What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-01-31 compared with 2024-02-02 · 111 added, 106 removed, 332 unchanged (40% of the section changed)

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Financial Statements and Supplementary Data.”

We are a leading broadband connectivity company and cable operator serving more than 32 million customers in 41 states through our Spectrum brand.

We are a leading broadband connectivity company and cable operator with services available to an estimated 57 million homes and businesses in 41 states through our Spectrum brand.

Over an advanced communications network, we offer a full range of state-of-the-art residential and business services including Spectrum Internet, TV, Mobile and Voice.

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Business — Products and Services” for further description of these services, including customer statistics for different services.

During the year ended December 31, 2023, we added 2,474,000 mobile lines and 155,000 Internet customers.

During the year ended December 31, 2024, we lost 508,000 Internet customers while adding 2,117,000 mobile lines.

Our Internet customer growth was challenged by the end of the FCC’s ACP, lower customer move rates and the competitive environment.

While our retention programs for the customers impacted by the end of ACP subsidies have been successful in retaining the vast majority of ACP customers, the end of the ACP subsidy program has been disruptive to our business and resulted in customer losses during the year.

In September, Spectrum launched a new brand platform, Life Unlimited, which emphasizes the power of Spectrum’s advanced network and cutting-edge connectivity products and services along with a new and simplified pricing and packaging strategy that better utilizes its seamless connectivity and entertainment products to offer lower promotional and persistent bundled pricing to drive growth.

Additionally, Spectrum announced new customer commitments focused on reliable connectivity, transparency, exceptional service and a focus on always improving.

Our mobile line growth continued to benefit from our pricing and packaging strategy, including our Anytime Upgrade offering and Phone Balance Buyout program.

Our Internet and mobile product bundles, including Spectrum One, provide a differentiated connectivity experience by bringing together Spectrum Internet, Advanced WiFi and Unlimited Spectrum Mobile to offer consumers fast, reliable and secure online connections on their favorite devices at home and on the go in high-value packages.

Anytime Upgrade allows certain customers to upgrade their devices whenever they want, eliminating traditional wait times, upgrade fees and condition requirements.

Our Phone Balance Buyout program makes switching mobile providers easier by helping customers pay off balances on ported lines.

We spent $2.2 billion on our subsidized rural construction initiative during the year ended December 31, 2024 and activated approximately 393,000 subsidized rural passings.

Our mobile line and Internet customer additions were supported by our Spectrum One offering, which brings together Spectrum Internet, Advanced WiFi and Unlimited Spectrum Mobile to offer consumers fast, reliable and secure online connections on their favorite devices at home and on-the-go in a high-value package, and were further supported by growth in our legacy and new subsidized rural markets.

We continue to upgrade our network to provide higher Internet speeds and reliability and invest in our products and customer service platforms.

We currently offer Spectrum Internet products with speeds up to 1 Gbps across our entire footprint and we are upgrading our network to provide multi-gigabit speeds.

Our Advanced WiFi, a managed WiFi service that provides customers an optimized home network and greater control over connected devices with enhanced security and privacy, is available to all of our Internet customers.

We continue to invest in our ability to provide a differentiated Internet connectivity experience for our mobile and fixed Internet customers with increasing availability of out-of-home WiFi access points across our footprint.

In addition, we continue to work towards the construction of our own 5G mobile data-only network in targeted areas of our footprint leveraging our CBRS Priority Access Licenses.

We also continue to develop our video product.

In September 2023, we entered into a new affiliation agreement with The Walt Disney Company ("Disney"), which provides a template for a new programming affiliation approach where we partner with content providers to provide access to both linear and app-based DTC content.

In October 2023, we began deploying Xumo to new video customers.

Xumo combines a live TV experience with access to hundreds of content applications, and features unified search and discovery along with a curated content offering based on the customer's interests and subscriptions.

We currently offer Spectrum Internet products with speeds up to 1 Gbps across our entire footprint.

Our network evolution initiative is progressing.

We are upgrading our network to deliver symmetrical and multi-gigabit speeds across our footprint and are now offering symmetrical speeds in all of our step 1 high split markets.

In 2024, we began offering certain seamless entertainment applications including, among others, Max, Disney+, ESPN+, Paramount+, ViX Premium and Tennis Channel Plus to customers in certain packages and reached agreements with several other programmers that will add Discovery+, Peacock, AMC+ and BET+ in certain packages in 2025.

completed deals with every major programmer to deliver better flexibility and greater value to our customers by including seamless entertainment applications with our Spectrum TV services at no additional cost.

We also continue to evolve our video product and are deploying Xumo stream boxes to new video customers.

Xumo combines a live TV experience with access to hundreds of content applications, and features unified search and discovery, along with a curated content offering based on a customer’s interests and subscriptions.

