Time Warner Cable 2007 Annual Report Download - page 104

FCC Order Approving the Transactions
In its order approving the Adelphia Acquisition, the Federal Communications Commission (the “FCC”)
imposed conditions on TWC related to regional sports networks (“RSNs”), as defined in the order, and the
resolution of disputes pursuant to the FCC’s leased access regulations. In particular, the order provides that:
• neither TWC nor its affiliates may offer an affiliated RSN on an exclusive basis to any multichannel video
programming distributor (“MVPD”);
• TWC may not unduly or improperly influence:
• the decision of any affiliated RSN to sell programming to an unaffiliated MVPD; or
• the prices, terms and conditions of sale of programming by an affiliated RSN to an unaffiliated MVPD;
• if an MVPD and an affiliated RSN cannot reach an agreement on the terms and conditions of carriage, the
MVPD may elect commercial arbitration to resolve the dispute;
• if an unaffiliated RSN is denied carriage by TWC, it may elect commercial arbitration to resolve the dispute
in accordance with federal and FCC rules; and
• with respect to leased access, if an unaffiliated programmer is unable to reach an agreement with TWC, that
programmer may elect commercial arbitration to resolve the dispute, with the arbitrator being required to
resolve the dispute using the FCC’s existing rate formula relating to pricing terms.
The FCC has suspended this “baseball style” arbitration procedure as it relates to TWC’s carriage of
unaffiliated RSNs, although it will allow the arbitration of a claim brought by the Mid-Atlantic Sports
Network because the claim was brought prior to the suspension. Any arbitrator’s award is subject to de novo
review at the FCC as well as judicial review.
Sale of Certain North Carolina Cable Systems
The closing of the transactions with Adelphia, which included the Company’s acquisition from Adelphia of
certain cable systems in Mooresville, Cornelius, Davidson and unincorporated Mecklenburg County, North
Carolina, triggered a right of first refusal under the franchise agreements covering these systems. These
municipalities (“the Consortium”) exercised their right to acquire these systems. As a result, on December 19,
2007, these cable systems, serving approximately 14,000 basic video subscribers and approximately 30,000
revenue generating units as of the closing date, were sold for $52 million. The sale of these systems did not have a
material impact on the Company’s results of operations or cash flows.
5. MERGER-RELATED AND RESTRUCTURING COSTS
Merger-related Costs
Cumulatively, through December 31, 2007, the Company expensed non-capitalizable merger-related costs
associated with the Transactions of $56 million, of which $10 million and $38 million was incurred during the years
ended December 31, 2007 and 2006, respectively.
As of December 31, 2007, payments of $56 million have been made against this accrual, of which $14 million
and $38 million were made during the years ended December 31, 2007 and 2006, respectively.
Restructuring Costs
Cumulatively, through December 31, 2007, the Company incurred restructuring costs of $65 million as part of
its broader plans to simplify its organizational structure and enhance its customer focus, and payments of
$49 million have been made against this accrual. Of the remaining $16 million liability, $9 million is
classified as a current liability, with the remaining $7 million classified as a noncurrent liability in the
consolidated balance sheet as of December 31, 2007. Amounts are expected to be paid through 2011.
99
TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)