces risks inherent to its voice services business.
TWC may encounter unforeseen difficulties as it introduces its voice services in new operating areas, including
the Acquired Systems, and/or increases the scale of its voice service offerings in areas in which they have already
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