Time Warner Cable 2014 Annual Report Download - page 43

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)
Comcast Merger
On February 12, 2014, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with
Comcast Corporation (“Comcast”) whereby the Company agreed to merge with and into a 100% owned subsidiary of
Comcast (the “Comcast merger”). Upon completion of the Comcast merger, all of the outstanding shares of the Company
will be cancelled and each issued and outstanding share will be converted into the right to receive 2.875 shares of Class A
common stock of Comcast. At their special meetings on October 8, 2014 and October 9, 2014, respectively, Comcast’s
shareholders approved the issuance of Comcast Class A common stock to TWC stockholders in the Comcast merger and
TWC stockholders approved the adoption of the Merger Agreement. TWC and Comcast expect to complete the Comcast
merger in early 2015, subject to receipt of regulatory approvals, as well as satisfaction of certain other closing conditions.
On April 25, 2014, Comcast entered into a binding agreement with Charter Communications, Inc. (“Charter”), which
contemplates three transactions (the “divestiture transactions”): (1) a contribution, spin-off and merger transaction, (2) an
asset exchange and (3) a sale of assets. The completion of the divestiture transactions will result in the combined company
divesting a net total of approximately 3.9 million video subscribers, a portion of which are TWC subscribers (primarily in
the Midwest). The divestiture transactions are expected to occur contemporaneously with one another and are conditioned
upon and will occur following the closing of the Comcast merger. They are also subject to a number of other conditions.
The Comcast merger is not conditioned upon the closing of the divestiture transactions and, accordingly, the Comcast
merger can be completed regardless of whether the divestiture transactions are ultimately completed.
Reportable Segments
The Company has three reportable segments: Residential Services, Business Services and Other Operations, which
have been determined based on how management evaluates and manages the business. For additional information about
the components of each of the Company’s reportable segments, as well as shared functions, refer to “—Financial
Statement Presentation—Reportable Segments,” below.
Residential Services Segment
TWC offers video, high-speed data and voice services, as well as security and home management services, to
residential customers. As of December 31, 2014, the Company served 14.5 million residential services customers and,
during 2014, TWC generated approximately $18.4 billion of revenue from the provision of residential services, which
represented 80.9% of TWC’s total revenue.
TWC’s video service provides over 300 channels (including, on average, over 200 high-definition (“HD”) channels)
and nearly 20,000 video-on-demand choices, which, increasingly, consumers can watch on the device of their choosing,
both inside and outside the home. TWC’s high-speed data service is available in a range of speed (from up to 2 to up to
300 megabits per second (“Mbps”) downstream), price and consumption (unlimited, 30 gigabyte (“GB”) and 5 GB) levels
and, for most high-speed data customers, includes access to a nationwide network of more than 300,000 Cable WiFi
hotspots along with communications and Internet security features. TWC’s voice service provides unlimited calling
throughout the U.S. and to Canada, Puerto Rico and Mexico, among others, and access to popular features in one simple
package. TWC’s IntelligentHome service provides state-of-the-art security and home management technology, taking
advantage of TWC’s always-on broadband network and around-the-clock security monitoring centers.
Residential Services revenue has benefited from growth in revenue per residential customer relationship (due to an
increasing percentage of subscribers purchasing more advanced, higher-priced tiers of service and increases in prices and
high-speed data equipment rental charges), offset by lower average residential customer relationships (due primarily to
lower residential video subscribers, offset by growth in high-speed data subscribers).
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