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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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Programming and Subscriber Rates
 
   Cable television systems offer their customers programming that includes
the local network, independent and educational broadcast television stations,
a limited number of broadcast television signals from distant cities, numerous
satellite-delivered, non-broadcast channels and, in some systems, local
information and public, educational and governmental access channels.
Depending upon each system's channel capacity and viewer interests, the
Company offers tiers of cable television programming: a basic programming tier
(consisting generally of network, independent and public television signals
available over-the-air), an "expanded basic" programming tier (consisting
generally of satellite-delivered programming services with broad based
viewership appealing to a wide variety of subscriber tastes), one or more
specialty tiers (consisting of satellite-delivered programming, services
tailored to particular niche subscriber groups such as the Sci-Fi Channel,
Home & Garden, The Cartoon Network, American Movie Classics, ESPN2 and
regional sports programming) and per channel and pay-per-view premium services
purchased from content suppliers such as HBO, Cinemax and The Disney Channel.
 
   The Company has retained Time Warner under an exclusive arrangement to
manage all of the Company's programming, except local programming, at rates
which the Company believes will be favorable. Time Warner has various
contracts and arrangements to obtain basic, satellite and premium programming
for the Systems from program suppliers, including, in limited circumstances,
some broadcast stations, with compensation generally based on a fixed fee per
customer or a percentage of the gross receipts for the particular service.
Some program suppliers provide volume discount pricing structures and/or offer
marketing support. Through Time Warner, the Company has long-term programming
contracts for the supply of a substantial amount of its programming. Such
contracts generally are for fixed periods of time ranging from one to five
years and will be subject to negotiated renewal. Time Warner invoices the
Company on a monthly basis for the programming services it provides to the
Company (approximately 61 services as of December 31, 1998) in an amount equal
to the amount such programming services charge Time Warner, plus an
administrative fee. For the period from April 9, 1998 to December 31, 1998,
the average monthly per subscriber programming cost payable to Time Warner was
$3.84. The loss of contracts with certain programming suppliers could have a
material adverse effect on the Company, its financial condition, prospects and
debt service ability. In the event that the Company's arrangement with Time
Warner is terminated, the Company expects it will be able to obtain other
programming arrangements, although such arrangements may be at higher rates.
This arrangement with Time Warner lasts only as long as Time Warner retains an
equity interest in Holdings and Holdings holds all or substantially all of the
Systems. This arrangement with Time Warner will terminate upon consummation of
the Charter Transaction.
 
   Cable programming costs are expected to continue to increase due to
additional programming being provided to customers, inflationary increases and
other factors. In 1996 and 1997, programming costs as a percentage of the
System's revenues were approximately 20.1% and 20.5%, respectively, and 20.8%
for the period January 1, 1998 to April 8, 1998. Following the Acquisition,
programming costs as a percentage of revenue increased to 23.2% due to the
loss of certain discounts that were realized as a result of being part of a
larger MSO. See "Pro Forma Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
 
   Monthly customer rates for services offered by the Systems vary from market
to market, primarily according to the amount of program offerings and costs of
operations. During 1998, the monthly basic service rates for residential
customers for the Systems ranged from $5.20 to $11.00, per-channel premium
service rates ranged from $7.95 to $11.95 and Cable Programming Satellite Tier
("CPST") service rates ranged from $13.59 to $24.24. During 1998 the weighted
average basic service rate was approximately $7.88 and the weighted averaged
CPST service rate was approximately $20.28. During January 1999, the Systems
increased their monthly subscription rates for CPST service from $20.28 to
$22.61 on a weighted average basis.
 
Customer Service and Marketing
 
   The Company emphasizes the importance of excellent customer service, which
it believes is critical to the successful operation of its business. The
Company intends to implement business approaches which permit it to
 
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