Every firm (small or large), cafe, restaurant are the active microeconomics households, which influence the situation of the whole ,market. It is possible, that a single small firm can produce high-quality wares which are praised by people and very soon other firms, which produce similar wares but of lower quality will possible bankrupt being unable to compete with that one (Howson, Cindy, Successful Business Intelligence 2013). With the run of time that small firm can turn into a great company or corporation and become a leading monopolistic on the market. This is why I have decided to research Time Warner Cable. The history of the company is unlike any other with their cutting edge digital technology, range of home entertainment and information choices for the whole family to enjoy, and superior customer service that demonstrates customer satisfaction is the company's number one priority. In the late 1940s, entrepreneurs using simple antennas an Army surplus coaxial cable created the country's first cable television system and revolutionized the way Americans watched television (Warner Sperling, Cass, The Brothers Warner 2008). More than 70 years later, Time Warner Cable (TWC), the second largest cable provider, owns and manages advanced, well clustered cable systems throughout the United States and is ready to embark on it's next life phase of merging with Charter Communications. With the spread of the medium of television in the years following World War II, entrepreneurs in rural and valley towns figured out a way to bring distant broadcast signals to their communities using antennas and coaxial cable. During this time, visionaries emerged who would shape both the cable industry as a whole and Time Warner Cable. By the late 1960s, cable is positioned for an explosive growth. A few of the early pioneers are Bill Daniels and Monroe "Monty" Rifkin. Bill Daniels is widely credited with creating a legitimate industry out of stringing coaxial cable down back ally's. Monty Rifkin helped Bill with investment into the industry. As we continue we will see the involvement of Warner Brothers, the ATC going public, the coming of age of TWC as a company, growth and innovation. Time Warner cable taking the industry as a leader, the transitions of the company, navigating through change and forward independence. To take ride of history with a company from development of being a cable provider, to separations of cellular service products, to mergers, to industry leader, to pioneers of cable internet service and home phone, to the robust business it is now, launching of Home Security system and now the new Hydra Box, this is a true American economic journey. Bill Daniels wasn’t among the initial ranks of cable system pioneers. But he is widely credited with creating a legitimate industry out of do-it-yourselfers stringing coaxial cables down back alleys. “I was the first guy to recognize it as a hell of a potential business,” Daniels would later claim. “And I brought the financial community in to really make it a business rather than an extension of an appliance shop.” A decorated fighter pilot and veteran of both WWII and the Korean War, Daniels found his calling after witnessing television for the first time at age thirty-two. In 1953, after learning of community antenna television, Daniels was determined to bring the new medium to Casper, Wyoming, where he was working as an insurance broker to the oil industry. With just $5,000 of his own money, he raised an initial $375,000 from a consortium of local oilmen and banks. “We were charging 150 bucks per connection, because we had a monopoly,” Daniels said. “With every 150 bucks we got we would build a couple more blocks of plant down the alley to get more customers. And we charged $7.50 a month for one channel.” Daniels could claim a CATV “first” in terms of signal transmission. Even with no intervening mountains, a television signal can be transmitted only so far on a “line of sight” basis due to the curvature of the earth. Having to cover close to two hundred miles to reach Casper with the signal, Daniels, who had worked with radar systems in the service but otherwise had no formal engineering training, hit on the idea of using microwave transmitters and relay towers to carry the signal. Within a few years, microwave transmission of television signals was in use at a number of CATV systems. Within several years, Daniels was serving as the president of the National Community Television Association (NCTA). He received numerous queries from eager entrepreneurs wanting to get into the business, and some from financiers wondering if any systems were for sale. As soon as his term ended in 1958, he was convinced that he could make community antenna television into a full-time career. He set himself up in Denver as a consultant, broker, and investment banker to the CATV industry. He was creating a new industry niche, and he dominated it for more than twenty-five years. Among Bill Daniels’ many storied successes in promoting cable television in the early years, one of the most important was to start off a young man named Monroe “Monty” Rifkin in the business. Monroe “Monty” Rifkin had a choice to make one afternoon in the spring of 1959. He could finish the sandwich on his desk in the TelePrompTer Inc. offices near New York’s Times Square. Or, he could meet the promoter from Denver waiting in the outer office to speak with whomever was in charge about something called community antenna television. Despite his reservations about having his lunch interrupted, Rifkin recalled liking Bill Daniels almost from the moment the stocky Westerner with his signature tailored suit and pocket handkerchief strode across the office, shook his hand, and got right to the point. He had been referred to Kahn and TelePrompTer by Television Digest editor Marty Kordell. Daniels had read about the company’s closed-circuit televised fights and wanted to talk to TelePrompTer about a related opportunity: community antenna television, or CATV. “What’s that?” asked Rifkin, who like most Americans, especially those living in cities and towns served by broadcast television, had never heard of CATV. The technology pitch was intriguing, but what especially interested Rifkin was the economics of the fledgling industry. Not surprisingly, Daniels argued that the CATV industry presented a great buying opportunity.
After visiting several of the systems Daniels was looking to sell, Rifkin was sold. First, he convinced Irving Kahn, CEO of TelePrompTer, to invest heavily in cable. In 1963, he went to work for Bill Daniels’ management company, Daniels and Associates, learning how to operate systems, grow and build new ones. From then on, his involvement in and influence on the cable industry would only increase. Warner Bros., among the leading motion picture studios in Hollywood, was definitely showing its age by the mid-1960s. Seven Arts Productions, a company that distributed films to television stations, bought the studio in 1967 to broaden the selection of films it could offer to the television industry. Within a few years, that combined operation caught the attention of an ambitious, enthusiastic, free-wheeling businessman determined to get into the entertainment business: Steven J. Ross.
