Time Warner Cable 2008 Annual Report Download - page 128

10. INVESTMENTS AND JOINT VENTURES
The Company had investments of $895 million and $735 million as of December 31, 2008 and 2007,
respectively. These investments are comprised almost entirely of equity-method investees.
As of December 31, 2008, investments accounted for using the equity method, and the respective ownership
percentage held by TWC, primarily consisted of Clearwire LLC (as defined below) (3.8% owned) in which TWC
invested $550 million in 2008, and SpectrumCo (as defined below), (27.8% owned) in which TWC invested an
additional $3 million in 2008. During the fourth quarter of 2008, the Company recorded a noncash pretax
impairment of $367 million on its investment in Clearwire LLC as a result of a significant decline in the estimated
fair value of Clearwire, reflecting the Clearwire Corp stock price decline from May 2008, when TWC agreed to
make its investment. As of December 31, 2008, the Company’s recorded investment for Clearwire LLC and
SpectrumCo approximates the Company’s equity interests in the underlying net assets of these equity-method
investments.
As of December 31, 2007, investments accounted for using the equity method, and the respective ownership
percentage held by TWC, primarily consisted of SpectrumCo (27.8% owned) in which TWC invested $33 million
in 2007.
Investment in Clearwire
In November 2008, TWC, Intel Corporation, Google Inc., Comcast Corporation (together with its subsidiaries,
“Comcast”) and Bright House Networks, LLC collectively invested $3.2 billion in Clearwire Corporation, a
wireless broadband communications company (“Clearwire Corp”), and one of its operating subsidiaries (“Clear-
wire LLC,” and, collectively with Clearwire Corp, “Clearwire”). TWC invested $550 million for membership
interests in Clearwire LLC and received voting and board of director nomination rights in Clearwire Corp.
Clearwire LLC was formed by the combination of Sprint Nextel Corporation’s (“Sprint”) and Clearwire Corp’s
respective wireless broadband businesses and is focused on deploying the first nationwide fourth-generation
wireless network to provide mobile broadband services to wholesale and retail customers. In connection with the
transaction, TWC entered into a wholesale agreement with Sprint that allows TWC to offer wireless services
utilizing Sprint’s second-generation and third-generation network and a wholesale agreement with Clearwire that
will allow TWC to offer wireless services utilizing Clearwire’s mobile broadband wireless network. The Company
allocated $20 million of its $550 million investment in Clearwire LLC to its rights under these agreements, which
the Company believes represents the fair value of favorable pricing provisions contained in the agreements. Such
assets are included in other assets in the consolidated balance sheet as of December 31, 2008 and will be amortized
over the estimated lives of the agreements. The Company’s investment in Clearwire LLC is being accounted for
under the equity method of accounting. The Company expects that Clearwire will incur losses in its early periods of
operation.
SpectrumCo Joint Venture
TWC is a participant in a joint venture with certain other cable companies (“SpectrumCo”) that holds
advanced wireless spectrum (“AWS”) licenses. Under certain circumstances, the members of SpectrumCo have the
ability to exit the venture and receive from the venture, subject to certain limitations and adjustments, AWS licenses
covering the areas in which they provide cable services. In January 2009, SpectrumCo redeemed the 10.9% interest
held by an affiliate of Cox Communications, Inc. (“Cox”) and Cox received AWS licenses, principally covering
areas in which Cox has cable services, and approximately $70 million in cash (of which TWC’s share was
$22 million). Following the closing of the Cox transaction, SpectrumCo’s AWS licenses cover 20 MHz over 80% of
the continental United States and Hawaii.
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TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)