Time Warner Cable 2014 Annual Report Download - page 48

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)
•High-speed data. High-speed data revenue primarily includes subscriber fees for the Company’s high-speed data
services and related installation charges. High-speed data revenue also includes amounts generated by the sale of
commercial networking and point-to-point transport services, such as Metro Ethernet services.
•Voice. Voice revenue includes subscriber fees for the Company’s voice services, along with related installation
charges, as well as fees collected on behalf of governmental authorities.
•Wholesale transport. Wholesale transport revenue primarily includes amounts generated by the sale of point-to-
point transport services offered to wireless telephone providers (i.e., cell tower backhaul) and other
telecommunications carriers.
•Other. Other revenue primarily includes revenue from enterprise-class, cloud-enabled hosting, managed
applications and services and other business subscriber-related fees.
Operating costs and expenses. Business Services segment operating costs and expenses include the operating costs
and expenses that management believes are necessary to assess the performance of and allocate resources to the Business
Services segment. Such costs are consistent with the operating costs and expense categories described above under
Residential Services operating costs and expenses. Operating costs and expenses exclude costs and expenses related to
“corporate” functions and functions supporting more than one reportable segment that are centrally managed (e.g.,
facilities, network operations, vehicles and procurement) and are not within the control of segment management.
Other Operations Segment
Revenue
•Advertising. Advertising revenue is generated through TWC Media’s sale of video and online advertising
inventory to local, regional and national advertising customers. The Company derives most of its advertising
revenue from the sale of advertising inventory on cable networks owned by third parties. The rights to such
advertising inventory are acquired by the Company in connection with its agreements to carry such networks or
obtained through contractual agreements to sell advertising inventory on behalf of other video distributors
(including, among others, Verizon’s FiOS, AT&T’s U-verse and Charter). The Company also generates
advertising revenue from the sale of inventory on the Lakers’ RSNs, the Company’s local sports, news and
lifestyle channels (e.g., Time Warner Cable News NY1) and, beginning in 2014, SportsNet LA.
•Other. Other revenue primarily includes (i) beginning in the fourth quarter of 2012, fees received from
distributors of the Lakers’ RSNs; (ii) fees paid to TWC (totaling $143 million, $138 million and $135 million in
2014, 2013 and 2012, respectively) primarily by the Advance/Newhouse Partnership for (a) the ability to
distribute the Company’s high-speed data service and (b) TWC’s management of certain functions, including,
among others, the acquisition of programming rights, as well as the provision of certain functions, including
engineering; (iii) home shopping network-related revenue (including commissions earned on the sale of
merchandise and carriage fees); and (iv) beginning in 2014, fees received from distributors of SportsNet LA.
Other revenue also includes intercompany revenue from the Residential Services and Business Services segments
for programming provided by the Lakers’ RSNs, the Company’s local sports, news and lifestyle channels and,
beginning in 2014, SportsNet LA.
Operating costs and expenses. Other operating costs and expenses primarily include operating costs associated with
TWC Media, the Lakers’ RSNs and the Company’s local sports, news and lifestyle channels and, beginning in 2014,
SportsNet LA.
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