Charter 2005 Annual Report Download - page 105

CHARTER COMMUNICATIONS, INC. 2005 FORM 10-K
applications; and incidental businesses engaged in as of the THIRD PARTY BUSINESS RELATIONSHIPS IN WHICH MR. ALLEN HAS OR HAD
closing of Charter’s initial public offering in November 1999. AN INTEREST
This restriction will remain in effect until all of the shares of As previously noted, Mr. Allen has and has had extensive
Charter’s high-vote Class B common stock have been converted investments in the areas of media and technology. We have a
into shares of Charter’s Class A common stock due to number of commercial relationships with third parties in which
Mr. Allen’s equity ownership falling below specified thresholds. Mr. Allen has an interest. Mr. Allen or his affiliates own equity
Should Charter or Charter Holdco or any of their interests or warrants to purchase equity interests in various
subsidiaries wish to pursue, or allow their subsidiaries to pursue, entities with which we do business or which provide us with
a business transaction outside of this scope, it must first offer products, services or programming. Mr. Allen owns 100% of the
Mr. Allen the opportunity to pursue the particular business equity of Vulcan Ventures Incorporated and Vulcan Inc. and is
transaction. If he decides not to pursue the business transaction the president of Vulcan Ventures. Ms. Jo Allen Patton is a
and consents to Charter or its subsidiaries engaging in the director and the President and Chief Executive Officer of Vulcan
business transaction, they will be able to do so. In any such Inc. and is a director and Vice President of Vulcan Ventures.
case, the restated certificate of incorporation of Charter and the Mr. Lance Conn is Executive Vice President of Vulcan Inc. and
limited liability company agreement of Charter Holdco would Vulcan Ventures. The various cable, media, Internet and
need to be amended accordingly to modify the current telephone companies in which Mr. Allen has invested may
restrictions on the ability of such entities to engage in any mutually benefit one another. We can give no assurance, nor
business other than the cable transmission business. The cable should you expect, that any of these business relationships will
transmission business means the business of transmitting video, be successful, that we will realize any benefits from these
audio, including telephone, and data over cable systems owned, relationships or that we will enter into any business relationships
operated or managed by Charter, Charter Holdco or any of in the future with Mr. Allen’s affiliated companies.
their subsidiaries from time to time. Mr. Allen and his affiliates have made, and in the future
Under Delaware corporate law, each director of Charter, likely will make, numerous investments outside of us and our
including Mr. Allen, is generally required to present to Charter, business. We cannot assure you that, in the event that we or
any opportunity he or she may have to acquire any cable any of our subsidiaries enter into transactions in the future with
transmission business or any company whose principal business any affiliate of Mr. Allen, such transactions will be on terms as
is the ownership, operation or management of cable transmis- favorable to us as terms we might have obtained from an
sion businesses, so that we may determine whether we wish to unrelated third party.
pursue such opportunities. However, Mr. Allen and the other
directors generally will not have an obligation to present other TechTV, Inc.
types of business opportunities to Charter and they may exploit TechTV, Inc. (‘‘TechTV’’) operated a cable television network
such opportunities for their own account. that offered programming mostly related to technology. Pursu-
Also, conflicts could arise with respect to the allocation of ant to an affiliation agreement that originated in 1998 and that
corporate opportunities between us and Mr. Allen and his terminates in 2008, TechTV has provided us with programming
affiliates in connection with his investments in businesses in for distribution via our cable systems. The affiliation agreement
which we are permitted to engage under Charter’s restated provides, among other things, that TechTV must offer Charter
certificate of incorporation. Certain of the indentures of Charter Holdco certain terms and conditions that are no less favorable
and its subsidiaries require the applicable issuer of notes to in the affiliation agreement than are given to any other
obtain, under certain circumstances, approval of the board of distributor that serves the same number of or fewer TechTV
directors of Charter and, where a transaction or series of related viewing customers.
transactions is valued at or in excess of $50 million, a fairness In March 2004, Charter Holdco entered into agreements
opinion with respect to transactions in which Mr. Allen has an with Vulcan Programming and TechTV, which provide for
interest. Related party transactions are approved by our Audit (i) Charter Holdco and TechTV to amend the affiliation
Committee in compliance with the listing requirements applica- agreement which, among other things, revises the description of
ble to NASDAQ national market listed companies. We have not the TechTV network content, provides for Charter Holdco to
instituted any other formal plan or arrangement to address waive certain claims against TechTV relating to alleged
potential conflicts of interest. breaches of the affiliation agreement and provides for TechTV
The restrictive provisions of the organizational documents to make payment of outstanding launch receivables due to
described above may limit our ability to take advantage of Charter Holdco under the affiliation agreement, (ii) Vulcan
attractive business opportunities. Consequently, our ability to Programming to pay approximately $10 million and purchase
offer new products and services outside of the cable transmis- over a 24-month period, at fair market rates, $2 million of
sion business and enter into new businesses could be adversely advertising time across various cable networks on Charter cable
affected, resulting in an adverse effect on our growth, financial systems in consideration of the agreements, obligations, releases
condition and results of operations. and waivers under the agreements and in settlement of the
aforementioned claims and (iii) TechTV to be a provider of
content relating to technology and video gaming for Charter’s
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