Jeffrey Chiu Daniel Druger Sarvesh Gupta ●●

Presentation Outline

1. Executive Summary

2. Situation Analysis

3. Market Analysis

4. Proposed Program

5. Benefit & Vision

Executive Summary

Executive Summary

Large drop in video subscribers

Root cause: Competition

Need to build stronger customer connection

Recommendations

Executive Summary

Create Customized Retention Program

Rollout in the Greater Los Angeles

Area

Customize Content for Providers

and Customers

Increased Retention

Economic trends are systematic

Why not Economy?

Recent drop in per capita disposable

income

Corresponding drop in coaxial

cable subscriptions

Similar drop in satellite TV

revenues

Situation Analysis

Why not Internet?

59%+ in each demo cite “home TV system” as the viewing choice for their favorite TV shows

Small percentage of total market is cord cutting, only about 1% (1.7M)

Source: Deloitte, “The State of the Media Democracy: Game Changing”, Feb 1, 2011Experain Simmons “New Media Study”, June 1, 2011Nielsen, “Nielsen Estimates Number of US Television Homes to be 114.7 Million

Nielsen data demonstrates internet used by consumers to supplement cable content, not replace it

Situation Analysis

DirecTV and Dish Network have captured 25% of the cable market

Why Competition?

Situation Analysis

Key Competitors

Situation Analysis

38% market share (746K HH)

Los Angeles County TWC Coverage Area

Current Market Coverage

41,800 subscribers lost

Market Analysis

Segmentation Breakdown87K

(11.7%)

176K(23.6%)

483K(64.7%)

Family Households

HH Income $150K+$160/Video Subscriber

4,885 Customers Lost = $781,600 Revenue

Market Analysis

Segmentation Breakdown87K

(11.7%)

176K(23.6%)

483K(64.7%)

Young ProfessionalsHH Income $75K-$150K$129/Video Subscriber

9,854 Customers Lost = $1,271,166 Revenue

Market Analysis

Segmentation Breakdown87K

(11.7%)

176K(23.6%)

483K(64.7%)

Non Family Professionals HH Income below $75K$99/Video Subscriber

27,015 Customers Lost = $2,674,485 Revenue

$4,744,890 TOTAL REVENUE LOST

Market Analysis

Why are they leaving?

Market Analysis

Current Retention Programs

Market Analysis

Free Membership

Three Level Membership

Points on Dollar Amount

Redemption Options: Gifts, Discount Outlet & Auction

Limited Membership

One Level Membership

Points on Dollar Amount

Redemption Options: Online Store Purchase Discounts

Rewards Program Launched in 1998

11% Drop - Disconnect Rate (Annual)

10% Reduction - Service Downgrade (Annual)

20% Increase – Revenue per Household (Annual)

Source: http://directmag.com/mag/marketing_tci_turns_around/

Past Successful Programs

Market Analysis

Proposed Program

CONNECT!

“A program designed to engage the customer with unique rewards through active involvement”

Proposed Program

SILVER

•$129 or less Monthly Spending on TWC Services

•1 point on every dollar

GOLD

•$130-$159 Monthly Spending on TWC Services

•2 points on every dollar

PLATINUM

•$160+ Monthly Spending on TWC Services

•3 points on every dollar

Proposed Programs

Proposed Program

Proposed Program

Provide Promotions on Content

Promote New products and Assess

Potential

Bonus Points on Enrollment

Points on Monthly Expenditure

Points on Other Services (VOD)

Points on Selective Promotions

Initial Enrollment

Monthly Bill

Orders VOD

Seeks Other ways to Earn Points

Retain Customer through engagement

Realize Value in Product

Targeted Marketing Initiatives

Develop Strategic Partnerships

Proposed Program

Home

Earn Points

For Premium Support Call 1.800.000.00

00

CONNECT!

3000Redeem

Reach Out

Today’s Trivia!What is the price of the latest Carl’s Jr. Burger? (200 points)

Sample Webpage

Welcome Mr. Tim Warner!