In September 2024, we launched our Life Unlimited brand platform which includes a new customer commitment that provides performance and service benchmarks and a new and simplified pricing structure designed to drive more value into our relationships.

By continually improving our product set and offering consumers the opportunity to save money by switching to our services, we believe we can continue to penetrate our expanding footprint and sell additional products to our existing customers.

We are also beginning to see operational benefits from the targeted investments we are making in employee wages and benefits to build employee skill sets and tenure, as well as the continued investments in digitization of our customer service platforms and

proactive maintenance, all with the goal of improving the customer experience, reducing transactions and driving customer growth and retention.

We see operational benefits from the targeted investments we made in employee wages and benefits to build employee skill sets and tenure, as well as the continued investments in digitization of our customer service platforms, all with the goal of improving the customer experience, reducing transactions and driving customer growth and retention.

We realized revenue, Adjusted EBITDA and income from operations during the periods presented as follows (in millions;

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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 customers and residential mobile lines partly offset by lower residential video and advertising sales revenues.

Adjusted EBITDA and income from operations growth was driven by growth in revenue and increases in operating costs and expenses, primarily mobile device and other mobile direct costs and costs to service customers, partly offset by a decrease in programming expense.

Income from operations was also affected by a gain on the sale of towers and lower depreciation and amortization expense, partly offset by an increase in stock compensation expense.

Approximately 90% of our revenues for each of the years ended December 31, 2023 and 2022 are attributable to monthly subscription fees charged to customers for our Internet, video, voice, mobile and commercial services as well as regional sports and news channels.

Growth in total revenue was primarily due to mobile line growth and higher average revenue per customer, partly offset by lower customers.

Adjusted EBITDA and income from operations growth was driven by growth in revenue and decreases in operating costs and expenses, primarily programming expense, partly offset by an increase in mobile device and other mobile direct costs.

Approximately 90% of our revenues for each of the years ended December 31, 2024 and 2023 are attributable to monthly subscription fees charged to customers for our Internet, video, mobile, voice and commercial services as well as regional sports and news channels.

Generally, these customer subscriptions may be discontinued by the customer at any time subject to a fee for certain commercial customers.

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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.

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.

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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 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 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.

There is considerable judgment involved in making such a determination.

We recognize interest and penalties accrued on uncertain income tax positions as part of the income tax provision.

See Note 16 to the accompanying consolidated financial statements contained in “Part II.

Financial Statements and Supplementary Data” for additional discussion.

Defined benefit pension plans

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As of December 31, 2024, the accumulated benefit obligation and fair value of plan assets was $2.2 billion and $2.3 billion, respectively, and the net funded asset was recorded as a $125 million noncurrent asset, $3 million current liability and $15 million long-term liability.

As of December 31, 2022, the accumulated benefit obligation and fair value of plan assets was $2.2 billion and $2.6 billion, respectively, and the net funded asset was

recorded as a $362 million noncurrent asset, $5 million current liability and $17 million long-term liability.

As of December 31, 2023, the accumulated benefit obligation and fair value of plan assets was $2.4 billion and $2.6 billion, respectively, and the net funded asset was recorded as a $149 million noncurrent asset, $3 million current liability and $19 million long-term liability.

In June 2023, we purchased a buy-in group annuity contract from a highly rated insurer and in October 2023, we announced plans to fully terminate the qualified pension plan.

The benefit obligation for the qualified pension plan as of December 31, 2023 of $2.4 billion was therefore determined on a plan termination basis for which it is assumed that a portion of eligible active and deferred vested participants will elect lump sum payments.

The benefit obligation for the qualified pension plan is determined on a plan termination basis for which it is assumed that a portion of eligible active and deferred vested participants will elect lump sum payments.

Pension benefits are based on formulas that reflect the employees’ years of service and compensation during their employment period.

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We use a December 31 measurement date for our pension plans.

We recognized net periodic pension cost of $216 million in 2023 and net periodic pension benefit of $254 million in 2022.

We recognized net periodic pension cost of $23 million and $216 million in 2024 and 2023, respectively.

Net periodic pension benefit or cost is determined using certain assumptions, including the expected long-term rate of return on plan assets, discount rate and mortality assumptions.

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We used a discount rate of 5.08% to determine the December 31, 2024 pension plan benefit obligation.

A decrease in the discount rate of 25 basis points would result in an $80 million increase in our pension plan benefit obligation as of December 31, 2023 and net periodic pension cost recognized in 2023 under our mark-to-market accounting policy.

A decrease in the discount rate of 25 basis points would result in a $68 million increase in our pension plan benefit obligation as of December 31, 2024 and net periodic pension cost recognized in 2024 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, 2025 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 a decrease in our 2024 net periodic pension benefit of approximately $6 million.

