The Spectrum network is the
backbone of today’s technology
and tomorrow’s innovation.
C
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2 0 1 9 A N N UA L R E P O R T
By the year 2025, over 40 billion
devices will be connected to the
Internet.* At the core of this activity
will be the Spectrum network.
*Worldwide Global DataSphere IoT Device and Data Forecast, 2019–2023, IDC. June 2019.
CHARTER COMMUNICATIONS
1
TM
A Better Way to Mobile
A new kind of mobile network built for
speed and reliability and designed to save.
2
2019 ANNUAL REPORT
Spectrum Mobile
Spectrum Mobile delivers the fastest overall speeds,^ and is the
most reliable,^^ coast to coast. And, in 2020, Spectrum will introduce
5G for an even better mobile experience with greater speeds and
faster downloads.
Spectrum Internet®
Spectrum is a top-performing Internet provider, delivering the fastest
download speeds, more consistently.** Plus, with Spectrum Internet Gig,
customers have access to the fastest speeds available, allowing multiple
device streaming and more—with no data caps or throttling.
Spectrum TV®
Spectrum provides the best in TV entertainment with more free HD
than any other provider. Plus, with the Spectrum TV® App, customers
can stream live TV, and watch their favorite movies and shows at home
or on-the-go. Spectrum customers also have free access to Spectrum
Originals exclusive series like Mad About You, L.A.’s Finest, Curfew,
Manhunt and more.
Spectrum Voice™
Spectrum offers customers a smart, reliable phone service along with
unlimited nationwide calling within the U.S., Canada, Mexico and more.
^ “Fastest Overall Speed” claim based on Nielsen Mobile Performance cellular and WiFi speed test results for Spectrum, Verizon, AT&T, T-Mobile and Sprint mobile
customers in Spectrum service area from 01/01/19 to 09/27/19. “Most reliable” claim based on 2018 FCC Measuring Broadband America report and RootMetrics®
by IHS Markit’s RootScore® Reports: 2H 2019. RootMetrics® test used best commercially available smartphones on 4 national mobile networks across all
available network types. Experiences may vary.
^^ “Most reliable” claim based on 2018 FCC Measuring Broadband America report and RootMetrics® by IHS Markit’s RootScore® Reports: 2H 2019. RootMetrics®
test used best commercially available smartphones.
on 4 national mobile networks across all available network types. Experiences may vary.
** Based on FCC Broadband Report 2019.
CHARTER COMMUNICATIONS
3
50000
20000
30000
40000
30000
20000
10000
15000
10000
5000
25000
20000
15000
10000
5000
0
50000
2017
2018
2019
0
20000
2017
2018
2019
0
30000
2017
2018
2019
2017
2018
30000
2019
20000
2017
2018
2019
10000
0
2017
2018
2019
2017
2018
2019
2017
2018
2019
2017
2018
2019
“
40000
Our results demonstrate that the benefits of our Time Warner
Cable Revenue1
Cable and Bright House transactions, which closed in 2016,
(In Millions)
are now being fully realized and that our product and service
strategy is working across all of our service areas.
$43,528
$41,581
20000
25000
15000
+3%
10000
THOMAS M. RUTLEDGE
Cable Adjusted EBITDA1
(In Millions)
Chairman and Chief Executive Officer
5000
15000
10000
5000
Residential & Small and Medium Business Customers
(In Thousands)
2017
2018
2019
0
2017
2018
2019
0
2017
2018
2019
Cable Revenue1
(In Millions)
Cable Adjusted EBITDA1
(In Millions)
$45,038
”
$15,301
$16,299
$17,375
+7%
27,161
28,103
29,235
+4%
$41,581
$43,528
$45,038
+3%
$15,301
$16,299
$17,375
+7%
1 Cable revenue and cable Adjusted EBITDA are non-GAAP measures and are defined and reconciled to the most comparable GAAP measures
Residential & Small and Medium Business Customers
beginning on page F-60 of this document.
(In Thousands)
27,161
28,103
29,235
+4%
4
2019 ANNUAL REPORT
Dear
Shareholders:
Charter performed well both operationally and finan-
cially in 2019. Our results demonstrate that the benefits
of our Time Warner Cable and Bright House transac-
tions, which closed in 2016, are now being fully realized
and that our product and service strategy is working
across all of our service areas.
We created over 1.1 million new customer relationships
in 2019, substantially more than in 2018. We also added
over 1.4 million new Internet customers, also more
than in 2018. We grew our full-year cable Adjusted
EBITDA1 by 6.6% to $17.4 billion in a non-political
advertising year. And net
income attributable to
Charter shareholders reached $1.7 billion. In addition,
we generated $5.8 billion of cable free cash flow,1
up over 100% year-over-year, and we repurchased
$7.6 billion of Charter stock and Charter Holdings
common units, while investing nearly $1.2 billion in
Spectrum Mobile.
We have an excellent path in front of us to grow both
customer relationships and cash flow. Our core asset—
our powerful, flexible, and easy-to-upgrade connectivity
network—allows us to offer data-rich wireline and
wireless connectivity products to both consumers and
businesses. And demand for both speed and through-
put on our network continues to increase rapidly,
driven by more devices in the home and growth in
IP video delivery.
Today, 85% of our Internet customers are in packages
that deliver speeds of 100 Mbps or more and nearly half
of our customers are in packages that deliver 200 Mbps
or more. We are also seeing strong demand for our Ultra
product, which delivers 400 Mbps, and we have Giga-
bit service available everywhere. Demand for speed and
throughput will continue to grow as new technologies
and applications emerge making multi-gigabit speeds
the norm. Despite strong demand for our connectiv-
ity products, we still only penetrate about 50% of our
passings with our Internet service today. We see strong
potential to grow our penetration given the importance
of our connectivity services to people’s daily lives, the
way we price, package and provide service and the
fact that we have a fast and cost-efficient pathway to
offering multi-gigabit wireline and wireless speeds in
the near future.
In late 2018, we expanded our connectivity product
set to include mobile service, with the ultimate goal of
driving faster overall relationship growth. Since launch,
Spectrum Mobile has grown quickly and today we have
over a million lines in service. And while it is still early, we
believe that our results indicate that our mobile prod-
uct drives connectivity customer satisfaction, and will
generate standalone profitability at scale.
1 Cable Adjusted EBITDA and cable free cash flow are non-GAAP measures and are defined and reconciled to the most comparable GAAP measures
beginning on page F-60 of this document.
CHARTER COMMUNICATIONS
5
We also remain focused on a number of service-
oriented initiatives to drive higher customer satisfaction
and retention, while reducing costs. Our insourcing
initiatives have resulted in a higher quality workforce,
driving an improved customer experience. In 2019, our
in-house agents handled over 90% of our customer
call volume, and we saw a meaningful decline in billing
and service-related calls. Our in-house field technicians
handled 80% of our 2019 truck rolls, with total truck
rolls also down year-over-year. Our self-install program
is also ramping quickly, with customer self-installations
now representing over 50% of our sales volume. Our
online selling and self-service platforms are also
becoming increasingly successful. In aggregate, these
initiatives of insourcing, reducing activities and increas-
ing customer directed activity are having a meaningful
impact on our business by reducing selling friction and
service transactions per customer relationship. In turn,
these benefits are reducing churn and our costs to
service customers per customer relationship.
As we look to the remainder of 2020 and beyond, we
remain focused on a number of key priorities, including:
• Accelerating our customer relationship growth
by (1) delivering superior services and value to our
customers and (2) by
improving the quality of
our operations by reducing unnecessary service
transactions and truck rolls per customer resulting in
lower churn;
• Positioning our company for long-term customer
relationship growth with current and new products,
by continuing to evolve to a fully converged net-
work that delivers high-speed, low-latency, seamless
connectivity services both inside and outside the
home; and
• Delivering sustainable free cash flow growth, by
driving Adjusted EBITDA growth, while reducing
capital intensity.
Our operating model is designed to drive continuous
improvement, and long-term growth, in a way that works
for our customers, our employees, the communities we
serve and our shareholders. We have a strong runway
for customer growth and significant opportunities for
operational cost efficiencies from improving products
and service and reducing transactions. In turn, we
remain well-positioned to drive long-term, sustainable
Adjusted EBITDA growth and free cash flow growth.
I would like to thank all of our employees for their dedi-
cation and our investors for their continued support.
Best Regards,
Thomas M. Rutledge
Chairman and Chief Executive Officer
Charter Communications
6
2019 ANNUAL REPORT
Charter Communications, Inc. (NASDAQ: CHTR) is a leading broadband communications company
and the second largest cable operator in the United States. Charter provides a full range of advanced residential
broadband services, including Spectrum TV® programming, Spectrum Internet®, Spectrum Voice®, and
Spectrum Mobile™. Under the Spectrum Business® brand, Charter provides scalable, and cost-effective
broadband communications solutions to small and medium-sized business organizations, including Internet
access, business telephone, and TV services. Through the Spectrum Enterprise brand, Charter is a national
provider of scalable, fiber-based technology solutions serving many of America’s largest businesses and
communications service providers. Charter’s advertising sales and production services are sold under the
Spectrum Reach® brand. Charter’s news and sports networks are operated under the Spectrum Networks
brand. More information about Charter can be found at newsroom.charter.com.
The Charter Footprint
CHARTER COMMUNICATIONS
7
Corporate Responsibility
Spectrum Community Impact
$4M
Charter has committed
more than $4 million in total
Hurricane Harvey, Irma and
Florence relief efforts.
Spectrum Housing Assist
Spectrum wants to ensure that the residents of our communities live in
safe and healthy homes. Spectrum provides critical home repairs across
its broad footprint by partnering with nonprofit organizations and
engaging its employee and community volunteers. To date, more than
41,000 homes have been improved and Spectrum is on track to meet the
goal of 50,000 homes improved by the end of 2020.
$5M
Charter has committed
$5 million to digital literacy.
Spectrum Digital Education
Spectrum is working to ensure that all members of the communities
served understand the value of broadband Internet and have the
educational resources needed to use it effectively in their daily lives.
Spectrum Digital Education was launched to help bridge the digital divide.
$250K
To date, Charter has awarded
a total of $250,000 to more
than 120 organizations
across its footprint.
Spectrum Employee Community Grants
In 2019, Charter created Spectrum Employee Community Grants to
enhance the positive impact employees are already making in their
communities. Employees with a sustained personal connection to a local
nonprofit focused on addressing critical social services, can nominate
that organization for a donation of up to $5,000.
8
2019 ANNUAL REPORT
Culture of
Inclusion
At Spectrum, the workforce is reflective of the full range of diversity
and abilities that exist in the markets served. Currently, the workforce
is comprised of 46 percent people of color, 11 percent veterans and 32
percent women, with a goal of enhancing diversity at every level of the
organization, including among senior leaders.
Charter’s Workforce
46%
People
of color
32%
Women
11%
Veterans
Focus on
Accessibility
Spectrum delivers products and services that are responsive to
customers’ varied interests and unique needs. From delivering high-
quality programming and content, to making its products fully accessible,
inclusive
Spectrum Accessibility exists to create empowering and
experiences for our customers.
CHARTER COMMUNICATIONS 9
Operating Summary
Financial Information
For the year ended December 31, (in millions, except ARPU data)
Revenue
Cable revenue1
Adjusted EBITDA1
Cable Adjusted EBITDA1
Income from operations
Free cash flow1
Cable free cash flow1
Capital expenditures
Monthly residential revenue per residential customer
2019
$45,764
$45,038
$16,855
$17,375
$ 6,511
$ 4,608
$ 5,769
$ 7,195
$112.63
2018
$ 43,634
$ 43,528
$ 16,059
$ 16,299
$ 5,221
$ 2,172
$ 2,766
$ 9,125
$ 111.56
Operating Statistics
Approximate as of December 31, (in thousands, except penetration data)
2019
2018
Customer Relationships:
Residential
Small and Medium Business
Total customer relationships
Single Play Penetration
Double Play Penetration
Triple Play Penetration
% Residential non-video customer relationships
Primary Service Units:
Residential
Video
Internet
Voice
Small and Medium Business
Video
Internet
Voice
27,277
1,958
29,235
43.0%
30.7%
26.2%
42.7%
15,620
24,908
9,443
524
1,756
1,144
26,270
1,833
28,103
41.6%
27.0%
31.4%
38.7%
16,104
23,625
10,135
502
1,634
1,051
Footprint:
Estimated passings
Total customer relationship penetration of estimated passings
52,154
56.1%
51,185
54.9%
1 Each of these terms is a non-GAAP measure and is defined and reconciled to the most comparable GAAP measure beginning on page F-60 of this document.
10
2019 ANNUAL REPORT
FORM 10-K
3_Charter_2019AR_34615_FN.indd 1
3/2/20 2:24 PM
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 10-K
______________
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From to
Commission File Number: 001-33664
Charter Communications, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or
organization)
84-1496755
(I.R.S. Employer Identification No.)
400 Atlantic Street
Stamford Connecticut
(Address of Principal Executive Offices)
06901
(Zip Code)
(203) 905-7801
(Registrant's telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock $.001 Par Value
CHTR
NASDAQ Global Select Market
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes
No
Indicate by check mark whether the registrants have submitted electronically and posted on their corporate website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrants were required to submit and post such files). Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition
of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
No
The aggregate market value of the registrant of outstanding Class A common stock held by non-affiliates of the registrant at June 30, 2019 was approximately
$65.3 billion, computed based on the closing sale price as quoted on the NASDAQ Global Select Market on that date. For purposes of this calculation only,
directors, executive officers and the principal controlling shareholders or entities controlled by such controlling shareholders of the registrant are deemed to be
affiliates of the registrant.
There were 209,975,963 shares of Class A common stock outstanding as of December 31, 2019. There was 1 share of Class B common stock outstanding as of
the same date.
Documents Incorporated By Reference
Information required by Part III is incorporated by reference from Registrant’s proxy statement or an amendment to this Annual Report on Form 10-K to be filed
by April 30, 2020.
CHARTER COMMUNICATIONS, INC.
FORM 10-K — FOR THE YEAR ENDED DECEMBER 31, 2019
TABLE OF CONTENTS
PART I
Item 1
Item 1A
Item 1B
Item 2
Item 3
Item 4
PART II
Item 5
Item 6
Item 7
Item 7A
Item 8
Item 9
Item 9A
Item 9B
PART III
Item 10
Item 11
Item 12
Item 13
Item 14
PART IV
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Item 15
Exhibits and Financial Statement Schedules
Signatures
Exhibit Index
Page No.
1
15
24
24
24
24
25
26
26
41
42
42
42
43
44
44
44
44
44
45
S- 1
E- 1
This annual report on Form 10-K is for the year ended December 31, 2019. The United States Securities and Exchange Commission
(“SEC”) allows us to “incorporate by reference” information that we file with the SEC, which means that we can disclose important
information to you by referring you directly to those documents. Information incorporated by reference is considered to be part
of this annual report. In addition, information that we file with the SEC in the future will automatically update and supersede
information contained in this annual report. In this annual report, “Charter,” “we,” “us” and “our” refer to Charter Communications,
Inc. and its subsidiaries.
i
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS:
This annual report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
regarding, among other things, our plans, strategies and prospects, both business and financial including, without limitation, the
forward-looking statements set forth in Part I. Item 1. under the heading “Business” and in Part II. Item 7. under the heading
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this annual report. Although we
believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable,
we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are
inherently subject to risks, uncertainties and assumptions, including, without limitation, the factors described in Part I. Item 1A.
under “Risk Factors” and in Part II. Item 7. under the heading, “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in this annual report. Many of the forward-looking statements contained in this annual report may be
identified by the use of forward looking words such as “believe,” “expect,” “anticipate,” “should,” “planned,” “will,” “may,”
“intend,” “estimated,” “aim,” “on track,” “target,” “opportunity,” “tentative,” “positioning,” “designed,” “create,” “predict,”
“project,” “initiatives,” “seek,” “would,” “could,” “continue,” “ongoing,” “upside,” “increases,” “focused on” and “potential,”
among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make
in this annual report are set forth in this annual report and in other reports or documents that we file from time to time with the
SEC, and include, but are not limited to:
•
•
•
•
•
•
•
•
•
•
our ability to sustain and grow revenues and cash flow from operations by offering video, Internet, voice, mobile,
advertising and other services to residential and commercial customers, to adequately meet the customer experience
demands in our service areas and to maintain and grow our customer base, particularly in the face of increasingly aggressive
competition, the need for innovation and the related capital expenditures;
the impact of competition from other market participants, including but not limited to incumbent telephone companies,
direct broadcast satellite ("DBS") operators, wireless broadband and telephone providers, digital subscriber line (“DSL”)
providers, fiber to the home providers and providers of video content over broadband Internet connections;
our ability to obtain programming at reasonable prices or to raise prices to offset, in whole or in part, the effects of higher
programming costs (including retransmission consents);
our ability to develop and deploy new products and technologies including mobile products and any other consumer
services and service platforms;
any events that disrupt our networks, information systems or properties and impair our operating activities or our
reputation;
the effects of governmental regulation on our business including costs, disruptions and possible limitations on operating
flexibility related to, and our ability to comply with, regulatory conditions applicable to us as a result of the Time Warner
Cable Inc. and Bright House Networks, LLC transactions;
general business conditions, economic uncertainty or downturn, unemployment levels and the level of activity in the
housing sector;
the ability to retain and hire key personnel;
the availability and access, in general, of funds to meet our debt obligations prior to or when they become due and to
fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) free cash flow, or (iii) access
to the capital or credit markets; and
our ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a
timely manner, could trigger a default of our other obligations under cross-default provisions.
All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by
this cautionary statement. We are under no duty or obligation to update any of the forward-looking statements after the date of
this annual report.
ii
Item 1. Business.
Introduction
PART I
We are the second largest cable operator in the United States and a leading broadband communications services company providing
video, Internet and voice services to approximately 29.2 million residential and small and medium business customers at
December 31, 2019. We also offer mobile service to residential customers and recently launched mobile service to small and
medium business customers. In addition, we sell video and online advertising inventory to local, regional and national advertising
customers and tailored communications and managed solutions to larger enterprise customers. We also own and operate regional
sports networks and local sports, news and community channels.
We own and operate a high-capacity, two-way telecommunications network which passes over 52 million households and small
and medium businesses across the United States. Our core strategy is to use our network to deliver high quality products at
competitive prices, combined with outstanding service. This strategy, combined with simple, easy to understand pricing and
packaging, is central to our goal of growing our customer base while selling more of our core connectivity services, which include
both fixed and mobile Internet, video and voice services, to each individual customer. We execute this strategy by managing our
operations in a consumer-friendly, efficient and cost-effective manner. Our operating strategy includes insourcing nearly all of
our customer care and field operations workforces, which results in higher quality service delivery. While an insourced operating
model can increase the field operations and customer care costs associated with individual service transactions, the higher quality
nature of insourced labor service transactions significantly reduces the volume of service transactions per customer, more than
offsetting the higher investment made in each insourced service transaction. As we reduce the number of service transactions and
recurring costs per customer relationship, we continue to provide our customers with products and prices that we believe provide
more value than what our competitors offer. The combination of offering high quality, competitively priced products and outstanding
service, allows us to both increase the number of customers we serve over our fully deployed network, and to increase the number
of products we sell to each customer. This combination also reduces the number of service transactions we perform per relationship,
yielding higher customer satisfaction and lower customer churn, resulting in lower costs to acquire and serve customers.
We have enhanced our service operations to allow our customers to (1) more frequently interact with us through our customer
website and Spectrum TV application, online chat and social media, (2) have their services installed at the time and in the manner
of their own choosing, including self-installation, and (3) receive a variety of video packages on an increasing number of connected
devices including those owned by us and those owned by the customer. By offering our customers growing levels of choices in
how they receive and install their services and how they interact with us, we are driving higher overall levels of customer satisfaction
and reducing our operating costs and capital expenditures per customer relationship. Ultimately, our operating strategy enables
us to offer high quality, competitively priced services profitably, while continuing to invest in new products and services.
The capability and functionality of our two-way network continues to grow in a number of areas, especially with respect to wireless
connectivity. Our Internet service offers consumers the ability to wirelessly connect to our network using WiFi technology. We
estimate that over 300 million devices are wirelessly connected to our network through WiFi. Initially, our wireless strategy focused
on offering wireless connectivity solutions inside the home and business using WiFi. Through our mobile virtual network operator
(“MVNO”) reseller agreement with Verizon Communications Inc. ("Verizon"), we are now able to offer Internet connectivity to
our customers beyond the home via our Spectrum Mobile product. We are also actively testing and evaluating opportunities for
our customers to wirelessly connect to our network using a combination of licensed and unlicensed radio spectrum to deliver fixed
and mobile service directly from our distributed, high capacity network.
Our principal executive offices are located at 400 Atlantic Street, Stamford, Connecticut 06901. Our telephone number is (203)
905-7801, and we have a website accessible at www.charter.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, and all amendments thereto, are available on our website free of charge as soon as
reasonably practicable after they have been filed. The information posted on our website is not incorporated into this annual
report.
1
Corporate Entity Structure
The chart below sets forth our entity structure and that of our direct and indirect subsidiaries. The chart does not include all of
our affiliates and subsidiaries and, in some cases, we have combined separate entities for presentation purposes. The equity
ownership percentages shown below are approximations. Indebtedness amounts shown below are principal amounts as of
December 31, 2019. See Note 9 to the accompanying consolidated financial statements contained in “Part II. Item 8. Financial
Statements and Supplementary Data,” which also includes the accreted values of the indebtedness described below.
2
Products and Services
We offer our customers subscription-based video services, Internet services, and voice and mobile services. Our services are
offered to residential and commercial customers on a subscription basis, with prices and related charges based on the types of
service selected, whether the services are sold as a “bundle” or on an individual basis, and based on the equipment necessary to
receive our services. Bundled services are available to substantially all of our passings, and approximately 57% of our residential
customers subscribe to a bundle of services including some combination of our video, Internet and/or voice products.
The following table summarizes our customer statistics for video, Internet, mobile and voice as of December 31, 2019 and 2018
(in thousands except per customer data and footnotes).
Approximate as of
December 31,
2019 (a)
2018 (a)
Customer Relationships (b)
Residential
Small and Medium Business
Total Customer Relationships
Residential Primary Service Units ("PSUs")
Video
Internet
Voice
27,277
1,958
29,235
15,620
24,908
9,443
Monthly Residential Revenue per Residential Customer (c)
$
112.63
$
Small and Medium Business PSUs
Video
Internet
Voice
524
1,756
1,144
26,270
1,833
28,103
16,104
23,625
10,135
111.56
502
1,634
1,051
Monthly Small and Medium Business Revenue per Customer (d)
$
169.90
$
174.88
Mobile Lines
Enterprise PSUs (e)
1,082
267
134
248
(a) We calculate the aging of customer accounts based on the monthly billing cycle for each account. On that basis, as of
December 31, 2019 and 2018, customers include approximately 154,200 and 217,600 customers, respectively, whose
accounts were over 60 days past due, approximately 13,500 and 24,000 customers, respectively, whose accounts were
over 90 days past due, and approximately 10,000 and 19,200 customers, respectively, whose accounts were over 120
days past due.
(b) Customer relationships include the number of customers that receive one or more levels of service, encompassing video,
Internet and voice services, without regard to which service(s) such customers receive. Customers who reside in residential
multiple dwelling units (“MDUs”) and that are billed under bulk contracts are counted based on the number of billed
units within each bulk MDU. Total customer relationships exclude enterprise and mobile-only customer relationships.
(c) Monthly residential revenue per residential customer is calculated as total residential video, Internet and voice annual
revenue divided by twelve divided by average residential customer relationships during the respective year. Monthly
residential revenue per residential customers excludes mobile revenue and customers.
(d) Monthly small and medium business revenue per customer is calculated as total small and medium business annual
revenue divided by twelve divided by average small and medium business customer relationships during the respective
year. Monthly small and medium business revenue per small and medium customer excludes mobile revenue and
customers.
(e) Enterprise PSUs represent the aggregate number of fiber service offerings counting each separate service offering at each
customer location as an individual PSU.
3
Residential Services
Video Services
Our video customers receive a package of programming which generally includes a digital set-top box that provides an interactive
electronic programming guide with parental controls, access to pay-per-view services, including video on demand (“VOD”)
(available to nearly all of our passings) and the ability to view certain video services on third-party devices inside and outside the
residence. Customers have the option to purchase additional tiers of services including premium channels which provide original
programming, commercial-free movies, sports, and other special event entertainment programming. Substantially all of our video
programming is available in high definition. We also offer certain video packages containing a limited number of channels via
our cable television systems.
In the vast majority of our footprint, we offer VOD service which allows customers to select from over 60,000 titles at any time.
VOD programming options may be accessed for free if the content is associated with a customer’s linear subscription, or for a fee
on a transactional basis. VOD services are also offered on a subscription basis included in a digital tier premium channel subscription
or for a monthly fee. Pay-per-view channels allow customers to pay on a per-event basis to view a single showing of a one-time
special sporting event, music concert, or similar event on a commercial-free basis.
Our goal is to provide our video customers with the programming they want, when they want it, on any device. Digital video
recorder (“DVR”) service enables customers to digitally record programming and to pause and rewind live programming.
Customers can also use our Spectrum TV application on Internet Protocol ("IP") devices to watch over 375 channels of cable TV
in home and approximately 275 channels out of home and view VOD programming. Customers are increasingly accessing their
subscription video content through connected IP devices via our IP network. In 2019, we launched cloud DVR service which
allows customers to schedule, record and watch their favorite programming anytime from connected IP devices as well as
SpectrumTV.com. Our video customers also have access to programmer authenticated applications and websites (known as TV
Everywhere services) such as HBO Go, Fox Now, Discovery Go and ESPN. We deploy Spectrum Guide®, our network or “cloud-
based” user interface, to new video customers in the majority of our service areas. Spectrum Guide runs on traditional set-top
boxes but offers a look and feel similar to that of our Spectrum TV application. Spectrum Guide also provides access to third-
party video applications such as Netflix.
Internet Services
Our Spectrum pricing and packaging (“SPP”) offers an entry level Internet download speed of at least 200 megabits per second
(“Mbps”) in approximately 60% of our footprint and 100 Mbps across approximately 40% of our footprint, which among other
things, allows several people within a single household to stream high definition (“HD”) television video content while
simultaneously using our Internet service for other purposes. Additionally, leveraging DOCSIS 3.1 technology, we offer 940 Mbps
speed service ("Spectrum Internet Gig") in nearly all of our footprint. Finally, we offer a security suite with our Internet services
which, upon installation by customers, provides protection against computer viruses and spyware and includes parental control
features.
We offer an in-home WiFi product that provides customers with high performance wireless routers to maximize their in-home
wireless Internet experience. At the end of 2019, we launched our advanced in-home WiFi product in select service areas and we
plan to continue to roll this product out to our entire footprint throughout 2020 and 2021. Advanced in-home WiFi provides
connected device visibility, management and control to customers in a single application and to customer service agents to help
support our customers. Advanced in-home WiFi is built on a software platform that will allow us to integrate and launch additional
network based security and control features.
Voice Services
We provide voice communications services using voice over Internet protocol ("VoIP") technology to transmit digital voice signals
over our network. Our voice services include unlimited local and long distance calling to the United States, Canada, Mexico and
Puerto Rico, voicemail, call waiting, caller ID, call forwarding and other features and offers international calling either by the
minute, or through packages of minutes per month. For customers that subscribe to both our voice and video offerings, caller ID
on TV is also available in most areas.
Mobile Services
At the end of the second quarter of 2018, we launched our mobile product, Spectrum Mobile, to residential customers under our
MVNO reseller agreement with Verizon. We currently offer our Spectrum Mobile service to residential customers subscribing to
4
our Internet service and recently launched mobile service to small and medium business customers. In the second quarter of 2019,
we expanded our Spectrum Mobile bring-your-own-device ("BYOD") program across all sales channels to include a broader set
of devices which we believe lowers the cost for consumers of switching mobile carriers, and reduces the short-term working capital
impact of selling new mobile devices on installment plans. We believe Spectrum-branded mobile services will drive more sales
of our core products, create longer customer lives and increase profitability and cash flow over time. As we continue to grow our
mobile services, including 5G in 2020, we expect that Spectrum Mobile will require an initial funding period to grow the product
as well as negative working capital impacts from the timing of device-related cash flows when we sell the handset or tablet to
customers pursuant to equipment installment plans.
We plan to use our WiFi network in conjunction with additional unlicensed, and potentially licensed, spectrum to improve network
performance and expand capacity to offer consumers a superior mobile service at a lower total cost to us. Further, we have
experimental wireless licenses from the Federal Communications Commission ("FCC") that we are utilizing to test next generation
mobile services in several service areas around the country. We intend to consider and pursue opportunities in the mobile space
which may include the acquisition of licensed spectrum and may include entering into or expanding joint ventures or partnerships
with wireless or cable providers which may require significant investment.
Commercial Services
We offer scalable broadband communications solutions for businesses and carrier organizations of all sizes, selling Internet access,
data networking, fiber connectivity to cellular towers and office buildings, video entertainment services and business telephone
services.
Small and Medium Business
Spectrum Business® offers Internet, voice and video services to small and medium businesses over our hybrid fiber coaxial network.
In addition, in 2019, we began offering our Spectrum Mobile service to small and medium business customers. Spectrum Business
includes a full range of video programming and entry-level Internet speeds of 200 Mbps downstream and 10 Mbps upstream in
virtually all of our markets. Additionally, customers can upgrade their Internet speeds by purchasing Internet Ultra (400 Mbps
downstream) or Internet Gig (940 Mbps downstream). Spectrum Business also includes a set of business services including static
IP and business WiFi, e-mail and security, and multi-line telephone services with more than 30 business features including web-
based service management, that are generally not available to residential customers.
Enterprise
Spectrum Enterprise offers more tailored communications products and managed service solutions to larger businesses, as well
as high-capacity last-mile data connectivity services to mobile and wireline carriers on a wholesale basis. Spectrum Enterprise's
product portfolio includes fiber Internet access, voice trunking services, unified messaging/unified communications (“UM/UC”),
Ethernet services that privately and securely connect geographically dispersed client locations, and video solutions designed to
meet the needs of hospitality, education, and healthcare clients. In addition, in 2019, Spectrum Enterprise launched an innovative
Hybrid Software-Defined Wide Area Network ("SD-WAN") that enables businesses to leverage the performance of Ethernet, the
ubiquity of Internet connectivity and the flexibility of a software-defined solution to solve a wide array of business communications
and networking challenges. Spectrum Enterprise combines its large, serviceable footprint and robust portfolio of fiber lit buildings
with a sizeable partner network to effectively serve enterprise customers nationally. These customers can benefit from obtaining
advanced services from a single provider, receiving a consistent solution while simplifying procurement and potentially reducing
their costs.
Advertising Services
Our advertising sales division, Spectrum Reach®, offers local, regional and national businesses the opportunity to advertise in
individual and multiple service areas on cable television networks and digital outlets. We receive revenues from the sale of local
advertising across various platforms for networks such as MTV, CNN and ESPN. In any particular service area, we typically
insert local advertising on 40 to 90 channels. Our large footprint provides opportunities for advertising customers to address
broader regional audiences from a single provider and thus reach more customers with a single transaction. Our size also provides
scale to invest in new technology to create more targeted and addressable advertising capabilities.
Available advertising time is generally sold by our advertising sales force. In some service areas, we have formed advertising
interconnects or entered into representation agreements with other video distributors, including, among others, Verizon, AT&T
Inc. (“AT&T”) and Comcast Corporation, under which we sell advertising on behalf of those operators. In other service areas,
we enter into representation agreements under which another operator in the area will sell advertising on our behalf. These
5
arrangements enable us and our partners to deliver linear commercials across wider geographic areas, replicating the reach of local
broadcast television stations to the extent possible. In addition, we enter into interconnect agreements from time to time with
other cable operators, which, on behalf of a number of video operators, sells advertising time to national and regional advertisers
in individual or multiple service areas.
Additionally, we sell the advertising inventory of our owned and operated local sports and news channels, of our regional sports
networks that carry Los Angeles Lakers’ basketball games and other sports programming and of SportsNet LA, a regional sports
network that carries Los Angeles Dodgers’ baseball games and other sports programming.
In 2019, we began expanding our deployment of household addressability, which allows for more precise targeting within various
parts of our footprint. We also began the roll-out of our Ad Portal, which allows small businesses to purchase local cable advertising
and/or creative services via our web portal with no sales personnel interaction at a fee within their budgets. Both products will
be more widely deployed in 2020. They join our fully deployed Audience App, which uses our proprietary set-top box viewership
data (all anonymized and aggregated) to optimize linear inventory, in our suite of advanced advertising products available to the
marketplace.
Other Services
Regional Sports and News Networks
We have an agreement with the Los Angeles Lakers for rights to distribute all locally available Los Angeles Lakers’ games through
2033. We broadcast those games on our regional sports network, Spectrum SportsNet. American Media Productions, LLC
("American Media Productions"), an unaffiliated third party, owns SportsNet LA, a regional sports network carrying the Los
Angeles Dodgers’ baseball games and other sports programming. In accordance with agreements with American Media
Productions, we act as the network’s exclusive affiliate and advertising sales representative and have certain branding and
programming rights with respect to the network. In addition, we provide certain production and technical services to American
Media Productions. The affiliate, advertising, production and programming agreements continue through 2038. We also own
26.8% of Sterling Entertainment Enterprises, LLC (doing business as SportsNet New York), a New York City-based regional
sports network that carries New York Mets’ baseball games as well as other regional sports programming.
We manage 28 local news channels, including Spectrum News NY1® and LA1, 24-hour news channels focused on New York City
and Los Angeles. Our local news channels provide 24/7 hyperlocal content, focusing on news, programming and storytelling that
addresses the deeper needs and interests of the diverse communities and neighborhoods we serve.
Pricing of Our Products and Services
Our revenues are principally derived from the monthly fees customers pay for the services we provide. We typically charge a
one-time installation fee which is sometimes waived or discounted in certain sales channels during certain promotional periods.
Our Spectrum pricing and packaging ("SPP") generally offers a standardized price for each tier of service, bundle of services, and
add-on service in a service area. We believe SPP:
•
•
•
•
•
offers a higher quality and more value-based set of services relative to our competitors, including faster Internet speeds, more
HD channels, lower equipment fees and a more transparent pricing structure;
offers simplicity for customers to understand our offers, and for our employees in service delivery;
drives our ability to package more services at the time of sale, thus increasing revenue per customer;
drives higher customer satisfaction, lower service calls and churn; and
allows for gradual price increases at the end of promotional periods.
We sell video and Internet packages with the option to add on voice and mobile services at attractive pricing. Our mobile customers
can choose one of two simple ways to pay for data. Customers can choose an unlimited data plan or a by-the-gig data usage plan.
Both plans include free nationwide talk and text and customers can easily switch between mobile data plans during the month.
Customers can also purchase mobile devices and accessory products and have the option to pay for devices under interest-free
monthly installment plans.
Our Network Technology
Our network includes three key components: a national backbone, regional/metro networks and a “last-mile” network. Both our
national backbone and regional/metro network components utilize a redundant IP ring/mesh architecture. The national backbone
6
component provides connectivity from regional demarcation points to nationally centralized content, connectivity and services.
The regional/metro network components provide connectivity between the regional demarcation points and headends within a
specific geographic area and enable the delivery of content and services between these network components.
Our last-mile network utilizes a hybrid fiber coaxial cable (“HFC”) architecture, which combines the use of fiber optic cable with
coaxial cable. In most systems, we deliver our signals via fiber optic cable from the headend to a group of nodes, and use coaxial
cable to deliver the signal from individual nodes to the homes served by that node. For our fiber Internet, Ethernet, carrier wholesale,
Session Initiation Protocol ("SIP") and Primary Rate Interface ("PRI") Spectrum Enterprise customers, fiber optic cable is extended
from individual nodes to the customer’s site. For certain new build and MDU sites, we increasingly bring fiber to the customer
site. Our design standard allows spare fiber strands to each node to be utilized for additional residential traffic capacity, and
enterprise customer needs as they arise. We believe that this hybrid network design provides high capacity and signal quality.
HFC architecture benefits include:
•
•
•
bandwidth capacity to enable traditional and two-way video and broadband services;
dedicated bandwidth for two-way services; and
signal quality and high service reliability.
Our systems provide an all-digital platform, leveraging DOCSIS 3.1 technology and bandwidth of 750 megahertz or greater to
approximately 100% of our estimated passings. This bandwidth capacity enables us to offer two-way signal capabilities necessary
to provide HD television, interactive video services such as VOD, high-speed Internet and voice services. An all-digital platform
leveraging DOCSIS 3.1 technology enables us to offer a larger selection of HD channels, Spectrum Internet Gig and better picture
quality while providing greater plant security and enabling lower installation and disconnect service truck rolls. We believe this
architecture also allows us to continue to enhance our network to enable multi-gigabit services with low latency at a lower
incremental capital cost relative to our competitors.
Management, Customer Operations and Marketing
Our operations are centralized, with senior executives located at several key corporate offices, responsible for coordinating and
overseeing operations, including establishing company-wide strategies, policies and procedures. Sales and marketing, network
operations, field operations, customer operations, engineering, advertising sales, human resources, legal, government relations,
information technology and finance are all directed at the corporate level. Regional and local field operations are responsible for
customer premise service transactions and maintaining and constructing that portion of our network which is located outdoors.
We continue to focus on improving the customer experience through enhanced product offerings, reliability of services, and
delivery of quality customer service. As part of our operating strategy, we insource most of our customer operations workload.
Our in-house call centers handle over 90% of our total customer service calls. We manage our customer service call centers
centrally to ensure a consistent, high quality customer experience. In addition, we route calls by call type to specific agents that
only handle such call types, enabling agents to become experts in addressing specific customer needs, creating a better customer
experience. We implemented a new call center agent desktop interface tool in 2019 which enables virtualization of all call centers
thereby better serving our customers. Virtualization allows calls to be routed across our call centers regardless of the location
origin of the call, reducing call wait times, and saving costs. We continue to migrate our call centers to full virtualization and
expect all our call centers to be fully virtualized by 2020.
We also provide customers with the opportunity to interact with us through a variety of forums in addition to telephonic
communications, including through our customer website, mobile device applications, online chat and social media. Our customer
websites and mobile applications enable customers to pay their bills, manage their accounts, order new services and utilize self-
service help and support.
We sell our residential and commercial services using a national brand platform known as Spectrum, Spectrum Business and
Spectrum Enterprise. These brands reflect our comprehensive approach to industry-leading products, driven by speed, performance
and innovation. Our marketing strategy emphasizes the sale of our bundled services through targeted direct response marketing
programs to existing and potential customers, and increases awareness and the value of the Spectrum brand. Our marketing
organization creates and executes marketing programs intended to grow customer relationships, increase the number of services
we sell per relationship, retain existing customers and cross-sell additional products to current customers. We monitor the
effectiveness of our marketing efforts, customer perception, competition, pricing, and service preferences, among other factors,
in order to increase our responsiveness to our customers and to improve our sales and customer retention. The marketing
organization manages all sales channels including inbound, direct sales, on-line, outbound telemarketing and stores.
7
Programming
We believe that offering a wide variety of video programming choices influences a customer’s decision to subscribe and retain
our cable video services. We obtain basic and premium programming, usually pursuant to written contracts from a number of
suppliers. Media corporation consolidation has, however, resulted in fewer suppliers and additional selling power on the part of
programming suppliers. Although an insignificant amount of our programming budget, recently we have begun entering into
agreements to co-produce or exclusively license original content which give us the right to provide our customers with certain
exclusive content for a period of time.
Programming is usually made available to us for a license fee, which is generally paid based on the number of customers to whom
we make that programming available. Programming license fees may include “volume” discounts and financial incentives to
support the launch of a channel and/or ongoing marketing support, as well as discounts for channel placement or service penetration.
For home shopping channels, we typically receive a percentage of the revenue attributable to our customers’ purchases. We also
offer VOD and pay-per-view channels of movies and events that are subject to a revenue split with the content provider.
Our programming costs have increased in excess of customary inflationary and cost-of-living type increases. We expect
programming costs per customer to continue to increase due to a variety of factors including, annual increases pursuant to our
programming contracts, contract renewals with programmers and the carriage of incremental programming, including new services
and VOD programming. Increases in the cost of sports programming and the amounts paid for broadcast station retransmission
consent have been the largest contributors to the growth in our programming costs over the last few years. Additionally, the
demands of large media companies who link carriage of their most popular networks to carriage and cost increases of their less
popular networks and who require us to carry their most popular networks to a large percentage of our video subscribers, has
limited our flexibility in creating more tailored and cost-sensitive programming packages for consumers.
Federal law allows commercial television broadcast stations to make an election between “must-carry” rights and an alternative
“retransmission-consent” regime. When a station opts for retransmission-consent, we are not allowed to carry the station’s signal
without that station’s permission. Continuing demands by owners of broadcast stations for cash payments at substantial increases
over amounts paid in prior years in exchange for retransmission consent will increase our programming costs or require us to cease
carriage of popular programming, potentially leading to a loss of customers in affected service areas.
Over the past several years, increases in our video service rates have not fully offset the increases in our programming costs, and
with the impact of increasing competition and other marketplace factors, we do not expect the increases in our video service rates
to fully offset the increase in our programming costs for the foreseeable future. Although we pass along a portion of amounts paid
for retransmission consent to the majority of our customers, our inability to fully pass programming cost increases on to our video
customers has had, and is expected in the future to have, an adverse impact on our cash flow and operating margins associated
with our video product. In order to mitigate reductions of our operating margins due to rapidly increasing programming costs,
we continue to review our pricing and programming packaging strategies.
Our programming contracts are generally for a fixed period of time, usually for multiple years, and are subject to negotiated
renewal. The contracts set to expire in any particular year vary. We will seek to renew these agreements on terms that we believe
are favorable. There can be no assurance, however, that these agreements will be renewed on favorable or comparable terms. To
the extent that we are unable to reach agreements with certain programmers on terms that we believe are reasonable, we have
been, and may in the future be, forced to remove such programming channels from our line-up, which may result in a loss of
customers.
8
Regions
We operate in geographically diverse areas which are organized in regional clusters. These regions are managed centrally on a
consolidated level. Our eleven regions and the customer relationships within each region as of December 31, 2019 are as follows
(in thousands):
Regions
Carolinas
Central
Florida
Great Lakes
Northeast
Northwest
New York City
South
Southern Ohio
Texas
West
Competition
Residential Services
Total Customer
Relationships
3,020
3,058
2,619
2,270
3,068
1,626
1,381
2,094
2,313
3,070
4,716
We face intense competition for residential customers, both from existing competitors and, as a result of the rapid development
of new technologies, services and products, from new entrants. We face triple play competition, consisting of wireline multichannel
video, wireline Internet, and wireline voice service, from three primary competitors, AT&T, Frontier Communications Corporation
(“Frontier”) and Verizon. As of December 31, 2019, AT&T, Frontier and Verizon offered these triple play packages in approximately
33%, 7% and 5% of our operating areas, respectively. AT&T also owns DIRECTV, and as a combined company provides video
service (via IP or satellite) and voice service (via fixed or wireless) across our entire footprint.
Video Competition
Our residential video service faces competition from DBS service providers, which have a national footprint and compete in all
of our operating areas. DBS providers offer satellite-delivered pre-packaged programming services that can be received by
relatively small and inexpensive receiving dishes. DBS providers offer aggressive promotional pricing, exclusive programming
(e.g., NFL Sunday Ticket) and video services that are comparable in many respects to our residential video service. Our residential
video service also faces competition from large telecommunications companies, primarily AT&T U-verse, Frontier fiber optic
service (“FiOS" or "Fios") and Verizon Fios, which offer wireline video services in significant portions of our operating areas.
Our residential video service also faces growing competition from a number of other sources, including companies that deliver
linear network programming, movies and television shows on demand and other video content over broadband Internet connections
to televisions, computers, tablets and mobile devices. These competitors include virtual multichannel video programming
distributors (“V-MVPDs”) such as AT&T TV NOW, Sling TV, YouTube TV and Hulu Live. Other online video business models
and products have also developed, some offered by programmers that have not traditionally sold programming directly to
consumers, including, (i) subscription video on demand (“SVOD”) services such as Netflix, Apple TV+, Amazon Prime, Hulu
Plus, Disney+, HBO Now, CBS All Access, Starz and Showtime Anytime, (ii) ad-supported free online video products, including
YouTube and Pluto TV, some of which offer programming for free to consumers that we currently purchase for a fee, (iii) pay-
per-view products, such as iTunes and Amazon Instant, and (iv) additional offerings from mobile providers which continue to
integrate and bundle video services and mobile products. Historically, we have generally viewed SVOD online video services as
complementary to our own video offering, and we have developed a cloud-based guide that is capable of incorporating video from
online video services currently offered in the marketplace. As the proliferation of online video services grows, however, services
from V-MVPDs and new direct to consumer offerings, as well as piracy and password sharing, negatively impact the number of
customers purchasing our video product.
9
Internet Competition
Our residential Internet service faces competition from fiber-to-the-home ("FTTH"), fiber-to-the-node ("FTTN"), DSL and wireless
broadband offerings, as well as from a variety of companies that offer other forms of online services, including fixed wireless and
satellite-based broadband services. AT&T, Frontier FiOS and Verizon’s Fios are our primary FTTH competitors. Given the FTTH
deployments of our competitors, launches of broadband services offering 1 gigabit per second (“Gbps”) speed have recently grown.
Several competitors, including AT&T, Frontier FiOS, Verizon's Fios, WideOpenWest Finance, LLC ("WOW") and Google Fiber,
deliver 1 Gbps broadband speed in at least a portion of their footprints which overlap our footprint. DSL service is often offered
at prices lower than our Internet services, although typically at speeds much lower than the minimum speeds we offer as part of
SPP. Various mobile phone companies offer wireless Internet services delivered over networks which they continue to enhance
to deliver faster speeds. AT&T, Verizon, Sprint Corporation ("Sprint") and T-Mobile US, Inc. ("T-Mobile") all began deploying
fifth generation (5G) mobile services in 2019, although generally in limited geographies, with plans to expand 5G more broadly
in 2020. In April 2018, Sprint and T-Mobile announced their intent to merge. If the transaction closes, the resulting company
would be one of the nation’s largest mobile carriers bringing increased competition with a stated intent of pursuing broad 5G
network deployment and offering fixed wireless broadband service. Some mobile phone companies offer unlimited data packages
to customers. In addition, a growing number of commercial areas, such as retail malls, restaurants and airports, offer WiFi Internet
service. Numerous local governments are also considering or actively pursuing publicly subsidized WiFi Internet access networks.
These options offer alternatives to cable-based Internet access.
Voice Competition
Our residential voice service competes with wireless and wireline phone providers, as well as other forms of communication, such
as text messaging on cellular phones, instant messaging, social networking services, video conferencing and email. We also
compete with “over-the-top” phone providers, such as Vonage, Skype, magicJack, Google Voice and Ooma, Inc., as well as
companies that sell phone cards at a cost per minute for both national and international service. The increase in the number of
different technologies capable of carrying voice services and the number of alternative communication options available to
customers as well as the replacement of wireline services by wireless have intensified the competitive environment in which we
operate our residential voice service. Our mobile service competes with other mobile providers such as Verizon, AT&T, T-Mobile
and Sprint, as well as various regional wireless service providers. We also compete for retail activations with other resellers that
buy bulk wholesale service from wireless service providers for resale.
Regional Competitors
In some of our operating areas, other competitors have built networks that offer video, Internet and voice services that compete
with our services. For example, in certain service areas, our residential video, Internet and voice services compete with Google
Fiber, Cincinnati Bell Inc., Hawaiian Telcom (owned by Cincinnati Bell Inc.), RCN Telecom Services, LLC, Grande
Communications Networks, LLC and WOW.
Additional Competition
In addition to multi-channel video providers, cable systems compete with other sources of news, information and entertainment,
including over-the-air television broadcast reception, live events, movie theaters and the Internet. Competition is also posed by
fixed wireless and satellite master antenna television systems, or SMATV systems, serving MDUs, such as condominiums,
apartment complexes, and private residential communities.
Business Services
We face intense competition across each of our business services product offerings. Our small and medium business video, Internet,
networking and voice services face competition from a variety of providers as described above. Our enterprise solutions also face
competition from the competitors described above as well as application-service providers and other telecommunications carriers,
such as metro and regional fiber-based carriers.
Advertising
We face intense competition for advertising revenue across many different platforms and from a wide range of local and national
competitors. Advertising competition has increased and will likely continue to increase as new advertising avenues seek to attract
the same advertisers. We compete for advertising revenue against, among others, local broadcast stations, national cable and
broadcast networks, radio stations, print media and online advertising companies and content providers.
