Time Warner Cable 2011 Annual Report Download - page 9

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PART I
Item 1. Business.
Overview
Time Warner Cable Inc. (together with its subsidiaries, “TWC”®or the “Company”) is among the largest providers of
video, high-speed data and voice services in the U.S., with technologically advanced, well-clustered cable 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, 2011, TWC served approximately 14.5 million customers who
subscribed to one or more of its three primary services, totaling approximately 27.1 million primary service units.
TWC offers its residential and business services customers video, high-speed data and voice services over its broadband
cable systems. TWC’s business services also include networking and transport services (including cell tower backhaul
services) and, through its wholly owned subsidiary, NaviSite, Inc. (“NaviSite”), managed and outsourced information
technology (“IT”) solutions and cloud services. TWC also sells advertising to a variety of national, regional and local
customers.
TWC markets its services separately and in “bundled” packages of multiple services and features. As of December 31,
2011, 60.4% of TWC’s customers subscribed to two or more of its primary services, including 26.5% of its customers who
subscribed to all three primary services.
Recent Developments
Wireless-related Agreements
On December 2, 2011, SpectrumCo, LLC (“SpectrumCo”), a joint venture between TWC, Comcast Corporation
(“Comcast”) and Bright House Networks, LLC (“Bright House”) that holds advanced wireless spectrum (“AWS”) licenses
that cover 20MHz over 80% of the continental U.S. and Hawaii, entered into an agreement pursuant to which SpectrumCo
will sell its AWS licenses to Cellco Partnership (doing business as Verizon Wireless), a joint venture between Verizon
Communications Inc. (“Verizon”) and Vodafone Group Plc, for $3.6 billion in cash. Upon closing, TWC, which owns 31.2%
of SpectrumCo, will be entitled to receive approximately $1.1 billion. This transaction, which is subject to certain regulatory
approvals and customary closing conditions, is expected to close during 2012. On February 9, 2012, Comcast and Verizon
Wireless received a Request for Additional Information and Documentary Materials from the U.S. Department of Justice in
connection with their required notification filed under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the “Hart-Scott-Rodino Act”).
Separately, on December 2, 2011, TWC, Comcast, Bright House and Verizon Wireless also entered into agency
agreements that will allow the cable companies to sell Verizon Wireless-branded wireless service, and Verizon Wireless to
sell each cable company’s services. After a four-year period, subject to certain conditions, the cable companies will have the
option to offer wireless service under their own brands utilizing Verizon Wireless’ network. In addition, the parties entered
into an agreement that provides for the creation of an innovation technology joint venture to better integrate wireless and
cable services. On January 13, 2012, TWC received a civil investigative demand from the U.S. Department of Justice
requesting additional information about these agreements. See “Management’s Discussion and Analysis of Results of
Operations and Financial Condition—Overview—Recent Developments—Wireless-related Agreements” and Note 7 to the
accompanying consolidated financial statements for additional information.
Acquisitions
On August 15, 2011, TWC entered into an agreement (the “Merger Agreement”) with Insight Communications
Company, Inc. (“Insight”) and a representative of its stockholders to acquire Insight and its subsidiaries, which operate cable
systems in Kentucky, Indiana and Ohio that then served subscribers representing approximately 1.5 million primary service
units. Insight reported revenues of approximately $1.1 billion for the year ended December 31, 2010. Pursuant to the Merger
Agreement, a subsidiary of TWC will merge with and into Insight, with Insight surviving as a direct wholly owned
subsidiary of the Company. TWC agreed to pay $3.0 billion in cash for Insight, as reduced by Insight’s indebtedness for
borrowed money and similar obligations (including amounts outstanding under Insight’s credit agreement and senior notes
due 2018, which totaled approximately $1.8 billion as of the date of the Merger Agreement). The purchase price is subject to
customary adjustments, including a reduction to the extent the number of Insight’s video subscribers at the closing is less
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