Time Warner Cable 2014 Annual Report Download - page 24

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TWE-A/N Partnership
Time Warner Entertainment-Advance/Newhouse Partnership (“TWE-A/N”) is a partnership that was formed in 1995
between Time Warner Entertainment Company, L.P. (“TWE”), a former subsidiary of TWC, and Advance/Newhouse
Partnership (“A/N”), a partnership owned by 100% owned subsidiaries of Advance Publications and Newhouse
Broadcasting Corporation. In connection with a TWC internal reorganization in September 2012, Time Warner Cable
Enterprises LLC (“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. These arrangements may be terminated by either party on 12 months’ notice.
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 and termination rights of the partners. TWCE and A/N each has the right to cause TWE-A/N to be
restructured at any time. 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
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