10
Seasonality and Cyclicality
Our business is subject to seasonal and cyclical variations. Our results are impacted by the seasonal nature of customers receiving
our cable services in college and vacation service areas. Our revenue is subject to cyclical advertising patterns and changes in
viewership levels. Our advertising revenue is generally higher in the second and fourth calendar quarters of each year, due in part
to increases in consumer advertising in the spring and in the period leading up to and including the holiday season. U.S. advertising
revenue is also cyclical, benefiting in even-numbered years from advertising related to candidates running for political office and
issue-oriented advertising. Our capital expenditures and trade working capital are also subject to significant seasonality based on
the timing of subscriber growth, network programs, specific projects and construction.
Regulation and Legislation
The following summary addresses the key regulatory and legislative developments affecting the cable industry and our services
for both residential and commercial customers. Cable system operations are extensively regulated by the federal government
(primarily the FCC), certain state governments and many local governments. A failure to comply with these regulations could
subject us to substantial penalties. Our business can be dramatically impacted by changes to the existing regulatory framework,
whether triggered by legislative, administrative, or judicial rulings. Congress and the FCC have frequently revisited the subject
of communications regulation and they are likely to do so again in the future. We could be materially disadvantaged in the future
if we are subject to new laws, regulations or regulatory actions that do not equally impact our key competitors. We cannot provide
assurance that the already extensive regulation of our business will not be expanded in the future. In addition, we are already
subject to Charter-specific conditions regarding certain business practices as a result of the FCC’s approval of the merger in 2016
with Time Warner Cable Inc. ("TWC") and acquisition of Bright House Networks, LLC ("Bright House").
Video Service
Must Carry/Retransmission Consent
There are two alternative legal methods for carriage of local broadcast television stations on cable systems. Federal “must carry”
regulations require cable systems to carry local broadcast television stations upon the request of the local broadcaster. Alternatively,
federal law includes “retransmission consent” regulations, by which popular commercial television stations can prohibit cable
carriage unless the cable operator first negotiates for “retransmission consent,” which may be conditioned on significant payments
or other concessions. Popular stations invoking “retransmission consent” have been demanding substantial compensation increases
in their recent negotiations with cable operators, thereby significantly increasing our operating costs.
Pole Attachments
The Communications Act of 1934, as amended (the "Communications Act") requires most utilities owning utility poles to provide
cable systems with access to poles and conduits and also subjects the rates charged for this access to either federal or state regulation.
The federally regulated rates now applicable to pole attachments used for cable, Internet, and telecommunications services are
substantially similar. The FCC's approach does not directly affect the rate in states that self-regulate, but many of those states
have substantially the same rate for all communications attachments.
Some municipalities have enacted “one-touch” make-ready pole attachment ordinances, which permit third parties to alter
components of our network attached to utility poles in ways that could adversely affect our businesses. Some of these ordinances
have been challenged with differing results. In 2018, the FCC adopted “one-touch” make-ready (“OTMR”) rules that will apply
in states where pole attachments are FCC regulated, and they may impact many of our existing pole attachments. Various utilities
have sought review of the OTMR rules in federal court.
Cable Rate Regulation
Pursuant to federal law, a cable system's video offerings are universally exempt from rate regulation, except for a cable system’s
minimum level of video programming service, referred to as “basic service,” and associated equipment. FCC regulations require
a local franchise authority interested in regulating rates for basic service and associated equipment to first make an affirmative
showing that there is no “effective competition” (as defined under federal law) in the community. Given the competitive nature
of our markets, the FCC recently rescinded certifications for the relatively few communities where we had been subject to rate
regulation. It is possible that the competitive situation could change, and that some local franchising authorities may be certified
to regulate rates in the future, and existing and potential laws and regulations may affect our marketing practices (including our
disclosure and itemization of subscriber fees).
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Other FCC Regulatory Matters
The Communications Act and FCC regulations cover a variety of additional areas, including, among other things: (1) licensing
of systems and facilities; (2) equal employment opportunity obligations; (3) customer service standards; (4) technical service
standards; (5) mandatory blackouts of certain network and syndicated programming; (6) restrictions on political advertising; (7)
restrictions on advertising in children’s programming; (8) ownership restrictions; (9) maintenance of public files; (10) emergency
alert systems; (11) inside wiring and exclusive contracts for MDU complexes; (12) disability access, including requirements
governing video-description and closed-captioning; (13) competitive availability of cable equipment; (14) the provision of up to
15% of video channel capacity for commercial leased access by unaffiliated third parties; and (15) public, education and government
entity access requirements. Each of these regulations restricts our business practices to varying degrees and may impose additional
costs on our operations. Further, the FCC regulates spectrum usage and other communications enterprises in ways that could
impact our operations. For example, the FCC is currently considering proposals to reallocate certain spectrum for new wireless
communications purposes, which could be disruptive to the satellite platform we rely upon to provide our video services. The
FCC is also preparing to make additional spectrum available for commercial services, which we might use to deliver services in
the future. Our ability to access and use such spectrum is uncertain and may be limited by further FCC auction or allocation
decisions.
It is possible that Congress or the FCC will expand or modify its regulation of cable systems in the future, and we cannot predict
at this time how that might impact our business.
Copyright
Cable systems are subject to a federal compulsory copyright license covering carriage of television and radio broadcast signals.
The copyright law provides copyright owners the right to audit our payments under the compulsory license, and the Copyright
Office is currently considering modifications to the license’s royalty calculations and reporting obligations. The possible
modification or elimination of this license is the subject of continuing legislative proposals and administrative review and could
adversely affect our ability to obtain desired broadcast programming.
Franchise Matters
Our cable systems generally are operated pursuant to nonexclusive franchises, permits, and similar authorizations granted by a
municipality or other state or local government entity in order to utilize and cross public rights-of-way.
Cable franchises generally are granted for fixed terms and in many cases include monetary penalties for noncompliance and may
be terminable if the franchisee fails to comply with material provisions. The specific terms and conditions of cable franchises
vary significantly between jurisdictions. They generally contain provisions governing cable operations, franchise fees, system
construction, maintenance, technical performance, customer service standards, supporting and carrying public access channels,
and changes in the ownership of the franchisee. Although local franchising authorities have considerable discretion in establishing
franchise terms, certain federal protections benefit cable operators. For example, federal law imposes a 5% cap on franchise fees.
In August 2019, the FCC clarified that in-kind contribution requirements set forth in cable franchises are subject to the statutory
cap on franchise fees, and it reaffirmed that state and local authorities are barred from imposing duplicative franchise and/or fee
requirements on franchised cable systems providing non-cable services. An appeal of the FCC’s order is pending in federal court.
A number of states have adopted franchising laws that provide for statewide franchising. Generally, state-wide cable franchises
are issued for a fixed term, but streamline many of the traditional local cable franchise requirements and eliminate local negotiation.
The Communications Act provides for an orderly franchise renewal process in which granting authorities may not unreasonably
deny renewals. If we fail to obtain renewals of franchises representing a significant number of our customers, it could have a
material adverse effect on our consolidated financial condition, results of operations, or our liquidity. Similarly, if a franchising
authority’s consent is required for the purchase or sale of a cable system, the franchising authority may attempt to impose more
burdensome requirements as a condition for providing its consent.
Internet Service
The FCC originally classified broadband Internet access services, such as those we offer, as an “information service,” which
exempted the service from traditional communications common carrier laws and regulations. In 2015, the FCC reclassified
broadband Internet access services as “telecommunications service” and, on that basis, imposed a number of “net neutrality” rules
governing the provision of broadband service. In 2017, the FCC reversed its 2015 decision. The Commission's 2017 Order
restored the “information service” classification and eliminated the 2015 rules, other than a transparency requirement, which
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created an obligation to disclose performance statistics and other service information to consumers. The 2017 FCC decision also
ruled that state regulators may not impose obligations similar to federal network neutrality obligations that the FCC eliminated.
In 2019, the U.S. Court of Appeals for the District of Columbia upheld the FCC’s information service reclassification, but vacated
the FCC’s blanket prohibition of state utility regulation of broadband services. The court left open the possibility that individual
state laws could be deemed preempted on a case by case basis if it is shown that they conflict with federal law. We understand
that this decision may be subject to further judicial review. Several states (including California) have already adopted state
obligations, and additional states may consider the imposition of new regulations on our Internet services, such as rules similar
to the network neutrality requirements that were eliminated by the FCC. California’s legislation has been challenged in court, and
we cannot predict how the challenge to California’s legislation or challenges to any future state legislation will be resolved. As
recent history has shown, it is possible that the FCC might further revise its approach to broadband Internet access, or that Congress
might enact legislation affecting the rules applicable to the service. The application of new legal requirements to our Internet
services could adversely affect our business.
In recent years, the FCC has demonstrated an interest in accelerating advancements in, and deployment of, wired and wireless
broadband infrastructure, including advanced 5G wireless service. For example, the FCC and some state regulatory commissions
direct certain subsidies to telephone and other companies deploying broadband to areas deemed to be “unserved” or “underserved.”
We have opposed such subsidies when directed to areas that we serve. However, continued regulatory efforts to accelerate
competitive wireline and wireless broadband deployment, including reforms that create regulatory imbalances, could adversely
affect our business.
Aside from the FCC’s generally applicable regulations, we have made certain commitments to comply with the FCC’s order in
connection with the FCC’s approval of the merger with TWC and acquisition of Bright House (discussed below).
Wireline Voice Service
The FCC has never classified the VoIP telephone services we offer as “telecommunications services” that are subject to traditional
federal common carrier regulation, but instead has imposed some of these requirements on a case-by-case basis, such as requirements
relating to 911 emergency services (“E911”), Communications Assistance for Law Enforcement Act ("CALEA") (the statute
governing law enforcement access to and surveillance of communications), Universal Service Fund contributions, customer privacy
and Customer Proprietary Network Information protections, number portability, network outage reporting, rural call completion,
disability access, regulatory fees, back-up power obligations, and discontinuance of service. It is possible that the FCC or Congress
will impose additional requirements on our VoIP telephone services in the future.
Although we believe that VoIP telephone services should be governed only by federal regulation, some states have attempted to
subject cable VoIP services to state level regulation, and at least one state has asserted jurisdiction over our VoIP services. We
prevailed on a legal challenge to that state’s assertion of jurisdiction, which was affirmed by a federal appellate court, but that
ruling is limited to the seven states in that circuit. Although we have registered with, or obtained certificates or authorizations
from the FCC and the state regulatory authorities in those states in which we offer competitive voice services in order to ensure
the continuity of our services, it is unclear whether and how these and other ongoing regulatory matters ultimately will be resolved.
State regulatory commissions and legislatures in other jurisdictions may continue to consider imposing regulatory requirements
on our fixed telephone services.
Mobile Service
Our Spectrum Mobile service offers mobile Internet access and telephone service. We provide this service as an MVNO using
Verizon’s network and our network of Spectrum Wi-Fi hotspots. As an MVNO, we are subject to many of the same FCC regulations
that apply to facilities-based wireless carriers, as well as certain state or local regulations, including (but not limited to): E911,
local number portability, customer privacy, CALEA, universal service fund contribution, and hearing aid compatibility and safety
and emission requirements for mobile devices. Spectrum Mobile’s broadband Internet access service is also subject to the FCC’s
transparency rule. The FCC or other regulatory authorities may adopt new or different regulations for MVNOs and/or mobile
service providers in the future, or impose new taxes or fees applicable to Spectrum Mobile, which could adversely affect the
service offering or our business generally.
Privacy and Information Security Regulation
The Communications Act limits our ability to collect, use, and disclose customers’ personally identifiable information for our
video, voice, and Internet services. We are subject to additional federal, state, and local laws and regulations that impose additional
restrictions on the collection, use and disclosure of consumer information. All broadband providers are also obliged by CALEA
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to configure their networks in a manner that facilitates the ability of state and federal law enforcement, with proper legal process
authorized under the Electronic Communications Privacy Act, to obtain records and information concerning our customers,
including the content of their communications. Further, the FCC, Federal Trade Commission (“FTC”), and many states regulate
and restrict the marketing practices of communications service providers, including telemarketing and sending unsolicited
commercial emails. The FTC currently has the authority, pursuant to its general authority to enforce against unfair or deceptive
acts and practices, to protect the privacy of Internet service customers, including our use and disclosure of certain customer
information.
Our operations are also subject to federal and state laws governing information security. In the event of an information security
breach, such rules may require consumer and government agency notification and may result in regulatory enforcement actions
with the potential of monetary forfeitures. The FCC, the FTC and state attorneys general regularly bring enforcement actions
against companies related to information security breaches and privacy violations.
Various security standards provide guidance to telecommunications companies in order to help identify and mitigate cybersecurity
risks. One such standard is the voluntary framework released by the National Institute for Standards and Technologies (“NIST”)
in 2014 and updated in 2018, in cooperation with other federal agencies and owners and operators of U.S. critical infrastructure.
The NIST cybersecurity framework provides a prioritized and flexible model for organizations to identify and manage cyber risks
inherent to their business. It was designed to supplement, not supersede, existing cybersecurity regulations and requirements.
Several government agencies have encouraged compliance with the NIST cybersecurity framework, including the FCC, which is
also considering expansion of its cybersecurity guidelines or the adoption of cybersecurity requirements.
Many states and local authorities have considered legislative or other actions that would impose restrictions on our ability to
collect, use and disclose, and safeguard certain consumer information, particularly with regard to our broadband Internet business.
For example, the California Consumer Privacy Act and Maine’s Act to Protect Privacy of Online Customer Information are both
scheduled go into effect in 2020. The California law will, under certain circumstances, regulate companies’ use and disclosure
of the personal information of California residents and authorizes enforcement actions by the California Attorney General and
private class actions for data breaches. The Maine law regulates how Internet service providers use and disclose customers’
personal information and requires Internet service providers to take reasonable measures to protect customers’ personal information.
We expect state and local efforts to regulate consumer privacy to continue in 2020. Additionally, several state legislatures are
considering the adoption of new data security and cybersecurity legislation that could result in additional network and information
security requirements for our business. We expect such state activity to increase as a result of the recent U.S. Court of Appeals
decision that, while affirming the FCC’s reclassification of Internet access as an “information service,” vacated the FCC’s blanket
prohibition of state regulation of broadband service and instead left open the possibility that individual state laws could be deemed
preempted on a case by case basis if it is shown that they conflict with federal law. There are also bills pending in both the U.S.
House of Representatives and Senate that could impose new privacy and data security obligations. We cannot predict whether
any of these efforts will be successful or preempted, or how new legislation and regulations, if any, would affect our business.
Commitments Related to the 2016 Merger with TWC and Acquisition of Bright House
In connection with approval of the 2016 merger with TWC and acquisition of Bright House (the "Transactions"), federal and state
regulators imposed a number of post-transaction conditions on us including but not limited to the following.
FCC Conditions
• Offer settlement-free Internet interconnection to any party that meets the requirements of our Interconnection Policy (available
on Charter’s website) on terms generally consistent with the policy for seven years (with a possible reduction to five years
from FCC approval in 2016);
• Deploy and offer high-speed broadband Internet access service to an additional two million locations over five years;
• Refrain from charging usage-based prices or imposing data caps on any fixed mass market broadband Internet access service
plans for seven years (with a possible reduction to five);
• Offer 30/4 Mbps discounted broadband where technically feasible to eligible customers throughout our service area for four
years from the offer’s commencement; and
• Continue to provide CableCARDs to any new or existing customer upon request for use in third-party retail devices for four
years and continue to support such CableCARDs for seven years (in each case, unless the FCC changes the relevant rules).
The FCC conditions also contain a number of compliance reporting requirements.
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DOJ Conditions
The Department of Justice (“DOJ”) Order prohibits us from entering into or enforcing any agreement with a video programmer
that forbids, limits or creates incentives to limit the video programmer’s provision of content to online video distributors ("OVDs").
We will not be able to avail ourself of other distributors’ most favored nation (“MFN”) provisions if they are inconsistent with
this prohibition. The DOJ’s conditions are effective for seven years after entry of the final judgment in 2016, although we may
petition the DOJ to eliminate the conditions after five years.
State Conditions
Certain state regulators, including California, New York, Hawaii and New Jersey also imposed conditions in connection with the
approval of the Transactions. These conditions include requirements related to:
• Building out our network to certain households and business locations that are not currently served by cable within the
designated states;
• Offering LifeLine service discounts and low-income broadband to eligible households served within the applicable states;
•
Investing in service improvement programs and customer service enhancements and maintaining customer-facing jobs within
the designated state; and
• Complying with reporting requirements.
Employees
As of December 31, 2019, we had approximately 95,100 active full-time equivalent employees.
Item 1A. Risk Factors.
Risks Related to Our Business
We operate in a very competitive business environment, which affects our ability to attract and retain customers and can
adversely affect our business, operations and financial results.
The industry in which we operate is highly competitive and has become more so in recent years. In some instances, we compete
against companies with fewer regulatory burdens, access to better financing, greater personnel resources, greater resources for
marketing, greater and more favorable brand name recognition, and long-established relationships with regulatory authorities and
customers. Increasing consolidation in the telecommunications and content industries have provided additional benefits to certain
of our competitors, either through access to financing, resources, or efficiencies of scale including the ability to launch new video
services.
Our video service faces competition from a number of sources, including DBS services, as well as other companies that deliver
linear network programming, movies and television shows on demand and other video content over broadband Internet connections
to televisions, computers, tablets and mobile devices often with password sharing among multiple users and security that makes
content susceptible to piracy. Newer products and services, particularly alternative methods for the distribution, sale and viewing
of content will likely continue to be developed, further increasing the number of competitors that we face.
The increasing number of choices available to audiences, including low-cost or free choices, could negatively impact not only
consumer demand for our products and services, but also advertisers’ willingness to purchase advertising from us. We compete
for the sale of advertising revenue with television networks and stations, as well as other advertising platforms, such as radio,
print and, increasingly, online media.
Our Internet service faces competition from the phone companies’ FTTH, FTTN, DSL and wireless broadband offerings as well
as from a variety of companies that offer other forms of online services, including fixed wireless and satellite-based broadband
services. Various mobile phone companies offer wireless Internet services delivered over networks which they continue to enhance
to deliver faster speeds and some began deploying 5G mobile services in 2019 with plans to expand 5G more broadly in the 2020.
Our voice and mobile services compete with wireless and wireline phone providers, as well as other forms of communication,
such as text messaging on cellular phones, instant messaging, social networking services, video conferencing and email.
Competition from these companies, including intensive marketing efforts with aggressive pricing, exclusive programming and
increased HD broadcasting may have an adverse impact on our ability to attract and retain customers.
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Wireline and wireless overbuilds could also adversely affect our growth, financial condition, and results of operations, by creating
or increasing competition. We are aware of traditional overbuild situations impacting certain of our service areas, however, we
are unable to predict the extent to which additional overbuild situations may occur.
Our services may not allow us to compete effectively. Our failure to effectively anticipate or adapt to new technologies and changes
in consumer expectations and behavior could significantly adversely affect our competitive position with respect to the leisure
time and discretionary spending of our customers and, as a result, affect our business and results of operations. Competition may
also reduce our expected growth of future cash flows which may contribute to future impairments of our franchises and goodwill
and our ability to meet cash flow requirements, including debt service requirements. For additional information regarding the
competition we face, see “Item 1. Business -Competition” and “-Regulation and Legislation.”
We face risks inherent in our commercial business.
We may encounter unforeseen difficulties as we increase the scale of our service offerings to businesses. We sell Internet access,
data networking and fiber connectivity to office buildings and cellular towers, and video and business voice services to businesses.
In order to grow our commercial business, we expect to continue to invest in technology, equipment and personnel focused on the
commercial business. Commercial business customers often require service level agreements and generally have heightened
customer expectations for reliability of services. If our efforts to build the infrastructure to scale the commercial business are not
successful, the growth of our commercial services business would be limited. We depend on interconnection and related services
provided by certain third parties for the growth of our commercial business. As a result, our ability to implement changes as the
services grow may be limited. If we are unable to meet these service level requirements or expectations, our commercial business
could be adversely affected. Competition continues to increase as well, as more companies deploy more fiber to more buildings,
which may negatively impact our growth and/or put pressure on margins. Finally, we expect advances in communications
technology, as well as changes in the marketplace and the regulatory and legislative environment. Consequently, we are unable to
predict the effect that ongoing or future developments in these areas might have on our commercial businesses and operations.
Programming costs per video customer are rising at a much faster rate than wages or inflation, and we may not have the ability
to reduce or moderate the growth rates of, or pass on to our customers, our increasing programming costs, which would
adversely affect our cash flow and operating margins.
Video programming has been, and is expected to continue to be, our largest operating expense item. In recent years, the cable
industry has experienced a rapid escalation in programming rates. Media corporation consolidation has resulted in fewer suppliers
and additional selling power on the part of programming suppliers. We expect programming rates will continue to increase due
to a variety of factors, including annual increases imposed by programmers with additional selling power as a result of media
consolidation, increased demands by owners of broadcast stations for payment for retransmission consent or linking carriage of
other services to retransmission consent, and additional programming, particularly new services. The inability to fully pass
programming cost increases on to our customers has had, and is expected in the future to have, an adverse impact on our cash flow
and operating margins associated with the video product. The contracts set to expire in any particular year vary. There can be no
assurance that these agreements will be renewed on favorable or comparable terms. In addition, a number of programmers have
begun to sell their services through alternative distribution channels, including IP-based platforms, which are less secure than our
own video distribution platforms. There is growing evidence that these less secure video distribution platforms are leading to video
product theft via password sharing among consumers. Password sharing may drive down the number of customers who pay for
certain programming, putting programmer revenues at risk, and which in turn may cause certain programmers to seek even higher
programming fees from us. The ability for consumers to receive the same content for free through such unauthorized channels
has devalued our video product which could impact sales, customer retention and our ability to pass through programming costs
to consumers, which increases the risk of non-renewal when programmers seek increases. To the extent that we are unable to
reach agreement with certain programmers on terms that we believe are reasonable, we have been, and may be in the future, forced
to remove such programming channels from our line-up, which may result in a loss of customers. Our failure to carry programming
that is attractive to our customers could adversely impact our customer levels, operations and financial results. In addition, if our
Internet customers are unable to access desirable content online because content providers block or limit access by our customers
as a class, our ability to gain and retain customers, especially Internet customers, may be negatively impacted.
Increased demands by owners of some broadcast stations for carriage of other services or payments to those broadcasters for
retransmission consent are likely to further increase our programming costs. Federal law allows commercial television broadcast
stations to make an election between “must-carry” rights and an alternative “retransmission-consent” regime. When a station opts
for the retransmission consent regime, we are not allowed to carry the station’s signal without that station’s permission. In some
cases, we carry stations under short-term arrangements while we attempt to negotiate new long-term retransmission agreements.
If negotiations with these programmers prove unsuccessful, they could require us to cease carrying their signals, possibly for an
indefinite period. Any loss of stations could make our video service less attractive to customers, which could result in less
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subscription and advertising revenue. In retransmission-consent negotiations, broadcasters often condition consent with respect
to one station on carriage of one or more other stations or programming services in which they or their affiliates have an interest.
Carriage of these other services, as well as increased fees for retransmission rights, may increase our programming expenses and
diminish the amount of capacity we have available to introduce new services, which could have an adverse effect on our business
and financial results.
Our inability to respond to technological developments and meet customer demand for new products and services could adversely
affect our ability to compete effectively.
We operate in a highly competitive, consumer-driven and rapidly changing environment. From time to time, we may pursue
strategic initiatives, including, for example, our wireless strategy which includes the launch of our mobile product through an
MVNO and testing the deployment of unlicensed and licensed spectrum for fixed and mobile wireless services. Our success is,
to a large extent, dependent on our ability to acquire, develop, adopt, upgrade and exploit new and existing technologies to address
consumers’ changing demands and distinguish our services from those of our competitors. We may not be able to accurately predict
technological trends or the success of new products and services. If we choose technologies or equipment that are less effective,
cost-efficient or attractive to customers than those chosen by our competitors, if we offer services that fail to appeal to consumers,
are not available at competitive prices or that do not function as expected, or we are not able to fund the expenditures necessary
to keep pace with technological developments, our competitive position could deteriorate, and our business and financial results
could suffer.
The ability of some of our competitors to introduce new technologies, products and services more quickly than we do may adversely
affect our competitive position. Furthermore, advances in technology, decreases in the cost of existing technologies or changes in
competitors’ product and service offerings may require us in the future to make additional research and development expenditures
or to offer, at no additional charge or at a lower price, certain products and services that we currently offer to customers separately
or at a premium. In addition, the uncertainty of our ability, and the costs, to obtain intellectual property rights from third parties
could impact our ability to respond to technological advances in a timely and effective manner.
Our inability to maintain and expand our upgraded systems and provide advanced services such as a state of the art user interface
in a timely manner, or to anticipate the demands of the marketplace, could materially adversely affect our ability to attract and
retain customers. In addition, as we launch our new mobile services using virtual network operator rights from a third party, we
expect an initial funding period to grow a new product as well as negative working capital impacts from the timing of device-
related cash flows when we provide the handset or tablet pursuant to equipment installation plans. Consequently, our growth,
financial condition and results of operations could suffer materially.
We depend on third-party service providers, suppliers and licensors; thus, if we are unable to procure the necessary services,
equipment, software or licenses on reasonable terms and on a timely basis, our ability to offer services could be impaired, and
our growth, operations, business, financial results and financial condition could be materially adversely affected.
We depend on a limited number of third-party service providers, suppliers and licensors to supply some of the services, hardware,
software and operational support necessary to provide some of our services. Some of our hardware, software and operational
support vendors, and service providers represent our sole source of supply or have, either through contract or as a result of intellectual
property rights, a position of some exclusivity. If any of these parties breaches or terminates its agreement with us or otherwise
fails to perform its obligations in a timely manner, demand exceeds these vendors’ capacity, tariffs are imposed that impact vendors'
ability to perform their obligations or significantly increase the amount we pay, they experience operating or financial difficulties,
they significantly increase the amount we pay for necessary products or services, or they cease production of any necessary product
due to lack of demand, profitability or a change in ownership or are otherwise unable to provide the equipment or services we
need in a timely manner, at our specifications and at reasonable prices, our ability to provide some services might be materially
adversely affected, or the need to procure or develop alternative sources of the affected materials or services might delay our ability
to serve our customers. In addition, the existence of only a limited number of vendors of key technologies can lead to less product
innovation and higher costs. These events could materially and adversely affect our ability to retain and attract customers and our
operations, business, financial results and financial condition.
Our business may be adversely affected if we cannot continue to license or enforce the intellectual property rights on which
our business depends.
We rely on patent, copyright, trademark and trade secret laws and licenses and other agreements with our employees, customers,
suppliers and other parties to establish and maintain our intellectual property rights in technology and the products and services
used in our operations. Also, because of the rapid pace of technological change, we both develop our own technologies, products
and services and rely on technologies developed or licensed by third parties. However, any of our intellectual property rights, or
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the rights of our suppliers, could be challenged or invalidated, or such intellectual property rights may not be sufficient to permit
us to take advantage of current industry trends or otherwise to provide competitive advantages, which could result in costly redesign
efforts, discontinuance of certain product or service offerings or other competitive harm. We may not be able to obtain or continue
to obtain licenses from these third parties on reasonable terms, if at all. In addition, claims of intellectual property infringement
could require us to enter into royalty or licensing agreements on unfavorable terms, incur substantial monetary liability or be
enjoined preliminarily or permanently from further use of the intellectual property in question, which could require us to change
our business practices or offerings and limit our ability to compete effectively. Even unsuccessful claims can be time-consuming
and costly to defend and may divert management’s attention and resources away from our business. Infringement claims continue
to be brought frequently in the communications and entertainment industries, and we are also often a party to such litigation
alleging that certain of our services or technologies infringe the intellectual property rights of others.
Various events could disrupt or result in unauthorized access to our networks, information systems or properties and could
impair our operating activities and negatively impact our reputation and financial results.
Network and information systems technologies are critical to our operating activities, both for our internal uses, such as network
management and supplying services to our customers, including customer service operations and programming delivery. Network
or information system shutdowns or other service disruptions caused by events such as computer hacking, phishing, dissemination
of computer viruses, worms and other destructive or disruptive software, “cyber attacks,” process breakdowns, denial of service
attacks and other malicious activity pose increasing risks. Both unsuccessful and successful “cyber attacks” on companies have
continued to increase in frequency, scope and potential harm in recent years. While we develop and maintain systems seeking to
prevent systems-related events and security breaches from occurring, the development and maintenance of these systems is costly
and requires ongoing monitoring and updating as techniques used in such attacks become more sophisticated and change frequently.
We, and the third parties on which we rely, may be unable to anticipate these techniques or implement adequate preventive measures.
While from time to time attempts have been made to access our network, these attempts have not as yet resulted in any material
release of information, degradation or disruption to our network and information systems.
Our network and information systems are also vulnerable to damage or interruption from power outages, telecommunications
failures, accidents, natural disasters (including extreme weather arising from short-term or any long-term changes in weather
patterns), terrorist attacks and similar events. Our system redundancy may be ineffective or inadequate, and our disaster recovery
planning may not be sufficient for all eventualities.
Any of these events, if directed at, or experienced by, us or technologies upon which we depend, could have adverse consequences
on our network, our customers and our business, including degradation of service, service disruption, excessive call volume to
call centers, and damage to our or our customers’ equipment and data. Large expenditures may be necessary to repair or replace
damaged property, networks or information systems or to protect them from similar events in the future. Moreover, the amount
and scope of insurance that we maintain against losses resulting from any such events or security breaches may not be sufficient
to cover our losses or otherwise adequately compensate us for any disruptions to our business that may result. Any such significant
service disruption could result in damage to our reputation and credibility, customer dissatisfaction and ultimately a loss of customers
or revenue. Any significant loss of customers or revenue, or significant increase in costs of serving those customers, could adversely
affect our growth, financial condition and results of operations.
Furthermore, our operating activities could be subject to risks caused by misappropriation, misuse, leakage, falsification or
accidental release or loss of information maintained in our information technology systems and networks and those of our third-
party vendors, including customer, personnel and vendor data. We provide certain confidential, proprietary and personal information
to third parties in connection with our business, and there is a risk that this information may be compromised.
We process, store, and transmit large amounts of data, including the personal information of our customers. Ongoing increases
in the potential for mis-use of personal information, the public’s awareness of the importance of safeguarding personal information,
and the volume of legislation that has been adopted or is being considered regarding the protection, privacy, and security of personal
information have resulted in increases to our information-related risks. We could be exposed to significant costs if such risks were
to materialize, and such events could damage our reputation, credibility and business and have a negative impact on our revenue.
We could be subject to regulatory actions and claims made by consumers in private litigations involving privacy issues related to
consumer data collection and use practices. We also could be required to expend significant capital and other resources to remedy
any such security breach.
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Our exposure to the economic conditions of our current and potential customers, vendors and third parties could adversely
affect our cash flow, results of operations and financial condition.
We are exposed to risks associated with the economic conditions of our current and potential customers, the potential financial
instability of our customers and their financial ability to purchase our products. If there were a general economic downturn, we
may experience increased cancellations or non-payment by our customers or unfavorable changes in the mix of products purchased.
This may include an increase in the number of homes that replace their video service with Internet-delivered and/or over-air content,
as well as an increase in the number of Internet and voice customers substituting mobile data and voice products for wireline
services, which would negatively impact our ability to attract customers, increase rates and maintain or increase revenue. In
addition, our ability to gain new customers is dependent to some extent on growth in occupied housing in our service areas, which
is influenced by both national and local economic conditions. Weak economic conditions may also have a negative impact on our
advertising revenue. These events have adversely affected us in the past, and may adversely affect our cash flow, results of operations
and financial condition if a downturn were to occur.
In addition, we are susceptible to risks associated with the potential financial instability of the vendors and third parties on which
we rely to provide products and services or to which we outsource certain functions. The same economic conditions that may
affect our customers, as well as volatility and disruption in the capital and credit markets, also could adversely affect vendors and
third parties and lead to significant increases in prices, reduction in output or the bankruptcy of our vendors or third parties upon
which we rely. Any interruption in the services provided by our vendors or by third parties could adversely affect our cash flow,
results of operation and financial condition.
For tax purposes, Charter could experience a deemed ownership change in the future that could limit its ability to use its tax
loss carryforwards.
Charter had approximately $7.5 billion of federal tax net operating loss carryforwards resulting in a gross deferred tax asset of
approximately $1.6 billion as of December 31, 2019. These losses resulted from the operations of Charter Communications Holding
Company, LLC ("Charter Holdco") and its subsidiaries and from loss carryforwards received as a result of the merger with TWC.
Federal tax net operating loss carryforwards expire in the years 2020 through 2035. In addition, Charter had state tax net operating
loss carryforwards resulting in a gross deferred tax asset (net of federal tax benefit) of approximately $257 million as of
December 31, 2019. State tax net operating loss carryforwards generally expire in the years 2020 through 2039.
In the past, Charter has experienced ownership changes as defined in Section 382 of the Internal Revenue Code of 1986, as amended
(the “Code”). In general, an ownership change occurs whenever the percentage of the stock of a corporation owned, directly or
indirectly, by 5-percent stockholders (within the meaning of Section 382 of the Code) increases by more than 50 percentage points
over the lowest percentage of the stock of such corporation owned, directly or indirectly, by such 5-percent stockholders at any
time over the preceding three years. As a result, Charter is subject to an annual limitation on the use of its loss carryforwards which
existed at November 30, 2009 for the first ownership change, those that existed at May 1, 2013 for the second ownership change,
and those created at May 18, 2016 for the third ownership change. The limitation on Charter's ability to use its loss carryforwards,
in conjunction with the loss carryforward expiration provisions, could reduce Charter's ability to use a portion of its loss
carryforwards to offset future taxable income, which could result in Charter being required to make material cash tax payments.
Charter's ability to make such income tax payments, if any, will depend at such time on its liquidity or its ability to raise additional
capital, and/or on receipt of payments or distributions from Charter Holdco and its subsidiaries.
If Charter were to experience additional ownership changes in the future (as a result of purchases and sales of stock by its 5-percent
stockholders, new issuances or redemptions of our stock, certain acquisitions of its stock and issuances, redemptions, sales or other
dispositions or acquisitions of interests in its 5-percent stockholders), Charter's ability to use its loss carryforwards could become
subject to further limitations.
If we are unable to retain key employees, our ability to manage our business could be adversely affected.
Our operational results have depended, and our future results will depend, upon the retention and continued performance of our
management team. Our ability to retain and hire new key employees for management positions could be impacted adversely by
the competitive environment for management talent in the broadband communications industry. The loss of the services of key
members of management and the inability or delay in hiring new key employees could adversely affect our ability to manage our
business and our future operational and financial results.
19
Risks Related to Our Indebtedness
We have a significant amount of debt and expect to incur significant additional debt, including secured debt, in the future,
which could adversely affect our financial health and our ability to react to changes in our business.
We have a significant amount of debt and expect to (subject to applicable restrictions in our debt instruments) incur additional
debt in the future as we maintain our stated objective of 4.0 to 4.5 times Adjusted EBITDA leverage (our net debt divided by our
last twelve months Adjusted EBITDA). As of December 31, 2019, our total principal amount of debt was approximately $78.4
billion with a leverage ratio of 4.5 times Adjusted EBITDA.
Our significant amount of debt could have consequences, such as:
impact our ability to raise additional capital at reasonable rates, or at all;
•
• make us vulnerable to interest rate increases, in part because approximately 14% of our borrowings as of December 31,
2019 were, and may continue to be, subject to variable rates of interest;
expose us to increased interest expense to the extent we refinance existing debt with higher cost debt;
require us to dedicate a significant portion of our cash flow from operating activities to make payments on our debt,
reducing our funds available for working capital, capital expenditures, and other general corporate expenses;
limit our flexibility in planning for, or reacting to, changes in our business, the cable and telecommunications industries,
and the economy at large;
place us at a disadvantage compared to our competitors that have proportionately less debt; and
adversely affect our relationship with customers and suppliers.
•
•
•
•
•
To the extent our current debt amounts increase more than expected, our business results are lower than expected, or credit rating
agencies downgrade our debt limiting our access to investment grade markets, the related risks that we now face will intensify.
In addition, our variable rate indebtedness may use London Interbank Offering Rate (“LIBOR”) as a benchmark for establishing
the rate. The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announced that it intends to stop
encouraging or compelling banks to submit rates for the calculation of LIBOR rates after 2021 (the “FCA Announcement”). The
FCA Announcement indicates that the continuation of LIBOR on the current basis is not guaranteed after 2021 and, based on the
foregoing, it appears likely that LIBOR will be discontinued or modified by 2021. The effects of the FCA Announcement cannot
be entirely predicted, but could include an increase in the cost of our variable rate indebtedness.
The agreements and instruments governing our debt contain restrictions and limitations that could significantly affect our
ability to operate our business, as well as significantly affect our liquidity.
Our credit facilities and the indentures governing our debt contain a number of significant covenants that could adversely affect
our ability to operate our business, our liquidity, and our results of operations. These covenants restrict, among other things, our
and our subsidiaries’ ability to:
incur additional debt;
repurchase or redeem equity interests and debt;
issue equity;
•
•
•
• make certain investments or acquisitions;
pay dividends or make other distributions;
•
dispose of assets or merge;
•
enter into related party transactions; and
•
grant liens and pledge assets.
•
Additionally, the Charter Communications Operating, LLC ("Charter Operating") credit facilities require Charter Operating to
comply with a maximum total leverage covenant and a maximum first lien leverage covenant. The breach of any covenants or
obligations in our indentures or credit facilities, not otherwise waived or amended, could result in a default under the applicable
debt obligations and could trigger acceleration of those obligations, which in turn could trigger cross defaults under other agreements
governing our long-term indebtedness. In addition, the secured lenders under our notes and the Charter Operating credit facilities
could foreclose on their collateral, which includes equity interests in our subsidiaries, and exercise other rights of secured creditors.
20
Risks Related to Ownership Position of Liberty Broadband Corporation and Advance/Newhouse Partnership
Liberty Broadband and Advance/Newhouse Partnership (“A/N”) have governance rights that give them influence over corporate
transactions and other matters.
Liberty Broadband currently owns a significant amount of Charter Class A common stock and is entitled to certain governance
rights with respect to Charter. A/N currently owns Charter Class A common stock and a significant amount of membership interests
in our subsidiary Charter Communications Holdings, LLC (“Charter Holdings”), that are convertible into Charter Class A common
stock and is entitled to certain governance rights with respect to Charter. Members of the Charter board of directors include a
director who is also an officer and director of Liberty Broadband and directors who are current or former officers and directors of
A/N. Mr. Greg Maffei is the President and Chief Executive Officer of Liberty Broadband. Steven Miron is the Chief Executive
Officer of A/N and Michael Newhouse is an officer or director of several of A/N’s affiliates. As of December 31, 2019, Liberty
Broadband beneficially held approximately 25% of Charter’s voting stock (including shares owned by GCI Liberty, Inc. ("GCI
Liberty," formerly known as Liberty Interactive Corporation) over which Liberty Broadband holds an irrevocable voting proxy)
and A/N beneficially held approximately 13% of Charter’s voting stock. Pursuant to the stockholders agreement between Liberty
Broadband, A/N and Charter, Liberty Broadband currently has the right to designate up to three directors as nominees for Charter’s
board of directors and A/N currently has the right to designate up to two directors as nominees for Charter’s board of directors.
Each of A/N and Liberty Broadband is entitled to nominate at least one director to each of the committees of Charter's board of
directors, subject to applicable stock exchange listing rules and certain specified voting or equity ownership thresholds for each
of A/N and Liberty Broadband, and provided that the Nominating and Corporate Governance Committee and the Compensation
and Benefit Committee each have at least a majority of directors independent from A/N, Liberty Broadband and Charter (referred
to as the “unaffiliated directors”).
In connection with the merger with TWC, Liberty Broadband and GCI Liberty entered into a proxy and right of first refusal
agreement, pursuant to which GCI Liberty granted Liberty Broadband an irrevocable proxy to vote all Charter Class A common
stock owned beneficially or of record by GCI Liberty, with certain exceptions. In addition, at the closing of the acquisition of
Bright House, A/N and Liberty Broadband entered into a proxy agreement pursuant to which A/N granted to Liberty Broadband
a 5-year irrevocable proxy (which we refer to as the “A/N proxy”) to vote, subject to certain exceptions, that number of shares of
Charter Class A common stock and Charter Class B common stock, in each case held by A/N (such shares are referred to as the
“proxy shares”), that will result in Liberty Broadband having voting power in Charter equal to 25.01% of the outstanding voting
power of Charter, provided, that the voting power of the proxy shares is capped at 7.0% of the outstanding voting power of Charter.
In December of 2019, Liberty Broadband’s voting power in Charter exceeded 25.01% and, therefore, as of December 31, 2019,
the A/N proxy had no impact on Liberty Broadband’s voting power. The stockholders agreement and Charter’s amended and
restated certificate of incorporation fixes the size of the board at 13 directors. Liberty Broadband and A/N are required to vote
(subject to the applicable voting cap) their respective shares of Charter Class A common stock and Charter Class B common stock
for the director nominees nominated by the nominating and corporate governance committee of the board of directors, including
the respective designees of Liberty Broadband and A/N, and against any other nominees, except that, with respect to the unaffiliated
directors, Liberty Broadband and A/N must instead vote in the same proportion as the voting securities are voted by stockholders
other than A/N and Liberty Broadband or any group which includes any of them are voted, if doing so would cause a different
outcome with respect to the unaffiliated directors. In addition, because Liberty Broadband’s voting power exceeds its voting cap
of 25.01%, Liberty Broadband must vote and exercise rights to consent with respect to voting securities held in excess of the voting
cap in the same proportion as all other votes cast by stockholders other than A/N and Liberty Broadband with respect to the
applicable matter. As a result of their rights under the stockholders agreement and their significant equity and voting stakes in
Charter, Liberty Broadband and/or A/N, who may have interests different from those of other stockholders, will be able to exercise
substantial influence over certain matters relating to the governance of Charter, including the approval of significant corporate
actions, such as mergers and other business combination transactions.
The stockholders agreement provides A/N and Liberty Broadband with preemptive rights with respect to issuances of Charter
equity in connection with certain transactions, and in the event that A/N or Liberty Broadband exercises these rights, holders
of Charter Class A common stock may experience further dilution.
The stockholders agreement provides that A/N and Liberty Broadband will have certain contractual preemptive rights over issuances
of Charter equity securities in connection with capital raising transactions, merger and acquisition transactions, and in certain other
circumstances. Holders of Charter Class A common stock will not be entitled to similar preemptive rights with respect to such
transactions. As a result, if Liberty Broadband and/or A/N elect to exercise their preemptive rights, (i) these parties would not
experience the dilution experienced by the other holders of Charter Class A common stock, and (ii) such other holders of Charter
Class A common stock may experience further dilution of their interest in Charter upon such exercise.
21
Risks Related to Regulatory and Legislative Matters
Our business is subject to extensive governmental legislation and regulation, which could adversely affect our business.
Regulation of the cable industry has increased cable operators’ operational and administrative expenses and limited their revenues.
Cable operators are subject to numerous laws and regulations including those covering the following:
the provision of high-speed Internet service, including net neutrality and transparency rules;
the provision of voice communications;
cable franchise renewals and transfers;
the provisioning and marketing of cable equipment;
customer and employee privacy and data security;
copyright royalties for retransmitting broadcast signals;
•
•
•
•
•
•
• when a cable system must carry a particular broadcast station and when it must first obtain retransmission consent to carry a
•
•
broadcast station;
the provision of video channel capacity to unaffiliated commercial leased access programmers;
limitations on our ability to enter into exclusive agreements with multiple dwelling unit complexes and control our inside
wiring;
equal employment opportunity;
emergency alert systems, disability access, pole attachments, and technical standards;
•
•
• marketing practices, customer service, and consumer protection; and
•
approval for mergers and acquisitions often accompanied by the imposition of restrictions and requirements on an applicant’s
business in order to secure approval of the proposed transaction.
Legislators and regulators at all levels of government frequently consider changing, and sometimes do change, existing statutes,
rules, regulations, or interpretations thereof, or prescribe new ones. Any future legislative, judicial, regulatory or administrative
actions may increase our costs or impose additional restrictions on our businesses.
As a result of the closing of the 2016 merger with TWC and acquisition of Bright House, our businesses are subject to the
conditions set forth in the FCC Order and the DOJ Consent Decree and those imposed by state utility commissions and local
franchise authorities, and there can be no assurance that these conditions will not have an adverse effect on our businesses
and results of operations.
In connection with the Transactions, the FCC Order, the DOJ Consent Decree, and the approvals from state utility commissions
and local franchise authorities incorporated numerous commitments and voluntary conditions made by the parties and imposed
numerous conditions on our businesses relating to the operation of our business and other matters. Under federal approvals, among
other things, (i) we are not permitted to charge usage-based prices or impose data caps and are prohibited from charging
interconnection fees for qualifying parties; (ii) we are prohibited from entering into or enforcing any agreement with a programmer
that forbids, limits or creates incentives to limit the programmer’s provision of content to OVD and cannot retaliate against
programmers for licensing to OVDs; (iii) we are not able to avail ourself of other distributors’ MFN provisions if they are inconsistent
with this prohibition; (iv) we appointed an independent compliance monitor and comply with a broad array of reporting
requirements; and (v) we must satisfy various other conditions relating to our Internet services, including building out an additional
two million locations with access to a high-speed connection of at least 60 megabits per second, and implementing a reduced price
high-speed Internet program for low income families. These and other conditions and commitments relating to the transactions
are of varying duration, ranging from three to seven years. In light of the breadth and duration of the conditions and potential
changes in market conditions during the time the conditions and commitments are in effect, there can be no assurance that our
compliance, and ability to comply, with the conditions will not have a material adverse effect on our business or results of operations.
Changes to existing statutes, rules, regulations, or interpretations thereof, or adoption of new ones, could have an adverse
effect on our business.
There are ongoing efforts to amend or expand the federal, state, and local regulation of some of the services offered over our cable
systems, which may compound the regulatory risks we already face. For example, with respect to our retail broadband Internet
access service, the FCC has reclassified the service twice in the last few years, with the first change adding federal regulatory
obligations and the second change largely removing those new regulatory obligations. These changes reflect a lack of regulatory
certainty in this business area, which may continue as a result of litigation, as well as future legislative or administrative changes.
Other potential legislative and regulatory changes could adversely impact our business by increasing our costs and competition
and limiting our ability to offer services in a manner that that would maximize our revenue potential. These changes could include,
22
for example, the adoption of new privacy restrictions on our collection, use and disclosure of certain customer information, new
data security and cybersecurity mandates that could result in additional network and information security requirements for our
business, new restraints on our discretion over programming decisions, including commercial leased access programming, new
restrictions on the rates we charge for video programming and the marketing and packaging of that video programming and other
services to consumers, changes to the cable industry’s compulsory copyright license to carry broadcast signals, new requirements
to assure the availability of navigation devices (such as set-top boxes) from third-party providers, new Universal Service Fund
obligations on our provision of Internet service that would add to the cost of that service; increases in government-administered
broadband subsidies to rural areas that could result in subsidized overbuilding of our more rural facilities, changes to the FCC's
administration of spectrum, and changes in the regulatory framework for VoIP phone service, including the scope of regulatory
obligations associated with our VoIP service and our ability to interconnect our VoIP service with incumbent providers of traditional
telecommunications service.
If any of these such laws or regulations are enacted, they could affect our operations and require significant expenditures. We
cannot predict future developments in these areas, and we are already subject to Charter-specific conditions regarding certain
Internet practices as a result of the FCC’s approval in 2016 of the merger with TWC and acquisition of Bright House, but any
changes to the regulatory framework for our video, Internet or VoIP services could have a negative impact on our business and
results of operations.
It remains uncertain what rule changes, if any, will ultimately be adopted by Congress and the FCC and what operating or financial
impact any such rules might have on us, including on our programming agreements, customer privacy and the user experience.
In addition, the FCC, the FTC, and various state agencies and attorney generals actively investigate industry practices and could
impose substantial forfeitures for alleged regulatory violations.
Our cable system franchises are subject to non-renewal or termination and are non-exclusive. The failure to renew a franchise
or the grant of additional franchises in one or more service areas could adversely affect our business.
