Time Warner Cable 2008 Annual Report Download - page 48

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 the TWC 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. Any competition directly with Time Warner or its affiliates
could materially adversely impact TWC’s business, financial results or financial condition.
TWC is currently party to agreements and, following the Separation, will be party to new 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 specified change of control.
TWC is currently party to agreements with Time Warner and, has entered into new agreements with Time
Warner that will be effective at the Separation, governing the use of TWC’s brand name. These agreements may be
terminated by Time Warner if TWC:
• commits a significant breach of its obligations under such agreements;
• undergoes a specified change of control; or
• materially fails 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,” from Time Warner and the trademark “Road Runner”
from an affiliate of Time Warner and will continue to do so following the Separation. 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 and TWC have entered into a Separation Agreement. In connection with the Separation
Transactions, if a number of TWC’s resulting new stockholders chose to sell their shares, or if there is a perception
that such sales might occur, it may cause short-term volatility in the trading volume and market price of TWC’s
common stock.
Time Warner’s capital markets and debt activity could adversely affect capital resources available to TWC.
Prior to the Separation, TWC’s ability to obtain financing in the capital markets and from other private sources
may be adversely affected by future capital markets activity undertaken by Time Warner and its other subsidiaries.
Capital raised by or committed to Time Warner for matters unrelated to TWC may reduce the supply of capital
available for TWC as a result of increased leverage of Time Warner on a consolidated basis or reluctance in the
market to incur additional credit exposure to Time Warner on a consolidated basis. In addition, TWC’s ability to
undertake significant capital raising activities may be constrained by competing capital needs of other Time Warner
businesses unrelated to TWC. As of December 31, 2008, Time Warner had unused committed capacity of
approximately $4.4 billion under its $7.0 billion committed credit facility, and approximately $1.2 billion of cash
and equivalents, and TWC had approximately $5.7 billion of available borrowing capacity under the Revolving
Credit Facility, and approximately $5.4 billion of cash and equivalents.
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