Ross’s early track record in business did not suggest he was headed to the top of one of the world’s largest communications companies. He started out as an executive trainee at the Riverside funeral home run by his in-laws in New York City. He hit upon the idea to rent out the funeral company limousines after hours. Looking for a place to park his limos, he made a deal with a parking lot company, Kinney, and then merged Kinney with his company. In 1967 Ross bought a private talent agency, Ashley Famous, whose owner, Ted Ashley, suggested he look at Warner Bros. for its movie vault, as well as a music subsidiary. Ross bought Warner-Seven Arts. in 1969 and decided to sell off his non-entertainment businesses. As he looked for alternatives to distributing the studio’s content, his focus within a few years landed on CATV. Ross placed his bets on the entertainment and communications fields, and there was no turning back. Over the years, Warner demonstrated a keen ability to “anticipate new technologies and their resulting markets,” as Ross told shareholders in 1987, reflecting on a quarter-century spent at the helm of a public corporation. Just as important as a nose for the next technological hit was a “willingness to build organizations to capitalize on those opportunities.” Systems operators that had grown up in the community antenna industry, keenly aware of the giant, publicly held companies infringing on their turf, by the latter 1960s saw an opportunity to tap the public markets for a source of permanent equity capital for their companies. Wall Street was attracted to the steady cash flow they were confident would make CATV stocks an easy sell to the public. “Those of us in the industry of course, were looking for another form of currency we could use to continue to develop and grow in this capital intensive business,” said Rifkin. He took the issue to Daniels in 1968. “I sat down with Bill Daniels and suggested to Bill that this era of public companies was coming. That we had an opportunity to be a leader in it, and that this was something I had done before, I had been trained to do and that I’d love to do again.” “So I concocted the idea of forming American Television and Communications Corp….and take that company public.” Rifkin worked with investment bankers from Paine Webber, Jackson & Curtis to prepare for an initial public offering of stock. The company, which had originally hoped to sell stock by year-end 1968, was buying systems at such a clip during late 1968, and in early 1969, that the offering was delayed so the SEC could review updated financial information. ATC had just over 100,000 customers by the time it went public in the spring of 1969. The stock offering raised $4.7 million to retire debt tied to the purchase of systems in 1968 and help fund the company’s expected torrid growth, including the need to upgrade systems as higher bandwidth systems became commonplace. Monty Rifkin was its first president, and the only corporate officer on its board of directors.
By the end of ATC’s first fiscal year in June 1969, the company was preparing applications for franchises in a number of new cities with populations of more than 250,000. Even though cable industry subscriber growth was nearing 25 percent a year, there was still a lot of upside out there. Cable still only served about four million homes, or about 7 percent of the total number of television homes in the United States. As the 1970s began, the cable industry experienced explosive growth. A new generation of business leaders, and investors, recognized cable’s largely untapped potential and flocked to the industry. By mid-decade, satellite transmission of television signals exclusively for cable systems marked the dawn of a new era in cable television. Cable now had a national reach, which sparked demand for cable programming to attract customers in urban America, CATV’s new frontier. ATC’s acquisition binge, which had delayed its initial stock offering in 1969, gathered momentum in the 1970s. Rifkin, while keeping a tight rein on spending, saw nothing but upside for the industry.
In 1970, ATC acquired cable systems in Albany, New York, its largest market to date, as well as Reading, Pennsylvania, and Jackson, Mississippi. Smaller systems were later added in North Carolina, Wisconsin, Oklahoma, five counties surrounding Albany, West Virginia, and Ohio. While it continued to buy existing systems, ATC recognized that its future lay in acquiring franchises to build new systems in larger and faster-growing markets. “In the past, ATC has grown principally through the acquisition of existing CATV systems,” the company stated in a November 1971 SEC filing. “But management believes that development of new CATV franchises will become a more significant factor in achieving future growth.”
In 1970, while on vacation in Florida, Rifkin read an item in a local paper indicating that the Walt Disney Company was contemplating building a major amusement park in the Orlando area. ATC won the Orlando franchise and acquired franchises in the surrounding communities. It was not only in focusing on building new franchises in more urban locales that signaled the growing sophistication of cable operators. Rifkin also placed great importance on attracting and developing talented executives and managers. In the early ‘70s, Rifkin was knocking on business school and industry doors to attract the best and brightest.
As Rifkin wrote in May 1971, “The key to our progress is our management team. This is a people business, and the people on our staff are the most valuable resource we have. The most important aspect of this business is what kind of creative talent you have got in management.” In 1972, Rifkin recruited Joseph Collins right out of Harvard Business School. Two years later, Rifkin, anxious to instill some marketing savvy in the corporate DNA, recruited Trygve Myhren, a veteran marketing executive with an MBA from Dartmouth who had learned his trade at Procter & Gamble. Myhren and Collins rapidly rose to the top echelon of ATC’s executive ranks, and eventually served as the company’s second and third CEOs, respectively. Time Inc. reigned as one of the nation’s premier magazine publishing companies throughout the 1960s. At its peak, the company accounted for roughly one-third of all magazine advertising spending in the United States. Its flagship Time magazine was a household name and brand throughout the country, and indeed around much of the world. Its authoritative voice, crafted by founder Henry Luce, in many ways spoke for America’s surging prominence on the world stage as the nation emerged from the Great Depression of the 1930s. During the 1960s, the company also began to think of itself as of a communications company, and not just a publisher of magazines and books. In the mid-1960s, Time Inc. took a 20 percent stake in a publicly held company called Sterling Communications, run by Chuck Dolan, which had the CATV franchise for the southern half of Manhattan, where broadcast signals were difficult to receive due to all the tall buildings. Time made additional capital investments in the enterprise, eventually buying out Dolan and other investors to own the company outright in 1973. Even for Time, which was known for being willing to stick with a business through tough times if there was a prospect of future success, Sterling Manhattan was looking like a lost cause. Time reported a $10 million loss on the southern Manhattan system in 1973 and had invested a total of $45 million in Sterling as of yearend 1973. Time management tapped Nick Nicholas from Time’s finance department to take charge of Manhattan Cable. Thayer Bigelow, also from finance, served as Nicholas’ deputy. Under the leadership of Nicholas, Bigelow, and a young Glenn Britt, the team pitched in and turned a loss-plagued operation into a moneymaker in about two years’ time. They took a three-pronged approach. The previous management team had been “at war” with the union, Local 3 of the International Brotherhood of Electrical Workers. Nicholas took a far more conciliatory tone toward the union, improving performance and morale. The team also reached out and developed a much more positive working relationship with the city, its principal regulator. Manhattan Cable was able to get a rate increase—to six dollars a month from five—for the first time since the system went live in the late 1960s. A direct-sales group created by the team helped drive revenues by going into apartment buildings, holding lobby parties, and developing stronger relationships with building managements throughout the city. The cable