Time Warner Cable 2012 Annual Report Download - page 26

Internal Reorganization
On September 30, 2012, the Company and certain of its subsidiaries completed an internal reorganization to simplify its
organizational structure. As part of this reorganization, on September 30, 2012, Time Warner Entertainment Company, L.P.
(“TWE”), a Delaware limited partnership and an indirect 100% owned subsidiary of the Company, merged with and into
Time Warner Cable Enterprises LLC (“TWCE”), a Delaware limited liability company and an indirect 100% owned
subsidiary of the Company, with TWCE as the surviving entity. TWE was originally formed by affiliates of Time Warner
Inc. (“Time Warner”) in 1992 to hold its interests in cable systems, cable networks and filmed entertainment. Through a
series of restructurings, the non-cable businesses, including the networks and filmed entertainment businesses and associated
liabilities, were transferred to affiliates of Time Warner.
TWE-A/N Partnership
Time Warner Entertainment-Advance/Newhouse Partnership (“TWE-A/N”) is a partnership that was formed in 1995
between TWE and Advance/Newhouse Partnership (“A/N”), a partnership owned by 100% owned subsidiaries of Advance
Publications and Newhouse Broadcasting Corporation. In connection with the Company’s September 30, 2012 internal
reorganization, among other things, TWCE acquired TWE’s and Time Warner NY Cable LLC’s (“TW NY Cable”) general and
preferred partnership interests in TWE-A/N. The general partnership interests in TWE-A/N are held by TWCE (the “TW
Partner”) and A/N. The TW Partner also holds preferred partnership interests.
2002 restructuring of TWE-A/N. TWE-A/N was restructured in 2002. As a result of this restructuring, cable systems and
their related assets and liabilities serving approximately 2.1 million video subscribers as of December 31, 2002 located primarily
in Florida (the “A/N Systems”), were transferred to a 100% owned subsidiary of TWE-A/N (the “A/N Subsidiary”). As part of
the restructuring, effective August 1, 2002, A/N’s interest in TWE-A/N was converted into an interest that tracks the economic
performance of the A/N Systems, while the TW Partner retains the economic interests and associated liabilities in the remaining
TWE-A/N cable systems. TWE-A/N’s financial results, other than the results of the A/N Systems, are consolidated with TWC’s.
Management and operations of TWE-A/N. Subject to certain limited exceptions, TWCE is the managing partner, with
exclusive management rights of TWE-A/N, other than with respect to the A/N Systems. Also, subject to certain limited
exceptions, A/N has authority for the supervision of the day-to-day operations of the A/N Subsidiary and the A/N Systems.
In connection with the 2002 restructuring, TWE entered into a services agreement with A/N and the A/N Subsidiary under
which TWE agreed to exercise various management functions, including oversight of programming and various engineering-
related matters. TWE and A/N also agreed to periodically discuss cooperation with respect to new product development.
Following the September 30, 2012 internal reorganization, TWCE performs these functions pursuant to the services
agreement. TWC receives a fee for providing the A/N Subsidiary with high-speed data services and the management
functions noted above.
Restrictions on transfer—TW Partner. The TW Partner is generally permitted to directly or indirectly dispose of its
entire partnership interest at any time to a 100% owned affiliate of TWCE. In addition, the TW Partner is also permitted to
transfer its partnership interests through a pledge to secure a loan, or a liquidation of TWCE in which TWC, or its affiliates,
receives a majority of the interests of TWE-A/N held by the TW Partner. TWCE is allowed to issue additional partnership
interests in TWCE so long as TWC continues to own, directly or indirectly, either 35% or 43.75% of the residual equity
capital of TWCE, depending on when the issuance occurs.
Restrictions on transfer—A/N Partner. A/N is generally permitted to directly or indirectly transfer its entire partnership
interest at any time to certain members of the Newhouse family or specified affiliates of A/N. A/N is also permitted to
dispose of its partnership interest through a pledge to secure a loan and in connection with specified restructurings of A/N.
Restructuring rights of the partners. TWCE and A/N each has the right to cause TWE-A/N to be restructured at any
time upon 12 months’ notice. Upon a restructuring, TWE-A/N is required to distribute the A/N Subsidiary with all of the
A/N Systems to A/N in complete redemption of A/N’s interests in TWE-A/N, and A/N is required to assume all liabilities of
the A/N Subsidiary and the A/N Systems. To date, neither TWCE nor A/N has delivered notice of the intent to cause a
restructuring of TWE-A/N.
TWCE’s regular right of first offer. Subject to exceptions, A/N and its affiliates are obligated to grant TWCE a right of
first offer prior to any sale of assets of the A/N Systems to a third party.
TWCE’s special right of first offer. Within a specified time period following the first, seventh, thirteenth and nineteenth
anniversaries of the deaths of two specified members of the Newhouse family (whose deaths have not yet occurred), A/N has
the right to deliver notice to TWCE stating that it wishes to transfer some or all of the assets of the A/N Systems, thereby
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