Our cable systems generally operate pursuant to franchises, permits, and similar authorizations issued by a state or local
governmental authority controlling the public rights-of-way. Many franchises establish comprehensive facilities and service
requirements, as well as specific customer service standards and monetary penalties for non-compliance. In many cases, franchises
are terminable if the franchisee fails to comply with significant provisions set forth in the franchise agreement governing system
operations. Franchises are generally granted for fixed terms and must be periodically renewed. Franchising authorities may resist
granting a renewal if either past performance or the prospective operating proposal is considered inadequate. Franchise authorities
often demand concessions or other commitments as a condition to renewal. In some instances, local franchises have not been
renewed at expiration, and we have operated and are operating under either temporary operating agreements or without a franchise
while negotiating renewal terms with the local franchising authorities.
We cannot assure you that we will be able to comply with all significant provisions of our franchise agreements and certain of our
franchisers have from time to time alleged that we have not complied with these agreements. Additionally, although historically
we have renewed our franchises without incurring significant costs, we cannot assure you that we will be able to renew, or to
renew as favorably, our franchises in the future. A termination of or a sustained failure to renew a franchise in one or more service
areas could adversely affect our business in the affected geographic area.
Our cable system franchises are non-exclusive. Consequently, local and state franchising authorities can grant additional franchises
to competitors in the same geographic area or operate their own cable systems. In some cases, local government entities and
municipal utilities may legally compete with us on more favorable terms.
Tax legislation and administrative initiatives or challenges to our tax and fee positions could adversely affect our results of
operations and financial condition.
We operate cable systems in locations throughout the United States and, as a result, we are subject to the tax laws and regulations
of federal, state and local governments. From time to time, various legislative and/or administrative initiatives may be proposed
that could adversely affect our tax positions. There can be no assurance that our effective tax rate or tax payments will not be
adversely affected by these initiatives. Certain states and localities have imposed or are considering imposing new or additional
taxes or fees on our services or changing the methodologies or base on which certain fees and taxes are computed. Potential changes
include additional taxes or fees on our services which could impact our customers, changes to income tax sourcing rules and other
changes to general business taxes, central/unit-level assessment of property taxes and other matters that could increase our income,
franchise, sales, use and/or property tax liabilities. For example, some local franchising authorities are seeking to impose franchise
fee assessments on our broadband Internet access service (in addition to our video service), and more may do so in the future. If
they do so, and challenges to such assessments are unsuccessful, it could adversely impact our costs. Although the FCC recently
23
issued a decision precluding the imposition of such duplicative fees, that favorable decision is currently subject to judicial review.
In addition, federal, state and local tax laws and regulations are extremely complex and subject to varying interpretations. There
can be no assurance that our tax positions will not be challenged by relevant tax authorities or that we would be successful in any
such challenge.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Our principal physical assets consist of cable distribution plant and equipment, including signal receiving, encoding and decoding
devices, headend reception facilities, distribution systems, and customer premise equipment for each of our cable systems.
Our cable plant and related equipment are generally attached to utility poles under pole rental agreements with local public utilities
and telephone companies, and in certain locations are buried in underground ducts or trenches. We own or lease real property for
signal reception sites, and own our service vehicles.
We generally lease space for business offices. Our headend and tower locations are located on owned or leased parcels of land,
and we generally own the towers on which our equipment is located.
The physical components of our cable systems require maintenance as well as periodic upgrades to support the new services and
products we introduce. See “Item 1. Business – Our Network Technology and Customer Premise Equipment.” We believe that
our properties are generally in good operating condition and are suitable for our business operations.
Item 3. Legal Proceedings.
The legal proceedings information set forth in Note 21 to the accompanying consolidated financial statements contained in “Part
II. Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K is incorporated herein by reference.
Item 4. Mine Safety Disclosures.
Not applicable.
24
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Charter’s Class A common stock is listed on the NASDAQ Global Select Market under the symbol “CHTR.” As of December 31,
2019, there were approximately 12,300 holders of record of Charter’s Class A common stock and one holder of Charter's Class B
common stock. Charter has not paid cash dividends on its common stock and does not intend to do so in the foreseeable future.
During 2019, there were no unregistered sales of securities of the registrant.
Securities Authorized for Issuance Under Equity Compensation Plans
The following information is provided as of December 31, 2019 with respect to equity compensation plans:
Plan Category
Equity compensation plans approved by security
holders
Equity compensation plans not approved by
security holders
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
Weighted
Average Exercise
Price of
Outstanding
Warrants and
Rights
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
12,608,020 (1)
—
$
$
242.50
15,882,887 (1)
—
—
TOTAL
12,608,020 (1)
15,882,887 (1)
(1) This total does not include 8,284 shares issued pursuant to restricted stock grants made under our 2019 Stock Incentive Plan,
which are subject to vesting based on continued service.
For information regarding securities issued under our equity compensation plans, see Note 16 to our accompanying consolidated
financial statements contained in “Part II. Item 8. Financial Statements and Supplementary Data.”
Performance Graph
The performance graph required by Item 5 will be included in Charter’s 2019 Proxy Statement (the “Proxy Statement”) under the
headings “Compensation Discussion and Analysis,” or in amendment to this Annual Report on Form 10-K and is incorporated
herein by reference.
Purchases of Equity Securities by the Issuer
The following table presents Charter’s purchases of equity securities completed during the fourth quarter of 2019 (dollars in
millions, except per share data).
Period
October 1 - 31, 2019
November 1 - 30, 2019
December 1 - 31, 2019
Total Number of
Shares Purchased (1)
1,186,853
1,586,050
2,270,062
$
$
$
Average Price Paid
per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (2)
428.17
472.21
471.62
1,157,618
1,538,480
2,243,602
Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under the
Plans or Programs (2)
$803
$2,254
$1,361
(1)
Includes 29,235, 47,570 and 26,460 shares withheld from employees for the payment of taxes and exercise costs upon the
exercise of stock options or vesting of other equity awards for the months of October, November and December 2019,
respectively.
(2) During the three months ended December 31, 2019, Charter purchased approximately 4.9 million shares of its Class A common
stock for approximately $2.3 billion. Charter Holdings purchased 0.7 million Charter Holdings common units from A/N at
an average price per unit of $442.38, or $292 million during the three months ended December 31, 2019. As of December 31,
2019, Charter had remaining board authority to purchase an additional $1.4 billion of Charter’s Class A common stock and/
25
or Charter Holdings common units. In addition to open market purchases including pursuant to Rule 10b5-1 plans adopted
from time to time, Charter may also buy shares of Charter Class A common stock, from time to time, pursuant to private
transactions outside of its Rule 10b5-1 plan and any such repurchases may also trigger the repurchases from A/N pursuant to
and to the extent provided in the Letter Agreement. See "Part II. Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations — Liquidity and Capital Resources."
Item 6. Selected Financial Data.
The following table presents selected consolidated financial data for the periods indicated (dollars in millions, except per share data):
Statement of Operations Data:
Revenues
Income from operations
Interest expense, net
Income (loss) before income taxes
Net income (loss) attributable to Charter shareholders
Income (loss) per common share, basic
Income (loss) per common share, diluted
Weighted average shares outstanding, basic (a)
Weighted average shares outstanding, diluted (a)
Balance Sheet Data (end of period):
Investment in cable properties
Total assets
Total debt
Total shareholders’ equity (deficit)
Years Ended December 31,
2019
2018
2017
2016
2015
$
$
$
$
$
$
$
45,764
6,511
3,797
2,431
1,668
7.60
7.45
$
$
$
$
$
$
$
43,634
5,221
3,540
1,686
1,230
5.29
5.22
$
$
$
$
$
$
$
41,581
4,106
3,090
1,028
9,895
38.55
34.09
$
$
$
$
$
$
$
29,003
2,456
2,499
820
3,522
17.05
15.94
$
$
$
$
$
$
$
9,754
1,114
1,306
(331)
(271)
(2.68)
(2.68)
219,506,735
223,786,380
232,356,665
256,720,715
206,539,100
101,152,647
235,525,226
296,703,956
234,791,439
101,152,647
$
$
$
$
138,920
148,188
79,078
38,811
$
$
$
$
141,564
146,130
72,827
44,272
$
$
$
$
142,712
146,623
70,231
47,531
$
$
$
$
144,396
149,067
61,747
50,366
$
$
$
$
16,375
39,316
35,723
(46)
(a) Weighted average number of shares outstanding for the year ended December 31, 2015 have been recast to reflect the application
of the Parent Merger Exchange Ratio (as defined in the Merger Agreement related to the merger with TWC and acquisition of
Bright House in 2016).
Comparability of the above information from year to year is affected by acquisitions and dispositions completed by us, including the
merger with TWC and acquisition of Bright House in 2016.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Reference is made to “Part I. Item 1A. Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements,” which
describe important factors that could cause actual results to differ from expectations and non-historical information contained
herein. In addition, the following discussion should be read in conjunction with the audited consolidated financial statements and
accompanying notes thereto of Charter included in “Part II. Item 8. Financial Statements and Supplementary Data.”
Overview
We are the second largest cable operator in the United States and a leading broadband communications services company providing
video, Internet and voice services to approximately 29.2 million residential and small and medium business customers at
December 31, 2019. We also offer mobile service to residential customers and recently launched mobile service to small and
medium business customers. In addition, we sell video and online advertising inventory to local, regional and national advertising
customers and tailored communications and managed solutions to larger enterprise customers. We also own and operate regional
sports networks and local sports, news and community channels. See “Part I. Item 1. Business — Products and Services” for
further description of these services, including customer statistics for different services.
In 2019, with the integration of TWC and Bright House substantially behind us, we are realizing the benefits of operating as one
company, with a unified product, marketing and service infrastructure. We remain focused on driving customer relationship growth
26
by deploying superior products and services packaged with attractive pricing. We expect our insourced, high quality workforce
will continue to drive an improved customer experience which will result in lower customer churn, longer customer lifetimes and,
combined with our continued ramping of our self-installation program, improved productivity with fewer customer calls and truck
rolls per customer relationship. With approximately 85% of our residential customer base now in SPP packages, we expect
additional benefits from lower legacy package migration activity, combined with SPP customers rolling off introductory pricing
and price increases. Further, we expect to continue to drive customer relationship growth through sales of bundled services and
improving customer retention despite the expectation for continued losses of video and wireline voice customers. With the
completion of our all-digital conversion, roll-out of DOCSIS 3.1 technology across our footprint, and the integration of TWC and
Bright House substantially complete, we have experienced a meaningful reduction in cable capital expenditures as a percent of
revenue in 2019 and expect continued lower cable capital intensity in 2020.
We launched our mobile product, Spectrum Mobile, in the second half of 2018 under our MVNO reseller agreement with Verizon.
Our Spectrum Mobile service is offered to customers subscribing to our Internet service and runs on Verizon's mobile network
combined with Spectrum WiFi. In the second quarter of 2019, we expanded our Spectrum Mobile bring-your-own-device program
across all sales channels to include a broader set of devices which we believe lowers the cost for consumers of switching mobile
carriers, and reduces the short-term working capital impact of selling new mobile devices on installment plans. We expect these
developments, along with the launch of 5G service offerings in 2020, to contribute to the growth of our mobile business. We also
continue to explore ways to drive even more mobile traffic to our network. We plan to use our WiFi network in conjunction with
additional unlicensed, and potentially licensed, spectrum to improve network performance and expand capacity to offer consumers
a superior mobile service at a lower total cost to us. Further, we have experimental wireless licenses from the FCC that we are
utilizing to test next generation mobile services in several service areas around the country.
We believe Spectrum-branded mobile services will drive higher sales of our core products, create longer customer lives and increase
profitability and cash flow over time. As a result of growth costs associated with our new mobile product line, we cannot be
certain that we will be able to grow revenues or maintain our margins at recent historical rates. During the years ended December 31,
2019 and 2018, our mobile product line increased revenues by $726 million and $106 million, respectively, reduced Adjusted
EBITDA by approximately $520 million and $240 million, respectively, and reduced free cash flow by approximately $1.2 billion
and $594 million, respectively. As we continue to grow our mobile service and scale the business, we expect continued negative
impacts to Adjusted EBITDA, as well as negative working capital impacts from the timing of device-related cash flows when we
sell the handset or tablet to customers pursuant to equipment installment plans.
The Company realized revenue, Adjusted EBITDA and income from operations during the periods presented as follows (in millions;
all percentages are calculated using whole numbers. Minor differences may exist due to rounding).
Revenues
Adjusted EBITDA
Income from operations
Years ended December 31,
2019
2018
$
$
$
45,764
16,855
6,511
$
$
$
43,634
16,059
5,221
2019 vs.
2018
Growth
4.9%
5.0%
24.7%
Adjusted EBITDA is defined as net income attributable to Charter shareholders plus net income attributable to noncontrolling
interest, net interest expense, income taxes, depreciation and amortization, stock compensation expense, loss on extinguishment
of debt, (gain) loss on financial instruments, net, other pension (benefits) costs, net, other (income) expense, net and other operating
(income) expenses, net, such as merger and restructuring costs, special charges and (gain) loss on sale or retirement of assets. See
“—Use of Adjusted EBITDA and Free Cash Flow” for further information on Adjusted EBITDA and free cash flow.
Growth in total revenue was primarily due to growth in our residential Internet, mobile and commercial business customers.
Adjusted EBITDA and income from operations growth was impacted by growth in revenue and increases in operating costs and
expenses, primarily mobile, programming and regulatory, connectivity and produced content. Income from operations was also
affected by a decrease in depreciation and amortization expense.
Approximately 91% of our revenues for each of the years ended December 31, 2019 and 2018 are attributable to monthly
subscription fees charged to customers for our video, Internet, voice, mobile and commercial services. Generally, these customer
subscriptions may be discontinued by the customer at any time subject to a fee for certain commercial customers. The remaining
9% of revenue is derived primarily from advertising revenues, franchise and other regulatory fee revenues (which are collected
27
by us but then paid to local authorities), VOD and pay-per-view programming, installation, processing fees or reconnection fees
charged to customers to commence or reinstate service, revenue from regional sports and news channels and commissions related
to the sale of merchandise by home shopping services.
Critical Accounting Policies and Estimates
Certain of our accounting policies require our management to make difficult, subjective and/or complex judgments. Management
has discussed these policies with the Audit Committee of Charter’s board of directors, and the Audit Committee has reviewed the
following disclosure. We consider the following policies to be the most critical in understanding the estimates, assumptions and
judgments that are involved in preparing our financial statements, and the uncertainties that could affect our results of operations,
financial condition and cash flows:
• Capitalization of labor and overhead costs
• Valuation and impairment of franchises and goodwill
•
• Defined benefit pension plans
Income taxes
Capitalization of labor and overhead costs
Costs associated with network construction or upgrades, placement of the customer drop to the dwelling and the placement of
outlets within a dwelling along with the costs associated with the deployment of new customer premise equipment necessary to
provide video, Internet or voice services, are capitalized. Costs capitalized include materials, direct labor and certain indirect
costs. These indirect costs are associated with the activities of personnel who assist in installation activities, and consist of
compensation and overhead costs associated with these support functions. While our capitalization is based on specific activities,
once capitalized, we track these costs on a composite basis by fixed asset category at the cable system level, and not on a specific
asset basis. For assets that are sold or retired, we remove the estimated applicable cost and accumulated depreciation. The costs
of disconnecting service and removing customer premise equipment from a dwelling and the costs to reconnect a customer drop
or to redeploy previously installed customer premise equipment are charged to operating expense as incurred. Costs for repairs
and maintenance are charged to operating expense as incurred, while plant and equipment replacement, including replacement of
certain components, betterments, and replacement of cable drops and outlets, are capitalized.
We make judgments regarding the installation and construction activities to be capitalized. We capitalized direct labor and overhead
of $1.6 billion and $1.8 billion, respectively, for the years ended December 31, 2019 and 2018. We capitalize direct labor and
overhead using standards developed from actual costs and applicable operational data. We calculate standards annually (or more
frequently if circumstances dictate) for items such as the labor rates, overhead rates, and the actual amount of time required to
perform a capitalizable activity. For example, the standard amounts of time required to perform capitalizable activities are based
on studies of the time required to perform such activities. Overhead rates are established based on an analysis of the nature of
costs incurred in support of capitalizable activities, and a determination of the portion of costs that is directly attributable to
capitalizable activities. The impact of changes that resulted from these studies were not material in the periods presented.
Labor costs directly associated with capital projects are capitalized. Capitalizable activities performed in connection with
installations include such activities as:
•
•
•
•
dispatching a “truck roll” to the customer’s dwelling or business for service connection or placement of new equipment;
verification of serviceability to the customer’s dwelling or business (i.e., determining whether the customer’s dwelling is
capable of receiving service by our cable network);
customer premise activities performed by in-house field technicians and third-party contractors in connection with the
installation, replacement and betterment of equipment and materials to enable video, Internet or voice services; and
verifying the integrity of the customer’s network connection by initiating test signals downstream from the headend to the
customer premise equipment, as well as testing signal levels at the utility pole or pedestal.
Judgment is required to determine the extent to which overhead costs incurred result from specific capital activities, and therefore
should be capitalized. The primary costs that are included in the determination of the overhead rate are (i) employee benefits and
payroll taxes associated with capitalized direct labor, (ii) direct variable costs associated with capitalizable activities, (iii) the cost
of support personnel, such as care personnel and dispatchers, who assist with capitalizable installation activities, and (iv) indirect
costs directly attributable to capitalizable activities.
While we believe our existing capitalization policies are appropriate, a significant change in the nature or extent of our operating
practices could affect management’s judgment about the extent to which we should capitalize direct labor or overhead in the future.
28
We monitor the appropriateness of our capitalization policies, and perform updates to our internal studies on an ongoing basis to
determine whether facts or circumstances warrant a change to our capitalization policies.
Valuation and impairment of franchises
The net carrying value of franchises as of both December 31, 2019 and 2018 was approximately $67.3 billion (representing 45%
and 46% of total assets, respectively). For more information and a complete discussion of how we value and test franchise assets
for impairment, see Note 5 to the accompanying consolidated financial statements contained in “Part II. Item 8. Financial Statements
and Supplementary Data.”
We perform an impairment assessment of franchise assets annually or more frequently as warranted by events or changes in
circumstances. We performed a qualitative assessment in 2019. Our assessment included consideration of a fair value appraisal
performed for tax purposes in the beginning of 2019 as of a December 31, 2018 valuation date (the "Appraisal") along with a
multitude of factors that affect the fair value of our franchise assets. Examples of such factors include environmental and competitive
changes within our operating footprint, actual and projected operating performance, the consistency of our operating margins,
equity and debt market trends, including changes in our market capitalization, and changes in our regulatory and political landscape,
among other factors. Based on our assessment, we concluded that it was more likely than not that the estimated fair values of our
franchise assets equals or exceeds their carrying values and that a quantitative impairment test is not required.
Valuation and impairment of goodwill
The net carrying value of goodwill as of both December 31, 2019 and 2018 was approximately $29.6 billion (representing 20%
of total assets). We have determined that we have one reporting unit for purposes of the assessment of goodwill impairment. For
more information and a complete discussion on how we test goodwill for impairment, see Note 5 to the accompanying consolidated
financial statements contained in “Part II. Item 8. Financial Statements and Supplementary Data.” We perform our impairment
assessment of goodwill annually as of November 30. As with our franchise impairment testing, we elected to perform a qualitative
assessment of goodwill in 2019 which included the Appraisal and other factors described above. Based on the Appraisal, we
determined that the fair value of the reporting unit significantly exceeded the net asset carrying value of the reporting unit. Given
the completion of the assessment and absence of significant adverse changes in factors impacting our fair value estimates, we
concluded that it is more likely than not that our goodwill is not impaired.
Income taxes
As of December 31, 2019, Charter had approximately $7.5 billion of federal tax net operating loss carryforwards resulting in a
gross deferred tax asset of approximately $1.6 billion. These losses resulted from the operations of Charter Holdco and its
subsidiaries and from loss carryforwards received as a result of the merger with TWC in 2016. Federal tax net operating loss
carryforwards expire in the years 2020 through 2035. In addition, as of December 31, 2019, Charter had state tax net operating
loss carryforwards, resulting in a gross deferred tax asset (net of federal tax benefit) of approximately $257 million. State tax net
operating loss carryforwards generally expire in the years 2020 through 2039. Such tax loss carryforwards can accumulate and
be used to offset Charter’s future taxable income. After December 31, 2019, $905 million of Charter's federal tax loss carryforwards
are subject to Section 382 and other restrictions. Pursuant to these restrictions, Charter estimates that approximately $226 million
annually over each of the next four years of federal tax loss carryforwards, should become unrestricted and available for Charter’s
use. Charter’s state tax loss carryforwards are subject to similar but varying restrictions.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or
all of the deferred tax assets will be realized. In evaluating the need for a valuation allowance, management takes into account
various factors, including the expected level of future taxable income, available tax planning strategies and reversals of existing
taxable temporary differences. Approximately $9 million of valuation allowance associated with federal capital loss carryforwards
and approximately $37 million of valuation allowance associated with state tax loss carryforwards and other miscellaneous deferred
tax assets remains on the December 31, 2019 consolidated balance sheet.
In determining our tax provision for financial reporting purposes, we establish a reserve for uncertain tax positions unless such
positions are determined to be “more likely than not” of being sustained upon examination, based on their technical merits. In
evaluating whether a tax position has met the more-likely-than-not recognition threshold, we presume the position will be examined
by the appropriate taxing authority that has full knowledge of all relevant information. A tax position that meets the more-likely-
than-not recognition threshold is measured to determine the amount of benefit to be recognized in our financial statements. The
tax position is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized when the position
is ultimately resolved. There is considerable judgment involved in determining whether positions taken on the tax return are “more
29
likely than not” of being sustained. We adjust our uncertain tax reserve estimates periodically because of ongoing examinations
by, and settlements with, the various taxing authorities, as well as changes in tax laws, regulations and interpretations.
No tax years for Charter are currently under examination by the IRS for income tax purposes. Charter's 2016 through 2019 tax
years remain open for examination and assessment. Charter’s short period return dated May 17, 2016 (prior to the merger with
TWC and acquisition of Bright House) remain subject to examination and assessment. Years prior to 2016 remain open solely
for purposes of examination of Charter’s loss and credit carryforwards. The IRS is currently examining Charter Holdings' income
tax return for 2016. Charter Holdings’ 2017 through 2019 tax years remain open for examination and assessment. The IRS is
currently examining TWC’s income tax returns for 2011 through 2014. TWC’s tax year 2015 remains subject to examination and
assessment. Prior to TWC’s separation from Time Warner Inc. (“Time Warner”) in March 2009, TWC was included in the
consolidated U.S. federal and certain state income tax returns of Time Warner. The IRS has examined Time Warner’s 2008 through
2010 income tax returns and the results are under appeal. We do not anticipate that these examinations will have a material impact
on our consolidated financial position or results of operations. In addition, we are also subject to ongoing examinations of our
tax returns by state and local tax authorities for various periods. Activity related to these state and local examinations did not have
a material impact on our consolidated financial position or results of operations during the year ended December 31, 2019, nor
do we anticipate a material impact in the future.
Defined benefit pension plans
We sponsor three qualified defined benefit pension plans and one nonqualified defined benefit pension plan that provide pension
benefits to a majority of employees who were employed by TWC before the merger with TWC. As of December 31, 2019, the
accumulated benefit obligation and fair value of plan assets was $3.4 billion and $3.2 billion, respectively, and the net underfunded
liability was recorded as a $1 million noncurrent asset, $4 million current liability and $160 million long-term liability. As of
December 31, 2018, the accumulated benefit obligation and fair value of plan assets was $3.0 billion and $2.9 billion, respectively,
and the net underfunded liability was recorded as a $1 million noncurrent asset, $4 million current liability and $95 million long-
term liability.
Pension benefits are based on formulas that reflect the employees’ years of service and compensation during their employment
period. Actuarial gains or losses are changes in the amount of either the benefit obligation or the fair value of plan assets resulting
from experience different from that assumed or from changes in assumptions. We have elected to follow a mark-to-market pension
accounting policy for recording the actuarial gains or losses annually during the fourth quarter, or earlier if a remeasurement event
occurs during an interim period. We use a December 31 measurement date for our pension plans.
We recognized net periodic pension costs of $69 million and net periodic pension benefits of $192 million in 2019 and 2018,
respectively. Net periodic pension benefit or expense is determined using certain assumptions, including the expected long-term
rate of return on plan assets, discount rate and mortality assumptions. We determined the discount rate used to compute pension
expense based on the yield of a large population of high-quality corporate bonds with cash flows sufficient in timing and amount
to settle projected future defined benefit payments. In developing the expected long-term rate of return on assets, we considered
the current pension portfolio’s composition, past average rate of earnings, and our asset allocation targets. We used a discount rate
of 3.48% to determine the December 31, 2019 pension plan benefit obligation. A decrease in the discount rate of 25 basis points
would result in a $157 million increase in our pension plan benefit obligation as of December 31, 2019 and net periodic pension
expense recognized in 2019 under our mark-to-market accounting policy. The expected long-term rate of return on plan assets
used to determine net periodic pension benefit for the year ended December 31, 2020 is expected to be 5.00%. A decrease in the
expected long-term rate of return of 25 basis points to 4.75%, while holding all other assumptions constant, would result in an
increase in our 2020 net periodic pension expense of approximately $7 million. See Note 22 to the accompanying consolidated
financial statements contained in “Part II. Item 8. Financial Statements and Supplementary Data” for additional discussion on
these assumptions.
30
Results of Operations
A discussion of changes in our results of operations during the year ended December 31, 2018 compared to the year ended
December 31, 2017 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended
December 31, 2018, filed with the SEC on January 31, 201(cid:27), which is available free of charge on the SECs website at
www.sec.gov and on our investor relations website at ir.charter.com.
The following table sets forth the consolidated statements of operations for the periods presented (dollars in millions, except per
share data):
Year Ended December 31,
2019
2018
$
45,764
$
43,634
29,224
9,926
103
39,253
6,511
(3,797)
(25)
(54)
(69)
(135)
(4,080)
2,431
(439)
1,992
(324)
1,668
7.60
7.45
$
$
$
27,860
10,318
235
38,413
5,221
(3,540)
—
(110)
192
(77)
(3,535)
1,686
(180)
1,506
(276)
1,230
5.29
5.22
Revenues
Costs and Expenses:
Operating costs and expenses (exclusive of items shown separately below)
Depreciation and amortization
Other operating expenses, net
Income from operations
Other Expenses:
Interest expense, net
Loss on extinguishment of debt
Loss on financial instruments, net
Other pension benefits (costs), net
Other expense, net
Income before income taxes
Income tax expense
Consolidated net income
Less: Net income attributable to noncontrolling interests
Net income attributable to Charter shareholders
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHARTER
SHAREHOLDERS:
Basic
Diluted
$
$
$
Weighted average common shares outstanding, basic
Weighted average common shares outstanding, diluted
219,506,735
223,786,380
232,356,665
235,525,226
Revenues. Total revenues grew $2.1 billion or 4.9% during the year ended December 31, 2019 as compared to 2018 primarily
due to increases in the number of residential Internet and commercial business customers, price adjustments as well as the launch
of our mobile service in the second half of 2018 offset by a decrease in video customers.
31
Revenues by service offering were as follows (dollars in millions; all percentages are calculated using whole numbers. Minor
differences may exist due to rounding):
Video
Internet
Voice
Residential revenue
Small and medium business
Enterprise
Commercial revenue
Advertising sales
Mobile
Other
Years ended December 31,
2018
% Growth
2019
$
$
17,607
16,667
1,920
36,194
3,868
2,556
6,424
1,568
726
852
45,764
$
$
17,348
15,181
2,114
34,643
3,665
2,528
6,193
1,785
106
907
43,634
1.5 %
9.8 %
(9.1)%
4.5 %
5.6 %
1.1 %
3.7 %
(12.1)%
NM
(6.2)%
4.9 %
Video revenues consist primarily of revenues from basic and digital video services provided to our residential customers, as well
as franchise fees, equipment service fees and video installation revenue. The increase in video revenues was attributable to the
following (dollars in millions):
Increase related to rate changes
Decrease in average residential video customers
Decrease in VOD and pay-per-view
2019 compared
to 2018
$
$
758
(412)
(87)
259
The increase related to rate changes was primarily due to price adjustments including annual increases and promotional roll-off.
Residential video customers decreased by 484,000 in 2019 compared to 2018.
The increase in Internet revenues from our residential customers was attributable to the following (dollars in millions):
Increase in average residential Internet customers
Increase related to rate changes
2019 compared
to 2018
$
$
790
696
1,486
Residential Internet customers grew by 1,283,000 in 2019 compared to 2018. The increase related to rate changes was primarily
due to price adjustments including promotional roll-off.
The decrease in voice revenues from our residential customers was attributable to the following (dollars in millions):
Decrease in average residential voice customers
Decrease related to rate changes
32
2019 compared
to 2018
$
$
(102)
(92)
(194)
The decrease related to rate changes was primarily due to value-based pricing. Residential wireline voice customers decreased
by 692,000 in 2019 compared to 2018.
The increase in small and medium business commercial revenues was attributable to the following (dollars in millions):
Increase in small and medium business customers
Decrease related to rate changes
2019 compared
to 2018
$
$
317
(114)
203
Small and medium business PSUs increased by 237,000 in 2019 compared to 2018. The decrease related to rate changes was
primarily due to value-based pricing related to SPP, net of promotional roll-off and price adjustments.
Enterprise revenues increased $28 million during the year ended December 31, 2019 as compared to the corresponding period in
2018 primarily due to growth in customers offset by the sale of non-strategic assets. Enterprise PSUs increased by 19,000 in 2019
compared to 2018.
Advertising sales revenues consist primarily of revenues from commercial advertising customers, programmers and other vendors,
as well as local cable and advertising on regional sports and news channels. Advertising sales revenues decreased $217 million
during the year ended December 31, 2019 as compared to the corresponding period in 2018 primarily due to a decrease in political
revenue.
During the year ended December 31, 2019, mobile revenues included approximately $488 million of device revenues and
approximately $238 million of service revenues. During the year ended December 31, 2018, mobile revenues included
approximately $97 million of device revenues and approximately $9 million of service revenues. As of December 31, 2019, we
had 1,082,000 mobile lines compared to 134,000 mobile as of December 31, 2018.
Other revenues consist of revenue from regional sports and news channels (excluding intercompany charges or advertising sales
on those channels), home shopping, late payment fees, wire maintenance fees and other miscellaneous revenues. The decrease
during the year ended December 31, 2019 as compared to the corresponding period in 2018 was primarily due to a decrease in
late payment fees and home shopping revenue offset by the sale of video devices.
Operating costs and expenses. The increase in our operating costs and expenses, exclusive of items shown separately in the
consolidated statements of operations, was attributable to the following (dollars in millions):
Programming
Regulatory, connectivity and produced content
Costs to service customers
Marketing
Mobile
Other
2019 compared
to 2018
$
$
166
156
(50)
2
900
190
1,364
Programming costs were approximately $11.3 billion and $11.1 billion, representing 39% and 40% of operating costs and expenses
for the years ended December 31, 2019 and 2018, respectively. Programming costs consist primarily of costs paid to programmers
for basic, digital, premium, VOD, and pay-per-view programming. The increase in programming costs is primarily a result of
contractual rate adjustments, including renewals and increases in amounts paid for retransmission consents partly offset by lower
video customers and pay-per-view. We expect programming rates will continue to increase due to a variety of factors, including
annual increases imposed by programmers with additional selling power as a result of media consolidation, increased demands
by owners of broadcast stations for payment for retransmission consent or linking carriage of other services to retransmission
consent, and additional programming, particularly new services. We have been unable to fully pass these increases on to our
customers and do not expect to be able to do so in the future without a potential loss of customers.
33
Regulatory, connectivity and produced content increased $156 million during the year ended December 31, 2019 compared to the
corresponding period in 2018 primarily due to higher costs of video devices sold to customers, regulatory pass-through fees and
original programming costs.
Costs to service customers decreased $50 million during the year ended December 31, 2019 compared to the corresponding period
in 2018 primarily due to lower maintenance and labor costs driven by fewer customer calls and truck rolls with improved productivity
and a higher number of self-installations.
Mobile costs of $1.2 billion and $346 million for the years ended December 31, 2019 and 2018, respectively, were comprised of
mobile device costs and mobile service and operating costs.
The increase in other expense was attributable to the following (dollars in millions):
Corporate costs
Property tax and insurance
Stock compensation expense
Sports and news
Advertising sales expense
Other
2019 compared
to 2018
$
$
80
54
30
26
(32)
32
190
Depreciation and amortization. Depreciation and amortization expense decreased by $392 million during the year ended
December 31, 2019 compared to the corresponding period in 2018 primarily due to certain assets acquired from TWC and Bright
House becoming fully depreciated offset by an increase in depreciation as a result of more recent capital expenditures.
Other operating expenses, net. The decrease in other operating expenses, net was attributable to the following (dollars in millions):
Merger and restructuring costs
Loss on sale of assets, net
Special charges, net
2019 compared
to 2018
$
$
(87)
(43)
(2)
(132)
The decrease in merger and restructuring costs is primarily due to lower employee retention and employee termination costs
incurred during 2019 as compared to 2018.
The decrease in loss on sale of assets, net for the year ended December 31, 2019 as compared to the year ended December 31,
2018 is primarily due to a $42 million impairment of non-strategic assets incurred during 2019 compared to a $75 million impairment
of non-strategic assets incurred during 2018. For more information, see Note 15 to the accompanying consolidated financial
statements contained in “Part II. Item 8. Financial Statements and Supplementary Data.”
Interest expense, net. Net interest expense increased by $257 million in 2019 from 2018 primarily due to an increase in weighted
average debt outstanding of approximately $3.0 billion primarily as a result of the issuance of notes in 2019 and 2018 for general
corporate purposes including stock buybacks and debt repayments offset by a decrease in weighted average interest rates.
Loss on extinguishment of debt. Loss on extinguishment of debt of $25 million for the year ended December 31, 2019 primarily
represents losses recognized as a result of the repurchase of CCO Holdings notes and amendments to Charter Operating's credit
facilities. For more information, see Note 9 to the accompanying consolidated financial statements contained in “Part II. Item 8.
Financial Statements and Supplementary Data.”
34
Loss on financial instruments, net. Gains and losses on financial instruments are recognized due to changes in the fair value of
our interest rate and our cross currency derivative instruments, and the foreign currency remeasurement of the fixed-rate British
pound sterling denominated notes (the “Sterling Notes”) into U.S. dollars. For more information, see Note 12 to the accompanying
consolidated financial statements contained in “Part II. Item 8. Financial Statements and Supplementary Data.”
Other pension benefits (costs), net. Other pension benefits (costs), net increased by $261 million during the year ended
December 31, 2019 compared to the corresponding period in 2018 primarily due to a remeasurement loss recorded in 2019 versus
a remeasurement gain in 2018. For more information, see Note 22 to the accompanying consolidated financial statements contained
in “Part II. Item 8. Financial Statements and Supplementary Data.”
Other expense, net. Other expense, net includes impairments on equity investments of approximately $121 million and $58
million for the years ended December 31, 2019 and 2018, respectively. For more information, see Note 6 to the accompanying
consolidated financial statements contained in “Part II. Item 8. Financial Statements and Supplementary Data.”
Income tax expense. We recognized income tax expense of $439 million and $180 million for the years ended December 31, 2019
and 2018, respectively. Income tax expense increased during the year ended December 31, 2019 compared to the corresponding
period in 2018 primarily as a result of higher pretax income and lower benefit from state tax rate changes. For more information,
see Note 17 to the accompanying consolidated financial statements contained in “Part II. Item 8. Financial Statements and
Supplementary Data.”
Net income attributable to noncontrolling interest. Net income attributable to noncontrolling interest for financial reporting
purposes represents A/N’s portion of Charter Holdings’ net income based on its effective common unit ownership interest and the
preferred dividend of $150 million for each of the years ended December 31, 2019 and 2018. For more information, see Note
11 to the accompanying consolidated financial statements contained in “Part II. Item 8. Financial Statements and Supplementary
Data.”
Net income attributable to Charter shareholders. Net income attributable to Charter shareholders was $1.7 billion and $1.2 billion
for the years ended December 31, 2019 and 2018, respectively, primarily as a result of the factors described above.
Use of Adjusted EBITDA and Free Cash Flow
We use certain measures that are not defined by U.S. generally accepted accounting principles (“GAAP”) to evaluate various
aspects of our business. Adjusted EBITDA and free cash flow are non-GAAP financial measures and should be considered in
addition to, not as a substitute for, net income attributable to Charter shareholders and net cash flows from operating activities
reported in accordance with GAAP. These terms, as defined by us, may not be comparable to similarly titled measures used by
other companies. Adjusted EBITDA and free cash flow are reconciled to net income attributable to Charter shareholders and net
cash flows from operating activities, respectively, below.
Adjusted EBITDA eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive
nature of our businesses as well as other non-cash or special items, and is unaffected by our capital structure or investment activities.
However, this measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets
used in generating revenues and our cash cost of financing. These costs are evaluated through other financial measures.
Free cash flow is defined as net cash flows from operating activities, less capital expenditures and changes in accrued expenses
related to capital expenditures.
Management and Charter’s board of directors use Adjusted EBITDA and free cash flow to assess our performance and our ability
to service our debt, fund operations and make additional investments with internally generated funds. In addition, Adjusted EBITDA
generally correlates to the leverage ratio calculation under our credit facilities or outstanding notes to determine compliance with
the covenants contained in the facilities and notes (all such documents have been previously filed with the SEC). For the purpose
of calculating compliance with leverage covenants, we use Adjusted EBITDA, as presented, excluding certain expenses paid by
our operating subsidiaries to other Charter entities. Our debt covenants refer to these expenses as management fees, which fees
were in the amount of $1.2 billion and $1.1 billion for the years ended December 31, 2019 and 2018, respectively.
35
Net income attributable to Charter shareholders
Plus: Net income attributable to noncontrolling interest
Interest expense, net
Income tax expense
Depreciation and amortization
Stock compensation expense
Loss on extinguishment of debt
Loss on financial instruments, net
Other pension (benefits) costs, net
Other, net
Adjusted EBITDA
Net cash flows from operating activities
Less: Purchases of property, plant and equipment
Change in accrued expenses related to capital expenditures
Free cash flow
Liquidity and Capital Resources
Overview
Years ended December 31,
2019
2018
1,668
324
3,797
439
9,926
315
25
54
69
238
16,855
11,748
(7,195)
55
4,608
$
$
$
$
1,230
276
3,540
180
10,318
285
—
110
(192)
312
16,059
11,767
(9,125)
(470)
2,172
$
$
$
$
We have significant amounts of debt. The principal amount of our debt as of December 31, 2019 was $78.4 billion, consisting of
$10.4 billion of credit facility debt, $45.9 billion of investment grade senior secured notes and $22.1 billion of high-yield senior
unsecured notes. Our business requires significant cash to fund principal and interest payments on our debt.
Our projected cash needs and projected sources of liquidity depend upon, among other things, our actual results, and the timing
and amount of our expenditures. As we continue to grow our new mobile services, we expect an initial funding period to grow a
new product as well as negative working capital impacts from the timing of device-related cash flows when we provide the handset
or tablet to customers pursuant to equipment installment plans. Free cash flow was $4.6 billion and $2.2 billion for the years
ended December 31, 2019 and 2018, respectively. See table below for factors impacting free cash flow during the year ended
December 31, 2019 compared to 2018. As of December 31, 2019, the amount available under our credit facilities was approximately
$4.7 billion and cash on hand was approximately $3.5 billion. We expect to utilize free cash flow, cash on hand and availability
under our credit facilities as well as future refinancing transactions to further extend the maturities of our obligations. The timing
and terms of any refinancing transactions will be subject to market conditions among other considerations. Additionally, we may,
from time to time, and depending on market conditions and other factors, use cash on hand and the proceeds from securities
offerings or other borrowings to retire our debt through open market purchases, privately negotiated purchases, tender offers or
redemption provisions. We believe we have sufficient liquidity from cash on hand, free cash flow and Charter Operating’s revolving
credit facility as well as access to the capital markets to fund our projected cash needs.
We continue to evaluate the deployment of our cash on hand and anticipated future free cash flow including to invest in our business
growth and other strategic opportunities, including mergers and acquisitions as well as stock repurchases and dividends. Charter's
target leverage of net debt to the last twelve months Adjusted EBITDA remains at 4 to 4.5 times Adjusted EBITDA, and up to 3.5
times Adjusted EBITDA at the Charter Operating level. Our leverage ratio was 4.5 times Adjusted EBITDA as of December 31,
2019. As Adjusted EBITDA grows, we expect to increase the total amount of our indebtedness to maintain leverage within Charter's
target leverage range. During the years ended December 31, 2019 and 2018, Charter purchased approximately 16.7 million and
14.1 million shares, respectively, of Charter Class A common stock for approximately $6.7 billion and $4.3 billion, respectively.
In December 2017, Charter and A/N entered into an amendment to the letter agreement (the "Letter Agreement") that requires A/
N to sell to Charter or to Charter Holdings, on a monthly basis, a number of shares of Charter Class A common stock or Charter
Holdings common units that represents a pro rata participation by A/N and its affiliates in any repurchases of shares of Charter
Class A common stock from persons other than A/N effected by Charter during the immediately preceding calendar month, at a
purchase price equal to the average price paid by Charter for the shares repurchased from persons other than A/N during such
immediately preceding calendar month. A/N and Charter both have the right to terminate or suspend the pro rata repurchase
arrangement on a prospective basis. Charter Holdings purchased from A/N 2.3 million and 2.1 million Charter Holdings common
36
units at an average price per unit of $388.72 and $308.90, or $885 million and $656 million, during the years ended December 31,
2019 and 2018, respectively.
As of December 31, 2019, Charter had remaining board authority to purchase an additional $1.4 billion of Charter’s Class A
common stock and/or Charter Holdings common units. Although Charter expects to continue to buy back its common stock
consistent with its leverage target range, Charter is not obligated to acquire any particular amount of common stock, and the timing
of any purchases that may occur cannot be predicted and will largely depend on market conditions and other potential uses of
capital. Purchases may include open market purchases, tender offers or negotiated transactions.
As possible acquisitions, swaps or dispositions arise, we actively review them against our objectives including, among other
considerations, improving the operational efficiency, geographic clustering of assets, product development or technology
capabilities of our business and achieving appropriate return targets, and we may participate to the extent we believe these
possibilities present attractive opportunities. However, there can be no assurance that we will actually complete any acquisitions,
dispositions or system swaps, or that any such transactions will be material to our operations or results.
Recent Events
In December 2019, CCO Holdings and CCO Holdings Capital Corp. jointly issued an additional $1.2 billion aggregate principal
amount of 4.750% senior unsecured notes due 2030 at a price of 101.125% of the aggregate principal amount. The net proceeds
were or will be used to pay related fees and expenses and for general corporate purposes, including to fund buybacks of Charter
Class A common stock and Charter Holdings common units as well as repaying certain indebtedness.
In December 2019, Charter Operating and Charter Communications Operating Capital Corp. jointly issued an additional $1.3
billion aggregate principal amount of 4.800% senior secured notes due 2050 at a price of 101.964% of the aggregate principal
amount. The net proceeds were or will be used to pay related fees and expenses and for general corporate purposes, including to
fund buybacks of Charter Class A common stock and Charter Holdings common units as well as repaying certain indebtedness.
In addition to the debt issued in December 2019 as described above, CCO Holdings and CCO Holdings Capital Corp. jointly
issued $3.35 billion aggregate principal amount of senior unsecured notes at varying rates, prices and maturity dates in 2019, and
Charter Operating and Charter Communications Operating Capital Corp. jointly issued $4.75 billion aggregate principal amount
of senior secured notes at varying rates, prices and maturity dates in 2019. The net proceeds were used to pay related fees and
expenses and for general corporate purposes, including funding buybacks of Charter Class A common stock and Charter Holdings
common units as well as repaying certain indebtedness.
In 2019, Charter Operating also entered into an amendment to its Credit Agreement repricing $4.5 billion of its revolving loan
and $4.0 billion of term loan A to LIBOR plus 1.25% and its existing term loan B to LIBOR plus 1.75%. In addition, $4.5 billion
of the revolving loan and $4.0 billion of term loan A maturities were extended to 2025 and $3.8 billion of term loan B maturities
were extended to 2027.
Free Cash Flow
Free cash flow increased $2.4 billion during the year ended December 31, 2019 compared to the corresponding prior period due
to the following.
Decrease in capital expenditures
Increase in Adjusted EBITDA
Change in working capital, excluding change in accrued interest
Increase in cash paid for interest, net
Other, net
2019 compared
to 2018
$
$
1,930
796
(255)
(75)
40
2,436
Free cash flow was reduced by $567 million during the year ended December 31, 2019 compared to the corresponding prior period
due to mobile with impacts negatively affecting working capital, capital expenditures and Adjusted EBITDA.
37
Contractual Obligations
The following table summarizes our payment obligations as of December 31, 2019 under our long-term debt and certain other
contractual obligations and commitments (dollars in millions.)
Long-Term Debt Principal Payments (a)
Long-Term Debt Interest Payments (b)
Finance and Operating Lease Obligations (c)
Programming Minimum Commitments (d)
Other (e)
Payments by Period
$
Total
78,416
50,577
1,594
276
12,658
$ 143,521
$
Less than
1 year
3,777
3,924
272
216
2,536
$ 10,725
1-3 years
6,504
7,551
492
49
3,034
17,630
$
$
$
3-5 years
8,701
6,635
360
11
892
$ 16,599
More than
5 years
$
$
59,434
32,467
470
—
6,196
98,567
(b)
(a) The table presents maturities of long-term debt outstanding as of December 31, 2019. Refer to Notes 9 and 21 to our
accompanying consolidated financial statements contained in “Part II. Item 8. Financial Statements and Supplementary Data”
for a description of our long-term debt and other contractual obligations and commitments.
Interest payments on variable debt are estimated using amounts outstanding at December 31, 2019 and the average implied
forward LIBOR rates applicable for the quarter during the interest rate reset based on the yield curve in effect at December 31,
2019. Actual interest payments will differ based on actual LIBOR rates and actual amounts outstanding for applicable periods.
(c) We lease certain facilities and equipment under noncancelable finance and operating leases. Finance lease obligations
represented $95 million of total finance and operating lease obligations as of December 31, 2019. Lease and rental costs
charged to expense for the years ended December 31, 2019 and 2018 were $445 million and $382 million, respectively.
(d) We pay programming fees under multi-year contracts typically based on a flat fee per customer, which may be fixed for the
term, or may in some cases escalate over the term. Programming costs included in the accompanying statement of operations
were approximately $11.3 billion and $11.1 billion for the years ended December 31, 2019 and 2018, respectively. Certain
of our programming agreements are based on a flat fee per month or have guaranteed minimum payments. The table sets
forth the aggregate guaranteed minimum commitments under our programming contracts.
“Other” represents other guaranteed minimum commitments, including rights negotiated directly with content owners for
distribution on company-owned channels or networks, commitments related to our role as an advertising and distribution
sales agent for third party-owned channels or networks, commitments to our customer premise equipment and device vendors
and contractual obligations related to third-party network augmentation.
(e)
The following items are not included in the contractual obligations table because the obligations are not fixed and/or determinable
due to various factors discussed below. However, we incur these costs as part of our operations:
• We rent utility poles used in our operations. Generally, pole rentals are cancelable on short notice, but we anticipate that such
rentals will recur. Rent expense incurred for pole rental attachments for the years ended December 31, 2019 and 2018 was
$180 million and $171 million, respectively.
• We pay franchise fees under multi-year franchise agreements based on a percentage of revenues generated from video service
per year. We also pay other franchise related costs, such as public education grants, under multi-year agreements. Franchise
fees and other franchise-related costs included in the accompanying statement of operations were $750 million and $747
million for the years ended December 31, 2019 and 2018, respectively.
• We have $363 million in letters of credit, of which $36 million is secured under the Charter Operating credit facility, primarily
to our various casualty carriers as collateral for reimbursement of workers' compensation, auto liability and general liability
claims.
• Minimum pension funding requirements have not been presented in the table above as such amounts have not been determined
beyond 2019. We made no cash contributions to the qualified pension plans in 2019; however, we are permitted to make
discretionary cash contributions to the qualified pension plans in 2020. For the nonqualified pension plan, we contributed
$4 million during 2019 and will continue to make contributions in 2020 to the extent benefits are paid.
See "Part I. Item 1. Business — Commitments Related to the 2016 Merger with TWC and Acquisition of Bright House" for a
listing of commitments as a result of the merger with TWC and acquisition of Bright House in 2016.
38
Historical Operating, Investing, and Financing Activities
Cash and Cash Equivalents. We held $3.5 billion and $551 million in cash and cash equivalents as of December 31, 2019 and
2018, respectively. We also held $66 million and $214 million in restricted cash as of December 31, 2019 and 2018, respectively,
representing escrowed funds of a consolidated variable interest entity. See Note 6 to the accompanying consolidated financial
statements contained in “Item 1. Financial Statements.”