television industry was about to enter an unprecedented era of growth. Cable operators competed fiercely for franchises. Territory was going quickly, and no one wanted to be left out. Large cable companies began to rationalize their scale into clusters, and to decentralize operations. The decade closed with two huge companies coming together based in large part on cable interests. The late 1980s were the era of the leveraged buyout—the “hostile takeover.” Money was cheap, the junk-bond market created by Drexel Burnham Lambert was exploding, and hungry corporate raiders were eager for targets to buy out and break up. Oft-cited as a potential mark was Time, Inc. Wall Street’s back of the envelope estimates put Time Inc.’s break-up value at twice what its shares were trading for in 1986, and maybe more. The executive team of Munro, Nicholas, Levin, Britt (who became treasurer of Time Inc. in 1987 and CFO in early 1988, replacing Thayer Bigelow, who became president of HBO and later head of cable investments at TWC), and Phil Lochner, general counsel, felt as if they were under siege. Rather than fall victim to a hostile takeover at a low price, Time began to look for a partner for a merger. The late 1980s were the era of the leveraged buyout—the “hostile takeover.” Money was cheap, the junk-bond market created by Drexel Burnham Lambert was exploding, and hungry corporate raiders were eager for targets to buy out and break up. Oft-cited as a potential mark was Time, Inc. Wall Street’s back of the envelope estimates put Time Inc.’s break-up value at twice what its shares were trading for in 1986, and maybe more. The executive team of Munro, Nicholas, Levin, Britt (who became treasurer of Time Inc. in 1987 and CFO in early 1988, replacing Thayer Bigelow, who became president of HBO and later head of cable investments at TWC), and Phil Lochner, general counsel, felt as if they were under siege. Rather than fall victim to a hostile takeover at a low price, Time began to look for a partner for a merger. Warner Communications’ name inevitably appeared on Time Inc.’s dance card of potential suitors. The Time Inc. team had considered pursuing a strategy of buying a movie studio to give it more content to distribute, which made Warner Bros. an intriguing possibility. Finding some form of combination for their largely complementary cable systems to gain even further economies of scale in cable also was an attractive proposition. By late summer 1987, Nick Nicholas, who had become heir apparent to the CEO position of Time Inc. after Dick Munro had retired, had become convinced that Warner was the one. He solicited the help of Time Inc.’s new Chief of Strategy Jerry Levin, whom he acknowledged as the better communicator, to make the case for the merger. Levin produced a memo for Munro that outlined the Time Inc. Warner deal. Ross, who had been pushing for a merger for months, was enthusiastic. Internally at Time Inc., going was tougher. The business case for the merger was the easiest part of the selling job: Real synergies in cable, and hoped for synergies in the entertainment and publishing businesses, supported bringing the two companies together. Cultural and leadership issues were a higher hurdle. The merger nearly foundered on the issue of who would run the combined company. Munro was adamant that Nicholas become the CEO of any merger of Time Inc. with another company. Ross initially balked at the idea. He eventually agreed, in the form of a legally nonbinding understanding, that he and Munro would be co-CEOs until Munro’s previously announced retirement in 1990. Nicholas would then step into Munro’s shoes as co-CEO, and become sole CEO at yearend 1994, though Ross would remain as chairman. The late 1980s were the era of the leveraged buyout—the “hostile takeover.” Money was cheap, the junk-bond market created by Drexel Burnham Lambert was exploding, and hungry corporate raiders were eager for targets to buy out and break up. Oft-cited as a potential mark was Time, Inc. Wall Street’s back of the envelope estimates put Time Inc.’s break-up value at twice what its shares were trading for in 1986, and maybe more.
The executive team of Munro, Nicholas, Levin, Britt (who became treasurer of Time Inc. in 1987 and CFO in early 1988, replacing Thayer Bigelow, who became president of HBO and later head of cable investments at TWC), and Phil Lochner, general counsel, felt as if they were under siege. Rather than fall victim to a hostile takeover at a low price, Time began to look for a partner for a merger. Warner Communications’ name inevitably appeared on Time Inc.’s dance card of potential suitors. The Time Inc. team had considered pursuing a strategy of buying a movie studio to give it more content to distribute, which made Warner Bros. an intriguing possibility. Finding some form of combination for their largely complementary cable systems to gain even further economies of scale in cable also was an attractive proposition.
By late summer 1987, Nick Nicholas, who had become heir apparent to the CEO position of Time Inc. after Dick Munro had retired, had become convinced that Warner was the one. He solicited the help of Time Inc.’s new Chief of Strategy Jerry Levin, whom he acknowledged as the better communicator, to make the case for the merger. Levin produced a memo for Munro that outlined the Time Inc. Warner deal. Ross, who had been pushing for a merger for months, was enthusiastic. Internally at Time Inc., going was tougher. The business case for the merger was the easiest part of the selling job: Real synergies in cable, and hoped for synergies in the entertainment and publishing businesses, supported bringing the two companies together. Cultural and leadership issues were a higher hurdle. The merger nearly foundered on the issue of who would run the combined company. Munro was adamant that Nicholas become the CEO of any merger of Time Inc. with another company. Ross initially balked at the idea. He eventually agreed, in the form of a legally non-binding understanding, that he and Munro would be co-CEOs until Munro’s previously announced retirement in 1990. Nicholas would then step into Munro’s shoes as co-CEO, and become sole CEO at yearend 1994, though Ross would remain as chairman.
The deal was nearly scuttled again by a hostile takeover bid launched against Time Inc. by Paramount just two weeks after the Time-Warner merger was announced. It took an arduous legal battle to establish that Time Inc. had not put itself up for sale, and could therefore reject Paramount’s unsolicited offer. But as a consequence, Time Inc. was forced to acquire Warner for cash, necessitating the assumption of a mountain of debt. Nevertheless, the deal finally closed in early 1990. Combining the leadership and operating components of Time Inc. and Warner Communications into a smoothly functioning whole, while working off the mountain of debt used to finance the deal, consumed a great deal of the newly merged company’s attention and focus for a number of years. In addition, the highly successful cable divisions, along with the rest of the industry, would be whipsawed by successive waves of re-regulation and deregulation to a degree unparalleled in modern business history. And even as those trends were playing out, Time Warner Cable in the 1990s played a leading role in ushering in the modern era of digital broadband communications. I conducted a small survey of family, friends, neighbors and coworkers to assist with this portion of my final project. With the government changing the label of internet service from a luxury to a utility, I have chosen to look specifically at the internet service and speeds provided by Time Warner Cable. Beginning August 1, 2015 and ending August 8th 2015, I obtained responses from a sample of 72 experienced Internet users and 23 inexperienced users. The demographics of the sample are relatively similar to those reported by the United States Census Bureau.

