and Tennessee serving approximately 631,000 subscribers. If the Swap Transaction
is completed, subsidiaries of Charter Holdings will acquire the AT&T systems
being exchanged. The Swap Transaction will allow us to improve the clustering of
our cable systems in certain key markets. For example, upon completion of the
Swap Transaction we will serve approximately 800,000 customers in St. Louis and
the surrounding areas of Missouri and Illinois. We believe that improved
clustering will allow us to gain operating efficiencies and economies of scale,
as well as to accelerate the roll-out of enhanced broadband technology and
services to more customers. The agreed value of the AT&T systems is $2.5 billion
and the agreed value of the Charter systems is $2.4 billion. As part of the Swap
Transaction, we will be required to pay AT&T approximately $108 million in cash.
This represents the difference in the agreed values of the systems being
exchanged. The Swap Transaction is subject to the negotiation and execution of a
definitive exchange agreement, regulatory approvals and other conditions typical
in transactions of this type. We cannot assure you that the Swap Transaction
will be completed.
PRODUCTS AND SERVICES
We offer our customers a full array of traditional cable television
services and programming and we have begun to offer new and advanced high
bandwidth services such as high-speed Internet access. We plan to continually
enhance and upgrade these services, including adding new programming and other
telecommunications services, and will continue to position cable television as
an essential service.
TRADITIONAL CABLE TELEVISION SERVICES. As of September 30, 1999,
approximately 87% of our customers subscribe to both "basic" and "expanded
basic" service and generally receive a line-up of between 33 and 85 channels of
television programming, depending on the bandwidth capacity of the system.
Customers who pay additional amounts can also subscribe for additional channels,
either individually or in packages of several channels, as add-ons to the basic
channels. As of September 30, 1999, more than 25% of our customers subscribe for
premium channels, with additional customers subscribing for other special add-on
packages. We tailor both our basic channel line-up and our additional channel
offerings to each system according to demographics, programming preferences,
competition, price sensitivity and local regulation.
Our traditional cable television service offerings include the following:
- BASIC CABLE. All of our customers receive basic cable services, which
generally consist of local broadcast television, local community
programming, including governmental and public access, and limited
satellite programming. For the nine months ended September 30, 1999, the
average monthly fee was $12.57 for basic service.
- EXPANDED BASIC CABLE. This expanded tier includes a group of
satellite-delivered or non-broadcast channels, such as Entertainment and
Sports Programming Network (ESPN), Cable News Network (CNN) and Lifetime
Television, in addition to the basic channel line-up. For the nine months
ended September 30, 1999, the average monthly fee was $16.08 for expanded
- PREMIUM CHANNELS. These channels provide unedited, commercial-free
movies, sports and other special event entertainment programming. Home
Box Office, Cinemax and Showtime are typical examples. We offer
subscriptions to these channels either individually or in packages. For
the nine months ended September 30, 1999, the average monthly fee was
$6.28 per premium subscription.
- PAY-PER-VIEW. These channels allow customers to pay to view a single
showing of a recently released movie, a one-time special sporting event
or music concerts on an unedited, commercial-free basis. We currently
charge a fee that ranges from $2.95 to $8.95 for movies.