Operating Activities. Net cash provided by operating activities decreased $19 million during the year ended December 31, 2019
compared to the year ended December 31, 2018, primarily due to changes in working capital, excluding the change in accrued
interest and accrued expenses related to capital expenditures, that used $780 million more cash and an increase in cash paid for
interest, net of $75 million offset by an increase in Adjusted EBITDA of $796 million.
Investing Activities. Net cash used in investing activities for the years ended December 31, 2019 and 2018 was $7.3 billion and
$9.7 billion, respectively. The decrease in cash used was primarily due to a decrease in capital expenditures and increase in accrued
expenses related to capital expenditures.
Financing Activities. Net cash used in financing activities decreased $254 million during the year ended December 31, 2019
compared to the year ended December 31, 2018 primarily due to an increase in the amount by which borrowings of long-term
debt exceeded repayments offset by an increase in the purchase of treasury stock and noncontrolling interest.
Capital Expenditures
We have significant ongoing capital expenditure requirements. Capital expenditures were $7.2 billion and $9.1 billion for the
years ended December 31, 2019 and 2018, respectively. The decrease was primarily due to lower customer premise equipment
expenditures as a result of the completion of our all-digital conversion and fewer SPP migrations, lower scalable infrastructure as
a result of the completion of the roll-out of DOCSIS 3.1 technology across our footprint and lower support spending with the
substantial completion of the integration of TWC and Bright House. See the table below for more details.
We currently expect 2020 cable capital expenditures to decline as a percentage of cable revenue versus 2019. The actual amount
of our capital expenditures in 2020 will depend on a number of factors including further spend related to product development
and growth rates of both our residential and commercial businesses.
Our capital expenditures are funded primarily from cash flows from operating activities and borrowings on our credit facility. In
addition, our accrued liabilities related to capital expenditures increased $55 million and decreased $470 million for the years
ended December 31, 2019 and 2018, respectively.
The following tables present our major capital expenditures categories in accordance with National Cable and Telecommunications
Association (“NCTA”) disclosure guidelines for the years ended December 31, 2019 and 2018. These disclosure guidelines are
not required disclosures under GAAP, nor do they impact our accounting for capital expenditures under GAAP (dollars in millions):
Customer premise equipment (a)
Scalable infrastructure (b)
Line extensions (c)
Upgrade/rebuild (d)
Support capital (e)
Total capital expenditures
Capital expenditures included in total related to:
Commercial services
All-digital transition
Mobile
$
$
$
$
$
Year ended December 31,
2018
2019
2,070
1,439
1,444
634
1,608
7,195
$
$
1,314
$
— $
$
432
3,124
2,227
1,373
704
1,697
9,125
1,313
344
242
(a) Customer premise equipment includes costs incurred at the customer residence to secure new customers and revenue generating
units, including customer installation costs and customer premise equipment (e.g., set-top boxes and cable modems).
39
(b) Scalable infrastructure includes costs not related to customer premise equipment, to secure growth of new customers and
revenue generating units, or provide service enhancements (e.g., headend equipment).
(c) Line extensions include network costs associated with entering new service areas (e.g., fiber/coaxial cable, amplifiers,
electronic equipment, make-ready and design engineering).
(d) Upgrade/rebuild includes costs to modify or replace existing fiber/coaxial cable networks, including betterments.
(e) Support capital includes costs associated with the replacement or enhancement of non-network assets due to technological
and physical obsolescence (e.g., non-network equipment, land, buildings and vehicles).
Debt
As of December 31, 2019, the accreted value of our total debt was approximately $79.1 billion, as summarized below (dollars
in millions):
December 31, 2019
Principal
Amount
Accreted
Value (a)
Interest Payment
Dates
Maturity
Date (b)
$
CCO Holdings, LLC:
5.250% senior notes due 2022
5.125% senior notes due 2023
4.000% senior notes due 2023
5.125% senior notes due 2023
5.750% senior notes due 2023
5.750% senior notes due 2024
5.875% senior notes due 2024
5.375% senior notes due 2025
5.750% senior notes due 2026
5.500% senior notes due 2026
5.875% senior notes due 2027
5.125% senior notes due 2027
5.000% senior notes due 2028
5.375% senior notes due 2029
4.750% senior notes due 2030
Charter Communications Operating, LLC:
3.579% senior notes due 2020
4.464% senior notes due 2022
Senior floating rate notes due 2024
4.500% senior notes due 2024
4.908% senior notes due 2025
3.750% senior notes due 2028
4.200% senior notes due 2028
5.050% senior notes due 2029
6.384% senior notes due 2035
5.375% senior notes due 2038
6.484% senior notes due 2045
5.375% senior notes due 2047
5.750% senior notes due 2048
5.125% senior notes due 2049
4.800% senior notes due 2050
6.834% senior notes due 2055
Credit facilities
Time Warner Cable, LLC:
5.000% senior notes due 2020
4.125% senior notes due 2021
4.000% senior notes due 2021
5.750% sterling senior notes due 2031 (c)
1,241
995
497
1,145
497
149
1,690
746
2,471
1,491
796
3,222
2,469
1,501
3,041
1,997
2,987
902
1,093
4,471
987
1,240
1,241
1,982
786
3,467
2,506
2,391
1,240
2,798
495
10,345
1,503
711
1,021
886
3/30 & 9/30
2/15 & 8/15
3/1 & 9/1
5/1 & 11/1
3/1 & 9/1
1/15 & 7/15
4/1 & 10/1
5/1 & 11/1
2/15 & 8/15
5/1 & 11/1
5/1 & 11/1
5/1 & 11/1
2/1 & 8/1
6/1 & 12/1
3/1 & 9/1
1/23 & 7/23
1/23 & 7/23
2/1, 5/1, 8/1 & 11/1
2/1 & 8/1
1/23 & 7/23
2/15 & 8/15
3/15 & 9/15
3/30 & 9/30
4/23 & 10/23
4/1 & 10/1
4/23 & 10/23
5/1 & 11/1
4/1 & 10/1
1/1 & 7/1
3/1 & 9/1
4/23 & 10/23
2/1 & 8/1
2/15 & 8/15
3/1 & 9/1
6/2
9/30/2022
2/15/2023
3/1/2023
5/1/2023
9/1/2023
1/15/2024
4/1/2024
5/1/2025
2/15/2026
5/1/2026
5/1/2027
5/1/2027
2/1/2028
6/1/2029
3/1/2030
7/23/2020
7/23/2022
2/1/2024
2/1/2024
7/23/2025
2/15/2028
3/15/2028
3/30/2029
10/23/2035
4/1/2038
10/23/2045
5/1/2047
4/1/2048
7/1/2049
3/1/2050
10/23/2055
Varies
2/1/2020
2/15/2021
9/1/2021
6/2/2031
$
1,250
1,000
500
1,150
500
150
1,700
750
2,500
1,500
800
3,250
2,500
1,500
3,050
2,000
3,000
900
1,100
4,500
1,000
1,250
1,250
2,000
800
3,500
2,500
2,450
1,250
2,800
500
10,427
1,500
700
1,000
828
40
6.550% senior debentures due 2037
7.300% senior debentures due 2038
6.750% senior debentures due 2039
5.875% senior debentures due 2040
5.500% senior debentures due 2041
5.250% sterling senior notes due 2042 (d)
4.500% senior debentures due 2042
Time Warner Cable Enterprises LLC:
8.375% senior debentures due 2023
8.375% senior debentures due 2033
1,500
1,500
1,500
1,200
1,250
861
1,250
1,000
1,000
78,416
$
$
1,675
1,772
1,713
1,255
1,258
831
1,142
1,148
1,284
79,078
5/1 & 11/1
1/1 & 7/1
6/15 & 12/15
5/15 & 11/15
3/1 & 9/1
7/15
3/15 & 9/15
5/1/2037
7/1/2038
6/15/2039
11/15/2040
9/1/2041
7/15/2042
9/15/2042
3/15 & 9/15
7/15 & 1/15
3/15/2023
7/15/2033
(a) The accreted values presented in the table above represent the principal amount of the debt adjusted for original issue discount
or premium at the time of sale, deferred financing costs, and, in regards to the TWC debt assumed, fair value premium
adjustments as a result of applying acquisition accounting plus the accretion of those amounts to the balance sheet date.
However, the amount that is currently payable if the debt becomes immediately due is equal to the principal amount of the
debt. In regards to the Sterling Notes, the principal amount of the debt and any premium or discount is remeasured into US
dollars as of each balance sheet date. We have availability under our credit facilities of approximately $4.7 billion as of
December 31, 2019.
In general, the obligors have the right to redeem all of the notes set forth in the above table in whole or in part at their option,
beginning at various times prior to their stated maturity dates, subject to certain conditions, upon the payment of the outstanding
principal amount (plus a specified redemption premium) and all accrued and unpaid interest.
(b)
(c) Principal amount includes £625 million valued at $828 million as of December 31, 2019 using the exchange rate as of
December 31, 2019.
(d) Principal amount includes £650 million valued at $861 million as of December 31, 2019 using the exchange rate as of
December 31, 2019.
See Note 9 to the accompanying consolidated financial statements contained in “Part II. Item 8. Financial Statements and
Supplementary Data” for further details regarding our outstanding debt and other financing arrangements, including certain
information about maturities, covenants and restrictions related to such debt and financing arrangements. The agreements and
instruments governing our debt and financing arrangements are complicated and you should consult such agreements and
instruments which are filed with the SEC for more detailed information.
At December 31, 2019, Charter Operating had a consolidated leverage ratio of approximately 2.9 to 1.0 and a consolidated first
lien leverage ratio of 2.8 to 1.0. Both ratios are in compliance with the ratios required by the Charter Operating credit facilities
of 5.0 to 1.0 consolidated leverage ratio and 4.0 to 1.0 consolidated first lien leverage ratio. A failure by Charter Operating to
maintain the financial covenants would result in an event of default under the Charter Operating credit facilities and the debt of
CCO Holdings. See “Part I. Item 1A. Risk Factors — The agreements and instruments governing our debt contain restrictions
and limitations that could significantly affect our ability to operate our business, as well as significantly affect our liquidity.”
Recently Issued Accounting Standards
See Note 23 to the accompanying consolidated financial statements contained in “Part II. Item 8. Financial Statements and
Supplementary Data” for a discussion of recently issued accounting standards.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We use derivative instruments to manage foreign exchange risk on the Sterling Notes, and do not hold or issue derivative instruments
for speculative trading purposes.
Cross-currency derivative instruments are used to effectively convert £1.275 billion aggregate principal amount of fixed-rate
British pound sterling denominated debt, including annual interest payments and the payment of principal at maturity, to fixed-
rate U.S. dollar denominated debt. The cross-currency derivative instruments have maturities of June 2031 and July 2042. We are
required to post collateral on the cross-currency derivative instruments when such instruments are in a liability position. In April
2019, we entered into a collateral holiday agreement for 60% of both the 2031 and 2042 cross-currency swaps, which eliminates
the requirement to post collateral for three years, as well as a ten year collateral cap on the remaining 40% of the cross-currency
swaps which limits the required collateral posting on that 40% of the cross-currency swaps to $150 million. The fair value of our
41
cross-currency derivatives included in other long-term liabilities on our consolidated balance sheets was $224 million and $237
million as of December 31, 2019 and 2018, respectively. For more information, see Note 12 to the accompanying consolidated
financial statements contained in “Part II. Item 8. Financial Statements and Supplementary Data.”
As of December 31, 2019 and 2018, the weighted average interest rate on the credit facility debt was approximately 3.3% and
4.3%, respectively, and the weighted average interest rate on the senior notes was approximately 5.4% and 5.6%, respectively,
resulting in a blended weighted average interest rate of 5.1% and 5.4%, respectively. The interest rate on approximately 86% and
85% of the total principal amount of our debt was effectively fixed as of December 31, 2019 and 2018, respectively.
The table set forth below summarizes the fair values and contract terms of financial instruments subject to interest rate risk
maintained by us as of December 31, 2019 (dollars in millions):
2020
2021
2022
2023
2024
Thereafter
Total
Fair Value
Debt:
Fixed Rate
$ 3,500
$ 1,700
$ 4,250
$ 4,150
$ 2,950
Average Interest Rate
4.19%
4.05%
4.70%
5.85%
5.36%
Variable Rate
$
277
$
277
$
277
$
436
$ 1,165
$
$
50,539
$67,089
5.53%
5.38%
8,895
$11,327
$
$
74,011
11,375
Average Interest Rate
2.94%
2.75%
2.78%
2.90%
3.16%
3.28%
3.22%
Interest rates on variable-rate debt are estimated using the average implied forward LIBOR for the year of maturity based on the
yield curve in effect at December 31, 2019 including applicable bank spread.
Item 8. Financial Statements and Supplementary Data.
Our consolidated financial statements, the related notes thereto, and the reports of independent accountants are included in this
annual report beginning on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
As of the end of the period covered by this report, under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of
disclosure controls and procedures with respect to the information generated for use in this annual report. The evaluation was
based upon reports and certifications provided by a number of executives. Based on, and as of the date of that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective to provide
reasonable assurances that information required to be disclosed in the reports we file or submit under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures,
no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control
objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible
controls and procedures. Based upon the above evaluation, we believe that our controls provide such reasonable assurances.
During the quarter ended December 31, 2019, there was no change in our internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in
Rule 13a-15(f) under the Exchange Act) for the Company. Our internal control system was designed to provide reasonable
42
assurance to our management and board of directors regarding the preparation and fair presentation of published financial
statements.
Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2019. In making
this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”) in Internal Control — Integrated Framework (2013). Based on management’s assessment utilizing these criteria we
believe that, as of December 31, 2019, our internal control over financial reporting was effective.
Our independent auditors, KPMG LLP, have audited our internal control over financial reporting as stated in their report on page
F-2.
Item 9B. Other Information.
On January 28, 2020, Charter’s board of directors approved an amendment to Charter's 2019 Stock Incentive Plan (the “Stock
Plan”) to remove the ability under the Stock Plan for Charter to effect a repricing of stock options without stockholder approval.
The foregoing summary of the amendment to the Stock Plan does not purport to be complete and is qualified in its entirety by
reference to the full text of such amendment, which is included as Exhibit 10.152 hereto.
43
Item 10. Directors, Executive Officers and Corporate Governance.
PART III
The information required by Item 10 will be included in the Proxy Statement under the headings “Election of Class A Directors,”
“Section 16(a) Beneficial Ownership Reporting Requirements,” and “Code of Ethics,” or in amendment to this Annual Report on
Form 10-K and is incorporated herein by reference.
Item 11. Executive Compensation.
The information required by Item 11 will be included in the Proxy Statement under the headings “Executive Compensation,”
“Election of Class A Directors – Director Compensation” and “Compensation Discussion and Analysis,” or in an amendment to
this Annual Report on Form 10-K and is incorporated herein by reference. Information contained in the Proxy Statement or an
amendment to this Annual Report on Form 10-K under the caption “Report of Compensation and Benefits Committee” is furnished
and not deemed filed with the SEC.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by Item 12 will be included in the Proxy Statement under the heading “Security Ownership of Certain
Beneficial Owners and Management” or in amendment to this Annual Report on Form 10-K and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by Item 13 will be included in the Proxy Statement under the heading “Certain Relationships and Related
Transactions” and “Election of Class A Directors” or in amendment to this Annual Report on Form 10-K and is incorporated herein
by reference.
Item 14. Principal Accounting Fees and Services.
The information required by Item 14 will be included in the Proxy Statement under the heading “Accounting Matters” or in
amendment to this Annual Report on Form 10-K and is incorporated herein by reference.
44
PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) The following documents are filed as part of this annual report:
(1) Financial Statements.
A listing of the financial statements, notes and reports of independent public accountants required by "Part II. Item 8.
Financial Statements and Supplementary Data" begins on page F-1 of this annual report.
(2) Financial Statement Schedules.
No financial statement schedules are required to be filed by Items 8 and 15(c) because they are not required or are
not applicable, or the required information is set forth in the applicable financial statements or notes thereto.
(3) The index to the exhibits begins on page E-1 of this annual report.
45
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Charter Communications, Inc. has
duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
CHARTER COMMUNICATIONS, INC.,
Registrant
By:
/s/ Thomas M. Rutledge
Thomas M. Rutledge
Chairman and Chief Executive Officer
Date: January 31, 2020
S- 1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard
R. Dykhouse and Kevin D. Howard, and each of them (with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead,
in any and all capacities, to sign on his or her behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this annual report, and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents and either of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of Charter Communications, Inc. and in the capacities and on the dates indicated.
Signature
Title
/s/ Thomas M. Rutledge
Thomas M. Rutledge
/s/ Christopher L. Winfrey
Christopher L. Winfrey
/s/ Kevin D. Howard
Kevin D. Howard
/s/ Eric L. Zinterhofer
Eric L. Zinterhofer
/s/ W. Lance Conn
W. Lance Conn
/s/ Kim C. Goodman
Kim C. Goodman
/s/ Craig A. Jacobson
Craig A. Jacobson
/s/ Gregory Maffei
Gregory Maffei
/s/ John D. Markley, Jr.
John D. Markley, Jr.
/s/ David C. Merritt
David C. Merritt
/s/ James E. Meyer
James E. Meyer
/s/ Steven Miron
Steven Miron
/s/ Balan Nair
Balan Nair
/s/ Michael Newhouse
Michael Newhouse
/s/ Mauricio Ramos
Mauricio Ramos
Date
January 31, 2020
Chairman, Chief Executive Officer, Director
(Principal Executive Officer)
Chief Financial Officer (Principal Financial Officer)
January 31, 2020
Executive Vice President, Chief Accounting Officer
and Controller (Principal Accounting Officer)
January 31, 2020
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
S- 2
January 31, 2020
January 31, 2020
January 31, 2020
January 31, 2020
January 31, 2020
January 31, 2020
January 31, 2020
January 31, 2020
January 31, 2020
January 31, 2020
January 31, 2020
January 31, 2020
Exhibits are listed by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K.
Exhibit
Description
Exhibit Index
2.1
2.2
3.1
3.2
3.3
4.1(a)
4.1(b)
10.1
10.2
10.3
10.4
10.5
10.6
10.7
Agreement and Plan of Mergers, dated as of May 23, 2015, among Time Warner Cable Inc., Charter
Communications, Inc., CCH I, LLC, Nina Corporation I, Inc., Nina Company II, LLC and Nina Company III, LLC
(incorporated by reference to Exhibit 2.1 to the current report on Form 8-K filed by Charter Communications, Inc.
on May 29, 2015 (File No. 001-33664)).
Contribution Agreement, dated March 31, 2015, by and among Advance/Newhouse Partnership, A/NPC Holdings
LLC, Charter Communications, Inc., CCH I, LLC, and Charter Communications Holding Company, LLC
(incorporated by reference to Exhibit 2.1 to the current report on Form 8-K filed by Charter Communications, Inc.
on April 1, 2015 (File No. 001-33664)).
Amended and Restated Certificate of Incorporation of Charter Communications, Inc. (incorporated by reference
to Exhibit 3.1 to the current report on Form 8-K of Charter Communications, Inc. filed on May 19, 2016 (File No.
001-33664)).
By-laws of Charter Communications, Inc. as of May 18, 2016 (incorporated by reference to Exhibit 3.2 to the
current report on Form 8-K of Charter Communications, Inc. filed on May 19, 2016 (File No. 001-33664)).
First Amendment to Bylaws of Charter Communications, Inc. dated July 24, 2018 (incorporated by reference to
Exhibit 3.1 to the current report on Form 8-K of Charter Communications, Inc. filed on July 30, 2018 (File No.
001-33664)).
Amended and Restated Stockholders Agreement, dated March 31, 2015, by and among Charter Communications,
Inc., Liberty Broadband Corporation and Advance/Newhouse Partnership (incorporated by reference to Exhibit
4.1 to the current report on Form 8-K filed by Charter Communications, Inc. on April 1, 2015 (File No. 001-33664)).
Second Amended and Restated Stockholders Agreement, dated May 23, 2015, by and among Charter
Communications, Inc., CCH I, LLC, Liberty Broadband Corporation and Advance/Newhouse Partnership
(incorporated by reference to Annex C to the registration statement on Form S-4 filed by CCH I, LLC on June 26,
2015 (File No. 333-205240)).
Indenture dated as of May 10, 2011, by and among CCO Holdings, LLC, and CCO Holdings Capital Corp., as
Issuers, Charter Communications, Inc., as Parent Guarantor, and The Bank of New York Mellon Trust Company,
N.A., as Trustee (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K of Charter
Communications, Inc. filed on May 16, 2011 (File No. 001-33664)).
Third Supplemental Indenture dated as of January 26, 2012 by and among CCO Holdings, LLC, and CCO Holdings
Capital Corp., as Issuers, Charter Communications, Inc., as Parent Guarantor, and The Bank of New York Mellon
Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.2 to the current report on Form 8-K of
Charter Communications, Inc. filed on February 1, 2012 (File No. 001-33664))
Fourth Supplemental Indenture dated August 22, 2012 relating to the 5.25% Senior Notes due 2022 by and among
CCO Holdings, LLC, CCO Holdings Capital Corp. and The Bank of New York Mellon Trust Company, N.A., as
trustee (incorporated by reference to Exhibit 10.1 to the quarterly report on Form 10-Q of Charter Communications,
Inc. filed on November 6, 2012 (File No. 001-33664)).
Fifth Supplemental Indenture dated December 17, 2012 relating to the 5.125% Senior Notes due 2023 by and
among CCO Holdings, LLC, CCO Holdings Capital Corp. and The Bank of New York Mellon Trust Company,
N.A., as trustee (incorporated by reference to Exhibit 10.9 to the annual report on Form 10-K of Charter
Communications, Inc. filed February 22, 2013 (File No. 001-33664)).
Sixth Supplemental Indenture relating to the 5.25% senior notes due 2021, dated as of March 14, 2013, by and
among CCO Holdings, LLC, and CCO Holdings Capital Corp., as Issuers, Charter Communications, Inc., as Parent
Guarantor, and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to
Exhibit 10.1 to the current report on Form 8-K of Charter Communications, Inc. filed March 15, 2013 (File No.
001-33664)).
Seventh Supplemental Indenture relating to the 5.75% senior notes due 2023, dated as of March 14, 2013, by and
among CCO Holdings, LLC, and CCO Holdings Capital Corp., as Issuers, Charter Communications, Inc., as Parent
Guarantor, and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to
Exhibit 10.2 to the current report on Form 8-K of Charter Communications, Inc. filed March 15, 2013 (File No.
001-33664)).
Eighth Supplemental Indenture relating to the 5.75% senior notes due 2024, dated as of May 3, 2013, by and among
CCO Holdings, LLC and CCO Holdings Capital Corp., as Issuers, Charter Communications, Inc., as Parent
Guarantor, and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to
Exhibit 10.7 to the quarterly report on Form 10-Q of Charter Communications, Inc. filed on May 7, 2013 (File No.
001-33664)).
E- 1
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
Indenture dated as of November 5, 2014, by and among CCO Holdings, LLC, CCO Holdings Capital Corp. and
CCOH Safari, LLC, as Issuers, Charter Communications, Inc., as Parent Guarantor, and The Bank of New York
Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to the current report on Form
8-K of Charter Communications, Inc. filed on November 10, 2014 (File No. 001-33664)).
Third Supplemental Indenture, dated as of April 21, 2015, among CCO Holdings, LLC, CCO Holdings Capital
Corp., Charter Communications, Inc., as guarantor, and The Bank of New York Mellon Trust Company, N.A., as
trustee (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K filed by Charter Communications,
Inc. on April 22, 2015 (File No. 001-33664)).
Fourth Supplemental Indenture, dated as of April 21, 2015, among CCO Holdings, LLC, CCO Holdings Capital
Corp., Charter Communications, Inc., as guarantor, and The Bank of New York Mellon Trust Company, N.A., as
trustee (incorporated by reference to Exhibit 4.2 to the current report on Form 8-K filed by Charter Communications,
Inc. on April 22, 2015 (File No. 001-33664)).
Fifth Supplemental Indenture, dated as of April 21, 2015, among CCO Holdings, LLC, CCO Holdings Capital
Corp., Charter Communications, Inc., as guarantor, and The Bank of New York Mellon Trust Company, N.A., as
trustee (incorporated by reference to Exhibit 4.3 to the current report on Form 8-K filed by Charter Communications,
Inc. on April 22, 2015 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated as of April 21, 2015 relating to the 5.125% Senior Notes due
2023, among CCO Holdings, LLC, CCO Holdings Capital Corp., Charter Communications, Inc., as guarantor, and
Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as representatives of the several Purchasers (as defined therein) (incorporated
by reference to Exhibit 10.1 to the current report on Form 8-K filed by Charter Communications, Inc. on April 22,
2015 (File No. 001-33664)).
Exchange and Registration Rights Agreement relating to the 5.375% Senior Notes due 2025, dated as of April 21,
2015, among CCO Holdings, LLC, CCO Holdings Capital Corp., Charter Communications, Inc., as guarantor, and
Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as representatives of the several Purchasers (as defined therein) (incorporated
by reference to Exhibit 10.2 to the current report on Form 8-K filed by Charter Communications, Inc. on April 22,
2015 (File No. 001-33664)).
Exchange and Registration Rights Agreement relating to the 5.875% Senior Notes due 2027, dated as of April 21,
2015, among CCO Holdings, LLC, CCO Holdings Capital Corp., Charter Communications, Inc., as guarantor, and
Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as representatives of the several Purchasers (as defined therein) (incorporated
by reference to Exhibit 10.3 to the current report on Form 8-K filed by Charter Communications, Inc. on April 22,
2015 (File No. 001-33664)).
Indenture, dated as of July 23, 2015, among Charter Communications Operating, LLC, Charter Communications
Operating Capital Corp. and CCO Safari II, LLC, as issuers, and The Bank of New York Mellon Trust Company,
N.A., as trustee and collateral agent (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K
filed by Charter Communications, Inc. on July 27, 2015 (File No. 001-33664)).
First Supplemental Indenture, dated as of July 23, 2015, among CCO Safari II, LLC, as escrow issuer, CCH II,
LLC, as limited guarantor, and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent
(incorporated by reference to Exhibit 4.2 to the current report on Form 8-K filed by Charter Communications, Inc.
on July 27, 2015 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated July 23, 2015 relating to the 3.579% Senior Secured Notes
due 2020, 4.464% Senior Secured Notes due 2022, 4.908% Senior Secured Notes due 2025, 6.384% Senior Secured
Notes due 2035, 6.484% Senior Secured Notes due 2045 and 6.834% Senior Secured Notes due 2055, between
CCO Safari II, LLC and Goldman, Sachs & Co., Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner
& Smith Incorporated, Deutsche Bank Securities Inc. and UBS Securities LLC, as representatives of the several
Purchasers (as defined therein) (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed
by Charter Communications, Inc. on July 27, 2015 (File No. 001-33664)).
Indenture, dated as of November 20, 2015, among CCO Holdings, LLC, CCO Holdings Capital Corp. and CCOH
Safari, LLC, as issuers, and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by
reference to Exhibit 4.1 to the current report on Form 8-K filed by Charter Communications, Inc. on November
25, 2015 (File No. 001-33664)).
First Supplemental Indenture, dated as of November 20, 2015, between CCOH Safari, LLC, as escrow issuer, and
The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 to the
current report on Form 8-K filed by Charter Communications, Inc. on November 25, 2015 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated November 20, 2015 relating to the 5.750% Senior Notes due
2026, between CCOH Safari, LLC and Credit Suisse Securities (USA) LLC, Goldman, Sachs & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, UBS Securities LLC and Deutsche Bank Securities Inc., as representatives
of the several Purchasers (as defined therein) (incorporated by reference to Exhibit 10.1 to the current report on
Form 8-K filed by Charter Communications, Inc. on November 25, 2015 (File No. 001-33664)).
E- 2
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
Sixth Supplemental Indenture, dated as of February 19, 2016, among CCO Holdings, LLC, CCO Holdings Capital
Corp., Charter Communications, Inc., as guarantor, and The Bank of New York Mellon Trust Company, N.A., as
trustee (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K filed by Charter Communications,
Inc. on February 22, 2016 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated February 19, 2016, relating to the 5.875% Senior Notes due
2024, among CCO Holdings, LLC, CCO Holdings Capital Corp., Charter Communications, Inc., as guarantor, and
Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC, Goldman, Sachs & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, UBS Securities LLC, Citigroup Global Markets Inc. and Wells Fargo Securities,
LLC, as representatives of the several Purchasers (as defined therein) (incorporated by reference to Exhibit 10.1
to the current report on Form 8-K filed by Charter Communications, Inc. on February 22, 2016 (File No.
001-33664)).
Seventh Supplemental Indenture, dated as of April 21, 2016, among CCO Holdings, LLC, CCO Holdings Capital
Corp., Charter Communications, Inc., as guarantor, and The Bank of New York Mellon Trust Company, N.A., as
trustee (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K filed by Charter Communications,
Inc. on April 27, 2016 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated April 21, 2016, relating to the 5.500% Senior Notes due 2026,
among CCO Holdings, LLC, CCO Holdings Capital Corp., Charter Communications, Inc., as guarantor, and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC,
Deutsche Bank Securities Inc., Goldman, Sachs & Co., UBS Securities LLC and Wells Fargo Securities, LLC, as
representatives of the several Purchasers (as defined therein) (incorporated by reference to Exhibit 10.1 to the
current report on Form 8-K filed by Charter Communications, Inc. on April 27, 2016 (File No. 001-33664)).
Second Supplemental Indenture, dated as of May 18, 2016, by and among Charter Communications Operating,
LLC, Charter Communications Operating Capital Corp., CCO Safari II, LLC and The Bank of New York Mellon
Trust Company, N.A., as trustee and collateral agent (incorporated by reference to Exhibit 4.1 to the current report
on Form 8-K filed by Charter Communications, Inc. on May 24, 2016 (File No. 001-33664)).
Third Supplemental Indenture, dated as of May 18, 2016, by and among CCO Holdings, LLC, the subsidiary
guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent
(incorporated by reference to Exhibit 4.2 to the current report on Form 8-K filed by Charter Communications, Inc.
on May 24, 2016 (File No. 001-33664)).
Second Supplemental Indenture, dated as of May 18, 2016, by and among CCO Holdings, LLC, CCO Holdings
Capital Corp., CCOH Safari, LLC and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated
by reference to Exhibit 4.3 to the current report on Form 8-K filed by Charter Communications, Inc. on May 24,
2016 (File No. 001-33664)).
Third Supplemental Indenture, dated as of February 6, 2017, among CCO Holdings, LLC, CCO Holdings Capital
Corp., and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to
Exhibit 4.1 to the current report on Form 8-K filed by Charter Communications, Inc. on February 6, 2017 (File
No. 001-33664)).
Exchange and Registration Rights Agreement, dated February 6, 2017, relating to the 5.125% Senior Notes due
2027, among CCO Holdings, LLC, CCO Holdings Capital Corp., and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc.,
Goldman, Sachs & Co., UBS Securities LLC, and Wells Fargo Securities, LLC, as representatives of the several
Purchasers (as defined therein) (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed
by Charter Communications, Inc. on February 6, 2017 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated March 29, 2017, relating to the 5.125% Senior Notes due
2027, among CCO Holdings, LLC, CCO Holdings Capital Corp., and Deutsche Bank Securities Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC,
Goldman, Sachs & Co., UBS Securities LLC, and Wells Fargo Securities, LLC, as representatives of the several
Purchasers (as defined therein) (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed
by Charter Communications, Inc. on March 31, 2017 (File No. 001-33664)).
Fifth Supplemental Indenture, dated as of April 20, 2017, among Charter Communications Operating, LLC, Charter
Communications Operating Capital Corp., the guarantors party thereto and The Bank of New York Mellon Trust
Company, N.A., as trustee and collateral agent (incorporated by reference to Exhibit 4.3 to the current report on
Form 8-K filed by Charter Communications, Inc. on April 26, 2017 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated April 20, 2017, relating to the 5.125% Senior Notes due 2027,
among CCO Holdings, LLC, CCO Holdings Capital Corp. and Citigroup Global Markets Inc., as a representative
of the several Purchasers (as defined therein) (incorporated by reference to Exhibit 10.1 to the current report on
Form 8-K filed by Charter Communications, Inc. on April 26, 2017 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated April 20, 2017, relating to the 5.375% Senior Notes due 2047,
among Charter Communications Operating, LLC, Charter Communications Operating Capital Corp., the guarantors
party thereto and Citigroup Global Markets Inc., as representative of the several Purchasers (as defined therein)
(incorporated by reference to Exhibit 10.2 to the current report on Form 8-K filed by Charter Communications,
Inc. on April 26, 2017 (File No. 001-33664)).
E- 3
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44
10.45
10.46
Sixth Supplemental Indenture, dated as of July 6, 2017, among Charter Communications Operating, LLC, Charter
Communications Operating Capital Corp., the guarantors party thereto and The Bank of New York Mellon Trust
Company, N.A., as trustee and collateral agent (incorporated by reference to Exhibit 4.3 to the current report on
Form 8-K filed by Charter Communications, Inc. on July 12, 2017 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated July 6, 2017, relating to the 3.750% Senior Notes due 2028,
among Charter Communications Operating, LLC, Charter Communications Operating Capital Corp., the guarantors
party thereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the several Purchasers
(as defined therein) (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed by Charter
Communications, Inc. on July 12, 2017 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated July 6, 2017, relating to the 5.375% Senior Notes due 2047,
among Charter Communications Operating, LLC, Charter Communications Operating Capital Corp., the guarantors
party thereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the several Purchasers
(as defined therein) (incorporated by reference to Exhibit 10.2 to the current report on Form 8-K filed by Charter
Communications, Inc. on July 12, 2017 (File No. 001-33664)).
Fourth Supplemental Indenture, dated as of August 8, 2017, among CCO Holdings, LLC, CCO Holdings Capital
Corp. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit
4.1 to the current report on Form 8-K filed by Charter Communications, Inc. on August 14, 2017 (File No.
001-33664)).
Exchange and Registration Rights Agreement, dated August 8, 2017, relating to the 5.000% Senior Notes due 2028,
among CCO Holdings, LLC, CCO Holdings Capital Corp. and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as representative of the several Purchasers (as defined therein) (incorporated by reference to Exhibit 10.1 to the
current report on Form 8-K filed by Charter Communications, Inc. on August 14, 2017 (File No. 001-33664)).
Seventh Supplemental Indenture, dated as of September 18, 2017, among Charter Communications Operating,
LLC, Charter Communications Operating Capital Corp., the guarantors party thereto and The Bank of New York
Mellon Trust Company, N.A., as trustee and collateral agent (incorporated by reference to Exhibit 4.3 to the current
report on Form 8-K filed by Charter Communications, Inc. on September 21, 2017 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated September 18, 2017, relating to the 4.200% Senior Secured
Notes due 2028, among Charter Communications Operating, LLC, Charter Communications Operating Capital
Corp., the guarantors party thereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global
Markets Inc., as representatives of the several Purchasers (as defined therein) (incorporated by reference to Exhibit
10.1 to the current report on Form 8-K filed by Charter Communications, Inc. on September 21, 2017 (File No.
001-33664)).
Exchange and Registration Rights Agreement, dated September 18, 2017, relating to the 5.375% Senior Secured
Notes due 2047, among Charter Communications Operating, LLC, Charter Communications Operating Capital
Corp., the guarantors party thereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global
Markets Inc., as representatives of the several Purchasers (as defined therein) (incorporated by reference to Exhibit
10.2 to the current report on Form 8-K filed by Charter Communications, Inc. on September 21, 2017 (File No.
001-33664)).
Fifth Supplemental Indenture, dated as of October 17, 2017, among CCO Holdings, LLC, CCO Holdings Capital
Corp. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit
4.3 to the current report on Form 8-K filed by Charter Communications, Inc. on October 20, 2017 (File No.
001-33664)).
Exchange and Registration Rights Agreement, dated October 17, 2017, relating to the 5.000% Senior Notes due
2028, among CCO Holdings, LLC, CCO Holdings Capital Corp. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as representative of the several Purchasers (as defined therein) (incorporated by reference to Exhibit
10.1 to the current report on Form 8-K filed by Charter Communications, Inc. on October 20, 2017 (File No.
001-33664)).
Exchange and Registration Rights Agreement, dated October 17, 2017, relating to the 4.000% Senior Notes due
2023, among CCO Holdings, LLC, CCO Holdings Capital Corp. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as representative of the several Purchasers (as defined therein) (incorporated by reference to Exhibit
10.2 to the current report on Form 8-K filed by Charter Communications, Inc. on October 20, 2017 (File No.
001-33664)).
Eighth Supplemental Indenture, dated as of December 21, 2017, among Charter Communications Operating, LLC,
Charter Communications Operating Capital Corp., CCO Holdings, LLC, the subsidiary guarantor parties thereto
and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.5 to
the current report on Form S-3 filed by Charter Communications, Inc. on December 22, 2017 (File No. 333-222241)).
Underwriting Agreement, dated as of April 3, 2018, among Charter Communications Operating, LLC, Charter
Communications Operating Capital Corp., CCO Holdings, LLC, as parent guarantor, the subsidiary guarantors
party thereto and Citigroup Global Markets Inc. and Deutsche Bank Securities Inc., as representatives of the several
underwriters named therein (incorporated by reference to Exhibit 99.1 to the current report on Form 8-K filed by
Charter Communications, Inc. on April 6, 2018 (File No. 001-33664)).
E- 4
10.47
10.48
10.49
10.50
10.51
10.52
10.53
10.54
10.55
10.56
10.57
10.58
10.59
10.60
10.61
Ninth Supplemental Indenture, dated as of April 17, 2018, among Charter Communications Operating, LLC, Charter
Communications Operating Capital Corp., as issuers, CCO Holdings, LLC, the subsidiary guarantors party thereto
and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (incorporated by reference
to Exhibit 4.2 to the current report on Form 8-K filed by Charter Communications, Inc. on April 20, 2018 (File
No. 001-33664)).
Underwriting Agreement, dated as of June 28, 2018, among Charter Communications Operating, LLC, Charter
Communications Operating Capital Corp., CCO Holdings, LLC, as parent guarantor, the subsidiary guarantors
party thereto and Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC, as representatives of the several
underwriters named therein (incorporated by reference to Exhibit 99.1 to the current report on Form 8-K filed by
Charter Communications, Inc. on July 3, 2018 (File No. 001-33664)).
Tenth Supplemental Indenture, dated as of July 3, 2018, among Charter Communications Operating, LLC, Charter
Communications Operating Capital Corp., as issuers, CCO Holdings, LLC, the subsidiary guarantors party thereto
and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (incorporated by reference
to Exhibit 4.2 to the current report on Form 8-K filed by Charter Communications, Inc. on July 9, 2018 (File No.
001-33664)).
Underwriting Agreement, dated as of August 9, 2018, among Charter Communications Operating, LLC, Charter
Communications Operating Capital Corp., CCO Holdings, LLC, as parent guarantor, the subsidiary guarantors
party thereto and Morgan Stanley & Co. LLC, as underwriter (incorporated by reference to Exhibit 99.1 to the
current report on Form 8-K filed by Charter Communications, Inc. on August 15, 2018 (File No. 001-33664)).
Underwriting Agreement, dated as of January 14, 2019, among Charter Communications Operating, LLC, Charter
Communications Operating Capital Corp., CCO Holdings, LLC, as parent guarantor, the subsidiary guarantors
party thereto and Citigroup Global Markets Inc. and Deutsche Bank Securities Inc., as representatives of the several
underwriters named therein (incorporated by reference to Exhibit 99.1 to the current report on Form 8-K filed by
Charter Communications, Inc. on January 17, 2019 (File No. 001-33664)).
Twelfth Supplemental Indenture, dated as of January 17, 2019, among Charter Communications Operating, LLC,
Charter Communications Operating Capital Corp., as issuers, CCO Holdings, LLC, the subsidiary guarantors party
thereto and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (incorporated by
reference to Exhibit 4.4 to the current report on Form 8-K filed by Charter Communications, Inc. on January 24,
2019 (File No. 001-33664)).
Indenture, dated as of May 23, 2019, among CCO Holdings, LLC, CCO Holdings Capital Corp. and The Bank of
New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to the current report
on Form 8-K filed by Charter Communications, Inc. on May 30, 2019 (File No. 001-33664)).
First Supplemental Indenture, dated as of May 23, 2019, among CCO Holdings, LLC, CCO Holdings Capital Corp.
and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 to
the current report on Form 8-K filed by Charter Communications, Inc. on May 30, 2019 (File No. 001-33664)).
Form of 5.375% Senior Notes due 2029 (incorporated by reference to Exhibit 4.3 to the current report on Form 8-
K filed by Charter Communications, Inc. on May 30, 2019 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated May 23, 2019, relating to the 5.375% Senior Notes due 2029,
among CCO Holdings, LLC, CCO Holdings Capital Corp. and Deutsche Bank Securities Inc., as representative
of the several Purchasers (as defined therein) (incorporated by reference to Exhibit 10.1 to the current report on
Form 8-K filed by Charter Communications, Inc. on May 30, 2019 (File No. 001-33664)).
Underwriting Agreement, dated as of June 25, 2019, among Charter Communications Operating, LLC, Charter
Communications Operating Capital Corp., CCO Holdings, LLC, as parent guarantor, the subsidiary guarantors
party thereto and Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC, as
representatives of the several underwriters named in Schedule I thereto (incorporated by reference to Exhibit 99.1
to the current report on Form 8-K filed by Charter Communications, Inc. on July 1, 2019 (File No. 001-33664)).
Fourteenth Supplemental Indenture, dated as of July 10, 2019, among Charter Communications Operating, LLC,
Charter Communications Operating Capital Corp., as issuers, CCO Holdings, LLC, the subsidiary guarantors party
thereto and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (incorporated by
reference to Exhibit 4.5 to the current report on Form 8-K filed by Charter Communications, Inc. on July 10, 2019
(File No. 001-33664)).
Form of 5.125% Senior Secured Notes due 2049 (incorporated by reference to Exhibit 4.6 to the current report on
Form 8-K filed by Charter Communications, Inc. on July 10, 2019 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated July 10, 2019, relating to the 5.375% Senior Notes due 2029,
among CCO Holdings, LLC, CCO Holdings Capital Corp. and Deutsche Bank Securities Inc., as representative
of the several Purchasers (as defined therein) (incorporated by reference to Exhibit 10.1 to the current report on
Form 8-K filed by Charter Communications, Inc. on July 10, 2019 (File No. 001-33664)).
Second Supplemental Indenture, dated as of October 1, 2019, among CCO Holdings, LLC, CCO Holdings Capital
Corp. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit
4.2 to the Current Report on Form 8-K filed by Charter Communications, Inc. on October 7, 2019).
E- 5
10.62
10.63
10.64
10.65
10.66
10.67
10.68
10.69
10.70
10.71
10.72
10.73
10.74
10.75
10.76
10.77
Form of 4.750% Senior Notes due 2030 (incorporated by reference to Exhibit 4.3 to the Current Report on Form
8-K filed by Charter Communications, Inc. on October 7, 2019 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated October 1, 2019, relating to the 4.750% Senior Notes due
2030, among CCO Holdings, LLC, CCO Holdings Capital Corp. and BofA Securities, Inc., as representative of
the several Purchasers (as defined therein) (incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K filed by Charter Communications, Inc. on October 7, 2019 (File No. 001-33664)).
Form of 4.750% Senior Notes due 2030 (incorporated by reference to Exhibit 4.3 to the Current Report on Form
8-K filed by Charter Communications, Inc. on October 30, 2019 (File No. 001-33664)).
Fifteenth Supplemental Indenture, dated as of October 24, 2019, among Charter Communications Operating, LLC,
Charter Communications Operating Capital Corp., as issuers, CCO Holdings, LLC, the subsidiary guarantors party
thereto and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (incorporated by
reference to Exhibit 4.5 to the Current Report on Form 8-K filed by Charter Communications, Inc. on October 30,
2019 (File No. 001-33664)).
Form of 4.800% Senior Secured Notes due 2050 (incorporated by reference to Exhibit 4.6 to the Current Report
on Form 8-K filed by Charter Communications, Inc. on October 30, 2019 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated October 24, 2019, relating to the 4.750% Senior Notes due
2030, among CCO Holdings, LLC, CCO Holdings Capital Corp. and BofA Securities, Inc., as representative of
the several Purchasers (as defined therein) (incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K filed by Charter Communications, Inc. on October 30, 2019 (File No. 001-33664)).
Underwriting Agreement, dated as of December 2, 2019, among Charter Communications Operating, LLC, Charter
Communications Operating Capital Corp., CCO Holdings, LLC, as parent guarantor, the subsidiary guarantors
party thereto and Deutsche Bank Securities Inc., Mizuho Securities USA LLC and Morgan Stanley & Co. LLC,
as representatives of the several underwriters named in Schedule I thereto (incorporated by reference to Exhibit
99.1 to the current report on Form 8-K filed by Charter Communications, Inc. on December 5, 2019 (File No.
001-33664)).
Form of 4.750% Senior Notes due 2030 (incorporated by reference to Exhibit 4.3 to the Current Report on Form
8-K filed by Charter Communications, Inc. on December 16, 2019 (File No. 001-33664)).
Form of 4.800% Senior Secured Notes due 2050 (incorporated by reference to Exhibit 4.6 to the Current Report
on Form 8-K filed by Charter Communications, Inc. on December 16, 2019 (File No. 001-33664)).
Exchange and Registration Rights Agreement, dated December 16, 2019, relating to the 4.750% Senior Notes due
2030, among CCO Holdings, LLC, CCO Holdings Capital Corp. and Citigroup Global Markets, Inc., as
representative of the several Purchasers (as defined therein) (incorporated by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed by Charter Communications, Inc. on December 16, 2019 (File No. 001-33664)).
Indenture, dated as of April 30, 1992 (the “TWCE Indenture”), as amended by the First Supplemental Indenture,
dated as of June 30, 1992, among Time Warner Entertainment Company, L.P. (“TWE”), Time Warner Companies,
Inc. (“TWCI”), certain of TWCI’s subsidiaries that are parties thereto and The Bank of New York, as Trustee
(incorporated herein by reference to Exhibits 10(g) and 10(h) to TWCI’s current report on Form 8-K dated June 26,
1992 and filed with the SEC on July 15, 1992 (File No. 1-8637)). (P)
Second Supplemental Indenture to the TWCE Indenture, dated as of December 9, 1992, among TWE, TWCI,
certain of TWCI’s subsidiaries that are parties thereto and The Bank of New York, as Trustee (incorporated herein
by reference to Exhibit 4.2 to Amendment No. 1 to TWE’s Registration Statement on Form S-4 dated and filed
with the SEC on October 25, 1993 (Registration No. 33-67688) (the “TWE October 25, 1993 Registration
Statement”)). (P)
Third Supplemental Indenture to the TWCE Indenture, dated as of October 12, 1993, among TWE, TWCI, certain
of TWCI’s subsidiaries that are parties thereto and The Bank of New York, as Trustee (incorporated herein by
reference to Exhibit 4.3 to the TWE October 25, 1993 Registration Statement). (P)
Fourth Supplemental Indenture to the TWCE Indenture, dated as of March 29, 1994, among TWE, TWCI, certain
of TWCI’s subsidiaries that are parties thereto and The Bank of New York, as Trustee (incorporated herein by
reference to Exhibit 4.4 to TWE’s Annual Report on Form 10-K for the year ended December 31, 1993 and filed
with the SEC on March 30, 1994 (File No. 1-12878)). (P)
Fifth Supplemental Indenture to the TWCE Indenture, dated as of December 28, 1994, among TWE, TWCI, certain
of TWCI’s subsidiaries that are parties thereto and The Bank of New York, as Trustee (incorporated herein by
reference to Exhibit 4.5 to TWE’s Annual Report on Form 10-K for the year ended December 31, 1994 and filed
with the SEC on March 30, 1995 (File No. 1-12878)). (P)
Sixth Supplemental Indenture to the TWCE Indenture, dated as of September 29, 1997, among TWE, TWCI, certain
of TWCI’s subsidiaries that are parties thereto and The Bank of New York, as Trustee (incorporated herein by
reference to Exhibit 4.7 to Historic TW Inc.’s (“Historic TW”) Annual Report on Form 10-K for the year ended
December 31, 1997 and filed with the SEC on March 25, 1998 (File No. 1-12259) (the “Time Warner 1997 Form
10-K”)).