My results show that reliability and speed are important characteristics of Internet service. The representative household is willing to pay about $20 per month for more reliable service and $45-48 for an increase in speed. Willingness-to-pay for speed increases with education, income and online experience, and decreases with age. Rural households value connection speed by about $3 more per month than urban households. Households are also willing to pay an additional $6 so that their Internet service provides the ability to designate downloads as high-priority, about $4 for the ability to interact with health specialists online, about $3 for the ability to download and view full-length movies, and about $5 for the ability to place free phone calls over the Internet and see the person being called. Using these results, I calculate that a representative household would be willing to pay about $59 per month for a less reliable Internet service with fast speed (“Standard”), about $85 for a reliable Internet service with fast speed and the priority feature (“Extreme”), and about $98 for a reliable Internet service with fast speed plus all other activities (“Ultimate”). An improvement to very fast service adds about $3 per month to these estimates. In contrast, an inexperienced household with a slow connection would be willing to pay about $31 per month for a Standard Internet service, about $59 per month for a Extreme service and $71 for a Ultimate service. An interesting finding from my results is that valuations for Internet service increase substantially with experience. The implication is that, if targeted correctly, private or public G. Rosston, S.J. Savage and D. Waldman IV programs that educate households about the benefits from broadband (e.g., digital literacy training), expose households to the broadband experience (e.g., public access) or directly support the initial take-up of broadband (e.g., discounted service and/or hookup fees) have potential to increase overall penetration in the United States.

