Time Warner Cable 2007 Annual Report Download - page 6

PART I
Item 1. Business.
Overview
Time Warner Cable Inc. (together with its subsidiaries, “TWC” or the “Company”) is the second-largest cable
operator in the U.S., with technologically advanced, well-clustered systems located mainly in five geographic
areas—New York state (including New York City), the Carolinas, Ohio, southern California (including Los
Angeles) and Texas. As of December 31, 2007, TWC served approximately 14.6 million customers who subscribed
to one or more of its video, high-speed data and voice services, representing approximately 32.1 million revenue
generating units (“RGUs”), which reflects the total of all TWC basic video, digital video, high-speed data and voice
service subscribers.
As of December 31, 2007, TWC served approximately 13.3 million basic video subscribers. Of those,
approximately 8.0 million (or 61%) received some portion of their video services via digital transmissions (“digital
video subscribers”). Also, as of December 31, 2007, TWC served approximately 7.6 million residential high-speed
data subscribers (or 29% of estimated high-speed data service-ready homes), approximately 2.9 million Digital
Phone subscribers (or 12% of estimated voice service-ready homes), and 280,000 commercial high-speed data
subscribers. TWC markets its services separately and as “bundled” packages of multiple services and features. As of
December 31, 2007, 48% of TWC’s customers subscribed to two or more of its primary services, including 16% of
its customers who subscribed to all three primary services. Historically, TWC has focused primarily on residential
customers, while also selling video, high-speed data and commercial networking and transport services to
commercial customers. Recently, TWC has begun selling voice services to small- and medium-sized
businesses as part of an increased emphasis on its commercial business. In addition to its video, high-speed
data and voice services, TWC sells advertising time to a variety of national, regional and local businesses.
On July 31, 2006, Time Warner NY Cable LLC (“TW NY”), a subsidiary of TWC, and Comcast Corporation
(together with its subsidiaries, “Comcast”) completed their respective acquisitions of assets comprising in the
aggregate substantially all of the cable assets of Adelphia Communications Corporation (“Adelphia”) (the
“Adelphia Acquisition”). Immediately prior to the Adelphia Acquisition, TWC and Time Warner
Entertainment Company, L.P. (“TWE”), a subsidiary of TWC, redeemed Comcast’s interests in TWC and
TWE, respectively (the “TWC Redemption” and the “TWE Redemption,” respectively, and collectively, the
“Redemptions”). In addition, immediately after the Adelphia Acquisition, TW NYexchanged certain cable systems
with Comcast (the “Exchange” and collectively with the Adelphia Acquisition and the Redemptions, the
“Transactions”). On February 13, 2007, Adelphia’s Chapter 11 reorganization plan became effective and,
under applicable securities law regulations and provisions of the U.S. bankruptcy code, TWC became a public
company subject to the requirements of the Securities Exchange Act of 1934, as amended (“the Exchange Act”).
Under the terms of the reorganization plan, during 2007, substantially all of the shares of TWC Class A common
stock, par value $.01 per share (“TWC Class A common stock”), that Adelphia received as part of the payment for
the systems TW NY acquired from Adelphia were distributed to Adelphia’s creditors. On March 1, 2007, TWC’s
Class A common stock began trading on the New York Stock Exchange under the symbol “TWC.” For additional
information about these transactions, see “—The 2006 Transactions with Adelphia and Comcast.” Time Warner Inc.
(“Time Warner”) currently owns approximately 84.0% of the common stock of TWC (representing a 90.6% voting
interest) and consolidates the financial results of TWC’s operations. Time Warner also owns 12.43% of the non-
voting common stock of a subsidiary of TWC.
For periods presented prior to January 1, 2007, the subscriber data contained in Part I of this Report include
subscribers in certain managed, but unconsolidated, cable systems located in Kansas City, south and west Texas and
New Mexico (the “Kansas City Pool”), which were distributed to TWC by Texas and Kansas City Cable Partners,
L.P. (“TKCCP”) effective January 1, 2007. The results of the Kansas City Pool were consolidated by TWC on
January 1, 2007. For additional information with respect to the distribution of the assets of TKCCP to its partners on
January 1, 2007, see “Management’s Discussion and Analysis of Results of Operations and Financial Condition—
Overview—Recent Developments—TKCCP Joint Venture.”
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