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SEC Filings

10-K405
RENAISSANCE MEDIA GROUP LLC filed this Form 10-K405 on 03/31/1999
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<PAGE>
 
rental fees, advertising revenue and commissions related to the sale of goods
by home shopping services and in-home wiring maintenance contracts. The table
below sets forth for the periods indicated basic, premium and other revenues
expressed as a percentage of total revenues:
 

<TABLE>
<CAPTION>
                                                                    Renaissance
                                                                       Media
                                          Systems                    Group LLC
                            --------------------------------------- ------------
                                                       Period from
                            Year Ended December 31,    January 1 --  Year Ended
                            -------------------------    April 8,   December 31,
                             1995     1996     1997        1998         1998
                            -------  -------  -------  ------------ ------------
<S>                         <C>      <C>      <C>      <C>          <C>
Basic......................    65.9%    68.4%    70.6%     71.6%        72.1%
Premium....................    14.7%    13.4%    12.8%     11.6%        11.2%
Other......................    19.4%    18.2%    16.6%     16.8%        16.7%
                            -------  -------  -------     -----        -----
Total Revenues.............   100.0%   100.0%   100.0%    100.0%       100.0%
                            =======  =======  =======     =====        =====
</TABLE>

 
   Basic revenue has been increasing as a percentage of total revenues since
1995 due primarily to increases in subscription rates offset by a change in
the treatment of the portion of franchise fees that are passed through
directly to subscribers on their monthly billing invoices ("subscriber
franchise fees"). Prior to 1997, subscriber franchise fees were not itemized
on subscribers' monthly billing invoices, but were included in the total
monthly service charge paid by subscribers. As a result, when the Systems
recorded monthly revenue it included subscriber franchise fees. Franchise fee
expense, prior to 1997, included non-subscriber franchise fees paid directly
by the Systems and subscriber franchise fees that were paid by and collected
from subscribers. Beginning in 1997, the Systems began itemizing subscriber
franchise fees on customers' billing invoices. As such, the Systems ceased
recording subscriber franchise fees to revenue and began recording subscriber
franchise fees to an accrual account. As a result of such change, franchise
fee expense only reflects the franchise fees paid directly by the Systems. The
effect of this change in the treatment of subscriber franchise fees was a
reduction of revenue in direct proportion to the reduction of franchise fee
expense, resulting in no impact to net income on a comparative basis. Premium
revenues have been decreasing as a percentage of total revenues due to
marginal growth in this revenue category. Other revenue has been decreasing as
a percentage of total revenues due primarily to the elimination in 1996 and
1995 of additional outlet charges, offset in part, by increases in other
revenue items.
 
   System Operating Expenses. System operating expenses are comprised of
variable operating expenses and selling, service and administrative expenses
directly attributable to the Systems. Variable operating expenses consist of
costs directly attributable to providing cable services to customers and
therefore generally vary directly with revenues. Variable operating expenses
include programming fees paid to suppliers of programming included in the
Systems' basic and premium cable television services, as well as expenses
related to copyright fees, franchise fees and bad debt expenses. Programming
costs have historically increased at rates in excess of inflation due, in
part, to improvements in the quality of programming. Cable programming costs
are expected to continue to increase due to additional programming being
provided to customers, inflationary increases and other factors. Programming
costs as a percentage of revenue increased to 20.5% in 1997 from 20.1% in 1996
and to 20.8% for the period January 1, 1998 to April 8, 1998. For the period
from April 9, 1998 to December 31, 1998, the Company's programming costs as a
percentage of revenue were 23.2%. The increase is due to the loss of certain
programming discounts that were realized as a result of being part of a large
MSO. Selling, service and administrative expenses directly attributable to the
Systems include the salaries and wages of field and office personnel, plant
operating expenses, office and administrative expenses and sales costs.
 
   Non-System Operating Expenses. Non-system operating expenses consist
primarily of corporate related expenses, which are not directly attributable
to the Systems. These expenses include personnel costs, rent, legal, audit,
tax and other corporate overhead costs.
 
   Depreciation, Amortization and Loss (Gain) on Disposal of Fixed
Assets. Depreciation, amortization and loss (gain) on disposal of fixed assets
include depreciation of the Systems' network and equipment, amortization
 
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