It is difficult to estimate demand for broadband service, and more importantly for specific characteristics of broadband service with data currently available. For example, while there is information about subscription rates to Internet access, pricing and plan choice are not generally available publicly. As a result, it would be difficult to implement the discrete choice methods of Berry et. al. (1995). Even if this data were available, there is insufficient variation in product characteristics to identify important marginal utility parameters of interest. For example, Internet access service plans are typically structured so that more reliability is bundled with more speed so that it is impossible to separate the willingness-to-pay for these two characteristics. Previous studies have typically used demographic variables to explain the demand for broadband Internet service (“Digital Divide Studies”) or have collected market and/or experimental data from household surveys to explain how price and non-price characteristics affect demand (“Price and Non-Price Characteristics”). Several other studies use survey and/or experimental data to examine how price and non-price characteristics affect the choice of Internet service. Goolsbee (2006) uses stated preference data from a 1999 survey of about 100,000 consumers to estimate the probability of choosing cable modem Internet service. After controlling for individual demographics, model results show an increase in the likelihood of cable modem service for people with lower prices. The elasticity of demand for cable Internet with respect to price ranges from -2.8 to -3.5. Hausman et. al. (2001) estimate a reduced-form model that relates the price of broadband to dial-up price, presence of RoadRunner service (Time Warner Cable), and demand and cost variables. Results cannot reject the hypothesis that dial-up prices do not constrain broadband prices, and they conclude that broadband Internet is a separate relevant market for competitive analysis. However, the finding of zero cross-price elasticity should be qualified to some extent as they do not control for variation in the quality-adjusted prices of Internet service.

