failure to comply with the material provisions of a franchise, our franchises
are subject to non-renewal or termination under certain circumstances. In
addition, the franchise authorities often demand certain concessions or other
commitments as a condition to renewal, which have been and may continue to be
costly to us. In certain cases, franchises have not been renewed at expiration,
and we have operated under either temporary operating agreements or without a
license while negotiating renewal terms with the franchising authorities. In
addition, there are costs associated with renewal. See "Business -- Franchises."
RAPID TECHNOLOGICAL ADVANCES -- WE MAY NOT BE ABLE TO FUND THE CAPITAL
EXPENDITURES NECESSARY TO KEEP PACE WITH TECHNOLOGICAL DEVELOPMENTS OR OUR
CUSTOMERS' DEMAND FOR NEW PRODUCTS OR SERVICES.
The cable business is characterized by rapid technological change and the
introduction of new products and services. There can be no assurance that we
will be able to fund the capital expenditures necessary to keep pace with
technological developments or that we will successfully anticipate the demand of
our customers for products or services requiring new technology. Our inability
to provide enhanced services in a timely manner or to anticipate the demands of
the market place could have a material adverse effect on the systems' business,
results of operations and financial condition. See "Business -- Competition."
CONTROL BY PRINCIPAL EQUITY HOLDER; RISKS ASSOCIATED WITH POTENTIAL CONFLICTS OF
INTEREST -- OUR MANAGEMENT MAY BE RESPONSIBLE FOR MANAGING OTHER CABLE
OPERATIONS AND MAY NOT BE ABLE TO DEVOTE THEIR FULL TIME TO OUR OPERATIONS.
Paul G. Allen beneficially owns approximately 96% of our outstanding equity
interests on a fully diluted basis. Accordingly, Mr. Allen has the ability to
control fundamental corporate transactions requiring equity holder approval,
including without limitation, election of directors, approval of merger
transactions involving us and sales of all or substantially all of our assets.
There can be no assurance that the interests of either Mr. Allen or his
affiliates will not conflict with the interests of the holders of the Notes.
In addition, it is possible that Mr. Allen may, from time to time, acquire
cable systems in addition to those owned or acquired by us. If he does so, CCI,
of which Mr. Allen is the majority owner, as well as some of the officers of CCI
may have a substantial role in managing these outside systems. CCI and its
officers and employees now devote substantially all of their time to managing
our systems. However, if such persons began to manage outside cable systems as
well, they might have to limit the management time devoted to managing our
systems, which could impair our results of operations. Moreover, allocating
managers' time and other CCI resources between our systems and outside systems
held by Mr. Allen could give rise to conflicts of interest. CCI does not have or
plan to create formal procedures for determining whether and to what extent
outside cable television systems described above will receive priority with
respect to personnel requirements.
DEPENDENCE ON KEY PERSONNEL -- THE LOSS OF CERTAIN KEY EXECUTIVES COULD
ADVERSELY AFFECT US.
Our operations are managed by CCI which, in turn, is managed by a small
number of key executive officers, including Jerald L. Kent. The loss of the
services of these individuals, and, in particular, of Mr. Kent, could have an
adverse effect on our financial condition and results of operations.