Charter 2008 Annual Report Download - page 51

Table of Contents
Mutual Services Agreement
Charter, Charter Holdco and CII are parties to a mutual services agreement whereby each party shall
provide rights and services to the other parties as may be reasonably requested for the management of the
entities involved and their subsidiaries, including the cable systems owned by their subsidiaries all on a
cost-reimbursement basis. The officers and employees of each party are available to the other parties to
provide these rights and services, and all expenses and costs incurred in providing these rights and services
are paid by Charter. Each of the parties will indemnify and hold harmless the other parties and their directors,
officers and employees from and against any and all claims that may be made against any of them in
connection with the mutual services agreement except due to its or their gross negligence or willful
misconduct. The mutual services agreement expires on November 12, 2009, and may be terminated at any
time by any party upon thirty days’ written notice to the other. For the year ended December 31, 2007,
Charter paid approximately $117 million to Charter Holdco for services rendered pursuant to the mutual
services agreement. All such amounts are reimbursable to Charter pursuant to a management arrangement
with our subsidiaries. CII no longer provides services pursuant to this agreement.
Previous Management Agreement with Charter Investment, Inc.
Prior to November 12, 1999, CII provided management and consulting services to our operating
subsidiaries for a fee equal to 3.5% of the gross revenues of the systems then owned, plus reimbursement of
expenses. The balance of management fees payable under the previous management agreement was accrued
with payment at the discretion of CII, with interest payable on unpaid amounts. For the year ended
December 31, 2007, Charter’s subsidiaries did not pay any fees to CII to reduce management fees payable. As
of December 31, 2007, total management fees payable by our subsidiaries to CII were approximately
$14 million, exclusive of any interest that may be charged.
Charter Communications Holding Company, LLC Limited Liability Agreement — Taxes
The limited liability company agreement of Charter Holdco contains special provisions regarding the
allocation of tax losses and profits among its members — Vulcan Cable III Inc., CII and us. In some
situations, these provisions may cause us to pay more tax than would otherwise be due if Charter Holdco had
allocated profits and losses among its members based generally on the number of common membership units.
Vulcan Ventures Channel Access Agreement
Vulcan Ventures, an entity controlled by Mr. Allen, Charter, CII and Charter Holdco are parties to an
agreement dated September 21, 1999 granting to Vulcan Ventures the right to use up to eight of our digital
cable channels as partial consideration for a prior capital contribution of $1.325 billion. Specifically, at
Vulcan Ventures’ request, we will provide Vulcan Ventures with exclusive rights for carriage of up to eight
digital cable television programming services or channels on each of the digital cable systems with local and
to the extent available, national control of the digital product owned, operated, controlled or managed by
Charter or its subsidiaries now or in the future of 550 megahertz or more. If the system offers digital services
but has less than 550 megahertz of capacity, then the programming services will be equitably reduced. Upon
request of Vulcan Ventures, we will attempt to reach a comprehensive programming agreement pursuant to
which it will pay the programmer, if possible, a fee per digital video customer. If such fee arrangement is not
achieved, then we and the programmer shall enter into a standard programming agreement. The initial term of
the channel access agreement was 10 years, and the term extends by one additional year (such that the
remaining term continues to be 10 years) on each anniversary date of the agreement unless either party
provides the other with notice to the contrary at least 60 days prior to such anniversary date. To date, Vulcan
Ventures has not requested to use any of these channels. However, in the future it is possible that Vulcan
Ventures could require us to carry programming that is less profitable to us than the programming that we
would otherwise carry and our results would suffer accordingly.
CC VIII, LLC
Charter acquired certain cable systems owned by Bresnan Communications Company Limited
Partnership in February 2000. As part of a subsequent settlement in 2005 regarding an issue as to whether the
documentation for
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Source: CHARTER COMMUNICATIO, DEF 14A, March 17, 2008