Charter 2004 Annual Report Download - page 99

CHARTER COMMUNICATIONS, INC. 2004 FORM 10-K
OTHER MISCELLANEOUS RELATIONSHIPS lease and related agreements for the year ended December 31,
2004.
Viacom Networks Carriage Fees
Pursuant to certain affiliation agreements with networks of We have carried The Outdoor Channel on a month-to-month
Viacom, Inc. (‘‘Viacom’’), including MTV, MTV2, Nickelodeon, basis since the expiration of an affiliation agreement in July
VH1, TVLand, CMT, Spike TV, Comedy Central, Viacom 2002. We paid approximately $1 million to The Outdoor
Digital Suite, CBS-owned and operated broadcast stations, Channel during 2004. In December 2003, Mr. Merritt became
Showtime, The Movie Channel, and Flix, Viacom provides director of Outdoor Channel Holdings, Inc., an affiliate of The
Charter with programming for distribution via our cable Outdoor Channel, Inc.
systems. The affiliation agreements provide for, among other
things, rates and terms of carriage, advertising on the Viacom Payment for Relative’s Services
networks, which Charter can sell to local advertisers and Since June 2003, Mr. Vogel’s brother-in-law has been an
marketing support. For the year ended December 31, 2004, employee of Charter Holdco and has received a salary commen-
Charter paid Viacom approximately $194 million for program- surate with his position in the engineering department.
ming. Charter recorded approximately $8 million as receivables Indemnification Advances
from Viacom networks related to launch incentives for certain Pursuant to Charter’s bylaws (and the employment agreements
channels and marketing support, respectively, for the year ended of certain of our current and former officers), Charter is
December 31, 2004. From April 1994 to July 2004, Mr. Dolgen obligated (subject to certain limitations) to indemnify and hold
served as Chairman and Chief Executive Officer of the Viacom harmless, to the fullest extent permitted by law, any officer,
Entertainment Group. director or employee against all expense, liability and loss
ADC Telecommunications Inc. (including, among other things, attorneys’ fees) reasonably
Charter and Charter Holdco purchase certain equipment for use incurred or suffered by such officer, director or employee as a
in our business from ADC Telecommunications, which provides result of the fact that he or she is a party or is threatened to be
broadband access and network equipment. Mr. Wangberg serves made a party or is otherwise involved in any action, suit or
as a director for ADC Telecommunications. For the year ended proceeding by reason of the fact that he or she is or was a
December 31, 2004, we paid $344,800 to ADC Telecommunica- director, officer or employee of Charter. In addition, Charter is
tions under this arrangement. obligated to pay, as an advancement of its indemnification
obligation, the expenses (including attorneys’ fees) incurred by
HDNet and HDNet Movies Network any officer, director or employee in defending any such action,
On January 10, 2003, we signed an agreement to carry two suit or proceeding in advance of its final disposition, subject to
around-the-clock, high-definition networks, HDNet and HDNet an obligation to repay those amounts under certain circum-
Movies. HDNet Movies delivers a commercial-free schedule of stances. Pursuant to these indemnification arrangements and as
full-length feature films converted from 35mm to high-definition, an advancement of costs, Charter has reimbursed certain of its
including titles from an extensive library of Warner Bros. films. current and former directors and executive officers a total of
HDNet Movies will feature a mix of theatrical releases, made- approximately $3 million in respect of invoices received in 2004,
for-TV movies, independent films and shorts. The HDNet in connection with their defense of certain legal actions
channel features a variety of HDTV programming, including live described herein. See ‘‘Item 3. Legal Proceedings.’’ Those
sports, sitcoms, dramas, action series, documentaries, travel current and former directors and officers include: Paul G. Allen,
programs, music concerts and shows, special events, and news David C. Andersen, David G. Barford, Mary Pat Blake,
features including the popular HDNet World Report. HDNet J. Christian Fenger, Kent D. Kalkwarf, Ralph G. Kelly, Jerald L.
also offers a selection of classic and recent television series. We Kent, Paul E. Martin, David L. McCall, Ronald L. Nelson,
paid HDNet and HDNet Movies approximately $609,100 in Nancy B. Peretsman, John C. Pietri, William D. Savoy, Steven A.
2004. We believe that entities controlled by Mr. Cuban owned Schumm, Curtis S. Shaw, William J. Shreffer, Stephen E. Silva,
approximately 81% of HDNet as of December 31, 2004. James Trey Smith and Carl E. Vogel. These amounts were
As of December 31, 2004, we believe that Mark Cuban, submitted to Charter’s director and officer insurance carrier and
co-founder and president of HDNet, owned approximately have been reimbursed consistent with the terms of the Securities
19,000,000 shares, or 6.2% of the total common equity in Class Action and Derivative Action Settlements described in
Charter based on a Schedule 13G filed with the SEC on ‘‘Item 3. Legal Proceedings.’’ On or about February 22, 2005,
May 21, 2003. Charter filed lawsuits against the four former officers who were
Affiliate Lease Agreement indicted and pled guilty as part of the government investigation
David L. McCall, who served as Senior Vice President — conducted by the United States Attorney’s Office. These suits
Operations — Eastern Division during 2002 and January 2003, is seek to recover fees and related expenses that Charter advanced
a partner in a partnership that leases office space to us under a these former officers under the indemnification provisions
lease agreement, which expires December 31, 2010. The described above.
partnership received approximately $43,400 pursuant to such
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