Sign Out

Submit

Current Points Balance

Redeem for Merchandise!(350 points)

Proposed Program

Time Warner Cable Connect! Enrollment 1,000 points

Two (2) Movies On Demand 40 points

Correct Trivia Answer 200 points

$133 Monthly Spend 266 points

1,506 points

Tim Warner

Sample Customer

Proposed Program

Assumptions:• 10% Annual retention increasing at 1% y/y• Revenue/Customer=$113.64 growing at 3% y/y• Program cost =1% of Revenue =$847K• No gains accounted for from service upgrades

5-Year Revenue Increase:

$6.5 millionPayback Period:

17 Months

Short Term Benefits

2012 2013 2014 2015 2016$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$475,015

$1,448,654

$2,875,419

$4,626,964

$6,491,261Five Year Cumulative Revenue Growth

Year

Rev

enu

e

Benefit & Vision

Rollout Plan

1 2 3 4 5 6 7 8 9 10 11 12+

Months

Website Development

Bill Redesign to Include Rewards Points

Train Call Center Agents

Market to Existing Customer (Direct mail, e-mail, bill inserts)

Plan On-Screen Homepage

Contact Partners for Branded Rewards/Sponsorship Opportunities

PlanAdditional

Rollouts in SC

Benefit & Vision

Risk AnalysisSlower than expected adoption of the program

• Low initial investment• Los Angeles test market

Competition adopts similar practices

• Leverage existing relationships with content providers and current customers

Perceived narrow focus of program

• Increased service upgrades and decreased service downgrades

• Improved customer satisfaction

Benefit & Vision

Long Term Vision

Tailor Rewards and Content to Individual Customer Preferences

Continue to Develop New Partnership Opportunities

Benefit & Vision

THANK YOU!

AppendixDVR Household Trend

Cord-Cutting

TV Still Preferred Method

General TWC Market Profile

Family Household Segment

Young Professional Segment

Aging Population Segment

Customer Pyramid

Viewing Habits by Demo

TV Consumption for Internet Users

Live and Playback by Demo

TWC Sub Gains/Losses

LA Coverage Statistics – 1

LA Coverage Statistics – 2

TWC Revenue Breakdown

HH Cable Connection by Income

Sub Losses by Segment

Gains from Retention Program

Sample On-Screen Display

Competitor Comparison – 1

Competitor Comparison - 2

TV sets per household has increased: Opportunity to take advantage of potential service-adds leading to revenue gains.

DVR Household Trend

Small percentage of total market that is cord cutting, only about 1% (1.7M)

Cord-Cutting

TV Still Preferred MethodTelevision still preferred

method of watching favorite TV shows across

all demos

Male: 50% / Female: 50% Mean Age: 36.51 Average HH Income: $86,056 Average HH Size: 2.91 Key Consumers: A25-64 (55%) P2-19 make up 33% of consumers

General TWC Market Profile

Customer Segments

Family Households P25-49 (37% of market) High income HH HH has multiple cable set-top-

boxes Majority of P2-19 universe

within HH (33% of market) Heavy DVR and on-demand

usage TV viewing is a shared

experience

Customer Segments

Young Professionals P20-34 (21% of market) College graduates No children Income growth potential Future family household Heavy DVR and on-demand

usage High price sensitivity Most likely to switch/cancel

video subscriptions

Customer Segments

Aging Population P50+ (29% of market) Stable customers, low churn Heavy users of traditional

services: 40+ hours/week spent watching traditional TV

TV watching is done live TV viewing is a personal

experience

IRON

GOLD

PLATINUM

Family Households: Multiple set-top-boxes, high usage of services, low price sensitivity, access to future consumers, bundle services (3)

Young Professionals: Use full-range of services, high earning potential, bundle services (2)

Aging Population: Low usage of broad services, low earning potential, below average revenue per subscriber

Non-family Professional: Use full-range of services, less price sensitive, bundle services (2), low growth potential

Customer Segmentation

Viewing Habits by Demo

Most consumers, in all age groups, watch TV shows on a TV set to some degree.

