Time Warner Cable 2007 Annual Report Download - page 40

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is a sister company of TWC and five of TWC’s directors (including Glenn A. Britt, TWC’s President and Chief
Executive Officer) served as executive officers of Time Warner or its predecessors in the past. A number of TWC
directors and executive officers also have restricted shares, restricted stock units and/or options to purchase shares
of Time Warner common stock. These past and ongoing relationships with Time Warner and any significant
financial interest in Time Warner by these persons may present conflicts of interest that could materially adversely
affect TWC’s business, financial results or financial condition. For example, these decisions could be materially
related to:
• the nature, quality and cost of services rendered to TWC by Time Warner;
• the desirability of corporate opportunities, such as the entry into new businesses or pursuit of potential
acquisitions, particularly those that might allow TWC to compete with Time Warner; and
• employee retention or recruiting.
Time Warner and its affiliates may compete with TWC in one or more lines of business and may provide some
services under the “Time Warner” brand or similar brand names.
Time Warner and its affiliates are engaged in a diverse range of entertainment and media-related businesses,
including filmed entertainment, home video and Internet-related businesses, and these businesses may have
interests that conflict with or compete in some manner with TWC’s business. Time Warner and its affiliates are
generally under no obligation to share any future business opportunities available to it with TWC and TWC’s
Certificate of Incorporation contains provisions that release Time Warner and its affiliates, including TWC’s
directors who are also Time Warner’s employees or executive officers, from this obligation and any liability that
would result from breach of this obligation. Time Warner may deliver video, high-speed data, voice and wireless
services over DSL, satellite or other means using the “Time Warner” brand name or similar brand names, potentially
causing confusion among customers and complicating TWC’s marketing efforts. For instance, Time Warner has
licensed the use of “Time Warner Telecom,” until July 2008, and “TW Telecom” and “TWTC” to Time Warner
Telecom Inc., a former affiliate of Time Warner and a provider of managed voice and data networking solutions to
enterprise organizations, which may compete with TWC’s commercial offerings. Any competition directly with
Time Warner or its affiliates could materially adversely impact TWC’s business, financial results or financial
condition.
TWC is party to agreements with Time Warner governing the use of TWC’s brand names, including the “Time
Warner Cable” brand name that may be terminated by Time Warner if TWC fails to perform its obligations under
those agreements or if TWC undergoes a change of control.
Some of the agreements governing the use of TWC’s brand names may be terminated by Time Warner if TWC:
• commits a significant breach of its obligations under such agreements;
• undergoes a change of control, even if Time Warner causes that change of control by selling some or all of
its interest in TWC; or
• materially fail to maintain the quality standards established for the use of these brand names and the
products and services related to these brand names.
TWC licenses its brand name, “Time Warner Cable,” and the trademark “Road Runner” from affiliates of Time
Warner. If Time Warner terminates these brand name license agreements, TWC would lose the goodwill associated
with its brand names and be forced to develop new brand names, which would likely require substantial
expenditures, and TWC’s business, financial results or financial condition would likely be materially adversely
affected.
A change in Time Warner’s controlling interest in TWC may cause short-term volatility in trading volume and
market price of TWC’s common stock.
Time Warner currently owns approximately 84.0% of TWC’s common stock, which represents a 90.6% voting
interest. Time Warner may, in the future, decide to spin-off or otherwise divest its controlling interest in TWC. If
Time Warner were to spin-off or divest its interest, the profile of TWC’s stockholders would change significantly. If
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