An interesting finding from my results is that valuations for Internet increase substantially with experience. The implication is that, if targeted correctly, private or public programs that educate households about the benefits from broadband (e.g., digital literacy training), expose households to the broadband experience (e.g., public access ) or directly support the initial take-up of broadband (e.g., discounted service and/or hookup fees) have potential to increase overall penetration in the United States (see Ackerberg et al, 2009). In twenty nine states cross the country, with more than fifty thousand employees, Time Warner Cable connects their twelve and one half million customers to what matters most in their lives. Time Warner Cable does that by providing reliable technology and superior service, making it simpler and easier for people to enjoy their world better. The current order of top providers are as follows: Comcast Corp (23 million subscribers). Direct TV (20 million), Dish Network (13.3 million), Time Warner Cable (12.5 million) and Verizon FiOS (5.6 million).

As of December 31, 2013, the Company had $25.052 billion of debt, $525 million of cash and equivalents (net debt of $24.527 billion, defined as total debt less cash and equivalents and short-term investments in U.S. Treasury securities, as applicable), and $6.943 billion of total TWC shareholders’ equity. As of December 31, 2012, the Company had $26.689 billion of debt, $3.304 billion of cash and equivalents, $150 million of short-term investments in U.S. Treasury securities (net debt of $23.235 billion), $300 million of mandatorily redeemable non-voting Series A Preferred Equity Membership Units (the “TW NY Cable Preferred Membership Units”) issued by a former subsidiary of TWC, Time Warner NY Cable LLC (“TW NY Cable”), and $7.279 billion of total TWC shareholders’ equity.