Most at risk are P18-34 & P35-44

TV Consumption for Internet Users

Live & Playback by Demo

Video2Q10 Subscribers 2Q11 Subscribers Gain/Loss

12,056,604 94.70% = 11,417,604 (639,000)

2Q10 rev/cust 2Q11 rev/cust

$ 108.44 104.80% = $ 113.64

2Q10 Sub Revenue 2Q11 Sub Revenue % Rev Loss $ Rev Loss

$ 1,307,418,113 $ 1,297,496,493 -0.76% (9,921,620)

Internet2Q10 Subscribers 2Q11 Subscribers Gain/Loss

9,291,188 104.40% = 9,700,000 408,812

Phone2Q10 Subscribers 2Q11 Subscribers Gain/Loss

4,314,477 104.30% = 4,500,000 185,523

TWC Subscriber Gains/Losses

Coverage Area HH UE Male Female Median Age HH IncomeAlhambra 31,910 48% 52% 38.55 $ 73,503 Burbank 28,156 49% 51% 38.27 $ 70,272

East San Fernando Valley 134,810 50% 50% 33.67 $ 66,779 Glendale 54,859 48% 52% 39.66 $ 88,552 Hollywood 99,367 51% 49% 33.79 $ 53,479 Los Feliz 63,655 51% 49% 33.15 $ 61,361 Pasadena 36,166 48% 52% 38.52 $ 104,005

South Pasadena 8,804 47% 53% 40.54 $ 146,276 South San Fernando Valley 40,263 48% 52% 41.18 $ 133,279

West San Fernando Valley 141,972 50% 50% 36.15 $ 84,590

Westside/Beverly Hills 106,090 49% 51% 39.67 $ 135,477

TOTAL 746,052 369,786 376,266 36.51 $ 86,056

64.4% of HH w/ children 480,457 49.6% 50.4%

Average HH size 2.9 33.50 $75,363 Market Weekly time spent watching traditional TV

2010 Total HH in LA footprint 1,957,778Current Market Share 38%

Total Subscribers 2Q11 12,056,604 LA Subscribers as % of Total 6%

Total 2Q11 y/y loss 639,000 Total 2Q11 y/y loss (%) -5.3%Estimated LA 2Q11 y/y loss 41,754

2Q10 HH UE 787,806

Avg 2Q11 rev per sub $ 113.64 LA revenue lost $ 4,744,890.72

LA Coverage Statistics

Coverage Area HH UE A2-19 A20-24 A25-34 A35-49 A50-64 A20-64 A65+

Alhambra 31,910 26% 6% 13% 23% 18% 54% 14%

Burbank 28,156 31% 6% 14% 24% 18% 56% 13%

East San Fernando Valley 134,810 37% 8% 15% 23% 15% 53% 10%

Glendale 54,859 31% 6% 12% 24% 19% 55% 14%

Hollywood 99,367 35% 8% 17% 23% 15% 55% 10%

Los Feliz 63,655 38% 8% 15% 22% 15% 52% 10%

Pasadena 36,166 27% 6% 13% 23% 24% 60% 13%

South Pasadena 8,804 30% 5% 12% 25% 20% 57% 13%

South San Fernando Valley 40,263 28% 5% 13% 25% 20% 58% 14%

West San Fernando Valley 141,972 36% 7% 13% 23% 17% 53% 11%

Westside/Beverly Hills 106,090 27% 8% 16% 23% 19% 58% 15%

TOTAL 746,052 246,312 53,771 107,758 172,767 128,695 409,221 88,604

64.4% of HH w/ children 480,457 33% 7% 14% 23% 17% 55% 12%

Average HH size 2.9 37% 8% 16% 38% 53% 10%

Weekly time spent watching traditional TV 23:00 24:17 28:08 32:58 41:04 46:16

Time Warner Cable 2010 2009% Change 2010 2009% Change

Subscription: Programming tiers $ 7,227 $ 7,188 0.5%

Video $ 10,995 $ 10,760 2.2% Premium channels $ 865 $ 875 -1.1%

High Speed Data $ 4,960 $ 4,520 9.7%Transactional video-on-demand $ 366 $ 367 -0.3%