E- 6
10.78
10.79
10.80
10.81
10.82
10.83
10.84
10.85
10.86
10.87
10.88
10.89
10.90
10.91
10.92
10.93
10.94
10.95
Seventh Supplemental Indenture to the TWCE Indenture, dated as of December 29, 1997, among TWE, TWCI,
certain of TWCI’s subsidiaries that are parties thereto and The Bank of New York, as Trustee (incorporated herein
by reference to Exhibit 4.8 to the Time Warner 1997 Form 10-K).
Eighth Supplemental Indenture to the TWCE Indenture, dated as of December 9, 2003, among Historic TW, TWE,
Warner Communications Inc. (“WCI”), American Television and Communications Corporation (“ATC”), TWC
and The Bank of New York, as Trustee (incorporated herein by reference to Exhibit 4.10 to Time Warner Inc.’s
(“Time Warner”) Annual Report on Form 10-K for the year ended December 31, 2003 (File No. 1-15062)).
Ninth Supplemental Indenture to the TWCE Indenture, dated as of November 1, 2004, among Historic TW, TWE,
Time Warner NY Cable Inc., WCI, ATC, TWC and The Bank of New York, as Trustee (incorporated herein by
reference to Exhibit 4.1 to Time Warner’s Quarterly Report on Form 10-Q for the quarter ended September 30,
2004 (File No. 1-15062)).
Tenth Supplemental Indenture to the TWCE Indenture, dated as of October 18, 2006, among Historic TW, TWE,
TW NY Cable Holding Inc. (“TW NY”), Time Warner NY Cable LLC (“TW NY Cable”), TWC, WCI, ATC and
The Bank of New York, as Trustee (incorporated herein by reference to Exhibit 4.1 to Time Warner’s current report
on Form 8-K dated and filed October 18, 2006 (File No. 1-15062)).
Eleventh Supplemental Indenture to the TWCE Indenture, dated as of November 2, 2006, among TWE, TW NY,
TWC and The Bank of New York, as Trustee (incorporated herein by reference to Exhibit 99.1 to Time Warner’s
current report on Form 8-K dated and filed November 2, 2006 (File No. 1-15062)).
Twelfth Supplemental Indenture to the TWCE Indenture, dated as of September 30, 2012, among Time Warner
Cable Enterprises LLC (“TWCE”), TWC, TW NY, Time Warner Cable Internet Holdings II LLC (“TWC Internet
Holdings II”) and The Bank of New York Mellon, as trustee, supplementing the Indenture dated April 30, 1992,
as amended (incorporated herein by reference to Exhibit 4.2 to TWC’s current report on Form 8-K dated
September 30, 2012 and filed with the SEC on October 1, 2012 (File No. 1-33335) (the “TWC September 30, 2012
Form 8-K”)).
Thirteenth Supplemental Indenture, dated as of May 18, 2016, by and among Time Warner Cable Enterprises LLC,
the guarantors party thereto and The Bank of New York Mellon (formerly known as The Bank of New York), as
trustee (incorporated by reference to Exhibit 4.4 to the current report on Form 8-K filed by Charter Communications,
Inc. on May 24, 2016 (File No. 001-33664)).
Indenture, dated as of April 9, 2007 (the “TWC Indenture”), among TWC, TW NY, TWE and The Bank of New
York, as trustee (incorporated herein by reference to Exhibit 4.1 to TWC’s current report on Form 8-K dated April
4, 2007 and filed with the SEC on April 9, 2007 (File No. 1-33335) (the “TWC April 4, 2007 Form 8-K”)).
First Supplemental Indenture to the TWC Indenture, dated as of April 9, 2007, among TWC, TW NY, TWE and
The Bank of New York, as trustee (incorporated herein by reference to Exhibit 4.2 to the TWC April 4, 2007 Form 8-
K).
Second Supplemental Indenture to the TWC Indenture, dated as of September 30, 2012, among TWC, TW NY,
TWCE, TWC Internet Holdings II and The Bank of New York Mellon, as trustee, supplementing the Indenture
dated April 9, 2007, as amended (incorporated herein by reference to Exhibit 4.1 to the TWC September 30, 2012
Form 8-K).
Third Supplemental Indenture, dated as of May 18, 2016, by and among Time Warner Cable Inc., TWC NewCo
LLC and The Bank of New York Mellon (formerly known as The Bank of New York), as trustee (incorporated by
reference to Exhibit 4.5 to the current report on Form 8-K filed by Charter Communications, Inc. on May 24, 2016
(File No. 001-33664)).
Fourth Supplemental Indenture, dated as of May 18, 2016, by and among TWC NewCo LLC, the guarantors party
thereto and The Bank of New York Mellon (formerly known as The Bank of New York), as trustee (incorporated
by reference to Exhibit 4.6 to the current report on Form 8-K filed by Charter Communications, Inc. on May 24,
2016 (File No. 001-33664)).
Form of TWC 6.55% Exchange Debentures due 2037 (included as Exhibit C to the First Supplemental Indenture
incorporated herein by reference to Exhibit 4.2 to the TWC April 4, 2007 Form 8-K).
Form of TWC 7.30% Debentures due 2038 (incorporated herein by reference to Exhibit 4.3 to the TWC June 16,
2008 Form 8-K).
Form of TWC 8.75% Notes due 2019 (incorporated herein by reference to Exhibit 4.2 to TWC’s current report on
Form 8-K dated November 13, 2008 and filed with the SEC on November 18, 2008) (File No. 1-33335).
Form of TWC 8.25% Notes due 2019 (incorporated herein by reference to Exhibit 4.2 to TWC’s current report on
Form 8-K dated March 23, 2009 and filed with the SEC on March 26, 2009 (File No. 1-33335)).
Form of TWC 6.75% Debentures due 2039 (incorporated herein by reference to Exhibit 4.1 to TWC’s current
report on Form 8-K dated June 24, 2009 and filed with the SEC on June 29, 2009 (File No. 1-33335)).
Form of TWC 5.0% Notes due 2020 (incorporated herein by reference to Exhibit 4.2 to the TWC December 8,
2009 Form 8-K).
E- 7
10.96
10.97
10.98
10.99
10.100
10.101
10.102
10.103
10.104
10.105
10.106
10.107(a)
10.107(b)
10.107(c)
10.107(d)
10.108
Form of TWC 4.125% Notes due 2021 (incorporated herein by reference to Exhibit 4.1 to TWC’s current report
on Form 8-K dated November 9, 2010 and filed with the SEC on November 15, 2010 (File No. 1-33335) (the
“TWC November 9, 2010 Form 8-K”)).
Form of TWC 5.875% Debentures due 2040 (incorporated herein by reference to Exhibit 4.2 to the TWC
November 9, 2010 Form 8-K).
Form of TWC 5.75% Note due 2031 (incorporated herein by reference to Exhibit 4.1 to TWC’s current report on
Form 8-K dated and filed with the SEC on May 26, 2011 (File No. 1-33335)).
Form of TWC 4% Note due 2021 (incorporated herein by reference to Exhibit 4.1 to TWC’s current report on Form
8-K dated September 7, 2011 and filed with the SEC on September 12, 2011 (File No. 1-33335) (the “TWC
September 7, 2011 Form 8-K”)).
Form of TWC 5.5% Debenture due 2041 (incorporated herein by reference to Exhibit 4.2 to the TWC September
7, 2011 Form 8-K).
Form of TWC 4.5% Debenture due 2042 (incorporated herein by reference to Exhibit 4.1 to TWC’s current report
on Form 8-K dated August 7, 2012 and filed with the SEC on August 10, 2012 (File No. 1-33335)).
Form of TWC 5.25% Note due 2042 (incorporated herein by reference to Exhibit 4.1 to TWC’s current report on
Form 8-K dated and filed with the SEC on June 27, 2012 (File No. 1-33335)).
Form of 5.500% Senior Notes due 2026 (incorporated herein by reference to Exhibit 10.1 to the current report on
Form 8-K of Charter Communications, Inc. filed April 27, 2016).
Amendment No. 5, dated as of August 24, 2015, to the Amended and Restated Credit Agreement dated as of April
11, 2012 between Charter Communications Operating, LLC, as borrower, CCO Holdings, LLC, as guarantor, and
Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 to the current report on
Form 8-K of Charter Communications, Inc. filed on August 28, 2015 (File No. 001-33664)).
Incremental Activation Notice, dated as of August 24, 2015 delivered by Charter Communications Operating, LLC,
CCO Holdings, LLC, the subsidiary guarantors party thereto, each Term H Lender party thereto to, each Term I
Lender party thereto and Bank of America, N.A., as Administrative Agent under the Amended and Restated Credit
Agreement, dated as of April 11, 2012 (incorporated by reference to Exhibit 10.1 to the current report on Form 8-
K of Charter Communications, Inc. filed on August 28, 2015 (File No. 001-33664)).
Escrow Credit Agreement, dated as of August 24, 2015, between CCO Safari III, LLC, as borrower, and Bank of
America, N.A., as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.3 to
the current report on Form 8-K of Charter Communications, Inc. filed on August 28, 2015 (File No. 001-33664)).
Restatement Agreement dated as of May 18, 2016, by and among Charter Communications Operating, LLC, CCO
Holdings, LLC, the subsidiary guarantors party thereto, Bank of America, N.A., as administrative agent and the
lenders party thereto (incorporated by reference to Exhibit 10.5 to the current report on Form 8-K of Charter
Communications, Inc. filed on May 24, 2016 (File No. 001-33664)).
Amendment No. 1 dated as of December 23, 2016, to the Amended and Restated Credit Agreement dated as of
March 18, 1999, as amended and restated on May 18, 2016, by and among Chart Communications Operating, LLC,
CCO Holdings, LLC, the Lenders Party thereto and Bank of America, N.A., as Administrative Agent (incorporated
by reference to Exhibit 10.1 to the current report on Form 8-K of Charter Communications, Inc. filed on December
30, 2016 (File No. 001-33664)).
Restatement Agreement dated as of December 21, 2017 to the Amended and Restated Credit Agreement dated as
of March 18, 1999, as amended and restated on May 18, 2016, as amended by Amendment No. 1, dated as of
December 23, 2016 and as further amended by that certain Incremental Activation Notice No. 1, dated as of
January 19, 2017, by and among Charter Communications Operating, LLC, CCO Holdings, LLC, the Lenders
Party thereto and Bank of America, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to
the current report on Form 8-K of Charter Communications, Inc. filed on December 28, 2017 (File No. 001-33664)).
Incremental Activation Notice, dated as of May 18, 2016, by and among Charter Communications Operating, LLC,
CCO Holdings, LLC, the subsidiary guarantors party thereto, Bank of America, N.A., as administrative agent and
the lenders party thereto (incorporated by reference to Exhibit 10.4 to the current report on Form 8-K of Charter
Communications, Inc. filed on May 24, 2016 (File No. 001-33664)).
Amendment No. 1, dated as of January 24, 2019, to (i) the Amended and Restated Credit Agreement, dated as of
March 18, 1999, as amended and restated on December 21, 2017, by and among Charter Communications Operating,
LLC, CCO Holdings, LLC, certain subsidiaries of Charter Communications Operating, LLC, the lenders party
thereto and Bank of America, N.A., as Administrative Agent and (ii) the Guarantee and Collateral Agreement, dated
as of March 18, 1999, as amended and restated as of March 31, 2010, as further amended and restated on May 18,
2016, by and among Charter Communications Operating, LLC, CCO Holdings, LLC, certain subsidiaries of Charter
Communications Operating, LLC and Bank of America, N.A., as Administrative Agent (incorporated by reference
to Exhibit 10.1 to the current report on Form 8-K filed by Charter Communications, Inc. on January 30, 2019 (File
No. 001-33664)).
E- 8
10.109
10.110
10.111
10.112
10.113
10.114
10.115
10.116
10.117
10.118
10.119
10.120
10.121+
10.122+
10.123+
10.124+
Restatement Agreement, dated as of April 26 2019, to the Amended and Restated Credit Agreement, dated as of
March 18, 1999, as amended and restated on December 21, 2017 and as amended by Amendment No. 1 as of
January 24, 2019, by and among Charter Communications Operating, LLC, CCO Holdings, LLC, certain
subsidiaries of Charter Communications Operating, LLC, the lenders party thereto and Bank of America, N.A., as
Administrative Agent (incorporated by reference to Exhibit 10.4 to the quarterly report on Form 10-Q of Charter
Communications, Inc. filed April 30, 2019 (File No. 001-33664)).
Amendment No. 1, dated as of October 24, 2019, to the Amended and Restated Credit Agreement, dated as of
March 18, 1999, as amended and restated on April 26, 2019, by and among Charter Communications Operating,
LLC, CCO Holdings, LLC, certain subsidiaries of Charter Communications Operating, LLC, the lenders party
thereto and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 to the Current
Report on Form 8-K filed by Charter Communications, Inc. on October 30, 2019 (File No. 001-33664)).
Collateral Agreement, dated as of May 18, 2016, by Charter Communications Operating, LLC, Charter
Communications Operating Capital Corp. and the other grantors party thereto in favor of The Bank of New York
Mellon Trust Company, N.A., as collateral agent (incorporated by reference to Exhibit 10.6 to the current report
on Form 8-K of Charter Communications, Inc. filed on May 24, 2016 (File No. 001-33664)).
First Lien Intercreditor Agreement, dated as of May 18, 2016, by and among Charter Communications Operating,
LLC, the other grantors party thereto, Bank of America, N.A., as credit agreement collateral agent for the credit
agreement secured parties, The Bank of New York Mellon Trust Company, N.A., as notes collateral agent for the
indenture secured parties, and each additional agent from time to time party thereto (incorporated by reference to
Exhibit 10.7 to the current report on Form 8-K of Charter Communications, Inc. filed on May 24, 2016 (File No.
001-33664)).
Joinder Agreement to Registration Rights Agreement, dated as of May 18, 2016, by and among CCO Safari II,
LLC, CCH II, LLC, Charter Communications Operating, LLC, Charter Communications Operating Capital Corp.,
CCO Holdings, LLC and the other guarantors party thereto (incorporated herein by reference to Exhibit 10.1 to
the current report on Form 8-K of Charter Communications, Inc. filed May 24, 2016).
Joinder Agreement to Registration Rights Agreement, dated as of May 18, 2016, by CCO Holdings, LLC and CCO
Holdings Capital Corp (incorporated herein by reference to Exhibit 10.2 to the current report on Form 8-K of
Charter Communications, Inc. filed May 24, 2016).
Escrow Assumption Agreement, dated as of May 18, 2016, by and among CCO Safari III, LLC, Charter
Communications Operating, LLC, Bank of America, N.A., as escrow administrative agent and Bank of America,
N.A., as administrative agent (incorporated herein by reference to Exhibit 10.3 to the current report on Form 8-K
of Charter Communications, Inc. filed May 24, 2016).
Amended and Restated Limited Liability Company Agreement of Charter Communications Holdings, LLC, dated
as of May 18, 2016, by and among Charter Holdings, Charter, CCH II, LLC, Advance/Newhouse Partnership and
the other party or parties thereto (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K of
Charter Communications, Inc. filed on May 19, 2016 (File No. 001-33664)).
Exchange Agreement, dated as of May 18, 2016, by and among Charter Holdings, Charter, Advance/Newhouse
Partnership and the other party or parties thereto (incorporated by reference to Exhibit 10.2 to the current report
on Form 8-K of Charter Communications, Inc. filed on May 19, 2016 (File No. 001-33664)).
Registration Rights Agreement, dated as of May 18, 2016, by and among Charter, Advance/Newhouse Partnership
and Liberty Broadband (incorporated by reference to Exhibit 10.3 to the current report on Form 8-K of Charter
Communications, Inc. filed on May 19, 2016 (File No. 001-33664)).
Tax Receivables Agreement, dated as of May 18, 2016, by and among Charter, Advance/Newhouse Partnership
and the other party or parties thereto (incorporated by reference to Exhibit 10.4 to the current report on Form 8-K
of Charter Communications, Inc. filed on May 19, 2016 (File No. 001-33664)).
Wireless Operational Cooperation Agreement dated as of May 5, 2017 between Charter Communications, Inc. and
Comcast Corporation (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed by Charter
Communications, Inc. on May 8, 2017 (File No. 001-33664)).
Charter Communications, Inc. Executive Bonus Plan (incorporated by reference to Exhibit 10.1 to the Quarterly
Report on Form 10-Q of Charter Communications, Inc. filed on May 8, 2012 (File No. 001-33664)).
Charter Communications, Inc. 2016 Executive Incentive Performance Plan (incorporated by reference to Appendix
A to the proxy statement for the Charter Communications, Inc. 2016 Annual Meeting of Stockholders filed March
17, 2016 (File No. 001-33664)).
Charter Communications, Inc. Amended and Restated 2009 Stock Incentive Plan (incorporated by reference to
Exhibit 10.6 to the Current Report on Form 8-K of Charter Communications, Inc. filed on May 19, 2016 (File No.
001-33664)).
Amendment to the Charter Communications, Inc. Amended and Restated 2009 Stock Incentive Plan, dated as of
October 25, 2016 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Charter
Communications, Inc. filed on October 28, 2016 (File No. 001-33664)).
E- 9
10.125+
10.126+
10.127+
10.128+
10.129+
10.130+
10.131+
10.132+
10.133+
10.134+
10.135+
10.136+
10.137+
Charter Communications, Inc.’s Amended and Restated Supplemental Deferred Compensation Plan, dated as of
September 1, 2011(incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed by Charter
Communications, Inc. on September 2, 2011 (File No. 001-33664)).
Form of Non-Qualified Time Vesting Stock Option Agreement dated April 26, 2011(incorporated by reference to
Exhibit 10.3 to the quarterly report on Form 10-Q filed by Charter Communications, Inc. on August 2, 2011 (File
No. 001-33664)).
Form of Non-Qualified Price Vesting Stock Option Agreement dated April 26, 2011(incorporated by reference to
Exhibit 10.2 to the quarterly report on Form 10-Q filed by Charter Communications, Inc. on August 2, 2011 (File
No. 001-33664)).
Form of Notice of LTIP Award Agreement Changes (RSU Awards) (incorporated by reference to Exhibit 10.3 to
the current report on Form 8-K filed by Charter Communications, inc. on January 22, 2014 (File No. 001-33664)).
Form of Notice of LTIP Award Agreement Changes (Time-Vesting Option Awards) (incorporated by reference to
Exhibit 10.4 to the current report on Form 8-K filed by Charter Communications, Inc. on January 22, 2014 (File
No. 001-33664)).
Form of Notice of LTIP Award Agreement Changes (Restricted Stock Awards) (incorporated by reference to Exhibit
10.5 to the current report on Form 8-K filed by Charter Communications, inc. on January 22, 2014 (File No.
001-33664)).
Form of Notice of LTIP Award Agreement Changes (Performance-Vesting Option Awards) (incorporated by
reference to Exhibit 10.6 to the current report on Form 8-K filed by Charter Communications, Inc. on January 22,
2014 (File No. 001-33664)).
Form of Stock Option Agreement dated January 15, 2014 (incorporated by reference to Exhibit 10.1 to the current
report on Form 8-K filed by Charter Communications, Inc. on January 22, 2014 (File No. 001-33664)).
Form of Restricted Stock Unit Agreement dated January 15, 2014 (incorporated by reference to Exhibit 10.2 to the
current report on Form 8-K filed by Charter Communications, Inc. on January 22, 2014 (File No. 001-33664)).
Charter Communications, Inc. 2019 Stock Incentive Plan (incorporated by reference to Annex A to the proxy
statement for the Charter Communications, Inc. 2019 Annual Meeting of Stockholders filed March 14, 2019 (File
No. 001-33664)).
Form of Nonqualified Stock Option Agreement under the Charter Communications, Inc. 2019 Stock Incentive Plan
(incorporated by reference to Exhibit 10.2 to the quarterly report on Form 10-Q of Charter Communications, Inc.
filed July 26, 2019 (File No. 001-33664)).
Form of Restricted Stock Unit Agreement under the Charter Communications, Inc. 2019 Stock Incentive Plan
(incorporated by reference to Exhibit 10.3 to the quarterly report on Form 10-Q of Charter Communications, Inc.
filed July 26, 2019 (File No. 001-33664)).
Form of Restricted Stock Agreement under the Charter Communications, Inc. 2019 Stock Incentive Plan
(incorporated by reference to Exhibit 10.4 to the quarterly report on Form 10-Q of Charter Communications, Inc.
filed July 26, 2019 (File No. 001-33664)).
10.138(a)+ Employment Agreement between Thomas Rutledge and Charter Communications, Inc., dated as of May 17, 2016
(incorporated by reference to Exhibit 10.5 to the current report on Form 8-K of Charter Communications, Inc. filed
on May 19, 2016 (File No. 001-33664)).
10.138(b)+ Time-Vesting Stock Option Agreement dated as of December 19, 2011 by and between Charter Communications,
Inc. and Thomas M. Rutledge (incorporated by reference to Exhibit 10.2 to the current report on Form 8-K filed
by Charter Communications, Inc. on December 19, 2011 (File No. 001-33664)).
10.138(c)+
Performance-Vesting Stock Option Agreement dated as of December 19, 2011 by and between Charter
Communications, Inc. and Thomas M. Rutledge (incorporated by reference to Exhibit 10.4 to the current report
on Form 8-K filed by Charter Communications, Inc. on December 19, 2011 (File No. 001-33664)).
10.139(a)+ Employment Agreement dated effective as of November 2, 2016 by and between Charter Communications, Inc.
and John Bickham (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Charter
Communications, Inc. filed on November 3, 2016 (File No. 001-33664)).
10.139(b)+ Time-Vesting Stock Option Agreement dated as of April 30, 2012 by and between Charter Communications, Inc.
and John Bickham (incorporated by reference to Exhibit 10.2 to the current report on Form 8-K filed by Charter
Communications, Inc. on May 1, 2012 (File No. 001-33664)).
Performance-Vesting Stock Option Agreement dated as of April 30, 2012 by and between Charter Communications,
Inc. and John Bickham (incorporated by reference to Exhibit 10.4 to the current report on Form 8-K filed by Charter
Communications, Inc. on May 1, 2012 (File No. 001-33664)).
10.139(c)+
10.140+
10.141+
Form of First Amended and Restated Indemnification Agreement (incorporated by reference to Exhibit 10.3 to the
quarterly report on Form 10-Q of Charter Communications, Inc. filed on August 6, 2013 (File No. 001-33664)).
Time Warner Cable Inc. 2006 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.45 to TWC’s
current report on Form 8-K dated February 13, 2007 and filed with the SEC on February 13, 2007).
E- 10
10.142+
10.143+
10.144+
10.145+
10.146+
10.147+
10.148+
10.149+
10.150
10.151
10.152*
21.1*
23.1*
31.1*
31.2*
32.1*
32.2*
101
Time Warner Cable Inc. 2006 Stock Incentive Plan, as amended, effective March 12, 2009 (incorporated herein
by reference to Exhibit 10.1 to TWC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009).
Time Warner Cable Inc. 2011 Stock Incentive Plan (incorporated herein by reference to Annex A to TWC’s definitive
Proxy Statement dated April 6, 2011 and filed with the SEC on April 6, 2011).
Form of Amendment to Nonqualified Stock Option Agreements Granted Under the Charter Communications, Inc.
Amended and Restated 2009 Stock Incentive Plan, dated as of October 25, 2016 (incorporated by reference to
Exhibit 10.2 to the Current Report on Form 8-K of Charter Communications, Inc. filed on October 28, 2016 (File
No. 001-33664)).
Employment Agreement dated effective as of November 2, 2016 by and between Charter Communications, Inc.
and Christopher L. Winfrey (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of
Charter Communications, Inc. filed on November 3, 2016 (File No. 001-33664)).
Employment Agreement dated as of November 10, 2016 by and between Charter Communications, Inc. and David
Ellen (incorporated by reference to Exhibit 10.101 to the Annual Report on Form 10-K of Charter Communications,
Inc. filed on February 16, 2017 (File No. 001-33664)).
Form of Performance-Vesting Stock Option Agreement granted to certain executive officers in 2016 under the
Charter Communications, Inc. Amended and Restated 2009 Stock Incentive Plan (incorporated by reference to
Exhibit 10.102 to the Annual Report on Form 10-K of Charter Communications, Inc. filed on February 16, 2017
(File No. 001-33664)).
Form of Performance-Vesting Restricted Stock Unit Agreement granted to certain executive officers in 2016 under
the Charter Communications, Inc. Amended and Restated 2009 Stock Incentive Plan (incorporated by reference
to Exhibit 10.103 to the Annual Report on Form 10-K of Charter Communications, Inc. filed on February 16, 2017
(File No. 001-33664)).
Employment Agreement between Charter Communications, Inc. and Kevin D. Howard, dated August 2, 2019
(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Charter Communications,
Inc. on August 7, 2019 (File No. 001-33664)).
Letter Agreement, dated as of December 23, 2016, between Charter Communications, Inc. and Advance/Newhouse
Partnership (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K of Charter
Communications, Inc. filed on December 28, 2016 (File No. 001-33664)).
Amendment to Letter Agreement, dated as of December 21, 2017, between Charter Communications, Inc. and
Advance/Newhouse Partnership (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K of
Charter Communications, Inc. filed on December 22, 2017 (File No. 001-33664)).
Amendment to the Charter Communications, Inc. 2019 Stock Incentive Plan, dated as of January 28, 2020.
Subsidiaries of Charter Communications, Inc.
Consent of KPMG LLP.
Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Securities Exchange
Act of 1934.
Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Securities Exchange
Act of 1934.
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 (Chief Executive Officer).
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 (Chief Financial Officer).
The following financial information from Charter Communications, Inc.’s Annual Report on Form 10-K for the
year ended December 31, 2019, filed with the Securities and Exchange Commission on January 31, 2020, formatted
in iXBRL (inline eXtensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets; (ii) the
Consolidated Statements of Operations; (iii) the Consolidated Statements of Changes in Shareholders' Equity; (iv)
the Consolidated Statements of Cash Flows; and (vi) the Notes to the Consolidated Financial Statements.
104
Cover page, formatted in iXBRL and contained in Exhibit 101.
_____________
*
+
Filed herewith
Management compensatory plan or arrangement
E- 11
INDEX TO FINANCIAL STATEMENTS
Audited Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2019 and 2018
Consolidated Statements of Operations for the Years Ended December 31, 2019, 2018 and 2017
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2019, 2018 and 2017
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018 and 2017
Notes to Consolidated Financial Statements
Page
F- 2
F- 4
F- 5
F- 6
F- 7
F- 8
F- 1
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Charter Communications, Inc.:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Charter Communications, Inc. and subsidiaries (the Company)
as of December 31, 2019 and 2018, the related consolidated statements of operations, changes in shareholders’ equity, and cash
flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively, the consolidated
financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2019,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the
three-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles. Also in our opinion,
the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019 based
on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission.
Change in Accounting Principle
As discussed in Note 23 to the consolidated financial statements, the Company has changed its method of accounting for leases
as of January 1, 2019 due to the adoption of Accounting Standard Codification Topic 842, Leases.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control
over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion
on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether
due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits
also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits
provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
F- 2
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgment. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on
the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of capitalization of installation direct labor and overhead costs
As discussed in Note 2 to the consolidated financial statements, the Company capitalizes direct labor and overhead costs using
standards developed from actual costs and applicable operational data associated with certain activities. The Company calculates
the standards annually (or more frequently when circumstances dictate) for items such as direct labor and overhead and the estimate
of the average amount of time required to perform a capitalizable activity. For the year ended December 31, 2019, the Company
capitalized $1.6 billion of direct labor and overhead costs, which included costs relating to installation activities.
We identified the evaluation of capitalization of installation direct labor and overhead costs as a critical audit matter. Evaluating
the Company’s determination of the relevant installation activities and the extent to which costs incurred are capitalized required
complex and subjective auditor judgment. Specifically, the complexity relates to the evaluation of the methodology, including the
development and accumulation of data within the methodology, used by the Company to estimate the installation direct labor and
overhead standards. The subjectivity relates to estimating the average length of time to complete specific installation activities.
The primary procedures we performed to address this critical audit matter included the following. We tested certain internal
controls over the Company's capitalization of installation direct labor and overhead costs process. The controls tested related to
the development and accumulation of data used within the methodology to estimate installation direct labor and overhead cost,
and the estimation of the average amount of time required to perform a capitalizable activity. We assessed the methodology,
including the development and accumulation of data used within the methodology for the inclusion of certain costs in the installation
direct labor and overhead standards. We selected a sample of the data used to develop the installation direct labor standard and
overhead standard to test the key data attributes used in the estimates by comparing such data to contracts with third parties and
internal documentation of wages and costs. We selected a sample to test the average length of time to complete specific installation
activities by (1) evaluating underlying key attributes of the data through inquiry of personnel who supervise installation activities
and (2) assessing the time required to complete certain activities through observation of personnel who perform installation
activities.
(signed) KPMG LLP
We have served as the Company’s auditor since 2002.
St. Louis, Missouri
January 30, 2020
F- 3
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Accounts receivable, less allowance for doubtful accounts of
$151 and $129, respectively
Prepaid expenses and other current assets
Total current assets
RESTRICTED CASH
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated depreciation of
$27,656 and $23,075, respectively
Customer relationships, net
Franchises
Goodwill
Total investment in cable properties, net
OPERATING LEASE RIGHT-OF-USE ASSETS
OTHER NONCURRENT ASSETS
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities
Operating lease liabilities
Current portion of long-term debt
Total current liabilities
LONG-TERM DEBT
DEFERRED INCOME TAXES
LONG-TERM OPERATING LEASE LIABILITIES
OTHER LONG-TERM LIABILITIES
SHAREHOLDERS’ EQUITY:
Class A common stock; $.001 par value; 900 million shares authorized;
209,975,963 and 225,353,807 shares issued and outstanding, respectively
Class B common stock; $.001 par value; 1,000 shares authorized;
1 share issued and outstanding
Preferred stock; $.001 par value; 250 million shares authorized;
no shares issued and outstanding
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total Charter shareholders’ equity
Noncontrolling interests
Total shareholders’ equity
December 31,
2019
2018
$
3,483
$
2,227
761
6,471
66
34,591
7,453
67,322
29,554
138,920
1,092
1,639
551
1,733
446
2,730
214
35,126
9,565
67,319
29,554
141,564
—
1,622
$
$
148,188
$
146,130
$
8,671
214
3,500
12,385
75,578
17,711
979
2,724
—
—
—
31,405
40
—
31,445
7,366
38,811
8,805
—
3,290
12,095
69,537
17,389
—
2,837
—
—
—
33,507
2,780
(2)
36,285
7,987
44,272
Total liabilities and shareholders’ equity
$
148,188
$
146,130
The accompanying notes are an integral part of these consolidated financial statements.
F- 4
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per share and share data)
Year Ended December 31,
2018
2019
2017
$
45,764
$
43,634
$
41,581
REVENUES
COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown
separately below)
Depreciation and amortization
Other operating expenses, net
Income from operations
OTHER INCOME (EXPENSES):
Interest expense, net
Loss on extinguishment of debt
Gain (loss) on financial instruments, net
Other pension benefits (costs), net
Other expense, net
Income before income taxes
Income tax benefit (expense)
Consolidated net income
Less: Net income attributable to noncontrolling interests
Net income attributable to Charter shareholders
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO
CHARTER SHAREHOLDERS:
Basic
Diluted
$
$
$
29,224
9,926
103
39,253
6,511
27,860
10,318
235
38,413
5,221
26,541
10,588
346
37,475
4,106
(3,797)
(3,540)
(3,090)
(25)
(54)
(69)
(135)
(4,080)
2,431
(439)
1,992
(324)
—
(110)
192
(77)
(3,535)
1,686
(180)
1,506
(276)
1,668
$
1,230
$
(40)
69
1
(18)
(3,078)
1,028
9,087
10,115
(220)
9,895
7.60
7.45
$
$
5.29
5.22
$
$
38.55
34.09
Weighted average common shares outstanding, basic
Weighted average common shares outstanding, diluted
219,506,735
223,786,380
232,356,665
235,525,226
256,720,715
296,703,956
The accompanying notes are an integral part of these consolidated financial statements.
F- 5
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(dollars in millions)
Class A
Common
Stock
Class B
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total Charter
Shareholders’
Equity
Non-
controlling
Interests
Total
Shareholders’
Equity
BALANCE, December 31, 2016
$
— $
— $
39,413 $
733 $
(7) $
40,139 $
10,227 $
Consolidated net income
Stock compensation expense
Accelerated vesting of equity awards
Exercise of stock options
Changes in accumulated other comprehensive
loss, net
Cumulative effect of accounting change
Purchases and retirement of treasury stock
Purchase of noncontrolling interest, net of tax
Exchange of Charter Holdings units held by A/N,
net of tax and TRA effects
Change in noncontrolling interest ownership, net
of tax
Distributions to noncontrolling interest
BALANCE, December 31, 2017
Consolidated net income
Stock compensation expense
Accelerated vesting of equity awards
Exercise of stock options
Changes in accumulated other comprehensive
loss, net
Cumulative effect of accounting changes
Purchases and retirement of treasury stock
Purchase of noncontrolling interest, net of tax
Change in noncontrolling interest ownership, net
of tax
Distributions to noncontrolling interest
BALANCE, December 31, 2018
Consolidated net income
Stock compensation expense
Exercise of stock options
Changes in accumulated other comprehensive
loss, net
Purchases and retirement of treasury stock
Purchase of noncontrolling interest, net of tax
Change in noncontrolling interest ownership, net
of tax
Distributions to noncontrolling interest
BALANCE, December 31, 2019
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
261
49
116
—
9
(4,788)
(295)
265
223
—
35,253
—
285
5
69
—
—
(2,055)
(104)
54
9,895
—
—
—
—
131
(6,927)
—
—
—
—
3,832
1,230
—
—
—
—
62
(2,344)
—
—
—
—
—
—
6
—
—
—
—
—
—
(1)
—
—
—
—
(1)
—
—
—
—
9,895
261
49
116
6
220
—
—
—
—
140
(11,715)
(295)
265
—
—
(1,187)
(298)
—
39,084
1,230
285
5
69
(1)
62
(4,399)
(104)
54
(153)
8,447
276
—
—
—
—
7
—
(518)
(72)
223
(362)
(139)
—
— $
—
— $
—
33,507 $
$
—
2,780 $
—
(2) $
—
36,285 $
(153)
7,987 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
315
118
—
(2,465)
(240)
170
—
1,668
—
—
—
(4,408)
—
—
—
—
—
—
2
—
—
—
—
1,668
315
118
2
(6,873)
(240)
170
—
324
—
—
—
—
(565)
(226)
(154)
$
— $
— $
31,405 $
40 $
— $
31,445 $
7,366 $
38,811
50,366
10,115
261
49
116
6
140
(11,715)
(1,482)
(33)
(153)
47,531
1,506
285
5
69
(1)
69
(4,399)
(622)
(18)
(153)
44,272
1,992
315
118
2
(6,873)
(805)
(56)
(154)
The accompanying notes are an integral part of these consolidated financial statements.
F- 6
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income
Adjustments to reconcile consolidated net income to net cash flows from
operating activities:
Year Ended December 31,
2018
2017
2019
$
1,992
$
1,506
$
10,115
Depreciation and amortization
Stock compensation expense
Accelerated vesting of equity awards
Noncash interest income, net
Other pension (benefits) costs, net
Loss on extinguishment of debt
(Gain) loss on financial instruments, net
Deferred income taxes
Other, net
Changes in operating assets and liabilities, net of effects from acquisitions
and dispositions:
Accounts receivable
Prepaid expenses and other assets
Accounts payable, accrued liabilities and other
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Change in accrued expenses related to capital expenditures
Real estate investments through variable interest entities
Other, net
Net cash flows from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt
Repayments of long-term debt
Payments for debt issuance costs
Purchase of treasury stock
Proceeds from exercise of stock options
Purchase of noncontrolling interest
Distributions to noncontrolling interest
Borrowings for real estate investments through variable interest entities
Distributions to variable interest entities noncontrolling interest
Other, net
Net cash flows from financing activities
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND
RESTRICTED CASH
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of
period
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
CASH PAID FOR INTEREST
CASH PAID FOR TAXES
9,926
315
—
(106)
69
25
54
320
158
(505)
(397)
(103)
11,748
(7,195)
55
(148)
(43)
(7,331)
19,685
(13,309)
(103)
(6,873)
118
(885)
(154)
—
—
(112)
(1,633)
10,318
285
5
(307)
(192)
—
110
110
175
(98)
(270)
125
11,767
(9,125)
(470)
(21)
(120)
(9,736)
13,820
(10,769)
(29)
(4,399)
69
(656)
(153)
342
(107)
(5)
(1,887)
2,784
765
3,549
3,963
71
$
$
$
144
621
765
3,865
45
$
$
$
$
$
$
10,588
261
49
(370)
(1)
40
(69)
(9,116)
16
(84)
76
449
11,954
(8,681)
820
(105)
(132)
(8,098)
25,276
(16,507)
(111)
(11,715)
116
(1,665)
(153)
—
—
(11)
(4,770)
(914)
1,535
621
3,421
41
The accompanying notes are an integral part of these consolidated financial statements.
F- 7
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
1. Organization and Basis of Presentation
Organization
Charter Communications, Inc. (together with its controlled subsidiaries, “Charter,” or the “Company”) is the second largest cable
operator in the United States and a leading broadband communications services company providing video, Internet and voice
services to residential and small and medium business customers. The Company also offers mobile service to residential customers
and recently launched mobile service to small and medium business customers. In addition, the Company sells video and online
advertising inventory to local, regional and national advertising customers and tailored communications and managed solutions
to larger enterprise customers. The Company also owns and operates regional sports networks and local sports, news and community
channels.
Charter is a holding company whose principal asset is a controlling equity interest in Charter Communications Holdings, LLC
(“Charter Holdings”), an indirect owner of Charter Communications Operating, LLC (“Charter Operating”) under which
substantially all of the operations reside. All significant intercompany accounts and transactions among consolidated entities have
been eliminated.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting
principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”).
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Areas involving significant judgments
and estimates include capitalization of labor and overhead costs, impairments of franchises and goodwill, pension benefits and
income taxes. Actual results could differ from those estimates.
Certain prior period amounts have been reclassified to conform with the 2019 presentation.
2. Summary of Significant Accounting Policies
Consolidation
The accompanying consolidated financial statements include the accounts of Charter and all entities in which Charter has a
controlling interest, including variable interest entities ("VIEs") where Charter is the primary beneficiary. The Company
consolidates based upon evaluation of the Company’s power, through voting rights or similar rights, to direct the activities of
another entity that most significantly impact the entity’s economic performance; its obligation to absorb the expected losses of the
entity; and its right to receive the expected residual returns of the entity. Charter controls and consolidates Charter Holdings. The
noncontrolling interest on the Company’s balance sheet primarily represents Advance/Newhouse Partnership's (“A/N”) minority
equity interests in Charter Holdings. See Note 11. All significant intercompany accounts and transactions among consolidated
entities have been eliminated in consolidation.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. These
investments are carried at cost, which approximates market value.
Restricted Cash
Restricted cash represents amounts held in escrow related to the Company's build-to-suit lease arrangement with a VIE. See Note
6. The amounts held in escrow are classified as noncurrent restricted cash in the Company's consolidated balance sheets. The
Company's restricted cash was primarily invested in a federal funds deposit account.
F- 8
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Property, Plant and Equipment
Additions to property, plant and equipment are recorded at cost, including all material, labor and certain indirect costs associated
with the construction of cable transmission and distribution facilities. While the Company’s capitalization is based on specific
activities, once capitalized, costs are tracked on a composite basis by fixed asset category at the cable system level and not on a
specific asset basis. For assets that are sold or retired, the estimated historical cost and related accumulated depreciation is removed.
Costs associated with the placement of the customer drop to the dwelling and the placement of outlets within a dwelling along
with the costs associated with the deployment of new customer premise equipment necessary to provide video, Internet or voice
services are capitalized. Costs capitalized include materials, direct labor and overhead costs. The Company capitalizes direct
labor and overhead using standards developed from actual costs and applicable operational data. The Company calculates standards
annually (or more frequently if circumstances dictate) for items such as the labor rates, overhead rates, and the actual amount of
time required to perform a capitalizable activity. Overhead costs are associated with the activities of the Company’s personnel
who assist in installation activities and consist of compensation and other indirect costs associated with these support functions.
Indirect costs primarily include employee benefits and payroll taxes, and vehicle and occupancy costs. The costs of disconnecting
service and removing customer premise equipment from a dwelling and the costs to reconnect a customer drop or to redeploy
previously installed customer premise equipment are charged to operating expense as incurred. Costs for repairs and maintenance
are charged to operating expense as incurred, while plant and equipment replacement, including replacement of certain components,
betterments, including replacement of cable drops and outlets, are capitalized.
Depreciation is recorded using the straight-line composite method over management’s estimate of the useful lives of the related
assets as follows:
Cable distribution systems
Customer premise equipment and installations
Vehicles and equipment
Buildings and improvements
Furniture, fixtures and equipment
Asset Retirement Obligations
8-20 years
3-8 years
6-21 years
10-40 years
2-10 years
Certain of the Company’s franchise agreements and leases contain provisions requiring the Company to restore facilities or remove
equipment in the event that the franchise or lease agreement is not renewed. The Company expects to continually renew its
franchise agreements and therefore cannot reasonably estimate any liabilities associated with such agreements. A remote possibility
exists that franchise agreements could be terminated unexpectedly, which could result in the Company incurring significant expense
in complying with restoration or removal provisions. The Company does not have any significant liabilities related to asset
retirements recorded in its consolidated financial statements.
Valuation of Long-Lived Assets
The Company evaluates the recoverability of long-lived assets (e.g., property, plant and equipment and finite-lived intangible
assets) to be held and used when events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Such events or changes in circumstances could include such factors as impairment of the Company’s indefinite life
assets, changes in technological advances, fluctuations in the fair value of such assets, adverse changes in relationships with local
franchise authorities, adverse changes in market conditions or a deterioration of current or expected future operating results. If a
review indicates that the carrying value of such asset is not recoverable from estimated undiscounted cash flows, the carrying value
of such asset is reduced to its estimated fair value. While the Company believes that its estimates of future cash flows are reasonable,
different assumptions regarding such cash flows could materially affect its evaluations of asset recoverability. No impairments
of long-lived assets held for use were recorded in 2019, 2018 and 2017. For non-strategic long-lived assets held for sale and
ultimately sold, the Company recorded impairments of approximately $41 million and $75 million during the years ended December
31, 2019 and 2018, respectively, to other operating expenses, net.
F- 9
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Leases
The primary leased asset classes of the Company include real estate, dark fiber, colocation facilities and other equipment. The
lease agreements include both lease and non-lease components, which the Company accounts for separately depending on the
election made for each leased asset class. For real estate and dark fiber leased asset classes, the Company accounts for lease and
non-lease components as a single lease component and includes all fixed payments in the measurement of lease liabilities and
lease assets. For colocation facilities leased asset class, the Company accounts for lease and non-lease components separately
including only the fixed lease payment component in the measurement of lease liabilities and lease assets.
In addition to fixed lease payments, certain of the Company’s lease agreements include variable lease payments which are tied to
an index or rate such as the change in the Consumer Price Index. These variable payments are not included in the measurement
of the lease liabilities and lease assets.
Lease assets and lease liabilities are initially recognized based on the present value of the future lease payments over the expected
lease term. As for most leases the implicit rate is not readily determinable, the Company uses a discount rate in determining the
present value of future payments based on the yield-to-maturity of the Company’s secured publicly traded United States dollars
denominated debt instruments interpolating the duration of the debt to the term of the executed lease.
The Company’s leases have base rent periods and some with optional renewal periods. Leases with base rent periods of less than
12 months are not recorded on the balance sheet. For purposes of measurement of lease liabilities, the expected lease terms may
include renewal options when it is reasonably certain that the Company will exercise such options. Based on conditions of the
Company's existing leases and its overall business strategies, the majority of the Company's renewal options are not reasonably
certain in determining the expected lease term. The Company will periodically reassess expected lease terms (and purchase options,
if applicable) based on significant triggering events or compelling economic reasons to exercise such options.
The Company’s primary lease income represents sublease income on certain real estate leases. Sublease income is included in
other revenue and presented gross from rent expense. For customer premise equipment ("CPE") where such CPE would qualify
as a lease, the Company applies the practical expedient to combine the operating lease with the subscription service revenue as a
single performance obligation in accordance with revenue recognition accounting guidance as the subscription service is the
predominant component.
Other Noncurrent Assets
Other noncurrent assets primarily include investments, trademarks, customer contract costs and other intangible assets. The
Company accounts for its investments in less than majority owned investees under either the equity method or as equity securities.
The Company applies the equity method to investments when it has the ability to exercise significant influence over the operating
and financial policies of the investee. The Company’s share of the investee’s earnings (losses) is included in other expense, net
in the consolidated statements of operations. The Company monitors its investments for indicators that a decrease in investment
value has occurred that is other than temporary. If it has been determined that an investment has sustained an other than temporary
decline in value, the investment is written down to fair value with a charge to earnings. Investments acquired are measured at fair
value utilizing the acquisition method of accounting. The difference between the fair value and the amount of underlying equity
in net assets for most equity method investments is due to previously unrecognized intangible assets at the investee. These amounts
are amortized as a component of equity earnings (losses), recorded within other expense, net over the estimated useful life of the
asset. Trademarks have been determined to have an indefinite life and are tested annually for impairment. Customer contract
costs are deferred in other noncurrent assets for upfront costs incurred to obtain a customer contract and upfront costs to fulfill a
customer contract, as further discussed below under the Customer Contract Costs accounting policy.
Revenue Recognition
Nature of Services
Residential Services
Residential customers are offered video, Internet, and voice services primarily on a subscription basis. Residential customers may
generally cancel their subscriptions at the end of their monthly service period without penalty. Each subscription service provided
F- 10
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
is accounted for as a distinct performance obligation and revenue is recognized ratably over the monthly service period as the
subscription services are delivered. Each optional service purchased is generally accounted for as a distinct performance obligation
when purchased and revenue is recognized when the service is provided.
Residential video customers have the option to purchase additional tiers of services, as well as video-on-demand (“VOD”)
programming and pay-per-view programming on a per-event basis. Video revenues consist primarily of revenues from the selected
programming service tier, as well as VOD fees, pay-per-view fees, retransmission fees, regulatory fees, equipment service fees
and video installation fees.
Residential Internet customers receive data download and upload services with speeds dependent on the selected tier of service.
Customers are also offered a security suite, an in-home WiFi product, and an out-of-home WiFi service. Internet revenues consist
primarily of data services, WiFi service fees and Internet installation fees.
Residential voice customers receive unlimited local and long distance calling to United States, Canada, Mexico, and Puerto Rico,
voicemail, call waiting, caller ID, call forward and other features. Customers may also purchase international calling either by
the minute, or through packages of minutes per month. Voice revenues consist primarily of voice services and regulatory fees.
Small and Medium Business
Small and medium business customers are offered video, Internet and voice services similar to those provided to residential
customers. Small and medium business customers may generally cancel their subscriptions at the end of their monthly service
period without penalty. Each subscription service provided is accounted for as a distinct performance obligation and revenue is
recognized ratably over the monthly service period as the subscription services are delivered.
Enterprise
Services to enterprise clients include more tailored communications products and managed service solutions to larger businesses,
as well as high-capacity last-mile data connectivity services to mobile and wireline carriers on a wholesale basis. Services are
primarily offered on a subscription basis with a contractually specified and non-cancelable service period. Each subscription service
provided is accounted for as a distinct performance obligation and revenue is recognized ratably over the contract period as the
subscription services are delivered. Enterprise subscription services are billed as monthly recurring charges to customers and
related installation services, if applicable, are billed upon completion of the customer installation. Installation services are not
accounted for as distinct performance obligations, but rather a component of the connectivity services, and therefore upfront
installation fees are deferred and recognized as revenue over the related contract period.
Advertising Services
The Company offers local, regional and national businesses the opportunity to advertise in individual and multiple service areas
on cable television networks and digital outlets. Placement of advertising is accounted for as a distinct performance obligation
and revenue is recognized at the point in time when the advertising is distributed. In some service areas, the Company has formed
advertising interconnects or entered into representation agreements with other video distributors, under which the Company sells
advertising on behalf of those distributors. In other service areas, the Company has entered into representation agreements under
which another operator in the area will sell advertising on the Company’s behalf. For representation arrangements in which the
Company controls the sale of advertising and acts as the principal to the transaction, the Company recognizes revenue earned from
the advertising customer on a gross basis and the amount remitted to the distributor as an operating expense. For other representation
arrangements in which the Company does not control the sale of advertising and acts as an agent to the transaction, the Company
recognizes revenue net of any fee remitted to the distributor.