Cash used by investing activities increased from $3.345 billion in 2012 to $3.476 billion in 2013, principally due to a decrease in return of capital from investors and an increase in capital expenditures, partially offset by a decrease in business acquisitions, net of cash acquired, and the maturities of short-term investments in U.S. Treasury securities (net of purchases). Cash used by investing activities decreased from $3.530 billion in 2011 to $3.345 billion in 2012, principally due to the 2012 return of capital from investors, partially offset by increases in business acquisitions, net of cash acquired, and capital expenditures, as well as the 2012 short-term investments in U.S. Treasury securities. Capital expenditures in 2012 included approximately $100 million of Insight-related capital spending.

Cash used by financing activities was $5.056 billion in 2013 compared to $4.053 billion in 2012. Cash used by financing activities in 2014 primarily consisted of repurchases of TWC common stock, the repayment of TWC’s 6.200% senior noted due July 2013, the payment of quarterly cash dividends, the redemption of the TW NY Cable Preferred Membership Units and the repayment of Duke Net's long-term debt. Cash used by financing activities in 2015 primarily consisted of the repayments of TWE’s 10.150% senior notes due May 2015 ($250 million in aggregate principal amount), TWC’s 5.400% senior notes due July 2015 ($1.5 billion in aggregate principal amount) and TWCE’s 8.875% senior notes due October 2015 ($350 million in aggregate principal amount), the repayment of Insight’s senior credit facility and senior notes, repurchases of TWC common stock and the payment of quarterly cash dividends, partially offset by the net proceeds of the public debt issuances in June and August 2015. Cash used by financing activities was $4.053 billion in 2015 compared to $28 million in 2011. Cash used by financing activities in 2015 primarily consisted of the repayments of TWE’s 10.150% senior notes due May 2015, TWC’s 5.400% senior notes due July 2015 and TWCE’s 8.875% senior notes due October 2015, the repayment of Insight’s senior credit facility and senior notes, repurchases of TWC common stock and the payment of quarterly cash dividends, partially offset by the net proceeds of the public debt issuances in June and August 2015. Cash used by financing activities in 2014 primarily consisted of repurchases of TWC common stock and the payment of quarterly cash dividends, partially offset by the net proceeds of the public debt issuances in May and September 2013.

Property, plant and equipment are stated at cost, and depreciation on these assets is provided using the straight-line method over their estimated useful lives. TWC incurs expenditures associated with the construction of its cable systems. Costs associated with the construction of transmission and distribution facilities are capitalized. With respect to customer premise equipment, which includes set-top boxes and high-speed data and telephone modems, TWC capitalizes installation costs only upon the initial deployment of these assets. All costs incurred in subsequent disconnects and reconnects of previously installed customer premise equipment are expensed as incurred. TWC uses standard capitalization rates to capitalize installation activities. Significant judgment is involved in the development of these capitalization standards, including the average time required to perform an installation and the determination of the nature and amount of indirect costs to be capitalized. The capitalization standards are reviewed at least annually and adjusted, if necessary, based on comparisons to actual costs incurred. TWC generally capitalizes expenditures for tangible fixed assets having a useful life of greater than one year. Capitalized costs include direct material, labor and overhead, as well as interest. The costs associated with the repair and maintenance of existing tangible fixed assets are expensed as incurred.