Voice $ 2,032 $ 1,886 7.7%

Video equipment rental and installation charges $ 1,308 $ 1,195 9.5%

Total Subscription $ 17,987 $ 17,166 4.8% DVR service $ 582 $ 510 14.1%

Advertising $ 881 $ 702 25.5%Franchise and other fees $ 493 $ 476 3.6%

Total $ 18,868 $ 17,868 5.6% Other $ 154 $ 149 3.4%

Total $ 10,995 $ 10,760 2.2% 2010 2009% ChangeResidential video 12,257 12669 -3.3%Commercial video 165 160 3.1%Residential high-speed data 9469 8994 5.3%Commercial high-speed data 334 295 13.2%Residential Digital Phone 4385 4153 5.6%Commercial Digital Phone 111 67 65.7%Primary service units 26721 26368 1.3%

TWC Revenue Breakdown

HH Cable Connection by Income

Income % of Pop. Subs lost y/y

<$75K 64.7% 27,015 $ 99.69

$75K-$150K 23.6% 9,854 $ 128.99

$150K+ 11.7% 4,885 $ 159.99

Total 100.0% 41,754

Avg Rev/Cust $ 113.66

Sub Losses by Segment

  2012 2013 2014 2015 2016

Total Video Subscriber Loss 41800 37620 29301.8 17467 3362

Target Retention Rate 10% 11.00% 12% 13% 14%

Total customers retained 4180 8318.2 11834.416 14105.17592 14575.88505

Revenue per Customer $113.64 $117.05 $120.56 $124.18 $127.90

Target Revenue Return $475,015 $973,639 $1,426,765 $1,751,545 $1,864,297

          

SG&A         

Costs         

          

EBIT (in billions) $475,015 $973,639 $1,426,765 $1,751,545 $1,864,297

Cumulative Revenue $475,015$1,448,654 $2,875,419 $4,626,964 $6,491,261

Total Revenue$84,781,349.28

Total Cost of Program$847,813.49

Gains From Retention Program

(500 points) (500 points) (750 points) (1000 points) (500 points) (1200 points)

Points Balance

3000

Redeem Now!

Today’s Trivia!What is the price of the latest Carl’s Jr. Burger? (200

points)Submit

In a universe as vast as it is mysterious, a small but powerful force has existed for

centuries. Protectors of peace and justice, they are called the Green Lantern Corps. A

brotherhood of warriors sworn to keep intergalactic order, each Green Lantern

wears a ring that grants him superpowers.

Watch Today! (1200 points or $14.95)

Select Merchandise(350 points each)

CONNECT!

Sample Rewards Screen

Benefit & Vision

DirecTV          Choice Choice Xtra Ultimate PremiereChannels 150 210 225 285

Price$29.99 ($60.99) $34.99 (65.99) $39.99 ($70.99)

$83.99 ($114.99)

Free HD Service No Yes Yes YesFree HD DVR Yes Yes Yes Yes

Free NFL Sunday Ticket No Yes Yes YesDirecTV Cinema No Yes Yes YesFree HBO/Showtime/Starz(3 months)

No (Showtime) Yes Yes Yes

HBO Go/Cinemax Go No Yes Yes Yes

Dish Network        

  DishFAMILYAmerica's Top 100

America's top 200

America's top 250

Channels 55 120 200 250

Price$19.99 ($24.99) $29.99 ($44.99) $39.99 ($59.99) $44.99 ($69.99)

Competitor Comparison

AT&T Uverse          Basic Premium  Channels 130 360  Price $89.00 $114.00  

Starz/Encore/Showtime No Yes    

Verizon FIOS          Prime HD Extreme HD Ultimate HD  Channels 195 285 350 Price $64.99 $74.99 $89.99 

HBO/Cinemax (50% off) Yes Yes Yes  

Time Warner Cable (TV and Internet)        Basic Midtier Premium  Channels 200 200 200 Price $79.99 $99.99 $139.99 Free local HD Yes Yes Yes  HD DVR No Yes Yes  

Movies/Free on Demand Yes Yes Yes  HBO/Cinemax No No Yes  

Competitor Comparison