Mobile
We also offer mobile service to residential customers and recently launched mobile service to small and medium business customers.
Mobile services are sold under an unlimited data plan or a by-the-gig data usage plan and revenue is recognized ratably over the
monthly service period as the services are delivered. Customers can purchase mobile equipment, including devices and accessory
products, and have the option to pay for devices under interest-free monthly installment plans. The sale of equipment is a separate
F- 11
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
performance obligation. Revenue is recognized from the sale of equipment upon delivery and acceptance by the customer, as this
is when control passes to the customer.
The Company’s revenues by product line are as follows:
Video
Internet
Voice
Residential revenue
Small and medium business
Enterprise
Commercial revenue
Advertising sales
Mobile
Other
Year Ended December 31,
2018
2017
2019
17,607
16,667
1,920
36,194
3,868
2,556
6,424
1,568
726
852
45,764
$
$
17,348
15,181
2,114
34,643
3,665
2,528
6,193
1,785
106
907
43,634
$
$
16,621
14,101
2,542
33,264
3,547
2,373
5,920
1,510
—
887
41,581
$
$
Fees imposed on the Company by various governmental authorities are passed through on a monthly basis to the Company’s
customers and are periodically remitted to authorities. Fees of $1.1 billion, $1.0 billion and $961 million for the years ended
December 31, 2019, 2018 and 2017, respectively, are reported in video, voice, mobile and commercial revenues, on a gross basis
with a corresponding operating expense because the Company is acting as a principal. Certain taxes, such as sales taxes imposed
on the Company’s customers, collected and remitted to state and local authorities, are recorded on a net basis because the Company
is acting as an agent in such situations.
A significant portion of our revenue is derived from customers who may generally cancel their monthly subscriptions at any time
without penalty. As such, the amount of revenue related to unsatisfied performance obligations is not necessarily indicative of the
future revenue to be recognized from our existing customer base. Revenue from customers with a contractually specified term
and non-cancelable service period will be recognized over the term of such contracts, which is generally two to seven years for
our enterprise contracts with a weighted average term of approximately three years.
Significant Judgments in Evaluating Revenue Recognition
The Company often provides multiple services to a customer. Provision of customer premise equipment, installation services, and
additional service tiers may have a significant level of integration and interdependency with the subscription video, Internet, voice,
or connectivity services provided. Judgment is required to determine whether provision of customer premise equipment, installation
services, and additional service tiers are considered distinct and accounted for separately, or not distinct and accounted for together
with the subscription services.
Allocation of the transaction price to the distinct performance obligations in bundled residential service subscriptions requires
judgment. The transaction price for a bundle of residential services is frequently less than the sum of the standalone selling prices
of each individual service. The Company allocates the residential services bundle discount among the services to which the
discount relates based on the relative standalone selling prices of those services. Standalone selling prices for the Company’s
residential video and Internet services are directly observable, while standalone selling price for the Company’s residential voice
service is estimated using the adjusted market assessment approach which relies upon information from peers and competitors
who sell residential voice services individually.
The Company believes residential and small and medium business non-refundable upfront installation fees charged to customers
result in a material right to renew the contract as such fees are not required to be paid upon subsequent renewals. The residential
and small and medium business upfront fee is deferred over the period the fee remains material to the customer, which the Company
has estimated to be approximately six months. Estimation of the period the fee remains material to the customer requires
F- 12
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
consideration of both quantitative and qualitative factors including average installation fee, average revenue per customer, and
customer behavior, among others.
Deferred Revenue Contract Liabilities
Timing of revenue recognition may differ from the timing of invoicing to customers. Residential, small and medium business, and
enterprise customers are invoiced for subscription services in advance of the service period. Deferred revenue liabilities, or contract
liabilities, are recorded when the Company collects payments in advance of performing the services. Deferred revenue liabilities,
or contract liabilities, are also recorded when the Company invoices customers upfront for installation services that are recognized
as revenue over time. Residential and small and medium business installation revenues are deferred over the period the fee remains
material to the customer. Enterprise installation revenues are deferred using a portfolio approach over the average contract life of
each enterprise service category. As of December 31, 2019 and 2018, current deferred revenue liabilities consisting of customer
prepayments of $366 million and $410 million, respectively, and upfront installation fees of $94 million and $84 million,
respectively, were included in accounts payable and accrued liabilities. As of December 31, 2019 and 2018, long-term deferred
revenue liabilities consisting of enterprise upfront installation fees of $34 million were included in other long-term liabilities.
Customer Contract Costs
The Company recognizes an asset for incremental costs of obtaining a contract with a customer if the amortization period of those
costs is expected to be longer than one year and the costs are expected to be recovered. Enterprise sales commission costs meet
the requirements to be deferred and, as a result, are recognized using a portfolio approach over a commission expense weighted-
average enterprise contract period. Deferred enterprise commission costs are included in other noncurrent assets in the consolidated
balance sheet and totaled $143 million and $142 million as of December 31, 2019 and 2018, respectively. As the amortization
period of residential and small and medium business commissions costs is less than one year, the Company applies the practical
expedient that allows such costs to be expensed as incurred. The Company has determined that the amortization period associated
with residential and small and medium business commission costs is less than one year based on qualitative and quantitative factors.
The Company recognizes an asset for costs incurred to fulfill a contract when those costs are directly related to services provided
under the contract, generate or enhance resources of the entity that will be used in performing service obligations under the contract,
and are expected to be recovered. Right-of-entry costs represent upfront costs incurred related to agreements entered into with
multiple dwelling units (“MDUs”) including landlords, real estate companies or owners to gain access to a building in order to
market and service customers who reside in the building. Right-of-entry costs meet the requirements to be deferred and, as a
result, are recognized over the term of the contracts. Deferred right-of-entry costs are included in other noncurrent assets in the
consolidated balance sheet and totaled $284 million and $273 million as of December 31, 2019 and 2018, respectively. Amortization
expense of $67 million and $62 million was included in regulatory, connectivity and produced content within operating costs and
expenses in the consolidated statements of operations for the year ended December 31, 2019 and 2018, respectively. Residential
and small and medium business installation costs not capitalized into property, plant and equipment are expensed as incurred under
cable industry-specific guidance.
Programming Costs
The Company has various contracts to obtain video programming from vendors whose compensation is typically based on a flat
fee per customer. The cost of the right to exhibit network programming under such arrangements is recorded in operating expenses
in the month the programming is available for exhibition. Programming costs are paid each month based on calculations performed
by the Company and are subject to periodic audits performed by the programmers. Certain programming contracts contain cash
and non-cash consideration from the programmers. If consideration received does not relate to a separate product or service, the
Company recognizes the consideration on a straight-line basis over the life of the programming agreement as a reduction of
programming expense. Programming costs included in the statements of operations were $11.3 billion, $11.1 billion and $10.6
billion for the years ended December 31, 2019, 2018 and 2017, respectively.
Advertising Costs
Advertising costs associated with marketing the Company’s products and services are generally expensed as costs are incurred.
F- 13
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Multiple-Element Transactions
In the normal course of business, the Company enters into multiple-element transactions where it is simultaneously both a customer
and a vendor with the same counterparty or in which it purchases multiple products and/or services, or settles outstanding items
contemporaneous with the purchase of a product or service from a single counterparty. Transactions, although negotiated
contemporaneously, may be documented in one or more contracts. The Company’s policy for accounting for each transaction
negotiated contemporaneously is to record each element of the transaction based on the respective estimated fair values of the
products or services purchased and the products or services sold. In determining the fair value of the respective elements, the
Company refers to quoted market prices (where available), historical transactions or comparable cash transactions. Cash
consideration received from a vendor is recorded as a reduction in the price of the vendor’s product unless (i) the consideration is
for the reimbursement of a specific, incremental, identifiable cost incurred, in which case the cash consideration received would
be recorded as a reduction in such cost (e.g., marketing costs), or (ii) an identifiable benefit in exchange for the consideration is
provided, in which case revenue would be recognized for this element.
Stock-Based Compensation
Restricted stock, restricted stock units, stock options as well as equity awards with market conditions are measured at the grant
date fair value and amortized to stock compensation expense over the requisite service period. The fair value of options is estimated
on the date of grant using the Black-Scholes option-pricing model and the fair value of equity awards with market conditions is
estimated on the date of grant using Monte Carlo simulations. The grant date weighted average assumptions used during the years
ended December 31, 2019, 2018 and 2017, respectively, were: risk-free interest rate of 2.5%, 2.4% and 1.8%; expected volatility
of 27%, 25% and 25%; and expected lives of 4.9 years, 5.1 years and 4.6 years. The Company’s volatility assumptions represent
management’s best estimate and were based on historical volatility. Expected lives were estimated using historical exercise data.
The valuations assume no dividends are paid. The Company has elected an accounting policy to assume zero forfeitures for stock
awards grants and account for forfeitures when they occur.
Defined Benefit Pension Plans
The Company sponsors three qualified defined benefit pension plans and one nonqualified defined benefit pension plan that provide
pension benefits to a majority of employees who were employed by Time Warner Cable Inc. ("TWC") before the merger with
TWC. Pension benefits are based on formulas that reflect the employees’ years of service and compensation during their employment
period. Actuarial gains or losses are changes in the amount of either the benefit obligation or the fair value of plan assets resulting
from experience different from that assumed or from changes in assumptions. The Company has elected to follow a mark-to-
market pension accounting policy for recording the actuarial gains or losses annually during the fourth quarter, or earlier if a
remeasurement event occurs during an interim period.
Income Taxes
The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and
the tax basis of the Company’s assets and liabilities and expected benefits of utilizing loss carryforwards. Since substantially all
the Company’s operations are held through its partnership interest in Charter Holdings, the primary deferred tax component recorded
in the consolidated balance sheet relates to the excess financial reporting outside basis, excluding amounts attributable to
nondeductible goodwill, over Charter’s tax basis in its investment in the partnership. Valuation allowances are established when
management determines that it is more likely than not that some portion or the entire deferred tax asset will not be realized. The
impact on deferred taxes of changes in tax rates and tax law, if any, applied to the years during which temporary differences are
expected to be settled, are reflected in the consolidated financial statements in the period of enactment. In determining the
Company’s tax provision for financial reporting purposes, the Company establishes a reserve for uncertain tax positions unless
such positions are determined to be “more likely than not” of being sustained upon examination, based on their technical merits.
There is considerable judgment involved in making such a determination. Interest and penalties are recognized on uncertain
income tax positions as part of the income tax provision. See Note 17.
F- 14
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Segments
The Company’s operations are managed and reported to its Chief Executive Officer (“CEO”), the Company’s chief operating
decision maker, on a consolidated basis. The CEO assesses performance and allocates resources based on the consolidated results
of operations. Under this organizational and reporting structure, the Company has one reportable segment, cable services.
3. Allowance for Doubtful Accounts
Activity in the allowance for doubtful accounts is summarized as follows for the years presented:
Balance, beginning of period
Charged to expense
Uncollected balances written off, net of recoveries
Balance, end of period
4. Property, Plant and Equipment
Year Ended December 31,
2018
2017
2019
$
$
129
659
(637)
151
$
$
113
570
(554)
129
$
$
124
469
(480)
113
Property, plant and equipment consists of the following as of December 31, 2019 and 2018:
Cable distribution systems
Customer premise equipment and installations
Vehicles and equipment
Buildings and improvements
Furniture, fixtures and equipment
Less: accumulated depreciation
December 31,
2019
2018
31,542
17,492
1,879
4,843
6,491
62,247
(27,656)
34,591
$
$
29,249
17,241
1,724
4,360
5,627
58,201
(23,075)
35,126
$
$
The Company periodically evaluates the estimated useful lives used to depreciate its assets and the estimated amount of assets
that will be abandoned or have minimal use in the future. A significant change in assumptions about the extent or timing of future
asset retirements, or in the Company’s use of new technology and upgrade programs, could materially affect future depreciation
expense.
Depreciation expense for the years ended December 31, 2019, 2018 and 2017 was $7.8 billion, $7.9 billion, and $7.8 billion,
respectively.
5. Franchises, Goodwill and Other Intangible Assets
Franchise rights represent the value attributed to agreements or authorizations with local and state authorities that allow access to
homes in cable service areas. For valuation purposes, they are defined as the future economic benefits of the right to solicit and
service potential customers (customer marketing rights), and the right to deploy and market new services to potential customers
(service marketing rights).
Management estimates the fair value of franchise rights at the date of acquisition and determines if the franchise has a finite life
or an indefinite life. The Company has concluded that all of its franchises qualify for indefinite life treatment given that there are
no legal, regulatory, contractual, competitive, economic or other factors which limit the period over which these rights will contribute
F- 15
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
to the Company's cash flows. The Company reassesses this determination periodically or whenever events or substantive changes
in circumstances occur.
All franchises are tested for impairment annually or more frequently as warranted by events or changes in circumstances. Franchise
assets are aggregated into essentially inseparable units of accounting to conduct valuations. The units of accounting generally
represent geographical clustering of the Company's cable systems into groups. The Company assesses qualitative factors to
determine whether the existence of events or circumstances leads to a determination that it is more likely than not that an indefinite
lived intangible asset has been impaired. If, after this optional qualitative assessment, the Company determines that it is not more
likely than not that an indefinite lived intangible asset has been impaired, then no further quantitative testing is necessary. In
completing the qualitative impairment testing, the Company evaluates a multitude of factors that affect the fair value of our franchise
assets. Examples of such factors include environmental and competitive changes within our operating footprint, actual and projected
operating performance, the consistency of our operating margins, equity and debt market trends, including changes in our market
capitalization, and changes in our regulatory and political landscape, among other factors. The Company performed a qualitative
assessment in 2019, which also included consideration of a fair value appraisal performed for tax purposes in the beginning of
2019 as of a December 31, 2018 valuation date (the "Appraisal"). After consideration of the qualitative factors in 2019, including
the results of the Appraisal, the Company concluded that it is more likely than not that the fair value of the franchise assets in each
unit of accounting exceeds the carrying value of such assets and therefore did not perform a quantitative analysis at the assessment
date. Periodically, the Company will elect to perform a quantitative analysis for impairment testing. If the Company elects or is
required to perform a quantitative analysis to test its franchise assets for impairment, the methodology described below is utilized.
If a quantitative analysis is performed, the estimated fair value of franchises is determined utilizing an income approach model
based on the present value of the estimated discrete future cash flows attributable to each of the intangible assets identified assuming
a discount rate. The fair value of franchises is determined based on estimated discrete discounted future cash flows using assumptions
consistent with internal forecasts. The franchise after-tax cash flow is calculated as the after-tax cash flow generated by the potential
customers obtained. The sum of the present value of the franchises’ after-tax cash flow in years 1 through 10 and the continuing
value of the after-tax cash flow beyond year 10 yields the fair value of the franchises.
This approach makes use of unobservable factors such as projected revenues, expenses, capital expenditures, customer trends, and
a discount rate applied to the estimated cash flows. The determination of the franchise discount rate is derived from the Company’s
weighted average cost of capital, which uses a market participant’s cost of equity and after-tax cost of debt and reflects the risks
inherent in the cash flows. The Company estimates discounted future cash flows using reasonable and appropriate assumptions
including among others, penetration rates; revenue growth rates; operating margins; and capital expenditures. The assumptions
are based on the Company’s and its peers’ historical operating performance adjusted for current and expected competitive and
economic factors surrounding the cable industry. The estimates and assumptions made in the Company’s valuations are inherently
subject to significant uncertainties, many of which are beyond its control, and there is no assurance that these results can be
achieved. The primary assumptions for which there is a reasonable possibility of the occurrence of a variation that would significantly
affect the measurement value include the assumptions regarding revenue growth, programming expense growth rates, the amount
and timing of capital expenditures, actual customer trends and the discount rate utilized.
The Company has determined that it has one reporting unit for purposes of the assessment of goodwill impairment. The fair value
of the reporting unit is determined using both an income approach and market approach. The Company’s income approach model
used for its reporting unit valuation is consistent with that used for its franchise valuation noted above except that cash flows from
the entire business enterprise are used for the reporting unit valuation. The Company’s market approach model estimates the fair
value of the reporting unit based on market prices in actual precedent transactions of similar businesses and market valuations of
guideline public companies. Goodwill is tested for impairment as of November 30 of each year, or more frequently as warranted
by events or changes in circumstances. Accounting guidance also permits an optional qualitative assessment for goodwill to
determine whether it is more likely than not that the carrying value of a reporting unit exceeds its fair value. If, after this qualitative
assessment, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying
amount then no further quantitative testing would be necessary. A quantitative assessment is performed if the qualitative assessment
results in a more likely than not determination or if a qualitative assessment is not performed. The quantitative assessment considers
whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is recorded to the extent
the reporting unit’s carrying value exceeds its fair value. As with the Company’s franchise impairment testing, in 2019 the Company
elected to perform a qualitative goodwill impairment assessment, which incorporated the results of the Appraisal and consideration
of the same qualitative factors relevant to the Company's franchise impairment testing. As a result of that assessment, the Company
concluded that goodwill is not impaired.
F- 16
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Customer relationships are recorded at fair value as of the date acquired less accumulated amortization. Customer relationships,
for valuation purposes, represent the value of the business relationship with existing customers, and are calculated by projecting
the discrete future after-tax cash flows from these customers, including the right to deploy and market additional services to these
customers. The present value of these after-tax cash flows yields the fair value of the customer relationships. The use of different
valuation assumptions or definitions of franchises or customer relationships, such as our inclusion of the value of selling additional
services to our current customers within customer relationships versus franchises, could significantly impact our valuations and
any resulting impairment. Customer relationships are amortized on an accelerated sum of years’ digits method over useful lives
of 8-15 years based on the period over which current customers are expected to generate cash flows. The Company periodically
evaluates the remaining useful lives of its customer relationships to determine whether events or circumstances warrant revision
to the remaining periods of amortization. Customer relationships are evaluated for impairment upon the occurrence of events or
changes in circumstances indicating that the carrying amount of an asset may not be recoverable. Customer relationships are
deemed impaired when the carrying value exceeds the projected undiscounted future cash flows associated with the customer
relationships. No impairment of customer relationships was recorded in the years ended December 31, 2019, 2018 or 2017.
The fair value of trademarks is determined using the relief-from-royalty method, a variation of the income approach, which applies
a fair royalty rate to estimated revenue derived under the Company’s trademarks. The fair value of the intangible is estimated to
be the present value of the royalty saved because the Company owns the trademarks. Royalty rates are estimated based on a review
of market royalty rates in the communications and entertainment industries. As the Company expects to continue to use each
trademark indefinitely, trademarks have been assigned an indefinite life and are tested annually for impairment using either a
qualitative analysis or quantitative analysis as elected by management. As with the Company’s franchise impairment testing, in
2019 the Company elected to perform a qualitative trademark impairment assessment and concluded that trademarks are not
impaired.
As of December 31, 2019 and 2018, indefinite-lived and finite-lived intangible assets are presented in the following table:
December 31,
2019
2018
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
67,322
$
— $
67,322
$
67,319
$
— $
29,554
159
—
—
29,554
159
29,554
159
—
—
67,319
29,554
159
97,035
$
— $
97,035
$
97,032
$
— $
97,032
18,230
405
18,635
$
$
(10,777) $
(122)
(10,899) $
7,453
283
7,736
$
$
18,229
409
18,638
$
$
(8,664) $
(92)
(8,756) $
9,565
317
9,882
Indefinite-lived intangible assets:
Franchises
Goodwill
Trademarks
Finite-lived intangible assets:
Customer relationships
Other intangible assets
$
$
$
$
Amortization expense related to customer relationships and other intangible assets for the years ended December 31, 2019, 2018
and 2017 was $2.2 billion, $2.4 billion and $2.7 billion, respectively.
F- 17
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
The Company expects amortization expense on its finite-lived intangible assets will be as follows.
2020
2021
2022
2023
2024
Thereafter
$
$
1,874
1,599
1,329
1,072
821
1,041
7,736
Actual amortization expense in future periods could differ from these estimates as a result of new intangible asset acquisitions or
divestitures, changes in useful lives, impairments, adoption of new accounting standards and other relevant factors.
6.
Investments
Investments consisted of the following as of December 31, 2019 and 2018:
Equity-method investments
Other investments
Total investments
December 31,
2019
2018
$
$
309
21
330
$
$
454
22
476
The Company’s equity-method investments consist of investments in companies that develop sports programming services, develop
applications to improve the security, control and privacy of connected devices in homes and businesses for broadband network
operators, distribute multi-video programs to national advertisers, provide programming on a video on demand, pay-per-view and
subscription basis and develop and deploy cloud-based software video user interfaces.
The Company's equity-method investments balances reflected in the table above includes differences between the acquisition date
fair value of certain investments acquired and the underlying equity in the net assets of the investee, referred to as a basis difference.
This basis difference is amortized as a component of equity earnings. The remaining unamortized basis difference was $203
million and $396 million as of December 31, 2019 and 2018, respectively.
The Company applies the equity method of accounting to these and other less significant equity-method investments, all of which
are recorded in other noncurrent assets in the consolidated balance sheets as of December 31, 2019 and 2018. For the years ended
December 31, 2019, 2018 and 2017, net losses from equity-method investments were $137 million, $77 million and $18 million,
respectively, which were recorded in other expense, net in the consolidated statements of operations. Net losses from equity-
method investments for the years ended December 31, 2019 and 2018 included impairments on equity investments of approximately
$121 million and $58 million, respectively.
F- 18
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Real Estate Investments through Variable Interest Entities
In July 2018, the Company's build-to-suit lease arrangement with a single-asset special purpose entity ("SPE") to build a new
Charter headquarters in Stamford, Connecticut obtained all approvals and was made effective. The SPE obtained a first-lien
mortgage note to finance the construction with fixed monthly payments through July 15, 2035 with a 5.612% coupon interest rate.
All payments of the mortgage note are guaranteed by Charter. The initial term of the lease is 15 years commencing August 1,
2020, with no termination options. At the end of the lease term there is a mirrored put option for the SPE to sell the property to
Charter and call option for Charter to purchase the property for a fixed purchase price. As the Company has determined the SPE
is a VIE of which it became the primary beneficiary upon the effectiveness of the arrangement, the Company has consolidated the
assets and liabilities of the SPE in its consolidated balance sheet as of December 31, 2019 and 2018 as follows.
Assets
Current assets
Restricted cash
Property, plant and equipment
Liabilities
Current liabilities
Other long-term liabilities
December 31,
2019
2018
$
$
$
$
$
— $
$
66
$
295
11
350
$
$
2
214
130
—
346
Property, plant and equipment includes land, a parking garage and building construction costs, including the capitalization of
qualifying interest. As of December 31, 2019 and 2018, other long-term liabilities include $339 million and $342 million,
respectively, in VIE's mortgage note liability and $11 million and $4 million, respectively, in liability-classified noncontrolling
interest recorded at amortized cost with accretion towards settlement of the put/call option in the lease.
The consolidated statement of cash flows for the year ended December 31, 2019 includes a decrease to restricted cash of $148
million primarily related to building construction costs. The consolidated statement of cash flows for the year ended December 31,
2018 includes an increase to restricted cash of $214 million as a result of activity in the VIE including borrowings of $342 million
by the VIE on the mortgage note liability offset by distributions by the VIE to the noncontrolling interest of $107 million for the
contributed land and parking garage and $21 million incurred by the VIE for building construction costs.
In October 2017, the Company acquired a defaulted mortgage loan issued to a single-asset SPE. The consolidated statement of
cash flows for the year ended December 31, 2017 includes $105 million related to the acquisition of the mortgage loan. As the
Company has determined the SPE is a VIE of which it is the primary beneficiary, the Company has consolidated the assets and
liabilities of the SPE in its consolidated balance sheet which are primarily comprised of the building securing the mortgage loan.
F- 19
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
7. Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consist of the following as of December 31, 2019 and 2018:
Accounts payable – trade
Deferred revenue
Accrued liabilities:
Programming costs
Labor
Capital expenditures
Interest
Taxes and regulatory fees
Property and casualty
Other
8. Leases
The components of lease related expenses, net are as follows.
Operating lease expense (a)
Finance lease expense:
Amortization of right-of-use assets
Interest on lease liabilities
Total finance lease expense
Sublease income
Total lease related expenses, net
December 31,
2019
2018
$
786
460
2,042
1,028
1,441
1,052
537
458
867
8,671
$
758
494
2,044
1,052
1,472
1,045
526
424
990
8,805
$
$
Year Ended
December 31, 2019
$
$
428
12
5
17
(27)
418
(a)
Includes short-term leases and variable leases costs of $130 million for the year ended December 31, 2019.
F- 20
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Supplemental cash flow information related to leases is as follows.
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
Finance leases
Supplemental balance sheet information related to leases is as follows.
Operating leases:
Operating lease right-of-use assets
Current operating lease liabilities
Long-term operating lease liabilities
Total operating lease liabilities
Finance leases:
Finance lease right-of-use assets (included within property, plant and equipment, net)
Current finance lease liabilities (included within accounts payable and accrued liabilities)
Long-term finance lease liabilities (included within other long-term liabilities)
Total finance lease liabilities
Weighted average remaining lease term
Operating leases
Finance leases
Weighted average discount rate
Operating leases
Finance leases
$
$
$
$
$
$
$
$
$
$
$
Year Ended
December 31, 2019
288
4
6
257
35
December 31, 2019
1,092
214
979
1,193
172
4
58
62
6.6 years
16.6 years
4.4%
5.7%
F- 21
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Maturities of lease liabilities are as follows.
2020
2021
2022
2023
2024
Thereafter
Undiscounted lease cash flow commitments
Reconciling impact from discounting
Lease liabilities on consolidated balance sheet as of December 31, 2019
Operating leases
265
$
259
221
193
155
406
1,499
(306)
1,193
$
$
$
Finance leases
7
6
6
6
6
64
95
(33)
62
The following table presents the Company’s unadjusted lease commitments as of December 31, 2018 as a required disclosure for
companies adopting the lease standard prospectively without revising comparative period information.
2019
2020
2021
2022
2023
Thereafter
Operating leases
286
$
254
207
170
143
440
1,500
$
$
$
Capital leases
10
9
9
9
10
64
111
9. Long-Term Debt
Long-term debt consists of the following as of December 31, 2019 and 2018:
CCO Holdings, LLC:
5.250% senior notes due March 15, 2021
5.250% senior notes due September 30, 2022
5.125% senior notes due February 15, 2023
4.000% senior notes due March 1, 2023
5.125% senior notes due May 1, 2023
5.750% senior notes due September 1, 2023
5.750% senior notes due January 15, 2024
5.875% senior notes due April 1, 2024
5.375% senior notes due May 1, 2025
5.750% senior notes due February 15, 2026
5.500% senior notes due May 1, 2026
5.875% senior notes due May 1, 2027
5.125% senior notes due May 1, 2027
December 31,
2019
2018
Principal
Amount
Accreted
Value
Principal
Amount
Accreted
Value
$
— $
— $
1,250
1,000
500
1,150
500
150
1,700
750
2,500
1,500
800
3,250
1,241
995
497
1,145
497
149
1,690
746
2,471
1,491
796
3,222
$
500
1,250
1,000
500
1,150
500
1,000
1,700
750
2,500
1,500
800
3,250
498
1,238
994
496
1,144
497
993
1,688
745
2,467
1,490
795
3,219
F- 22
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
5.000% senior notes due February 1, 2028
5.375% senior notes due June 1, 2029
4.750% senior notes due March 1, 2030
Charter Communications Operating, LLC:
3.579% senior notes due July 23, 2020
4.464% senior notes due July 23, 2022
Senior floating rate notes due February 1, 2024
4.500% senior notes due February 1, 2024
4.908% senior notes due July 23, 2025
3.750% senior notes due February 15, 2028
4.200% senior notes due March 15, 2028
5.050% senior notes due March 30, 2029
6.384% senior notes due October 23, 2035
5.375% senior notes due April 1, 2038
6.484% senior notes due October 23, 2045
5.375% senior notes due May 1, 2047
5.750% senior notes due April 1, 2048
5.125% senior notes due July 1, 2049
4.800% senior notes due March 1, 2050
6.834% senior notes due October 23, 2055
Credit facilities
Time Warner Cable, LLC:
8.750% senior notes due February 14, 2019
8.250% senior notes due April 1, 2019
5.000% senior notes due February 1, 2020
4.125% senior notes due February 15, 2021
4.000% senior notes due September 1, 2021
5.750% sterling senior notes due June 2, 2031 (a)
6.550% senior debentures due May 1, 2037
7.300% senior debentures due July 1, 2038
6.750% senior debentures due June 15, 2039
5.875% senior debentures due November 15, 2040
5.500% senior debentures due September 1, 2041
5.250% sterling senior notes due July 15, 2042 (b)
4.500% senior debentures due September 15, 2042
Time Warner Cable Enterprises LLC:
8.375% senior debentures due March 15, 2023
8.375% senior debentures due July 15, 2033
Total debt
Less current portion:
8.750% senior notes due February 14, 2019
8.250% senior notes due April 1, 2019
5.000% senior notes due February 1, 2020
3.579% senior notes due July 23, 2020
Long-term debt
2,500
1,500
3,050
2,000
3,000
900
1,100
4,500
1,000
1,250
1,250
2,000
800
3,500
2,500
2,450
1,250
2,800
500
10,427
—
—
1,500
700
1,000
828
1,500
1,500
1,500
1,200
1,250
861
1,250
2,469
1,501
3,041
1,997
2,987
902
1,093
4,471
987
1,240
1,241
1,982
786
3,467
2,506
2,391
1,240
2,798
495
10,345
—
—
1,503
711
1,021
886
1,675
1,772
1,713
1,255
1,258
831
1,142
2,500
—
—
2,000
3,000
900
1,100
4,500
1,000
1,250
—
2,000
800
3,500
2,500
1,700
—
—
500
10,038
1,250
2,000
1,500
700
1,000
796
1,500
1,500
1,500
1,200
1,250
827
1,250
2,466
—
—
1,992
2,982
903
1,091
4,466
986
1,240
—
1,982
785
3,467
2,506
1,683
—
—
495
9,959
1,260
2,030
1,541
721
1,033
855
1,680
1,780
1,719
1,256
1,258
798
1,140
1,000
1,000
78,416
—
—
(1,500)
(2,000)
74,916
$
1,148
1,284
79,078
—
—
(1,503)
(1,997)
75,578
$
1,000
1,000
71,961
(1,250)
(2,000)
—
—
68,711
$
1,191
1,298
72,827
(1,260)
(2,030)
—
—
69,537
$
F- 23
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
(a) Principal amount includes £625 million valued at $828 million and $796 million as of December 31, 2019 and 2018,
respectively, using the exchange rate at that date.
(b) Principal amount includes £650 million valued at $861 million and $827 million as of December 31, 2019 and 2018,
respectively, using the exchange rate at that date.
The accreted values presented in the table above represent the principal amount of the debt adjusted for original issue discount or
premium at the time of sale, deferred financing costs, and, in regards to the debt assumed in acquisitions, fair value premium
adjustments as a result of applying acquisition accounting plus the accretion of those amounts to the balance sheet date. However,
the amount that is currently payable if the debt becomes immediately due is equal to the principal amount of the debt. In regards
to the fixed-rate British pound sterling denominated notes (the “Sterling Notes”), the principal amount of the debt and any premium
or discount is remeasured into US dollars as of each balance sheet date. See Note 12. The Company has availability under the
Charter Operating credit facilities of approximately $4.7 billion as of December 31, 2019.
In 2019, CCO Holdings and CCO Holdings Capital Corp. jointly issued $4.55 billion aggregate principal amount of senior unsecured
notes at varying rates, prices and maturity dates, and Charter Operating and Charter Communications Operating Capital Corp.
jointly issued $6.05 billion aggregate principal amount of senior secured notes at varying rates, prices and maturity dates. The net
proceeds were used to pay related fees and expenses and for general corporate purposes, including funding buybacks of Charter
Class A common stock and Charter Holdings common units as well as repaying certain indebtedness.
During the years ended December 31, 2019 and 2017, the Company repurchased $1.35 billion and $2.8 billion, respectively, of
various series of senior notes. Loss on extinguishment of debt consisted of the following for the years ended December 31, 2019
and 2017.
CCO Holdings notes redemption
Time Warner Cable, LLC notes redemption
Charter Operating credit facility refinancing
CCO Holdings Notes
Year Ended December 31,
2019
2017
$
$
(22) $
—
(3)
(25) $
(33)
(1)
(6)
(40)
The CCO Holdings notes are senior debt obligations of CCO Holdings and CCO Holdings Capital and rank equally with all other
current and future unsecured, unsubordinated obligations of CCO Holdings and CCO Holdings Capital. They are structurally
subordinated to all obligations of subsidiaries of CCO Holdings.
CCO Holdings may redeem some or all of the CCO Holdings notes at any time at a premium. The optional redemption price
declines to 100% of the respective series’ principal amount, plus accrued and unpaid interest, if any, on or after varying dates in
2020 through 2027.
In addition, at any time prior to varying dates in 2020 through 2022, CCO Holdings may redeem up to 40% of the aggregate
principal amount of certain notes at a premium plus accrued and unpaid interest to the redemption date, with the net cash proceeds
of one or more equity offerings (as defined in the indenture); provided that certain conditions are met. In the event of specified
change of control events, CCO Holdings must offer to purchase the outstanding CCO Holdings notes from the holders at a purchase
price equal to 101% of the total principal amount of the notes, plus any accrued and unpaid interest.
High-Yield Restrictive Covenants; Limitation on Indebtedness.
The indentures governing the CCO Holdings notes contain certain covenants that restrict the ability of CCO Holdings, CCO
Holdings Capital and all of their restricted subsidiaries to:
•
•
incur additional debt;
pay dividends on equity or repurchase equity;
F- 24
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
• make investments;
•
•
•
sell all or substantially all of their assets or merge with or into other companies;
sell assets;
in the case of restricted subsidiaries, create or permit to exist dividend or payment restrictions with respect to CCO Holdings,
guarantee their parent companies debt, or issue specified equity interests;
engage in certain transactions with affiliates; and
grant liens.
•
•
The above limitations in certain circumstances regarding incurrence of debt, payment of dividends and making investments
contained in the indentures of CCO Holdings permit CCO Holdings and its restricted subsidiaries to perform the above, so long
as, after giving pro forma effect to the above, the leverage ratio would be below a specified level for the issuer. The leverage ratio
under the indentures is 6.0 to 1.0. The leverage ratio was 4.2 as of December 31, 2019.
Charter Operating Notes
The Charter Operating notes are guaranteed by CCO Holdings and substantially all of the operating subsidiaries of Charter
Operating. In addition, the Charter Operating notes are secured by a perfected first priority security interest in substantially all of
the assets of Charter Operating to the extent such liens can be perfected under the Uniform Commercial Code by the filing of a
financing statement and the liens rank equally with the liens on the collateral securing obligations under the Charter Operating
credit facilities. Charter Operating may redeem some or all of the Charter Operating notes at any time at a premium.
The Charter Operating notes are subject to the terms and conditions of the indenture governing the Charter Operating notes. The
Charter Operating notes contain customary representations and warranties and affirmative covenants with limited negative
covenants. The Charter Operating indenture also contains customary events of default.
Charter Operating Credit Facilities
The Charter Operating credit facilities have an outstanding principal amount of $10.4 billion at December 31, 2019 as follows:
•
•
•
•
•
term loan A-2 with a remaining principal amount of approximately $205 million, which is repayable in quarterly installments
and aggregating $11 million in each loan year, with the remaining balance due at final maturity on March 31, 2023. Pricing
on term loan A-2 is LIBOR plus 1.50%;
term loan A-4 with a remaining principal amount of approximately $4.0 billion, which is repayable in quarterly installments
and aggregating $202 million in each loan year, with the remaining balance due at final maturity on February 1, 2025.
Pricing on term loan A-4 is LIBOR plus 1.25%;
term loan B-1 with a remaining principal amount of approximately $2.4 billion, which is repayable in equal quarterly
installments and aggregating $25 million in each loan year, with the remaining balance due at final maturity on April 30,
2025. Pricing on term loan B-1 is LIBOR plus 1.75%;
term loan B-2 with a remaining principal amount of approximately $3.8 billion, which is repayable in equal quarterly
installments and aggregating $38 million in each loan year, with the remaining balance due at final maturity on February
1, 2027. Pricing on term loan B-2 is LIBOR plus 1.75%; and
a revolving loan allowing for borrowings of up to $4.75 billion, $249 million maturing on March 31, 2023 and $4.5 billion
maturing on February 1, 2025. Pricing on the revolving loan is LIBOR plus 1.50% with a commitment fee of 0.30% on
the portion maturing in 2023 and LIBOR plus 1.25% with a commitment fee of 0.20% on the portion maturing in 2025. As
of December 31, 2019, $36 million of the revolving loan was utilized to collateralize a like principal amount of letters of
credit out of $363 million of letters of credit issued on the Company’s behalf.
Amounts outstanding under the Charter Operating credit facilities bear interest, at Charter Operating’s election, at a base rate or
LIBOR (1.73% and 2.50% as of December 31, 2019 and December 31, 2018, respectively), as defined, plus an applicable margin.
The Charter Operating credit facilities also allow us to enter into incremental term loans in the future, with amortization as set
forth in the notices establishing such term loans. Although the Charter Operating credit facilities allow for the incurrence of a
certain amount of incremental term loans subject to pro forma compliance with its financial maintenance covenants, no assurance
can be given that the Company could obtain additional incremental term loans in the future if Charter Operating sought to do so
F- 25
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
or what amount of incremental term loans would be allowable at any given time under the terms of the Charter Operating credit
facilities.
The obligations of Charter Operating under the Charter Operating credit facilities are guaranteed by CCO Holdings and substantially
all of the operating subsidiaries of Charter Operating. The obligations are also secured by (i) a lien on substantially all of the assets
of Charter Operating and its subsidiaries, to the extent such lien can be perfected under the Uniform Commercial Code by the
filing of a financing statement, and (ii) a pledge by CCO Holdings of the equity interests owned by it in any of Charter Operating’s
subsidiaries, as well as intercompany obligations owing to it by any of such entities.
Restrictive Covenants
The Charter Operating credit facilities contain representations and warranties, and affirmative and negative covenants customary
for financings of this type. The financial covenants measure performance against standards set for leverage to be tested as of the
end of each quarter. The Charter Operating credit facilities contain provisions requiring mandatory loan prepayments under specific
circumstances, including in connection with certain sales of assets, so long as the proceeds have not been reinvested in the business.
Additionally, the Charter Operating credit facilities provisions contain an allowance for restricted payments with certain limitations.
The Charter Operating credit facilities permit Charter Operating and its subsidiaries to make distributions to pay interest on the
currently outstanding subordinated and parent company indebtedness, provided that, among other things, no default has occurred
and is continuing under the Charter Operating credit facilities. The Charter Operating credit facilities also contain customary events
of default.
Time Warner Cable, LLC Notes and Debentures
The Time Warner Cable, LLC ("TWC, LLC") senior notes and debentures are guaranteed by CCO Holdings and substantially all
of the operating subsidiaries of Charter Operating and rank equally with the liens on the collateral securing obligations under the
Charter Operating notes and credit facilities. Interest on each series of TWC, LLC senior notes and debentures is payable semi-
annually (with the exception of the Sterling Notes, which is payable annually) in arrears.
The TWC, LLC indenture contains customary covenants relating to restrictions on the ability of TWC, LLC or any material
subsidiary to create liens and on the ability of TWC, LLC and Time Warner Cable Enterprises LLC ("TWCE") to consolidate,
merge or convey or transfer substantially all of their assets. The TWC, LLC indenture also contains customary events of default.
The TWC, LLC senior notes and debentures may be redeemed in whole or in part at any time at TWC, LLC’s option at a redemption
price equal to the greater of (i) all of the applicable principal amount being redeemed and (ii) the sum of the present values of the
remaining scheduled payments on the applicable TWC, LLC senior notes and debentures discounted to the redemption date on a
semi-annual basis (with the exception of the Sterling Notes, which are on an annual basis), at a comparable government bond rate
plus a designated number of basis points as further described in the indenture and the applicable note or debenture, plus, in each
case, accrued but unpaid interest to, but not including, the redemption date.
The Company may offer to redeem all, but not less than all, of the Sterling Notes in the event of certain changes in the tax laws
of the U.S. (or any taxing authority in the U.S.). This redemption would be at a redemption price equal to 100% of the principal
amount, together with accrued and unpaid interest on the Sterling Notes to, but not including, the redemption date.
TWCE Debentures
The TWCE senior debentures are guaranteed by CCO Holdings, substantially all of the operating subsidiaries of Charter Operating
and TWC, LLC and rank equally with the liens on the collateral securing obligations under the Charter Operating notes and credit
facilities. Interest on each series of TWCE senior debentures is payable semi-annually in arrears. The TWCE senior debentures
are not redeemable before maturity.
The TWCE indenture contains customary covenants relating to restrictions on the ability of TWCE or any material subsidiary to
create liens and on the ability of TWC, LLC and TWCE to consolidate, merge or convey or transfer substantially all of their assets.
The TWCE indenture also contains customary events of default.
F- 26
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Limitations on Distributions
Distributions by the Company’s subsidiaries to a parent company for payment of principal on parent company notes are restricted
under the indentures and credit facilities discussed above, unless there is no default under the applicable indenture and credit
facilities, and unless each applicable subsidiary’s leverage ratio test is met at the time of such distribution. As of December 31,
2019, there was no default under any of these indentures or credit facilities and each subsidiary met its applicable leverage ratio
tests based on December 31, 2019 financial results. There can be no assurance that they will satisfy these tests at the time of the
contemplated distribution. Distributions by Charter Operating for payment of principal on parent company (CCO Holdings) notes
are further restricted by the covenants in its credit facilities.
However, without regard to leverage, during any calendar year or any portion thereof during which the borrower is a flow-through
entity for tax purposes, and so long as no event of default exists, the borrower may make distributions to the equity interests of
the borrower in an amount sufficient to make permitted tax payments.
In addition to the limitation on distributions under the various indentures, distributions by the Company’s subsidiaries may be
limited by applicable law, including the Delaware Limited Liability Company Act, under which the Company’s subsidiaries may
make distributions if they have “surplus” as defined in the act.
Liquidity and Future Principal Payments
The Company continues to have significant amounts of debt, and its business requires significant cash to fund principal and interest
payments on its debt, capital expenditures and ongoing operations. As set forth below, the Company has significant future principal
payments. The Company continues to monitor the capital markets, and it expects to undertake refinancing transactions and utilize
free cash flow and cash on hand to further extend or reduce the maturities of its principal obligations. The timing and terms of
any refinancing transactions will be subject to market conditions.
Based upon outstanding indebtedness as of December 31, 2019, the amortization of term loans, and the maturity dates for all senior
and subordinated notes, total future principal payments on the total borrowings under all debt agreements are as follows:
Year
2020
2021
2022
2023
2024
Thereafter
10. Common Stock
Amount
3,777
1,977
4,527
4,586
4,115
59,434
78,416
$
$
Charter’s Class A common stock and Class B common stock are identical except with respect to certain voting, transfer and
conversion rights. Holders of Class A common stock are entitled to one vote per share. Charter’s Class B common stock represents
the share issued to A/N. One share of Charter’s Class B common stock has a number of votes reflecting the voting power of the
Charter Holdings common units and Charter Holdings convertible preferred units held by A/N as of the applicable record date on
an if-converted, if-exchanged basis, and is generally intended to reflect A/N’s economic interests in Charter Holdings.
F- 27
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
The following table summarizes our shares outstanding for the three years ended December 31, 2019:
BALANCE, December 31, 2016
Exchange of Charter Holdings units held by A/N (see Note 11)
Exercise of stock options
Restricted stock issuances, net of cancellations
Restricted stock unit vesting
Purchase of treasury stock
BALANCE, December 31, 2017
Exercise of stock options
Restricted stock issuances, net of cancellations
Restricted stock unit vesting
Purchase of treasury stock
BALANCE, December 31, 2018
Exercise of stock options
Restricted stock issuances, net of cancellations
Restricted stock unit vesting
Purchase of treasury stock
BALANCE, December 31, 2019
Share Repurchases
Class A
Common
Stock
268,897,792
1,263,497
1,044,526
9,517
1,159,083
(33,868,356)
238,506,059
576,583
10,223
618,649
(14,357,707)
225,353,807
1,271,419
8,284
728,553
(17,386,100)
209,975,963
Class B
Common
Stock
1
—
—
—
—
—
1
—
—
—
—
1
—
—
—
—
1
The following represents the Company's purchase of Charter Class A common stock and the effect on the consolidated statements
of cash flows during the years ended December 31, 2019, 2018 and 2017.
Share buybacks
Income tax withholding
Exercise cost
2019
Shares
16,697,458
380,797
307,845
17,386,100
$
$
Year Ended December 31,
2018
$
6,734
139
6,873
Shares
14,108,919
224,319
24,469
14,357,707
$
$
$
4,322
77
4,399
2017
Shares
33,375,878
447,455
45,023
33,868,356
$
$
$
11,570
145
11,715
As of December 31, 2019, Charter had remaining board authority to purchase an additional $1.4 billion of Charter’s Class A
common stock and/or Charter Holdings common units. The Company also withholds shares of its Class A common stock in
payment of income tax withholding owed by employees upon vesting of equity awards as well as exercise costs owed by employees
upon exercise of stock options.
At the end of each fiscal year, Charter’s board of directors approves the retirement of the then currently outstanding treasury stock
and those shares were retired as of December 31, 2019 and 2018. The Company accounts for treasury stock using the cost method
and includes treasury stock as a component of total shareholders’ equity. Upon retirement, these treasury shares are allocated
between additional paid-in capital and retained earnings based on the cost of original issue included in additional paid-in capital.
11. Noncontrolling Interests
Noncontrolling interests represents consolidated subsidiaries of which the Company owns less than 100%. The Company is a
holding company whose principal asset is a controlling equity interest in Charter Holdings, the indirect owner of the Company’s
F- 28
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
cable systems. Noncontrolling interests on the Company’s balance sheet primarily includes A/N’s equity interests in Charter
Holdings, which is comprised of a common ownership interest and a convertible preferred ownership interest.
As of December 31, 2019, A/N held 17.9 million Charter Holdings common units which are exchangeable at any time into either
Charter Class A common stock on a one-for-one basis, or, at Charter’s option, cash, based on the then current market price of
Charter Class A common stock. Net income (loss) of Charter Holdings attributable to A/N’s common noncontrolling interest for
financial reporting purposes is based on the weighted average effective common ownership interest of approximately 8%, 8% and
9% and was $173 million, $125 million and $69 million for the years ended December 31, 2019, 2018 and 2017, respectively.
Charter Holdings is required to make quarterly cash tax distributions (with annual true-ups) on a pro rata basis to its partners based
on the partner with the highest proportionate cash tax requirement. To the extent such tax distributions would exceed Charter’s
cash tax requirements, it may waive its entitlement to tax distributions and, instead, issue a non-pro rata "advance" to A/N, which
will accrue interest at a money market rate and will reduce A/N’s exchange value into cash or Charter Class A common stock.
Charter Holdings distributed $2 million to A/N as a pro rata tax distribution on its common units during the year ended December 31,
2019 and $3 million during each of the years ended December 31, 2018 and 2017.
The following table represents Charter Holdings' purchase of Charter Holdings common units from A/N pursuant to the Letter
Agreement (see Note 20) and the effect on total shareholders' equity during the years ended December 31, 2019, 2018 and 2017.
Number of units purchased
Average price per unit
Amount of units purchased
Decrease in noncontrolling interest based on carrying value
Decrease in additional paid-in-capital, net of tax
Year Ended December 31,
2018
2019
2017
2,276,906
$
388.72
$
885
(565) $
(240) $
2,125,190
$
308.90
$
656
(518) $
(104) $
4,798,367
347.03
1,665
(1,187)
(295)
$
$
$
$
Total shareholders' equity was also adjusted during the years ended December 31, 2019, 2018 and 2017 due to changes in Charter
Holdings' ownership as follows.
Decrease in noncontrolling interest
Increase in additional paid-in-capital, net of tax
Year Ended December 31,
2018
2019
2017
$
$
(226) $
$
170
(72) $
$
54
(362)
223
The following table represents the exchange of Charter Holdings common units held by A/N for shares of Charter Class A common
stock pursuant to the Letter Agreement (see Note 20) and the effect on total shareholders' equity during the year ended December 31,
2017. The exchange of A/N common units resulted in a step-up in the tax-basis of the assets of Charter Holdings which is further
discussed in Note 17.