|Estimated Useful December 31, 2013 2012 cost | | |
|(in millions) | | |
| |2013 |2012 |
|Land, buildings and improvements(a) |1,851 |1,778 |
|Distribution systems(b) |23,119 |21,141 |
|Converters and modems |5,687 |5,806 |
|Capitalized software costs(c) |2,252 |1,895 |
|Vehicles and other equipment |2,286 |2,214 |
|Construction in progress |424 |438 |
|Property, plant and equipment, gross |35,619 |33,272 |
|Accumulated depreciation |20,563 |18,530 |
|Property, plant and equipment, net |15,056 |14,742 |

My suggestions as it relates to Time Warner Cable would be focused around taxes. If the Company were to recognize the benefits of these uncertain income tax position (IRS Business Tax codes), the income tax provision and effective tax rate would be impacted by $68 million, $50 million and $33 million, including interest and penalties and net of the federal and state benefit for income taxes, for the years ended December 31, 2014, 2013 and 2012, respectively. These benefit amounts include interest and penalties of $20 million, $15 million and $11 million for the years ended December 31, 2014, 2013 and 2012, respectively, net of the federal and state benefit for income taxes. The impact of temporary differences and tax attributes are considered when calculating accruals for interest and penalties associated with the reserve for uncertain income tax positions. The amount accrued for interest and penalties, before the federal and state benefit for income taxes, as of December 31, 2014 and 2013 was $28 million and $22 million, respectively. The Company recognizes interest and penalties accrued on uncertain income tax positions as part of the income tax provision. The income tax provision for the years ended December 31, 2014, 2013 and 2012 includes interest and penalties, before the federal and state benefit for income taxes, of $6 million, $6 million and $1 million, respectively.

If the Company were to recognize the benefits of these uncertain income tax positions upon a favorable resolution of these matters, the income tax provision and effective tax rate could be impacted by up to approximately $20 million, including interest and penalties and net of the federal and state benefit for income taxes. This benefit amount includes interest and penalties of approximately $10 million, net of the federal and state benefit for income taxes. The Company otherwise should not anticipate that its reserve for uncertain income tax positions as of December 31, 2014 will significantly increase or decrease during the twelve-month period ended December 31, 2015; however, various events could cause the Company’s current expectations to change in the future. The changes could be impacted by the pending merger with Charter Communications. For Time Warner Cable I suggest the merger should happen as the CEO seems to have lost the drive to maintain the company as an independent cable provider. When the passion is lost, in turn it services decline, quality of work diminishes, and the company value will decline.

Rob Marcus lead Time Warner Cable’s next chapter with the absolute certainty that major challenges and changes lie ahead. They are just as certain, and enthusiastic, about the opportunities the company is positioned to take advantage of. Time Warner Cable seeks to maintain its tradition of innovation leadership with the continued introduction of products that give customers greater control over the technology that Time Warner Cable delivers to their homes. It also continues its trend of leading the industry in understanding and serving well-defined groups of customers and their needs. And Time Warner Cable prides itself on the connections it forges with its workforce, and the connections they make with each other, and customers in communities across America.

References

Bluebook R. 12.9.1, Internal Revenue Code ("In citations to the Internal Revenue Code, '26 U.S.C.' may be replaced with 'I.R.C.' Thus: 26 U.S.C. § 61 (2006) becomes: I.R.C. § 61 (2006) . . .")

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Time Warner Cable. (2014). 2013 annual report of Time Warner Cable. retrieved from http://ir.timewarnercable.com/files/doc_financials/Annual%20Reports/468244_010.pdf

Time Warner Cable. (2013). 2012 annual report of Time Warner Cable. retrieved from http://ir.timewarnercable.com/files/doc_financials/Annual%20Reports/468244_010.pdf

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economics