Number of units exchanged
Amount of units exchanged
Decrease in noncontrolling interest based on carrying value
Increase in additional paid-in-capital, net of tax and TRA effects
Year Ended
December 31, 2017
1,263,497
$
$
$
400
(298)
265
As of December 31, 2019, A/N also held 25 million Charter Holdings convertible preferred units with a face amount of $2.5 billion
that pays a 6% annual preferred dividend. The 6% annual preferred dividend is paid quarterly in cash, if and when declared,
provided that, if dividends are suspended at any time, the dividends will accrue until they are paid. Net income (loss) of Charter
F- 29
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Holdings attributable to A/N's preferred noncontrolling interest for financial reporting purposes is based on the preferred dividend
which was $150 million for each of the years ended December 31, 2019, 2018 and 2017. Each convertible preferred unit is
convertible into either 0.37334 of a Charter Holdings common unit (if then held by A/N) or 0.37334 of a share of Charter Class
A common stock (if then held by a third party), representing a conversion price of $267.85 per unit, based on a conversion feature
as defined in the Limited Liability Company Agreement of Charter Holdings. After May 18, 2021, Charter may redeem the
convertible preferred units if the price of Charter Class A common stock exceeds 130% of the conversion price, or $348.205 per
unit. These Charter Holdings common and convertible preferred units held by A/N are recorded in noncontrolling interests as
permanent equity in the consolidated balance sheet.
12. Accounting for Derivative Instruments and Hedging Activities
The Company uses derivative instruments to manage foreign exchange risk on the Sterling Notes, and does not hold or issue
derivative instruments for speculative trading purposes.
Cross-currency derivative instruments are used to effectively convert £1.275 billion aggregate principal amount of fixed-rate
British pound sterling denominated debt, including annual interest payments and the payment of principal at maturity, to fixed-
rate U.S. dollar denominated debt. The cross-currency swaps have maturities of June 2031 and July 2042. The Company is required
to post collateral on the cross-currency derivative instruments when the derivative contracts are in a liability position. In April
2019, the Company entered into a collateral holiday agreement for 60% of both the 2031 and 2042 cross-currency swaps, which
eliminates the requirement to post collateral for three years, as well as a ten year collateral cap on the remaining 40% of the cross-
currency swaps which limits the required collateral posting on that 40% of the cross-currency swaps to $150 million. The fair
value of the Company's cross-currency derivatives included in other long-term liabilities on the Company's consolidated balance
sheets was $224 million and $237 million as of December 31, 2019 and 2018, respectively.
The Company’s derivative instruments are not designated as hedges and are marked to fair value each period, with the impact
recorded as a gain or loss on financial instruments, net in the consolidated statements of operations. While these derivative
instruments are not designated as hedges for accounting purposes, management continues to believe such instruments are closely
correlated with the respective debt, thus managing associated risk.
The effect of financial instruments on the consolidated statements of operations is presented in the table below.
Gain (Loss) on Financial Instruments, Net:
Change in fair value of cross-currency derivative instruments
Foreign currency remeasurement of Sterling Notes to U.S. dollars
13. Fair Value Measurements
Year Ended December 31,
2018
2017
2019
$
$
$
13
(67)
(54) $
(212) $
102
(110) $
226
(157)
69
Accounting guidance establishes a three-level hierarchy for disclosure of fair value measurements, based on the transparency of
inputs to the valuation of an asset or liability as of the measurement date, as follows:
• Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
• Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and
inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial
instrument.
• Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.
Financial Assets and Liabilities
The Company has estimated the fair value of its financial instruments as of December 31, 2019 and 2018 using available market
information or other appropriate valuation methodologies. Considerable judgment, however, is required in interpreting market
F- 30
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
data to develop the estimates of fair value. Accordingly, the estimates presented in the accompanying consolidated financial
statements are not necessarily indicative of the amounts the Company would realize in a current market exchange.
The carrying amounts of cash and cash equivalents, restricted cash, receivables, payables and other current assets and liabilities
approximate fair value because of the short maturity of those instruments.
Financial instruments accounted for at fair value on a recurring basis and classified within Level 2 of the valuation hierarchy
include the Company's cross-currency derivative instruments and were valued at $224 million and $237 million as of December 31,
2019 and December 31, 2018, respectively.
The estimated fair value of the Company’s senior notes and debentures as of December 31, 2019 and 2018 is based on quoted
market prices in active markets and is classified within Level 1 of the valuation hierarchy, while the estimated fair value of the
Company’s credit facilities is based on quoted market prices in inactive markets and is classified within Level 2. The carrying
amount of the consolidated variable interest entity's mortgage note liability approximates fair value.
A summary of the carrying value and fair value of the Company’s debt at December 31, 2019 and 2018 is as follows:
December 31,
2019
2018
Carrying
Value
Fair Value
Carrying
Value
Fair Value
$
$
68,733
10,345
$
$
74,938
10,448
$
$
62,868
9,959
$
$
61,087
9,608
Debt
Senior notes and debentures
Credit facilities
Non-financial Assets and Liabilities
The Company’s nonfinancial assets such as equity-method investments, franchises, property, plant, and equipment, and other
intangible assets are not measured at fair value on a recurring basis; however, they are subject to fair value adjustments in certain
circumstances, such as when there is evidence that an impairment may exist. When such impairments are recorded, fair values
are generally classified within Level 3 of the valuation hierarchy.
14. Operating Costs and Expenses
Operating costs and expenses, exclusive of items shown separately in the consolidated statements of operations, consist of the
following for the periods presented:
Programming
Regulatory, connectivity and produced content
Costs to service customers
Marketing
Mobile
Other
Year Ended December 31,
2018
2017
2019
$
$
11,290
2,366
7,277
3,044
1,246
4,001
29,224
$
$
11,124
2,210
7,327
3,042
346
3,811
27,860
$
$
10,596
2,064
7,235
3,036
—
3,610
26,541
Programming costs consist primarily of costs paid to programmers for basic, premium, digital, video on demand and pay-per-
view programming. Regulatory, connectivity and produced content costs represent payments to franchise and regulatory authorities,
costs directly related to providing video, Internet and voice services as well as payments for sports, local and news content produced
by the Company. Included in regulatory, connectivity and produced content costs is content acquisition costs for the Los Angeles
F- 31
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Lakers’ basketball games and Los Angeles Dodgers’ baseball games, which are recorded as games are exhibited over the applicable
season. Costs to service customers include costs related to field operations, network operations and customer care for the Company’s
residential and small and medium business customers, including internal and third-party labor for the non-capitalizable portion
of installations, service and repairs, maintenance, bad debt expense, billing and collection, occupancy and vehicle costs. Marketing
costs represent the costs of marketing to current and potential commercial and residential customers including labor costs. Mobile
costs represent costs associated with the Company's mobile service such as device and service costs, marketing, sales and
commissions, retail stores, personnel costs, taxes, among others. Other includes corporate overhead, advertising sales expenses,
indirect costs associated with the Company’s enterprise business customers and regional sports and news networks, property tax
and insurance expense and stock compensation expense, among others.
15. Other Operating Expenses, Net
Other operating expenses, net consist of the following for the years presented:
Merger and restructuring costs
Special charges, net
Loss on sale of assets, net
Merger and restructuring costs
Year Ended December 31,
2018
2019
2017
$
$
10
51
42
103
$
$
97
53
85
235
$
$
351
(21)
16
346
Merger and restructuring costs represent costs incurred in connection with merger and acquisition transactions and related
restructuring, such as advisory, legal and accounting fees, employee retention costs and employee termination costs related to
acquisitions. Changes in accruals for merger and restructuring costs from January 1, 2017 through December 31, 2019 are presented
below:
Liability, December 31, 2016
$
Costs incurred
Cash paid
Liability, December 31, 2017
Costs incurred
Cash paid
Liability, December 31, 2018
Costs incurred
Cash paid
Remaining liability, December 31, 2019
$
Employee
Retention
Costs
Employee
Termination
Costs
Transaction
and Advisory
Costs
$
7
4
(10)
1
1
(1)
1
—
(1)
— $
244
226
(298)
172
64
(179)
57
1
(51)
7
$
$
25
4
(12)
17
2
(8)
11
8
(12)
7
$
Other Costs
$
Total
276
302
(380)
198
92
(215)
75
10
(68)
17
— $
68
(60)
8
25
(27)
6
1
(4)
3
$
In addition to the costs indicated above, the Company recorded $5 million and $49 million of expense related to accelerated vesting
of equity awards of terminated employees for the years ended December 31, 2018 and 2017, respectively.
Special charges, net
Special charges, net primarily includes employee termination costs not related to acquisitions and net amounts of litigation
settlements. During 2018, special charges, net also includes a $22 million charge related to the Company's withdrawal liability
from a multiemployer pension plan. In 2017, special charges, net also includes a $101 million benefit related to the remeasurement
of the Tax Receivable Agreement ("TRA") liability as a result of the enactment of the Tax Cuts & Jobs Act (“Tax Reform”) in
F- 32
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
December 2017 (see Note 17) offset by an $83 million charge related to the Company's withdrawal liability from a multiemployer
pension plan.
Loss on sale of assets, net
Loss on sale of assets, net represents the net loss recognized on the sales and disposals of fixed assets including a $42 million and
$75 million impairment of non-strategic assets during the years ended December 31, 2019 and 2018, respectively.
16. Stock Compensation Plans
Charter’s stock incentive plan provides for grants of nonqualified stock options, incentive stock options, stock appreciation rights,
dividend equivalent rights, performance units and performance shares, share awards, phantom stock, restricted stock units and
restricted stock. Directors, officers and other employees of the Company and its subsidiaries, as well as others performing consulting
services for the Company, are eligible for grants under the stock incentive plan. The stock incentive plan allows for the issuance
of up to 16 million shares of Charter Class A common stock (or units convertible into Charter Class A common stock).
Charter Stock options and restricted stock units generally cliff vest upon the three year anniversary of each grant. Certain stock
options and restricted stock units vest based on achievement of stock price hurdles. Stock options generally expire ten years from
the grant date and restricted stock units have no voting rights. Restricted stock generally vests one year from the date of grant.
TWC restricted stock units that were converted into Charter restricted stock units in 2016 generally vest 50% on each of the third
and fourth anniversary of the grant date.
As of December 31, 2019, total unrecognized compensation remaining to be recognized in future periods totaled $175 million for
stock options, $0.9 million for restricted stock and $205 million for restricted stock units and the weighted average period over
which they are expected to be recognized is 2 years for stock options, 4 months for restricted stock and 2 years for restricted stock
units. The Company recorded $315 million, $285 million and $261 million of stock compensation expense for the years ended
December 31, 2019, 2018 and 2017, respectively, which is included in operating costs and expenses. The Company also recorded
$5 million and $49 million of expense for the years ended December 31, 2018 and 2017, respectively, related to accelerated vesting
of equity awards of terminated employees which is recorded in merger and restructuring costs in other operating expenses, net in
the consolidated statements of operations.
F- 33
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
A summary of the activity for the Company’s stock options for the years ended December 31, 2019, 2018 and 2017, is as
follows (shares in thousands, except per share data):
2019
Weighted
Average
Exercise
Price
Shares
Year Ended December 31,
2018
Aggregate
Intrinsic
Value
Shares
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
Shares
2017
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
10,410
$ 225.53
1,847
$ 298.84
9,649
$ 201.83
1,507
$ 350.40
9,592
$ 181.39
1,175
$ 302.87
(1,271) $ 186.90
$
247
(577) $ 133.35
$
114
(1,044) $ 124.32
$
219
Outstanding, beginning of
period
Granted
Exercised
Canceled
Outstanding, end of period
10,549
$ 241.14
$
2,573
10,410
$ 225.53
(437) $ 270.94
(169) $ 300.46
(74) $ 251.63
9,649
$ 201.83
Weighted average remaining
contractual life
Options exercisable, end of
period
Options expected to vest,
end of period
7 years
7 years
8 years
3,119
$ 161.13
7,430
$ 274.74
$
$
1,011
2,194
$ 122.19
1,734
$
90.56
1,563
Weighted average fair value
of options granted
$ 84.39
$ 94.70
$ 73.67
A summary of the activity for the Company’s restricted stock for the years ended December 31, 2019, 2018 and 2017, is as follows
(shares in thousands, except per share data):
Outstanding, beginning of period
Granted
Vested
Canceled
Outstanding, end of period
2019
Year Ended December 31,
2018
2017
Weighted
Average
Grant
Price
Shares
Weighted
Average
Grant
Price
Shares
Weighted
Average
Grant
Price
Shares
10
8
$ 297.86
$ 359.33
(10) $ 297.86
—
— $
$ 359.33
8
$ 343.10
10
$ 297.86
10
(10) $ 343.10
—
— $
$ 297.86
10
$ 231.81
10
$ 343.10
10
(10) $ 231.81
—
— $
$ 343.10
10
F- 34
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
A summary of the activity for the Company’s restricted stock units for the years ended December 31, 2019, 2018 and 2017, is as
follows (shares in thousands, except per share data):
2019
Year Ended December 31,
2018
2017
Weighted
Average
Grant
Price
Shares
Weighted
Average
Grant
Price
Shares
Weighted
Average
Grant
Price
Shares
Outstanding, beginning of period
Granted
Vested
Canceled
Outstanding, end of period
17. Income Taxes
$ 219.61
2,211
$ 298.22
704
(729) $ 206.88
(127) $ 250.85
$ 249.45
2,059
$ 192.96
2,391
$ 348.75
526
(619) $ 216.27
(87) $ 286.41
$ 219.61
2,211
3,313
285
$ 192.41
$ 302.76
(1,159) $ 216.21
(48) $ 234.99
$ 192.96
2,391
Substantially all of the Company’s operations are held through Charter Holdings and its direct and indirect subsidiaries. Charter
Holdings and the majority of its subsidiaries are generally limited liability companies that are not subject to income tax. However,
certain of these limited liability companies are subject to state income tax. In addition, the subsidiaries that are corporations are
subject to income tax. Generally, the taxable income, gains, losses, deductions and credits of Charter Holdings are passed through
to its members, Charter and A/N. Charter is responsible for its share of taxable income or loss of Charter Holdings allocated to it
in accordance with the Charter Holdings Limited Liability Company Agreement ("LLC Agreement") and partnership tax rules
and regulations. As a result, Charter's primary deferred tax component recorded in the consolidated balance sheets relates to its
excess financial reporting outside basis, excluding amounts attributable to nondeductible goodwill, over Charter's tax basis in the
investment in Charter Holdings.
Charter Holdings, the indirect owner of the Company’s cable systems, generally allocates its taxable income, gains, losses,
deductions and credits proportionately according to the members’ respective ownership interests, except for special allocations
required under Section 704(c) of the Internal Revenue Code and the Treasury Regulations (“Section 704(c)”). Pursuant to Section
704(c) and the LLC Agreement, each item of income, gain, loss and deduction with respect to any property contributed to the
capital of the partnership shall, solely for tax purposes, be allocated among the members so as to take into account any variation
between the adjusted basis of such property to the partnership for U.S. federal income tax purposes and its initial gross asset value
using the “traditional method” as described in the Treasury Regulations.
F- 35
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Income Tax Benefit (Expense)
For the years ended December 31, 2019, 2018, and 2017, the Company recorded deferred income tax benefit (expense) as shown
below. The tax provision in future periods will vary based on current and future temporary differences, as well as future operating
results.
Current expense:
Federal income taxes
State income taxes
Current income tax expense
Deferred benefit (expense):
Federal income taxes
State income taxes
Deferred income tax benefit (expense)
Income tax benefit (expense)
Year Ended December 31,
2018
2017
2019
$
$
(6) $
(113)
(119)
(358)
38
(320)
(439) $
(23) $
(47)
(70)
(204)
94
(110)
(180) $
(4)
(25)
(29)
9,082
34
9,116
9,087
Income tax benefit for the year ended December 31, 2017 was recognized primarily as a result of the enactment of Tax Reform
in December 2017. Among other things, the primary provisions of Tax Reform impacting the Company are the reductions to the
U.S. corporate income tax rate from 35% to 21% and temporary 100% bonus depreciation for certain assets. The change in tax
law required the Company to remeasure existing net deferred tax liabilities using the lower rate in the period of enactment resulting
in an income tax benefit of approximately $9.3 billion to reflect these changes in the year ended December 31, 2017.
The Company’s effective tax rate differs from that derived by applying the applicable federal income tax rate of 21% for the
years ended December 31, 2019 and 2018 and 35% for the year ended December 31, 2017, respectively, as follows:
Statutory federal income taxes
Statutory state income taxes, net
Change in uncertain tax positions
Nondeductible expenses
Net income attributable to noncontrolling interest
Excess stock compensation
Federal tax credits
Tax rate changes
Other
Income tax benefit (expense)
Year Ended December 31,
2018
2019
2017
$
$
(510) $
(57)
(64)
(24)
80
63
46
15
12
(439) $
(354) $
(54)
(24)
(25)
68
34
77
107
(9)
(180) $
(360)
(34)
3
(21)
84
88
21
9,293
13
9,087
F- 36
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Deferred Tax Assets (Liabilities)
The tax effects of these temporary differences that give rise to significant portions of the deferred tax assets and deferred tax
liabilities at December 31, 2019 and 2018 are presented below.
Deferred tax assets:
Loss carryforwards
Accrued and other
Total gross deferred tax assets
Less: valuation allowance
Deferred tax assets
Deferred tax liabilities:
Investment in partnership
Accrued and other
Deferred tax liabilities
Net deferred tax liabilities
December 31,
2019
2018
$
$
$
$
1,839
664
2,503
(46)
2,457
$
$
(20,159) $
(9)
(20,168)
(17,711) $
2,453
578
3,031
(89)
2,942
(20,319)
(12)
(20,331)
(17,389)
The deferred tax liabilities on the investment in partnership above includes approximately $55 million net deferred tax liabilities
and $3 million net deferred tax assets relating to certain indirect subsidiaries that file separate state income tax returns at
December 31, 2019 and 2018, respectively.
Valuation Allowance
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or
all of the deferred tax assets will be realized. In evaluating the need for a valuation allowance, management takes into account
various factors, including the expected level of future taxable income, available tax planning strategies and reversals of existing
taxable temporary differences. As of December 31, 2019, approximately $9 million of the valuation allowance is associated with
federal capital loss carryforwards and $37 million is associated with state tax loss carryforwards and other miscellaneous deferred
tax assets. As of December 31, 2018, approximately $39 million of the valuation allowance is associated with federal tax net
operating loss carryforwards acquired in acquisitions and approximately $50 million is associated with state tax loss carryforwards
and tax credits.
Net Operating Loss Carryforwards
As of December 31, 2019, Charter had approximately $7.5 billion of federal tax net operating loss carryforwards resulting in a
gross deferred tax asset of approximately $1.6 billion. Federal tax net operating loss carryforwards expire in the years 2020
through 2035. These losses resulted from the operations of Charter Communications Holdings Company, LLC ("Charter Holdco")
and its subsidiaries. In addition, as of December 31, 2019, Charter had state tax net operating loss carryforwards, resulting in a
gross deferred tax asset (net of federal tax benefit) of approximately $257 million. State tax net operating loss carryforwards
generally expire in the years 2020 through 2039.
Upon closing of the merger with TWC in 2016, Charter experienced a third “ownership change” as defined in Section 382 of the
Internal Revenue Code; resulting in a third set of limitations on Charter’s use of its existing federal and state net operating losses,
capital losses, and tax credit carryforwards. Both the first ownership change limitations that applied as a result of Charter’s
emergence from bankruptcy in 2009 and second ownership change limitations that applied as a result of Liberty Media Corporation’s
purchase in 2013 of a 27% beneficial interest in Charter will also continue to apply. After December 31, 2019, $905 million of
Charter's federal tax loss carryforwards are subject to Section 382 and other restrictions. Pursuant to these restrictions, Charter
estimates that approximately $226 million annually over each of the next four years of federal tax loss carryforwards should
become unrestricted and available for Charter’s use. Since the limitation amounts accumulate for future use to the extent they are
not utilized in any given year, Charter believes its loss carryforwards should become fully available to offset future taxable income.
F- 37
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Charter’s state loss carryforwards are subject to similar, but varying, limitations on their future use. If Charter was to experience
another “ownership change” in the future, its ability to use its loss carryforwards could be subject to further limitations.
Tax Receivable Agreement
Under the LLC Agreement, A/N has rights to: (1) convert at any time some or all of its preferred units in Charter Holdings for
common units in Charter Holdings, and (2) exchange at any time some or all of its common units in Charter Holdings for Charter’s
Class A common stock or cash, at Charter’s option. Pursuant to a TRA between Charter and A/N, Charter must pay to A/N 50%
of the tax benefit when realized by Charter from the step-up in tax basis resulting from any future exchange or sale of the preferred
and common units. Charter did not record a liability for this obligation as of the acquisition date since the tax benefit is dependent
on uncertain future events that are outside of Charter’s control, such as the timing of a conversion or exchange. A future exchange
or sale is not based on a fixed and determinable date and the exchange or sale is not certain to occur. If all of A/N's partnership
units were to be exchanged or sold in the future, the undiscounted value of the obligation is currently estimated to be in the range
of zero to $3 billion depending on measurement of the tax step-up in the future and Charter’s ability to realize the tax benefit in
the periods following the exchange or sale. Factors impacting these calculations include, but are not limited to, the fair value of
the equity at the time of the exchange and the effective tax rates when the benefits are realized.
In connection with the Letter Agreement between Charter and A/N (see Note 20) whereby 1.3 million Charter Holdings common
units held by A/N during the year ended December 31, 2017 were exchanged for shares of Charter Class A common stock for an
aggregate purchase price of $400 million, an immediate step-up of $487 million in the tax basis of the assets of Charter Holdings
occurred. As it relates to the exchange and tax step-up, a net deferred tax asset of approximately $85 million was recorded and a
resulting TRA liability owed to A/N of $118 million which, as a transaction with a shareholder, was recorded directly to additional
paid in capital, net of tax during the year ended December 31, 2017. The TRA liability is recorded on an iterative, undiscounted
basis. During the year ended December 31, 2017, the TRA liability was remeasured as a result of the enactment of Tax Reform
resulting in a $101 million benefit recorded to other operating expenses, net. See Note 15. Following such remeasurement, the
TRA liability of $150 million and $151 million is reflected in other long-term liabilities on the consolidated balance sheets as of
December 31, 2019 and 2018, respectively.
Uncertain Tax Positions
The net amount of the unrecognized tax benefits recorded as of December 31, 2019 that could impact the effective tax rate is $242
million. The Company has determined that it is reasonably possible that its existing reserve for uncertain tax positions as of
December 31, 2019 could decrease by approximately $31 million during the year ended December 31, 2020 related to various
ongoing audits, settlement discussions and expiration of statute of limitations with various state and local agencies; however,
various events could cause the Company’s current expectations to change in the future. These uncertain tax positions, if ever
recognized in the financial statements, would be recorded in the consolidated statements of operations as part of the income tax
provision. A reconciliation of the beginning and ending amount of unrecognized tax benefits, exclusive of interest and penalties,
included in other long-term liabilities on the accompanying consolidated balance sheets of the Company is as follows:
BALANCE, December 31, 2017
Additions on prior year tax positions
Additions on current year tax positions
Reductions on settlements and expirations with taxing authorities
BALANCE, December 31, 2018
Additions on prior year tax positions
Additions on current year tax positions
Reductions on settlements and expirations with taxing authorities
BALANCE, December 31, 2019
$
$
$
164
7
25
(16)
180
15
44
(9)
230
The Company recognizes interest and penalties accrued on uncertain income tax positions as part of the income tax provision.
Interest and penalties included in other long-term liabilities on the accompanying consolidated balance sheets of the Company
were $56 million and $45 million as of December 31, 2019 and 2018, respectively.
F- 38
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
No tax years for Charter are currently under examination by the Internal Revenue Service ("IRS") for income tax purposes. Charter's
2016 through 2019 tax years remain open for examination and assessment. Charter’s short period return dated May 17, 2016 (prior
to the TWC and Bright House Networks, LLC transactions) remain subject to examination and assessment. Years prior to 2016
remain open solely for purposes of examination of Charter’s loss and credit carryforwards. The IRS is currently examining Charter
Holdings’ income tax return for 2016. Charter Holdings’ 2017 through 2019 tax years remain open for examination and assessment.
The IRS is currently examining TWC’s income tax returns for 2011 through 2014. TWC’s tax year 2015 remains subject to
examination and assessment. Prior to TWC’s separation from Time Warner Inc. (“Time Warner”) in March 2009, TWC was
included in the consolidated U.S. federal and certain state income tax returns of Time Warner. The IRS has examined Time Warner’s
2008 through 2010 income tax returns and the results are under appeal. The Company does not anticipate that these examinations
will have a material impact on the Company’s consolidated financial position or results of operations. In addition, the Company
is also subject to ongoing examinations of the Company’s tax returns by state and local tax authorities for various periods. Activity
related to these state and local examinations did not have a material impact on the Company’s consolidated financial position or
results of operations during the year ended December 31, 2019, nor does the Company anticipate a material impact in the future.
18.
Earnings Per Share
Basic earnings per common share is computed by dividing net income attributable to Charter shareholders by the weighted average
number of shares of common stock outstanding during the period. Diluted earnings per common share considers the impact of
potentially dilutive securities using the treasury stock and if-converted methods and is based on the weighted average number of
shares used for the basic earnings per share calculation, adjusted for the dilutive effect of stock options, restricted stock, restricted
stock units, equity awards with market conditions and Charter Holdings convertible preferred units and common units. Charter
Holdings common and convertible preferred units of 29 million and 31 million for the years ended December 31, 2019 and 2018
were not included in the computation of diluted earnings per share as their effect would have been antidilutive. The following is
the computation of diluted earnings per common share for the years presented.
Year Ended December 31,
2018
2017
2019
Numerator:
Net income attributable to Charter shareholders
Effect of dilutive securities:
Charter Holdings common units
Charter Holdings convertible preferred units
Net income attributable to Charter shareholders after assumed conversions
Denominator:
$
$
1,668
$
1,230
$
9,895
—
—
—
—
69
150
1,668
$
1,230
$
10,114
Weighted average common shares outstanding, basic
219,506,735
232,356,665
256,720,715
Effect of dilutive securities:
Assumed exercise or issuance of shares relating to stock plans
Weighted average Charter Holdings common units
Weighted average Charter Holdings convertible preferred units
4,279,645
—
—
3,168,561
4,012,145
— 26,637,596
9,333,500
—
Weighted average common shares outstanding, diluted
223,786,380
235,525,226
296,703,956
Basic earnings per common share attributable to Charter shareholders
Diluted earnings per common share attributable to Charter shareholders
$
$
7.60
7.45
$
$
5.29
5.22
$
$
38.55
34.09
F- 39
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
19.
Comprehensive Income
The following table sets forth the consolidated statements of comprehensive income for the years ended December 31, 2019, 2018
and 2017.
Consolidated net income
Net impact of interest rate derivative instruments
Foreign currency translation adjustment
Consolidated comprehensive income
Less: Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Charter shareholders
20. Related Party Transactions
Year Ended December 31,
2018
2019
2017
$
$
1,992
—
2
1,994
(324)
1,670
$
$
1,506
—
(1)
1,505
(276)
1,229
$
$
10,115
5
1
10,121
(220)
9,901
The following sets forth certain transactions in which the Company and the directors, executive officers, and affiliates of the
Company are involved or, in the case of the management arrangements, subsidiaries that are debt issuers that pay certain of their
parent companies for services.
Charter is a party to management arrangements with one of its subsidiaries, Spectrum Management Holding Company, LLC
("Spectrum Management") and certain of their subsidiaries. Under these agreements, Charter, Spectrum Management and Charter
Holdco provide management services for the cable systems owned or operated by their subsidiaries. Costs associated with providing
these services are charged directly to the Company’s operating subsidiaries. All other costs incurred on behalf of Charter’s operating
subsidiaries are considered a part of the management fee. These costs are recorded as a component of operating costs and expenses,
in the accompanying consolidated financial statements. The management fee charged to the Company’s operating subsidiaries
approximated the expenses incurred by Spectrum Management, Charter Holdco and Charter on behalf of the Company’s operating
subsidiaries in 2019, 2018 and 2017.
Liberty Broadband and A/N
Under the terms of the Amended and Restated Stockholders Agreement with Liberty Broadband, A/N and Legacy Charter, dated
May 23, 2015, (the “Stockholders Agreement”), the number of Charter’s directors is fixed at 13, and includes its CEO. Two
designees selected by A/N are members of the board of directors of Charter and three designees selected by Liberty Broadband
are members of the board of directors of Charter. The remaining eight directors are not affiliated with either A/N or Liberty
Broadband. Each of A/N and Liberty Broadband is entitled to nominate at least one director to each of the committees of Charter's
board of directors, subject to applicable stock exchange listing rules and certain specified voting or equity ownership thresholds
for each of A/N and Liberty Broadband, and provided that the Nominating and Corporate Governance Committee and the
Compensation and Benefit Committee each have at least a majority of directors independent from A/N, Liberty Broadband and
Charter (referred to as the “unaffiliated directors”). Each of the Nominating and Corporate Governance Committee and the
Compensation and Benefits Committee is currently comprised of three unaffiliated directors and one designee of each of A/N and
Liberty Broadband. A/N and Liberty Broadband also have certain other committee designation and other governance rights. Mr.
Thomas Rutledge, the Company’s CEO, is the chairman of the board of Charter.
In December 2017, Charter and A/N entered into an amendment to the letter agreement (the “Letter Agreement”) that requires A/
N to sell to Charter or to Charter Holdings, on a monthly basis, a number of shares of Charter Class A common stock or Charter
Holdings common units that represents a pro rata participation by A/N and its affiliates in any repurchases of shares of Charter
Class A common stock from persons other than A/N effected by Charter during the immediately preceding calendar month, at a
purchase price equal to the average price paid by Charter for the shares repurchased from persons other than A/N during such
immediately preceding calendar month. A/N and Charter both have the right to terminate or suspend the pro rata repurchase
arrangement on a prospective basis. Pursuant to the TRA between Charter and A/N, Charter must pay to A/N 50% of the tax benefit
when realized by Charter from the step-up in tax basis resulting from any future exchange or sale of the preferred and common
units. See Note 17 for more information.
F- 40
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
The Company is aware that Dr. John Malone, a director emeritus of Charter and Chairman of the board of directors and holder of
49.0% of voting interest in Liberty Broadband, may be deemed to have a 39.9% voting interest in Qurate Retail, Inc. ("Qurate")
and is on the board of directors of Qurate. Qurate wholly owns HSN, Inc. (“HSN”) and QVC, Inc. (“QVC”). The Company has
programming relationships with HSN and QVC. For the years ended December 31, 2019, 2018 and 2017, the Company recorded
revenue in aggregate of approximately $50 million, $73 million and $77 million, respectively, from HSN and QVC as part of
channel carriage fees and revenue sharing arrangements for home shopping sales made to customers in the Company’s footprint.
Dr. Malone and Mr. Steven Miron, a member of Charter’s board of directors, also serve on the board of directors of Discovery
Communications, Inc., (“Discovery”). The Company is aware that Dr. Malone owns 1.2% of the series A common stock, 93.6%
of the series B common stock and 2.6% of the series C common stock of Discovery and has a 28.2% voting interest in Discovery
for the election of directors. The Company is aware that Advance/Newhouse Programming Partnership (“A/N PP”), an affiliate
of A/N and in which Mr. Miron is the CEO, owns 100% of the Series A-1 preferred stock of Discovery and 100% of the Series
C-1 preferred stock of Discovery and has a 24.1% voting interest for matters other than the election of directors. A/N PP also has
the right to appoint three directors out of a total of twelve directors to Discovery’s board. The Company purchases programming
from Discovery pursuant to agreements entered into prior to Dr. Malone and Mr. Miron joining Charter’s board of directors. Based
on publicly available information, the Company does not believe that Discovery would currently be considered a related party.
The amount paid to Discovery represents less than 3% of total operating costs and expenses for the years ended December 31,
2019, 2018 and 2017.
Equity Investments
The Company has agreements with certain equity investees (see Note 6) pursuant to which the Company has made or received
related party transaction payments. The Company recorded payments to equity investees totaling $314 million, $361 million and
$317 million during the years ended December 31, 2019, 2018 and 2017, respectively.
21.
Commitments and Contingencies
Commitments
The following table summarizes the Company’s payment obligations as of December 31, 2019 for its contractual obligations.
Programming Minimum Commitments (a)
Other (b)
$
276
12,658
$ 12,934
$
216
2,536
$ 2,752
$
37
2,598
$ 2,635
$
$
12
436
448
$
$
11
366
377
$
$
Total
2020
2021
2022
2023
2024
Thereafter
—
6,196
6,196
$
— $
526
526
(a) The Company pays programming fees under multi-year contracts ranging from three to ten years, typically based on a flat
fee per customer, which may be fixed for the term, or may in some cases escalate over the term. Programming costs included
in the statement of operations were 11.3 billion, 11.1 billion and 10.6 billion for the years ended December 31, 2019, 2018
and 2017 respectively. Certain of the Company’s programming agreements are based on a flat fee per month or have guaranteed
minimum payments. The table sets forth the aggregate guaranteed minimum commitments under the Company’s programming
contracts.
(b) “Other” represents other guaranteed minimum commitments, including rights negotiated directly with content owners for
distribution on company-owned channels or networks, commitments related to our role as an advertising and distribution
sales agent for third party-owned channels or networks, commitments to our customer premise equipment and device vendors
and contractual obligations related to third-party network augmentation.
The following items are not included in the contractual obligation table due to various factors discussed below. However, the
Company incurs these costs as part of its operations:
• The Company rents utility poles used in its operations. Generally, pole rentals are cancelable on short notice, but the Company
anticipates that such rentals will recur. Rent expense incurred for pole rental attachments for the years ended December 31,
2019, 2018 and 2017 was $180 million, $171 million and $167 million, respectively.
F- 41
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
• The Company pays franchise fees under multi-year franchise agreements based on a percentage of revenues generated from
video service per year. The Company also pays other franchise related costs, such as public education grants, under multi-
year agreements. Franchise fees and other franchise-related costs included in the accompanying statement of operations were
$750 million, $747 million and $705 million for the years ended December 31, 2019, 2018 and 2017 respectively.
• The Company has $363 million in letters of credit, of which $36 million is secured under the Charter Operating credit facility,
primarily to its various casualty carriers as collateral for reimbursement of workers' compensation, auto liability and general
liability claims.
• Minimum pension funding requirements have not been presented in the table above as such amounts have not been determined
beyond 2019. The Company made no cash contributions to the qualified pension plans in 2019; however, the Company is
permitted to make discretionary cash contributions to the qualified pension plans in 2020. For the nonqualified pension plan,
the Company contributed $4 million during 2019 and will continue to make contributions in 2020 to the extent benefits are
paid.
Legal Proceedings
In August 2015, a purported stockholder of Charter, Matthew Sciabacucchi, filed a lawsuit in the Delaware Court of Chancery,
on behalf of a putative class of Charter stockholders, challenging the transactions involving Charter, TWC, A/N, and Liberty
Broadband announced by Charter on May 26, 2015. The lawsuit, which named as defendants Charter and its board of directors,
alleged that the transactions resulted from breaches of fiduciary duty by Charter’s directors and that Liberty Broadband improperly
benefited from the challenged transactions at the expense of other Charter stockholders. The lawsuit has proceeded to the discovery
phase. Charter denies any liability, believes that it has substantial defenses, and is vigorously defending this lawsuit. Although
Charter is unable to predict the outcome of this lawsuit, it does not expect the outcome will have a material effect on its operations,
financial condition or cash flows.
The California Attorney General and the Alameda County, California District Attorney are investigating whether certain of Charter’s
waste disposal policies, procedures and practices are in violation of the California Business and Professions Code and the California
Health and Safety Code. That investigation was commenced in January 2014. A similar investigation involving TWC was initiated
in February 2012. Charter is cooperating with these investigations. While the Company is unable to predict the outcome of these
investigations, it does not expect that the outcome will have a material effect on its operations, financial condition, or cash flows.
On December 19, 2011, Sprint Communications Company L.P. (“Sprint”) filed a complaint in the U.S. District Court for the
District of Kansas alleging that TWC infringed certain U.S. patents purportedly relating to Voice over Internet Protocol (“VoIP”)
services. At the trial, the jury returned a verdict of $140 million against TWC and further concluded that TWC had willfully
infringed Sprint’s patents. The court subsequently declined to enhance the damage award as a result of the purported willful
infringement and awarded Sprint an additional $6 million, representing pre-judgment interest on the damages award. The Company
appealed the case to the United States Court of Appeals for the Federal Circuit where the Company lost the appeal. The Company
filed a petition for writ of certiorari with the United States Supreme Court which was denied on November 4, 2019. The Company
has now paid the verdict, interest and costs in full. The Company continues to pursue indemnity from one of its vendors and has
brought a patent suit against Sprint (TC Tech, LLC v. Sprint) in the U.S. District Court for the District of Delaware implicating
Sprint's LTE technology. The ultimate outcomes of the pursuit of indemnity against the Company’s vendor and the TC Tech
litigation cannot be predicted. The Company does not expect the outcome of its indemnity claim nor the outcome of the TC Tech
litigation will have a material adverse effect on its operations or financial condition.
Sprint filed a second suit against Charter and Bright House Networks, LLC on December 2, 2017 in the United States District
Court for the District of Delaware. This suit alleges infringement of 15 patents related to the Company's provision of Voice over
Internet Protocol (“VoIP”) services (ten of which were asserted against Legacy TWC in the matter described above). Charter is
vigorously defending this case. While the Company is unable to predict the outcome of this Sprint suit, it does not expect that
this litigation will have a material effect on its operations, financial condition, or cash flows.
Sprint filed a third suit against Charter on May 17, 2018 in the United States District Court for the Eastern District of Virginia.
This suit alleges infringement of three patents related to the Company's video on demand services. The Company is vigorously
defending this case. The court transferred this case to the United States District Court for the District of Delaware on December
20, 2018 pursuant to an agreement between the parties. While the Company is unable to predict the outcome of this litigation, it
does not expect that this litigation will have a material effect on its operations, financial condition, or cash flows.
F- 42
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
In addition to the Sprint litigation described above, the Company is a defendant or co-defendant in several additional lawsuits
involving alleged infringement of various intellectual property relating to various aspects of its businesses. Other industry
participants are also defendants in certain of these cases. In the event that a court ultimately determines that the Company infringes
on any intellectual property, the Company may be subject to substantial damages and/or an injunction that could require the
Company or its vendors to modify certain products and services the Company offers to its subscribers, as well as negotiate royalty
or license agreements with respect to the intellectual property at issue. While the Company believes the lawsuits are without merit
and intends to defend the actions vigorously, no assurance can be given that any adverse outcome would not be material to the
Company’s consolidated financial condition, results of operations, or liquidity. The Company cannot predict the outcome of any
such claims nor can it reasonably estimate a range of possible loss.
The Company is party to other lawsuits, claims and regulatory inquiries that arise in the ordinary course of conducting its business.
The ultimate outcome of these other legal matters pending against the Company cannot be predicted, and although such lawsuits
and claims are not expected individually to have a material adverse effect on the Company’s consolidated financial condition,
results of operations or liquidity, such lawsuits could have, in the aggregate, a material adverse effect on the Company’s consolidated
financial condition, results of operations or liquidity. Whether or not the Company ultimately prevails in any particular lawsuit or
claim, litigation can be time consuming and costly and injure the Company’s reputation.
22. Employee Benefit Plans
Pension Plans
The Company sponsors three qualified defined benefit pension plans and one nonqualified defined benefit pension plan that provide
pension benefits to a majority of employees who were employed by TWC before the merger with TWC.
Changes in the projected benefit obligation, fair value of plan assets and funded status of the pension plans from January 1 through
December 31 are presented below:
Projected benefit obligation at beginning of year
Interest cost
Actuarial (gain) loss
Settlement
Benefits paid
Projected benefit obligation at end of year (a)
Accumulated benefit obligation at end of year (a)
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Settlement
Benefits paid
Fair value of plan assets at end of year (b)
Funded status
2019
2018
3,041
129
499
(257)
(51)
3,361
3,361
2,943
559
4
(257)
(51)
3,198
$
$
$
$
$
(163) $
3,569
128
(438)
(169)
(49)
3,041
3,041
3,273
(118)
6
(169)
(49)
2,943
(98)
$
$
$
$
$
$
(a) As of December 31, 2019 and 2018, qualified pension plans represented $3.3 billion and $3.0 billion, respectively, of both
the projected benefit obligation and accumulated benefit obligation while the Company’s nonqualified pension plan represented
$35 million and $34 million, respectively.
(b) The fair value of plan assets consists entirely of the Company’s qualified pension plans.
F- 43
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Pretax amounts recognized in the consolidated balance sheet as of December 31, 2019 and 2018 consisted of the following:
Noncurrent asset
Current liability
Long-term liability
Net amounts recognized in consolidated balance sheet
December 31,
2019
2018
$
$
$
1
(4)
(160)
(163) $
1
(4)
(95)
(98)
The components of net periodic benefit (cost) for the years ended December 31, 2019, 2018 and 2017 consisted of the following:
Interest cost
Expected return on plan assets
Remeasurement gain (loss)
Net periodic pension benefit (cost)
Year Ended December 31,
2019
2018
2017
$
$
(129) $
164
(104)
(69) $
(128) $
198
122
192
$
(133)
189
(55)
1
The remeasurement gains (losses) recorded during the years ended December 31, 2019, 2018 and 2017 were primarily driven by
changes in the discount rate as well as gains or losses to record pension assets to fair value. The remeasurement loss recorded
during the year ended December 31, 2017 was also impacted by the adoption of the revised lump sum conversion mortality tables
published by the IRS effective January 1, 2018.
The discount rates used to determine benefit obligations as of December 31, 2019 and 2018 were 3.48% and 4.37%, respectively.
The Company utilized the RP 2015/MP2015 mortality tables published by the Society of Actuaries to measure the benefit obligations
as of December 31, 2019 and 2018.
Weighted average assumptions used to determine net periodic benefit costs consisted of the following:
Year ended December 31,
2019
2018
2017
Expected long-term rate of return on plan assets
Discount rate
5.75%
4.37%
5.75%
4.24%
6.50%
3.88%
In developing the expected long-term rate of return on plan assets, the Company considered the pension portfolio’s composition,
past average rate of earnings and the Company’s future asset allocation targets. The weighted average expected long-term rate of
return on plan assets and discount rate used to determine net periodic pension benefit for the year ended December 31, 2020 are
expected to be 5.00% and 3.48%, respectively. The Company determined the discount rates used to determine benefit obligations
and net periodic pension benefit based on the yield of a large population of high quality corporate bonds with cash flows sufficient
in timing and amount to settle projected future defined benefit payments.
Pension Plan Assets
The assets of the qualified pension plans are held in a master trust in which the qualified pension plans are the only participating
plans (the “Master Trust”). The investment policy for the qualified pension plans is to manage the assets of the Master Trust with
the objective to provide for pension liabilities to be met, maintaining retirement income security for the participants of the plans
and their beneficiaries. The investment portfolio is a mix of pooled funds invested in fixed income securities, equity securities
and certain alternative investments with the objective of matching plan liability performance, diversifying risk and achieving a
F- 44
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
target investment return. Pension assets are managed in a balanced portfolio comprised of two major components: a return-seeking
portion and a liability-matching portion.
The Company uses an investment strategy designed to increase the fixed income allocation as the funded status of the qualified
pension plans improves. As the qualified pension plans reach set funded status milestones, the assets will be rebalanced to shift
more assets from equity to fixed income. Based on the progress with this strategy, the target investment allocation for pension
fund assets is permitted to vary within specified ranges subject to Investment Committee approval for return-seeking securities
and liability-matching securities. The target and actual investment allocation of the qualified pension plans by asset category
consisted of the following:
Return-seeking securities
Liability-matching securities
Other investments
December 31, 2019
December 31, 2018
Target
Allocation
Actual
Allocation
Target
Allocation
Actual
Allocation
60.0%
40.0%
—%
56.2%
43.7%
0.1%
60.0%
40.0%
—%
54.6%
45.1%
0.3%
The following tables set forth the investment assets of the qualified pension plans by level within the fair value hierarchy as of
December 31, 2019 and 2018:
Cash
Commingled bond funds(a)
Commingled equity funds(a)
Collective trust funds(b)
Total investment assets
Accrued investment income and other
receivables
Investments measured at net asset value(c)
Fair value of plan assets
December 31, 2019
December 31, 2018
Fair
Value
$
4
$
1,335
1,135
139
2,613
1
584
3,198
$
$
Level 1
Level 2
Fair
Value
Level 1
Level 2
4
—
—
—
4
$
$
—
1,270
952
113
2,335
4
—
—
—
4
$
$
— $
4
$
1,335
1,135
139
2,609
1,270
952
113
2,339
11
593
2,943
$
$
(a) Commingled funds include bond funds with corporate and U.S. treasury debt securities and equity funds with global equity
index, infrastructure and real estate securities that have a readily determinable fair value and are valued using the net assets
provided by the administrator of the fund. The value of each fund is based on the fair value of underlying securities in the
portfolio, which represents the amount that the fund might reasonably expect to receive for the securities upon a sale, less
liabilities, and then divided by the number of units outstanding. Equity securities within the funds are valued using observable
inputs on either a daily or weekly basis and the resulting per share value serves as a basis for current redemption value. Debt
securities within the funds are valued based on observable prices from the new issue market, benchmark quotes, secondary
trading and dealer quotes.
(b) Collective trust funds consist of short-term investment strategies comprised of instruments issued or fully guaranteed by the
U.S. government and/or its agencies and multi-strategy funds, which are valued using the net assets provided by the
administrator of the fund. The value of each fund is based on the readily determinable fair value of the underlying assets
owned by the fund, less liabilities, and then divided by the number of units outstanding.
(c) As a practical expedient, certain investment classes which hold securities that are not readily available for redemption and
are measured at fair value using the net asset value ("NAV") per share (or its equivalent) have not been classified in the fair
value hierarchy.
F- 45
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Investments Measured at Net Asset Value per Share Practical Expedient
The following table summarizes the investment classes for which fair value is measured using the NAV per share (or its equivalent)
practical expedient as of December 31, 2019 and 2018. These investment classes are not readily available for redemption. The
NAV of each fund is based on the fair value of underlying assets in the portfolio. Certain investments report NAV per share on a
month or quarter lag. There are no material unfunded commitments with respect to these investment classes.
Alternative funds(a)
Fixed income funds(b)
Real estate funds(c)
Investments measured at NAV
Fair Value
December 31,
2019
2018
$
$
271
177
136
584
$
$
Redemption Frequency (if
currently eligible)
301 weekly, monthly, quarterly
164
daily, monthly
128
593
quarterly
Redemption
Notice Period
1-180 days
10-40 days
45-90 days
(a) The alternative fund investment class includes funds with various securities selected to provide complimentary sources of
return with our equity and bond portfolios that better manage risk. The Company’s alternative fund investments include
holdings such as public equities, exchange traded derivatives, and corporate bonds, among others. A portion of the alternative
funds cannot be redeemed until the one year anniversary of the purchase date.
(b) Fixed income funds invest in residential and commercial mortgages, as well as global sovereign securities.
(c) Real estate funds are not publicly traded and invest primarily in unlisted direct core real estate, including super-regional malls,
shopping centers, and commercial real estate (e.g. education, healthcare and storage).
Pension Plan Contributions
The Company made no cash contributions to the qualified pension plans during the years ended December 31, 2019, 2018 and
2017; however, the Company may make discretionary cash contributions to the qualified pension plans in the future. Such
contributions will be dependent on a variety of factors, including current and expected interest rates, asset performance, the funded
status of the qualified pension plans and management’s judgment. For the nonqualified unfunded pension plan, the Company will
continue to make contributions during 2020 to the extent benefits are paid.
Benefit payments for the pension plans are expected to be $183 million in 2020, $186 million in 2021, $188 million in 2022, $190
million in 2023, $190 million in 2024 and $929 million in 2025 to 2029.
Multiemployer Plans
The Company contributes to multiemployer plans under the terms of collective-bargaining agreements that cover its union-
represented employees. Such multiemployer plans provide medical, pension and retirement savings benefits to active employees
and retirees. The Company made contributions to multiemployer plans of $9 million, $9 million and $18 million for the years
ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019 and 2018, other long-term liabilities includes
approximately $101 million and $104 million, respectively, related to the Company's withdrawal from a multiemployer pension
plan.
Defined Contribution Benefit Plans
The Company’s employees may participate in the Charter Communications, Inc. 401(k) Savings Plan (the “401(k) Plan”).
Employees that qualify for participation can contribute up to 50% of their salary, on a pre-tax basis, subject to a maximum
contribution limit as determined by the Internal Revenue Service. The Company’s matching contribution is discretionary and is
equal to 100% of the amount of the salary reduction the participant elects to defer (up to 6% of the participant’s eligible
compensation), excluding any catch-up contributions and is paid by the Company on a per pay period basis. The Company made
contributions to the 401(k) plan totaling $303 million, $290 million and $274 million for the years ended December 31, 2019,
2018 and 2017, respectively.
F- 46
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
For employees who are not eligible to participate in the Company’s long-term incentive plan and who are not covered by a collective
bargaining agreement, the Company offers a contribution to the Retirement Accumulation Plan ("RAP"), equal to 3% of eligible
pay. The Company made contributions to the RAP totaling $152 million, $151 million and $139 million for the years ended
December 31, 2019, 2018 and 2017, respectively.
23. Recently Issued Accounting Standards
Accounting Standards Adopted in Prior Periods
ASU 2016-09, Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09")
Upon adoption of ASU 2016-09, the Company recorded a cumulative-effect adjustment which included an increase to total
shareholders’ equity of $140 million as of January 1, 2017 and the recognition of excess tax benefits in deferred tax assets that
were previously not recognized.
ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”)
Upon adoption of ASU 2014-09, the Company recorded a cumulative-effect adjustment which included an increase to total
shareholders’ equity of $38 million as of January 1, 2018.
ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16")
The Company identified a $31 million increase to total shareholders' equity and corresponding increase to deferred tax assets
related to the adoption of ASU 2016-16, which was recorded during the year ended December 31, 2018.
Accounting Standards Adopted January 1, 2019
ASU No. 2016-02, Leases (“ASU 2016-02”)
In February 2016, the FASB issued ASU 2016-02 which requires lessees to recognize almost all leases on their balance sheet as
a lease asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified
as either operating or finance. Classification is based on criteria largely similar to the criteria applied under legacy lease accounting,
but without explicit bright lines.
The Company adopted ASU 2016-02 using the modified retrospective approach with a cumulative-effect adjustment recorded at
the beginning of the period of adoption (January 1, 2019). Therefore, the Company recognized and measured operating leases on
the consolidated balance sheet without revising comparative period information or disclosure. At transition, the Company elected
the package of practical expedients permitted under the transition guidance within the standard, which eliminates the reassessment
of past leases, classification and initial direct costs. The Company did not elect to use hindsight to reassess lease terms or impairment
at the adoption date. The Company elected the land easements practical expedient which allows the Company not to retrospectively
treat land easements as leases; however, must apply lease accounting prospectively to land easements if they meet the definition
of a lease.
The Company implemented internal controls and key system functionality to enable the preparation of financial information on
adoption. The new standard resulted in the recording of leased assets and lease liabilities for the Company’s operating leases of
approximately $1.1 billion and $1.2 billion, respectively, as of January 1, 2019. The difference between the leased assets and lease
liabilities primarily represents the prior year end deferred rent liabilities balance, resulting from historical straight-lining of operating
leases, which was effectively reclassified upon adoption to reduce the measurement of the leased assets. The adoption of the
standard did not have an impact on the Company’s shareholders equity, results from operations and cash flows. The adoption of
the new standard resulted in additional interim and annual lease disclosures. See Note 8.
ASU No. 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13")
In August 2018, the FASB issued ASU 2018-13 which amends fair value measurement disclosure requirements to eliminate, add
and modify certain disclosures to improve the effectiveness of such disclosure in the notes to the financial statements. ASU 2018-13
F- 47
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
will be effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted. The Company
early adopted ASU 2018-13 on January 1, 2019. The adoption of ASU 2018-13 did not have a material impact to the Company's
consolidated financial statements.
ASU No. 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans ("ASU 2018-14")
In August 2018, the FASB issued ASU 2018-14 which amends defined benefit plan disclosure requirements to eliminate, add and
modify certain disclosures to improve the effectiveness of such disclosure in the notes to the financial statements. ASU 2018-14
will be effective for interim and annual periods beginning after December 15, 2021. Early adoption is permitted. The Company
early adopted ASU 2018-14 on January 1, 2019. The adoption of ASU 2018-14 did not have a material impact to the Company's
consolidated financial statements.
ASU No. 2017-04, Simplifying the Test for Goodwill Impairment (“ASU 2017-04”)
In January 2017, the FASB issued ASU 2017-04 which eliminates step two from the goodwill impairment test. Under the new
standard, to the extent the carrying amount of a reporting unit exceeds the fair value, the Company will record an impairment
charge equal to the difference. ASU 2017-04 will be effective for interim and annual periods beginning after December 15, 2019.
The Company elected to early adopt ASU 2017-04 in connection with the completion of its November 30, 2019 annual impairment
assessment. The adoption of ASU 2017-04 did not have a material impact to the Company's consolidated financial statements.
Accounting Standards Adopted January 1, 2020
ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”)
In June 2016, the FASB issued ASU 2016-13, which requires a financial asset (or a group of financial assets) measured at amortized
cost basis to be assessed for impairment under the current expected credit loss model rather than an incurred loss model. The
measurement of expected credit losses is based on relevant information about past events, including historical experience, current
conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. The primary financial
assets of the Company in scope of ASU 2016-13 include accounts receivables and equipment installment plan notes receivables.
The Company adopted ASU 2016-13 on January 1, 2020. The adoption of ASU 2016-13 did not have a material impact to the
Company's consolidated financial statements.
ASU No. 2018-15, Customer’s Accounting for Implementation Costs in a Cloud Computing Arrangement That Is a Service
Contract ("ASU 2018-15")
In August 2018, the FASB issued ASU 2018-15 which requires upfront implementation costs incurred in a cloud computing
arrangement (or hosting arrangement) that is a service contract to be amortized to hosting expense over the term of the arrangement,
beginning when the module or component of the hosting arrangement is ready for its intended use. The Company adopted ASU
2018-15 on January 1, 2020. The adoption of ASU 2018-15 did not have a material impact to the Company's consolidated financial
statements.
ASU No. 2019-02, Improvements to Accounting for Costs of Films and License Agreements for Program Materials ("ASU
2019-02")
In March 2019, the FASB issued ASU 2019-02 which aligns the accounting for production costs of an episodic television series
with the accounting for production costs of films regarding cost capitalization, amortization, impairment, presentation and
disclosure. The Company adopted ASU 2019-02 on January 1, 2020. The adoption of ASU 2019-02 did not have a material impact
to the Company's consolidated financial statements.
Accounting Standards Not Yet Adopted
ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”)
In December 2019, the FASB issued ASU 2019-12, which is intended to simplify various aspects related to accounting for income
taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing
F- 48
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
guidance to improve consistent application. ASU 2019-12 will be effective for interim and annual periods beginning after December
15, 2020 (January 1, 2021 for the Company). Early adoption is permitted. The Company is currently evaluating the impact the
adoption of ASU 2019-12 will have on its consolidated financial statements.
24.
Unaudited Quarterly Financial Data
The following table presents quarterly data for the periods presented in the consolidated statement of operations:
Revenues
Income from operations
Net income attributable to Charter shareholders
Earnings per common share attributable to Charter
shareholders:
Basic
Diluted
Weighted average common share outstanding:
Basic
Diluted
Revenues
Income from operations
Net income attributable to Charter shareholders
Earnings per common share attributable to Charter
shareholders:
Basic
Diluted
Weighted average common share outstanding:
Basic
Diluted
25. Consolidating Schedules
Year Ended December 31, 2019
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$
$
$
$
$
11,206
1,425
253
1.13
1.11
$
$
$
$
$
11,347
1,541
314
1.41
1.39
$
$
$
$
$
11,450
1,586
387
1.77
1.74
$
$
$
$
$
11,761
1,959
714
3.36
3.28
224,630,122
227,595,365
222,392,274
225,942,172
218,499,213
222,355,867
212,648,072
217,778,099
Year Ended December 31, 2018
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$
$
$
$
$
10,657
1,042
168
0.71
0.70
$
$
$
$
$
10,854
1,360
273
1.17
1.15
$
$
$
$
$
10,892
1,380
493
2.14
2.11
$
$
$
$
$
11,231
1,439
296
1.31
1.29
237,762,295
241,420,722
234,241,769
237,073,566
230,554,633
233,607,414
227,005,966
230,131,933
Each of Charter Operating, TWC, LLC, TWCE, CCO Holdings and certain subsidiaries jointly, severally, fully and unconditionally
guarantee the outstanding debt securities of the others (other than the CCO Holdings notes) on an unsecured senior basis and the
condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10, Financial
Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered. Certain Charter Operating subsidiaries
that are regulated telephone entities only become guarantor subsidiaries upon approval by regulators. This information is not intended
to present the financial position, results of operations and cash flows of the individual companies or groups of companies in accordance
with generally accepted accounting principles.
F- 49
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
The "Intermediate Holding Companies" column includes the assets and liabilities of the captive insurance company, a company
wholly-owned by Charter outside of Charter Holdings and which does not, directly or indirectly, own any interest in Charter Holdings.
The “Charter Operating and Restricted Subsidiaries” column is presented to comply with the terms of the Credit Agreement.
Condensed consolidating financial statements as of December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018
and 2017 follow.
F- 50
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Charter Communications, Inc. and Subsidiaries
Condensed Consolidating Balance Sheet
As of December 31, 2019
Non-Guarantor Subsidiaries
Guarantor Subsidiaries
Intermediate
Holding
Companies
CCO
Holdings
Charter
Charter
Operating
and
Restricted
Subsidiaries
Eliminations
Charter
Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Accounts receivable, net
Receivables from related party
Prepaid expenses and other current assets
Total current assets
RESTRICTED CASH
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net
Customer relationships, net
Franchises
Goodwill
Total investment in cable properties, net
$
— $
234
$
500
$
2,749
$
— $
1
34
10
45
—
—
—
—
—
—
31
264
40
569
66
683
—
—
—
683
—
59
—
559
—
—
—
—
—
—
2,195
—
711
5,655
—
33,908
7,453
67,322
29,554
138,237
—
925
—
1,426
—
(357)
—
(357)
—
—
—
—
—
—
(180,699)
—
(1,504)
—
3,483
2,227
—
761
6,471
66
34,591
7,453
67,322
29,554
138,920
—
1,092
—
1,639
INVESTMENT IN SUBSIDIARIES
49,024
55,266
76,409
OPERATING LEASE RIGHT-OF-USE ASSETS
LOANS RECEIVABLE – RELATED PARTY
OTHER NONCURRENT ASSETS
—
260
2
167
699
211
—
545
—
Total assets
$
49,331
$
57,661
$
77,513
$
146,243
$ (182,560) $
148,188
LIABILITIES AND SHAREHOLDERS’/MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities
$
Operating lease liabilities
Payables to related party
Current portion of long-term debt
Total current liabilities
LONG-TERM DEBT
LOANS PAYABLE – RELATED PARTY
DEFERRED INCOME TAXES
LONG-TERM OPERATING LEASE LIABILITIES
OTHER LONG-TERM LIABILITIES
SHAREHOLDERS’/MEMBER’S EQUITY
Controlling interest
Noncontrolling interests
Total shareholders’/member’s equity
18
—
—
—
18
—
—
17,641
—
227
31,445
—
31,445
$
695
$
296
$
7,662
$
— $
8,671
30
—
—
725
—
—
15
191
363
—
—
—
296
21,951
—
—
—
—
184
357
3,500
11,703
53,627
1,504
55
788
2,134
—
(357)
—
(357)
—
(1,504)
—
—
—
49,024
7,343
56,367
55,266
76,409
(180,699)
—
23
—
55,266
76,432
(180,699)
214
—
3,500
12,385
75,578
—
17,711
979
2,724
31,445
7,366
38,811
Total liabilities and shareholders’/member’s equity
$
49,331
$
57,661
$
77,513
$
146,243
$ (182,560) $
148,188
F- 51
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Charter Communications, Inc. and Subsidiaries
Condensed Consolidating Balance Sheet
As of December 31, 2018
Non-Guarantor Subsidiaries
Guarantor Subsidiaries
Intermediate
Holding
Companies
CCO
Holdings
Charter
Charter
Operating
and
Restricted
Subsidiaries
Eliminations
Charter
Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Accounts receivable, net
Receivables from related party
Prepaid expenses and other current assets
Total current assets
RESTRICTED CASH
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net
Customer relationships, net
Franchises
Goodwill
Total investment in cable properties, net
INVESTMENT IN SUBSIDIARIES
LOANS RECEIVABLE – RELATED PARTY
OTHER NONCURRENT ASSETS
$
— $
251
$
— $
300
$
— $
1
27
14
42
—
—
—
—
—
—
33
518
32
834
214
468
—
—
—
468
—
57
—
57
—
—
—
—
—
—
53,592
60,530
78,960
251
—
674
222
526
—
1,699
—
400
2,399
—
34,658
9,565
67,319
29,554
141,096
—
—
1,403
—
(602)
—
(602)
—
—
—
—
—
—
(193,082)
(1,451)
551
1,733
—
446
2,730
214
35,126
9,565
67,319
29,554
141,564
—
—
(3)
1,622
Total assets
$
53,885
$
62,942
$
79,543
$
144,898
$ (195,138) $
146,130
LIABILITIES AND SHAREHOLDERS’/MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities
$
Payables to related party
Current portion of long-term debt
Total current liabilities
LONG-TERM DEBT
LOANS PAYABLE – RELATED PARTY
DEFERRED INCOME TAXES
OTHER LONG-TERM LIABILITIES
SHAREHOLDERS’/MEMBER’S EQUITY
Controlling interest
Noncontrolling interests
Total shareholders’/member’s equity
9
—
—
9
—
—
17,376
215
36,285
—
36,285
$
893
$
283
$
7,620
$
— $
8,805
—
—
893
—
—
16
478
—
—
283
18,730
—
—
—
602
3,290
11,512
50,807
1,451
—
2,144
(602)
—
(602)
—
(1,451)
(3)
—
53,592
7,963
61,555
60,530
78,960
(193,082)
—
24
—
60,530
78,984
(193,082)
—
3,290
12,095
69,537
—
17,389
2,837
36,285
7,987
44,272
Total liabilities and shareholders’/member’s equity
$
53,885
$
62,942
$
79,543
$
144,898
$ (195,138) $
146,130
F- 52
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Charter Communications, Inc. and Subsidiaries
Condensed Consolidating Statement of Operations
For the year ended December 31, 2019
REVENUES
COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown
separately below)
Depreciation and amortization
Other operating (income) expenses, net
Income from operations
OTHER INCOME (EXPENSES):
Interest income (expense), net
Loss on extinguishment of debt
Loss on financial instruments, net
Other pension costs, net
Other expense, net
Equity in income of subsidiaries
Income before income taxes
Income tax expense
Consolidated net income
Less: Net income attributable to noncontrolling interests
Non-Guarantor Subsidiaries
Guarantor Subsidiaries
Intermediate
Holding
Companies
CCO
Holdings
Charter
Charter
Operating
and
Restricted
Subsidiaries
Eliminations
Charter
Consolidated
$
52
$
1,170
$
— $
45,756
$
(1,214) $
45,764
52
—
—
52
—
10
—
—
—
—
1,998
2,008
2,008
(340)
1,668
—
1,114
15
(11)
1,118
52
32
—
—
—
(4)
2,251
2,279
2,331
(10)
2,321
(323)
—
—
—
—
—
29,275
9,911
111
39,297
6,459
(1,067)
(2,772)
(22)
—
—
—
3,340
2,251
2,251
—
2,251
—
(3)
(54)
(69)
(131)
—
(3,029)
3,430
(89)
3,341
(1)
(1,217)
29,224
—
3
(1,214)
—
—
—
—
—
—
(7,589)
(7,589)
(7,589)
—
(7,589)
—
9,926
103
39,253
6,511
(3,797)
(25)
(54)
(69)
(135)
—
(4,080)
2,431
(439)
1,992
(324)
Net income
$
1,668
$
1,998
$
2,251
$
3,340
$
(7,589) $
1,668
F- 53
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Charter Communications, Inc. and Subsidiaries
Condensed Consolidating Statement of Operations
For the year ended December 31, 2018
REVENUES
COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately
below)
Depreciation and amortization
Other operating expenses, net
Income from operations
OTHER INCOME (EXPENSES):
Interest income (expense), net
Loss on financial instruments, net
Other pension benefits, net
Other expense, net
Equity in income of subsidiaries
Income before income taxes
Income tax expense
Consolidated net income
Less: Net income attributable to noncontrolling interests
Non-Guarantor Subsidiaries
Guarantor Subsidiaries
Intermediate
Holding
Companies
CCO
Holdings
Charter
Charter
Operating
and
Restricted
Subsidiaries
Eliminations
Charter
Consolidated
$
46
$
1,141
$
— $
43,620
$
(1,173) $
43,634
46
—
—
46
—
9
—
—
—
1,377
1,386
1,386
(156)
1,230
—
1,096
11
5
1,112
29
30
—
—
(31)
1,632
1,631
1,660
(8)
1,652
(275)
—
—
—
—
—
(1,016)
—
—
—
2,648
1,632
1,632
—
1,632
—
27,891
10,307
230
38,428
5,192
(2,563)
(110)
192
(46)
—
(2,527)
2,665
(16)
2,649
(1)
(1,173)
—
—
(1,173)
—
—
—
—
—
(5,657)
(5,657)
(5,657)
—
(5,657)
—
27,860
10,318
235
38,413
5,221
(3,540)
(110)
192
(77)
—
(3,535)
1,686
(180)
1,506
(276)
Net income
$
1,230
$
1,377
$
1,632
$
2,648
$
(5,657) $
1,230
F- 54
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Charter Communications, Inc. and Subsidiaries
Condensed Consolidating Statement of Operations
For the year ended December 31, 2017
REVENUES
COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately
below)
Depreciation and amortization
Other operating (income) expenses, net
Income from operations
OTHER INCOME (EXPENSES):
Interest income (expense), net
Loss on extinguishment of debt
Gain on financial instruments, net
Other pension benefits
Other expense, net
Equity in income of subsidiaries
Income before income taxes
Income tax benefit (expense)
Consolidated net income
Less: Net income attributable to noncontrolling interests
Non-Guarantor Subsidiaries
Guarantor Subsidiaries
Intermediate
Holding
Companies
CCO
Holdings
Charter
Charter
Operating
and
Restricted
Subsidiaries
Eliminations
Charter
Consolidated
$
90
$
1,186
$
— $
41,578
$
(1,273) $
41,581
90
—
(101)
(11)
101
5
—
—
—
—
680
685
786
9,109
9,895
—
1,164
9
3
1,176
10
20
—
—
—
(14)
882
888
898
1
899
(219)
—
—
—
—
—
(883)
(34)
—
—
—
1,799
882
882
—
882
—
26,560
10,579
444
37,583
3,995
(2,232)
(6)
69
1
(4)
—
(2,172)
1,823
(23)
1,800
(1)
(1,273)
—
—
(1,273)
—
—
—
—
—
—
(3,361)
(3,361)
(3,361)
—
26,541
10,588
346
37,475
4,106
(3,090)
(40)
69
1
(18)
—
(3,078)
1,028
9,087
(3,361)
10,115
—
(220)
Net income
$
9,895
$
680
$
882
$
1,799
$
(3,361) $
9,895
F- 55
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Charter Communications, Inc. and Subsidiaries
Condensed Consolidating Statement of Comprehensive Income
For the year ended December 31, 2019
Consolidated net income
Foreign currency translation adjustment
Consolidated comprehensive income
Less: Comprehensive income attributable to noncontrolling interests
Non-Guarantor Subsidiaries
Guarantor Subsidiaries
Intermediate
Holding
Companies
CCO
Holdings
Charter
Charter
Operating
and
Restricted
Subsidiaries
Eliminations
Charter
Consolidated
$
1,668
$
2,321
$
2,251
$
3,341
$
(7,589) $
1,992
2
1,670
—
2
2,323
(323)
2
2,253
—
2
3,343
(1)
(6)
(7,595)
—
2
1,994
(324)
Comprehensive income
$
1,670
$
2,000
$
2,253
$
3,342
$
(7,595) $
1,670
Charter Communications, Inc. and Subsidiaries
Condensed Consolidating Statement of Comprehensive Income
For the year ended December 31, 2018
Consolidated net income
Foreign currency translation adjustment
Consolidated comprehensive income
Less: Comprehensive income attributable to noncontrolling interests
Non-Guarantor Subsidiaries
Guarantor Subsidiaries
Intermediate
Holding
Companies
CCO
Holdings
Charter
Charter
Operating
and
Restricted
Subsidiaries
Eliminations
Charter
Consolidated
$
1,230
$
1,652
$
1,632
$
2,649
$
(5,657) $
1,506
(1)
1,229
—
(1)
1,651
(275)
(1)
1,631
—
(1)
2,648
(1)
3
(5,654)
—
(1)
1,505
(276)
Comprehensive income
$
1,229
$
1,376
$
1,631
$
2,647
$
(5,654) $
1,229
Charter Communications, Inc. and Subsidiaries
Condensed Consolidating Statement of Comprehensive Income
For the year ended December 31, 2017
Non-Guarantor Subsidiaries
Guarantor Subsidiaries
Intermediate
Holding
Companies
CCO
Holdings
Charter
Charter
Operating
and
Restricted
Subsidiaries
Eliminations
Charter
Consolidated
Consolidated net income
$
9,895
$
899
$
882
$
1,800
$
(3,361) $
10,115
Net impact of interest rate derivative instruments
Foreign currency translation adjustment
Consolidated comprehensive income
Less: Comprehensive income attributable to noncontrolling interests
5
1
9,901
—
5
1
905
(219)
5
1
888
—
5
1
1,806
(1)
(15)
(3)
5
1
(3,379)
10,121
—
(220)
Comprehensive income
$
9,901
$
686
$
888
$
1,805
$
(3,379) $
9,901
F- 56
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Charter Communications, Inc. and Subsidiaries
Condensed Consolidating Statement of Cash Flows
For the year ended December 31, 2019
+
Non-Guarantor Subsidiaries
Guarantor Subsidiaries
Intermediate
Holding
Companies
CCO
Holdings
Charter
Charter
Operating
and
Restricted
Subsidiaries
Eliminations
Charter
Consolidated
NET CASH FLOWS FROM OPERATING ACTIVITIES
$
(36)
$
76
$
(1,051)
$
12,759
$
— $
11,748
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Change in accrued expenses related to capital expenditures
Real estate investments through variable interest entities
Contribution to subsidiaries
Distributions from subsidiaries
Other, net
Net cash flows from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt
Repayments of long-term debt
Payment for debt issuance costs
Purchase of treasury stock
Proceeds from exercise of stock options
Purchase of noncontrolling interest
Distributions to noncontrolling interest
Contributions from parent
Distributions to parent
Other, net
—
—
—
(119)
6,910
—
6,791
—
—
—
(6,873)
118
—
—
—
—
—
(67)
—
(148)
(59)
7,891
(30)
7,587
—
—
—
—
—
(885)
(152)
119
—
—
—
(2,860)
9,068
—
6,208
4,584
(1,366)
(43)
—
—
—
—
59
(6,910)
(7,891)
—
—
Net cash flows from financing activities
(6,755)
(7,828)
(4,657)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning
of period
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of
period
—
—
(165)
465
500
—
(7,195)
55
—
—
—
54
67
—
—
3,038
(23,869)
(67)
(7,086)
(20,831)
15,101
(11,943)
(60)
—
—
—
(2)
2,860
(9,068)
(112)
(3,224)
2,449
300
—
—
—
—
—
—
—
(3,038)
23,869
—
20,831
—
—
(7,195)
55
(148)
—
—
(43)
(7,331)
19,685
(13,309)
(103)
(6,873)
118
(885)
(154)
—
—
(112)
(1,633)
2,784
765
$
— $
300
$
500
$
2,749
$
— $
3,549
F- 57
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Charter Communications, Inc. and Subsidiaries
Condensed Consolidating Statement of Cash Flows
For the year ended December 31, 2018
Non-Guarantor Subsidiaries
Guarantor Subsidiaries
Intermediate
Holding
Companies
CCO
Holdings
Charter
Charter
Operating
and
Restricted
Subsidiaries
Eliminations
Charter
Consolidated
NET CASH FLOWS FROM OPERATING ACTIVITIES
$
(10) $
120
$ (1,009) $
12,666
$
— $
11,767
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Change in accrued expenses related to capital expenditures
Real estate investments through variable interest entities
Contribution to subsidiaries
Distributions from subsidiaries
Other, net
Net cash flows from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt
Repayments of long-term debt
Borrowings (repayments) of loans payable - related parties
Payment for debt issuance costs
Purchase of treasury stock
Proceeds from exercise of stock options
Purchase of noncontrolling interest
Distributions to noncontrolling interest
Contributions from parent
Distributions to parent
Borrowings for real estate investments through variable interest
entities
Distributions to variable interest entities noncontrolling interest
Other, net
Net cash flows from financing activities
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning
of period
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of
period
—
—
—
(69)
4,421
—
4,352
—
—
(12)
—
(4,399)
69
—
—
—
—
—
—
—
(4,342)
—
—
(16)
—
(21)
(142)
5,178
(20)
4,979
—
—
—
—
—
—
(656)
(152)
69
(4,421)
342
(107)
—
(4,925)
174
291
—
—
—
(142)
6,187
—
6,045
—
—
—
—
—
—
—
—
142
(5,178)
—
—
—
(5,036)
—
—
(9,109)
(470)
—
—
—
(100)
(9,679)
13,820
(10,769)
12
(29)
—
—
—
(1)
142
(6,187)
—
—
(5)
(3,017)
(30)
330
—
—
—
353
(15,786)
—
(15,433)
—
—
—
—
—
—
—
—
(353)
15,786
—
—
—
15,433
—
—
$
— $
465
$
— $
300
$
— $
(9,125)
(470)
(21)
—
—
(120)
(9,736)
13,820
(10,769)
—
(29)
(4,399)
69
(656)
(153)
—
—
342
(107)
(5)
(1,887)
144
621
765
F- 58
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018 AND 2017
(dollars in millions, except share or per share data or where indicated)
Charter Communications, Inc. and Subsidiaries
Condensed Consolidating Statement of Cash Flows
For the year ended December 31, 2017
Non-Guarantor Subsidiaries
Guarantor Subsidiaries
Intermediate
Holding
Companies
CCO
Holdings
Charter
Charter
Operating
and
Restricted
Subsidiaries
Eliminations
Charter
Consolidated
NET CASH FLOWS FROM OPERATING ACTIVITIES:
$
159
$
187
$
(814) $
12,422
$
— $
11,954
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Change in accrued expenses related to capital expenditures
Real estate investments through variable interest entities
Contribution to subsidiaries
Distributions from subsidiaries
Other, net
Net cash flows from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt
Repayments of long-term debt
Borrowings (repayments) of loans payable - related parties
Payment for debt issuance costs
Purchase of treasury stock
Proceeds from exercise of stock options
Purchase of noncontrolling interest
Distributions to noncontrolling interest
Contributions from parent
Distributions to parent
Other, net
Net cash flows from financing activities
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning
of period
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of
period
—
—
—
(115)
11,732
—
11,617
—
—
(234)
—
(11,715)
116
—
—
—
—
—
(11,833)
(57)
57
—
—
(105)
—
13,488
—
13,383
—
—
—
—
—
—
(1,665)
(151)
115
(11,732)
—
(13,433)
137
154
—
—
—
(693)
9,598
—
8,905
6,231
(775)
—
(59)
—
—
—
—
—
(13,488)
—
(8,091)
—
—
(8,681)
820
—
—
—
(132)
(7,993)
19,045
(15,732)
234
(52)
—
—
—
(2)
693
(9,598)
(11)
(5,423)
(994)
1,324
—
—
—
808
(34,818)
—
(34,010)
—
—
—
—
—
—
—
—
(808)
34,818
—
34,010
—
—
(8,681)
820
(105)
—
—
(132)
(8,098)
25,276
(16,507)
—
(111)
(11,715)
116
(1,665)
(153)
—
—
(11)
(4,770)
(914)
1,535
$
— $
291
$
— $
330
$
— $
621
F- 59
Use of Non-GAAP Financial Measures
We use certain measures that are not defined by U.S.
generally accepted accounting principles (“GAAP”)
to evaluate various aspects of our business. Adjusted
EBITDA and free cash flow are non-GAAP financial
measures and should be considered in addition to, not
as a substitute for, net income attributable to Charter
shareholders and net cash flows from operating activi-
ties reported in accordance with GAAP. These terms,
as defined by us, may not be comparable to similarly
titled measures used by other companies. Adjusted
EBITDA and free cash flow are reconciled to net
income attributable to Charter shareholders and net
cash flows from operating activities, respectively, in
this annual report.
Adjusted EBITDA is defined as net income attributable
to Charter shareholders plus net income attributable
to noncontrolling interest, net interest expense,
income taxes, depreciation and amortization, stock
compensation expense, loss on extinguishment of
debt, (gain) loss on financial instruments, net, other
pension (benefits) costs, net, other (income) expense,
net and other operating (income) expenses, net, such
as merger and restructuring costs, special charges and
(gain) loss on sale or retirement of assets. As such, it
eliminates the significant non-cash depreciation and
amortization expense that results from the capital-
intensive nature of our businesses as well as other
non-cash or special items, and is unaffected by our
capital structure or investment activities. However,
this measure is limited in that it does not reflect the
periodic costs of certain capitalized tangible and intan-
gible assets used in generating revenues and our cash
cost of financing. These costs are evaluated through
other financial measures.
Free cash flow is defined as net cash flows from oper-
ating activities, less capital expenditures and changes
in accrued expenses related to capital expenditures.
Management and Charter’s board of directors use
Adjusted EBITDA and free cash flow to assess our
performance and our ability to service our debt,
fund operations and make additional investments
with internally generated funds. In addition, Adjusted
EBITDA generally correlates to the leverage ratio cal-
culation under our credit facilities or outstanding
notes to determine compliance with the covenants
contained in the facilities and notes (all such documents
have been previously filed with the SEC). For the pur-
pose of calculating compliance with leverage cove-
nants, we use Adjusted EBITDA, as presented,
excluding certain expenses paid by our operating sub-
sidiaries to other Charter entities. Our debt covenants
refer to these expenses as management fees, which
were $1.2 billion, $1.1 billion and $1.1 billion for the years
ended December 31, 2019, 2018 and 2017, respectively.
Cable revenue is defined as total revenues less mobile
revenues. Cable Adjusted EBITDA is defined as
Adjusted EBITDA less mobile revenues plus mobile
operating costs and expenses. Cable free cash flow
is defined as free cash flow plus mobile net cash
outflows from operating activities and mobile
capital expenditures.
Management and Charter’s board of directors use
cable revenue, cable Adjusted EBITDA and cable free
cash flow to provide management and investors a
more meaningful year over year perspective on the
financial and operational performance and trends of
our core cable business without the impact of the
revenue, costs and capital expenditures in the initial
funding period to grow a new product line as well as
the negative working capital impacts from the timing
of device-related cash flows when we provide the
handset or tablet to customers pursuant to equipment
installment plans.
F-60
3_Charter_2019AR_34615_FN.indd 2
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Unaudited Reconciliation of Non-GAAP Measures to GAAP Measures
(dollars in millions)
For the year ended December 31
Total revenues
Less: Mobile revenue
Cable revenue
Net income attributable to Charter shareholders
Plus:
(cid:19)(cid:132)(cid:149)(cid:164)(cid:3)(cid:153)(cid:158)(cid:147)(cid:159)(cid:157)(cid:149)(cid:3)(cid:145)(cid:164)(cid:164)(cid:162)(cid:153)(cid:146)(cid:165)(cid:164)(cid:145)(cid:146)(cid:156)(cid:149)(cid:3)(cid:164)(cid:159)(cid:3)(cid:158)(cid:159)(cid:158)(cid:147)(cid:159)(cid:158)(cid:164)(cid:162)(cid:159)(cid:156)(cid:156)(cid:153)(cid:158)(cid:151)(cid:3)(cid:153)(cid:158)(cid:164)(cid:149)(cid:162)(cid:149)(cid:163)(cid:164)
(cid:19)(cid:127)(cid:158)(cid:164)(cid:149)(cid:162)(cid:149)(cid:163)(cid:164)(cid:3)(cid:149)(cid:168)(cid:160)(cid:149)(cid:158)(cid:163)(cid:149)(cid:6)(cid:3)(cid:158)(cid:149)(cid:164)
(cid:19)(cid:127)(cid:158)(cid:147)(cid:159)(cid:157)(cid:149)(cid:3)(cid:164)(cid:145)(cid:168)(cid:3)(cid:87)(cid:146)(cid:149)(cid:158)(cid:149)(cid:150)(cid:153)(cid:164)(cid:88)(cid:3)(cid:149)(cid:168)(cid:160)(cid:149)(cid:158)(cid:163)(cid:149)
(cid:19)(cid:122)(cid:149)(cid:160)(cid:162)(cid:149)(cid:147)(cid:153)(cid:145)(cid:164)(cid:153)(cid:159)(cid:158)(cid:3)(cid:145)(cid:158)(cid:148)(cid:3)(cid:145)(cid:157)(cid:159)(cid:162)(cid:164)(cid:153)(cid:170)(cid:145)(cid:164)(cid:153)(cid:159)(cid:158)
(cid:19)(cid:137)(cid:164)(cid:159)(cid:147)(cid:155)(cid:3)(cid:147)(cid:159)(cid:157)(cid:160)(cid:149)(cid:158)(cid:163)(cid:145)(cid:164)(cid:153)(cid:159)(cid:158)(cid:3)(cid:149)(cid:168)(cid:160)(cid:149)(cid:158)(cid:163)(cid:149)
(cid:19)(cid:130)(cid:159)(cid:163)(cid:163)(cid:3)(cid:159)(cid:158)(cid:3)(cid:149)(cid:168)(cid:164)(cid:153)(cid:158)(cid:151)(cid:165)(cid:153)(cid:163)(cid:152)(cid:157)(cid:149)(cid:158)(cid:164)(cid:3)(cid:159)(cid:150)(cid:3)(cid:148)(cid:149)(cid:146)(cid:164)
(cid:19)(cid:87)(cid:125)(cid:145)(cid:153)(cid:158)(cid:88)(cid:3)(cid:156)(cid:159)(cid:163)(cid:163)(cid:3)(cid:159)(cid:158)(cid:3)(cid:150)(cid:153)(cid:158)(cid:145)(cid:158)(cid:147)(cid:153)(cid:145)(cid:156)(cid:3)(cid:153)(cid:158)(cid:163)(cid:164)(cid:162)(cid:165)(cid:157)(cid:149)(cid:158)(cid:164)(cid:163)(cid:6)(cid:3)(cid:158)(cid:149)(cid:164)(cid:3)
(cid:19)(cid:133)(cid:164)(cid:152)(cid:149)(cid:162)(cid:3)(cid:160)(cid:149)(cid:158)(cid:163)(cid:153)(cid:159)(cid:158)(cid:3)(cid:87)(cid:146)(cid:149)(cid:158)(cid:149)(cid:150)(cid:153)(cid:164)(cid:163)(cid:88)(cid:3)(cid:147)(cid:159)(cid:163)(cid:164)(cid:163)(cid:6)(cid:3)(cid:158)(cid:149)(cid:164)
(cid:19)(cid:133)(cid:164)(cid:152)(cid:149)(cid:162)(cid:6)(cid:3)(cid:158)(cid:149)(cid:164)
Adjusted EBITDA
Less: Mobile revenue
Plus: Mobile costs and expenses
Cable Adjusted EBITDA
Net cash flows from operating activities
Less:
(cid:19)(cid:134)(cid:165)(cid:162)(cid:147)(cid:152)(cid:145)(cid:163)(cid:149)(cid:163)(cid:3)(cid:159)(cid:150)(cid:3)(cid:160)(cid:162)(cid:159)(cid:160)(cid:149)(cid:162)(cid:164)(cid:169)(cid:6)(cid:3)(cid:160)(cid:156)(cid:145)(cid:158)(cid:164)(cid:3)(cid:145)(cid:158)(cid:148)(cid:3)(cid:149)(cid:161)(cid:165)(cid:153)(cid:160)(cid:157)(cid:149)(cid:158)(cid:164)
(cid:19)(cid:121)(cid:152)(cid:145)(cid:158)(cid:151)(cid:149)(cid:3)(cid:153)(cid:158)(cid:3)(cid:145)(cid:147)(cid:147)(cid:162)(cid:165)(cid:149)(cid:148)(cid:3)(cid:149)(cid:168)(cid:160)(cid:149)(cid:158)(cid:163)(cid:149)(cid:163)(cid:3)(cid:162)(cid:149)(cid:156)(cid:145)(cid:164)(cid:149)(cid:148)(cid:3)(cid:164)(cid:159)(cid:3)(cid:147)(cid:145)(cid:160)(cid:153)(cid:164)(cid:145)(cid:156)(cid:3)(cid:149)(cid:168)(cid:160)(cid:149)(cid:158)(cid:148)(cid:153)(cid:164)(cid:165)(cid:162)(cid:149)(cid:163)
Free cash flow
Plus:
(cid:19)(cid:131)(cid:159)(cid:146)(cid:153)(cid:156)(cid:149)(cid:3)(cid:158)(cid:149)(cid:164)(cid:3)(cid:147)(cid:145)(cid:163)(cid:152)(cid:3)(cid:159)(cid:165)(cid:164)(cid:150)(cid:156)(cid:159)(cid:167)(cid:163)(cid:3)(cid:150)(cid:162)(cid:159)(cid:157)(cid:3)(cid:159)(cid:160)(cid:149)(cid:162)(cid:145)(cid:164)(cid:153)(cid:158)(cid:151)(cid:3)(cid:145)(cid:147)(cid:164)(cid:153)(cid:166)(cid:153)(cid:164)(cid:153)(cid:149)(cid:163)
(cid:19)(cid:134)(cid:165)(cid:162)(cid:147)(cid:152)(cid:145)(cid:163)(cid:149)(cid:163)(cid:3)(cid:159)(cid:150)(cid:3)(cid:157)(cid:159)(cid:146)(cid:153)(cid:156)(cid:149)(cid:3)(cid:160)(cid:162)(cid:159)(cid:160)(cid:149)(cid:162)(cid:164)(cid:169)(cid:6)(cid:3)(cid:160)(cid:156)(cid:145)(cid:158)(cid:164)(cid:3)(cid:145)(cid:158)(cid:148)(cid:3)(cid:149)(cid:161)(cid:165)(cid:153)(cid:160)(cid:157)(cid:149)(cid:158)(cid:164)
Cable free cash flow
(cid:41)(cid:39)(cid:40)(cid:48)
(cid:41)(cid:39)(cid:40)(cid:47)
(cid:41)(cid:39)(cid:40)(cid:46)
(cid:59)(cid:3)(cid:43)(cid:44)(cid:6)(cid:46)(cid:45)(cid:43)
(cid:87)(cid:46)(cid:41)(cid:45))
(cid:59)(cid:3)(cid:43)(cid:42)(cid:6)(cid:45)(cid:42)(cid:43)
(cid:87)(cid:40)(cid:39)(cid:45))
(cid:59)(cid:3)(cid:43)(cid:40)(cid:6)(cid:44)(cid:47)(cid:40)
—
(cid:59)(cid:3)(cid:43)(cid:44)(cid:6)(cid:39)(cid:42)(cid:47)
(cid:59)(cid:3)(cid:43)(cid:42)(cid:6)(cid:44)(cid:41)(cid:47)
(cid:59)(cid:3)(cid:43)(cid:40)(cid:6)(cid:44)(cid:47)(cid:40)
(cid:59)(cid:3) (cid:40)(cid:6)(cid:45)(cid:45)(cid:47)
(cid:59)(cid:3) (cid:40)(cid:6)(cid:41)(cid:42)(cid:39)
(cid:59)(cid:3) (cid:48)(cid:6)(cid:47)(cid:48)(cid:44)
(cid:42)(cid:41)(cid:43)
(cid:42)(cid:6)(cid:46)(cid:48)(cid:46)
(cid:43)(cid:42)(cid:48)
(cid:48)(cid:6)(cid:48)(cid:41)(cid:45)
(cid:42)(cid:40)(cid:44)
(cid:41)(cid:44)
(cid:44)(cid:43)
(cid:45)(cid:48)
(cid:41)(cid:42)(cid:47)
(cid:41)(cid:46)(cid:45)
(cid:42)(cid:6)(cid:44)(cid:43)(cid:39)
(cid:40)(cid:47)(cid:39)
(cid:40)(cid:39)(cid:6)(cid:42)(cid:40)(cid:47)
(cid:41)(cid:47)(cid:44)
—
(cid:40)(cid:40)(cid:39)
(cid:87)(cid:40)(cid:48)(cid:41))
(cid:42)(cid:40)(cid:41)
(cid:41)(cid:41)(cid:39)
(cid:42)(cid:6)(cid:39)(cid:48)(cid:39)
(cid:87)(cid:48)(cid:6)(cid:39)(cid:47)(cid:46))
(cid:40)(cid:39)(cid:6)(cid:44)(cid:47)(cid:47)
(cid:41)(cid:45)(cid:40)
(cid:43)(cid:39)
(cid:87)(cid:45)(cid:48))
(cid:87)(cid:40))
(cid:42)(cid:45)(cid:43)
(cid:59)(cid:3)(cid:40)(cid:45)(cid:6)(cid:47)(cid:44)(cid:44)
(cid:59)(cid:3)(cid:40)(cid:45)(cid:6)(cid:39)(cid:44)(cid:48)
(cid:59)(cid:3)(cid:40)(cid:44)(cid:6)(cid:42)(cid:39)(cid:40)
(cid:87)(cid:46)(cid:41)(cid:45))
(cid:40)(cid:6)(cid:41)(cid:43)(cid:45)
(cid:87)(cid:40)(cid:39)(cid:45))
(cid:42)(cid:43)(cid:45)
—
—
(cid:59)(cid:3)(cid:40)(cid:46)(cid:6)(cid:42)(cid:46)(cid:44)
(cid:59)(cid:3)(cid:40)(cid:45)(cid:6)(cid:41)(cid:48)(cid:48)
(cid:59)(cid:3)(cid:40)(cid:44)(cid:6)(cid:42)(cid:39)(cid:40)
(cid:59)(cid:3)(cid:40)(cid:40)(cid:6)(cid:46)(cid:43)(cid:47)
(cid:59)(cid:3)(cid:40)(cid:40)(cid:6)(cid:46)(cid:45)(cid:46)
(cid:59)(cid:3)(cid:40)(cid:40)(cid:6)(cid:48)(cid:44)(cid:43)
(cid:87)(cid:46)(cid:6)(cid:40)(cid:48)(cid:44))
(cid:44)(cid:44)
(cid:87)(cid:48)(cid:6)(cid:40)(cid:41)(cid:44))
(cid:87)(cid:43)(cid:46)(cid:39))
(cid:87)(cid:47)(cid:6)(cid:45)(cid:47)(cid:40))
(cid:47)(cid:41)(cid:39)
(cid:59)(cid:3) (cid:43)(cid:6)(cid:45)(cid:39)(cid:47)
(cid:59)(cid:3) (cid:41)(cid:6)(cid:40)(cid:46)(cid:41)
(cid:59)(cid:3) (cid:43)(cid:6)(cid:39)(cid:48)(cid:42)
(cid:46)(cid:41)(cid:48)
(cid:43)(cid:42)(cid:41)
(cid:42)(cid:44)(cid:41)
(cid:41)(cid:43)(cid:41)
—
—
(cid:59)(cid:3) (cid:44)(cid:6)(cid:46)(cid:45)(cid:48)
(cid:59)(cid:3) (cid:41)(cid:6)(cid:46)(cid:45)(cid:45)
(cid:59)(cid:3) (cid:43)(cid:6)(cid:39)(cid:48)(cid:42)
F-61
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3_Charter_2019AR_34615_FN.indd 4
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3_Charter_2019AR_34615_FN.indd 5
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Transfer Agent and Registrar
Questions related to stock transfers, lost
certificates or account changes should be
directed to:
Computershare
P.O. Box 505000
Louisville, KY 40233-5000
866.245.6077
www.computershare.com/investor
Independent Registered
Public Accounting Firm
KPMG LLP
Trademarks
Trademark terms that belong to Charter and
its affiliates are marked by ® or TM at their
first use in this report. The ® symbol indi-
cates that the trademark is registered in the
U.S. Patent and Trade mark Office. The TM
symbol indicates that the mark is being used
as a common law trademark, and applica-
tions for registration of common law trade-
marks may have been filed.
Shareholder Information
Common Stock Information
Charter Communications, Inc. Class A com-
mon stock is traded on the NASDAQ Global
Select Market under the symbol CHTR.
Charter has not paid stock or cash dividends
on any of its common stock.
Market Information
2019
First quarter
Second quarter
Third quarter
Fourth quarter
High
Low
$366.27
$398.77
$427.42
$485.73
$284.53
$345.37
$375.03
$405.60
Annual Meeting of Stockholders
April 28, 2020, 8:30 a.m. (Mtn. Daylight Time)
6350 S. Fiddler’s Green Circle
2nd Floor (Room C)
Greenwood Village, CO 80111
Form 10-K
Additional copies of the Form 10-K, filed
annually with the Securities and Exchange
Commission (SEC), are available without
charge (without exhibits) by accessing
Charter’s investor relations website,
ir.charter.com, or by contacting Investor
Relations at investor@charter.com.
Headquarters
Charter Communications, Inc.
400 Atlantic Street
Stamford, CT 06901
Charter.com
Investor Relations
Charter’s investor relations website, located
at ir.charter.com, offers financial information,
press releases, access to quarterly conference
calls and SEC filings. The site allows you to
request a shareholder kit, including recent
financial information. You may also subscribe
to e-mail alerts for all press releases and
SEC filings.
Shareholder requests may be directed
to Investor Relations via email at
investor@charter.com.
3_Charter_2019AR_34615_FN.indd 6
3/2/20 2:24 PM
Leadership and
Board of Directors
Leadership
Board of Directors
Thomas M. Rutledge
Chairman and Chief Executive Officer
Eric L. Zinterhofer
Founder of Searchlight Capital Partners, LLC
Lead Independent Director
W. Lance Conn
Former President of Vulcan Capital
Kim C. Goodman
President, Card Services, FiServ, Inc.
Craig A. Jacobson
Founding Partner of Hansen, Jacobson, Teller,
Hoberman, Newman, Warren, Richman, Rush,
Kaller & Gellman, L.L.P.
Gregory B. Maffei
Chief Executive Officer, President and Director of
Liberty Broadband Corporation, Liberty Media
Corporation, GCI Liberty, Inc. and Liberty
TripAdviser Holdings, Inc.
John D. Markley, Jr.
Managing Director of New Amsterdam
Growth Capital
David C. Merritt
Private investor and consultant
James E. Meyer
Chief Executive Officer, Sirius XM Holdings Inc.
Steve A. Miron
Senior Executive Officer with the
Advance/Newhouse companies
Balan Nair
President and Chief Executive Officer of
Liberty Latin America Ltd.
Michael A. Newhouse
Director and Senior Executive Officer with the
Advance/Newhouse companies
Mauricio Ramos
Chief Executive Officer of
Millicom International Cellular S.A.
Thomas M. Rutledge
Chairman and Chief Executive Officer
John Bickham
President and Chief Operating Officer
Christopher L. Winfrey
Chief Financial Officer
David G. Ellen
Senior Executive Vice President
Thomas E. Adams
Executive Vice President, Field Operations
Bill Archer
Executive Vice President, President of
Spectrum Enterprise
Mike Bair
Executive Vice President, Spectrum Networks
Catherine C. Bohigian
Executive Vice President, Government Affairs
Rich DiGeronimo
Chief Product and Technology Officer
Richard R. Dykhouse
Executive Vice President, General Counsel and
Corporate Secretary
Charles Fisher
Executive Vice President, Corporate Finance and
Development
Cliff Hagen
Executive Vice President, Customer Operations
Jonathan Hargis
Executive Vice President, Chief Marketing Officer
Kevin Howard
Executive Vice President, Chief Accounting Officer
and Controller
David Kline
Executive Vice President, President of
Spectrum Reach
Paul Marchand
Executive Vice President, Human Resources
Stephanie Mitchko
Executive Vice President, Chief Technology Officer
Tom Montemagno
Executive Vice President, Programming Acquisition
James Nuzzo
Executive Vice President, Business Planning
Scott Weber
Executive Vice President, Network Operations
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Charter Communications, Inc.
400 Atlantic Street
Stamford, Connecticut 06901
Spectrum.com
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