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 2025 net periodic pension cost of approximately $6 million.

See Note 20 to the accompanying consolidated financial statements contained in “Part II.

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A discussion of changes in our results of operations during the year ended December 31, 2023 compared to the year ended December 31, 2022 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, 2022, filed with the SEC on January 27, 2023, which is available free of charge on the SEC's website at www.sec.gov and on Charter's investor relations website at ir.charter.com.

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, 2023, filed with the SEC on February 2, 2024, which is available free of charge on the SEC's website at www.sec.gov and on Charter's 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):

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Interest expense, net (5,229) (5,188)

Other income (expense), net (517) 56

Other expense, net (387) (517)

(5,616) (5,705)

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Weighted average common shares outstanding, diluted 145,363,771 151,966,313

Total revenues grew $585 million or 1.1% during the year ended December 31, 2023 as compared to 2022 primarily due to growth in residential Internet revenue, mobile device sales and residential mobile service revenues partly offset by lower residential video and advertising sales revenues as well as $68 million of total customer credits related to the temporary loss of Disney programming during 2023.

Total revenues grew $478 million or 0.9% during the year ended December 31, 2024 as compared to 2023 primarily due to growth in mobile lines, average revenue per customer and advertising sales, partly offset by lower customers.

Revenues by service offering were as follows (dollars in millions;

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Video 15,126 16,351 (7.5) %

Voice 1,510 1,559 (3.1) %

Mobile service 3,083 2,243 37.5 %

Voice 1,437 1,510 (4.9) %

Residential revenue 43,006 43,136 (0.3) %

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Increase related to rate and product mix changes $ 493

Increase in average residential Internet customers 178

The increase related to rate and product mix was primarily due to promotional rate step-ups and rate adjustments, partly offset by lower bundled revenue allocation.

Residential Internet customers grew by 132,000 in 2023 compared to 2022.

Decrease in average residential Internet customers (165)

The increase related to rate and product mix was primarily due to promotional rate step-ups and rate adjustments, partly offset by retention offers extended to customers that previously received an ACP subsidy.

Residential Internet customers decreased by 510,000 in 2024 compared to 2023.

Video revenues consist primarily of revenues from video services provided to our residential customers, as well as franchise fees, equipment service fees and video installation revenue.

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Decrease in average residential video customers $ (1,418)

Decrease related to rate and product mix changes (128)

Increase related to rate and product mix changes 193

Residential video customers decreased by 1,176,000 in 2024 compared to 2023.

The decrease related to rate and product mix was primarily due to a higher mix of lower cost video packages within our video customer base and $63 million of customer credits related to the temporary loss of Disney programming in 2023, offset by the pass-through of programming cost increases and promotional rate step-ups.

The increase related to rate and product mix was primarily due to promotional rate step-ups, video rate adjustments that pass-through programming rate increases and $63 million of customer credits related to the temporary loss of Disney programming in 2023, partly offset by a higher mix of lower priced video packages within our video customer base and costs required by accounting principles to be allocated to seamless entertainment applications and netted within video revenue.

The increase in mobile service revenues from our residential customers is attributable to the following (dollars in millions):

2024 compared to 2023

Increase in average residential mobile lines $ 758

Increase related to rate 82

Residential mobile lines increased by 2,049,000 in 2024 compared to 2023.

The increase related to rate is primarily related to successful conversion of free lines to paying lines and success of our Unlimited Plus plan.

The decrease in voice revenues from our residential customers was attributable to the following (dollars in millions):

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Residential wireline voice customers decreased by 1,076,000 in 2024 compared to 2023.

The increase in mobile service revenues from our residential customers is attributable to the following (dollars in millions):

2023 compared to 2022

Increase in average residential mobile lines $ 883

Decrease related to rate (338)

Residential mobile lines increased by 2,403,000 in 2023 compared to 2022.

The decrease related to rate is primarily related to the Spectrum One offering and is partly offset by higher bundled revenue allocation.

The increase in SMB revenues is attributable to the following (dollars in millions):

2024 compared to 2023

Increase in SMB customers $ 76

Decrease related to rate and product mix changes (73)

SMB customers grew by 15,000 in 2023 compared to 2022.

The decrease related to rate and product mix changes were primarily due to a higher mix of lower priced video packages and a lower number of voice lines per SMB customer relationship.

Enterprise revenues increased $93 million during the year ended December 31, 2023 as compared to the corresponding period in 2022 primarily due to an increase in Internet PSUs partly offset by lower wholesale PSUs.

Increase related to rate and product mix changes $ 12

Increase in average SMB customers 6

SMB customers decreased by 7,000 in 2024 compared to 2023.

Enterprise revenues increased $113 million during the year ended December 31, 2024 as compared to the corresponding period in 2023 primarily due to an increase in Internet PSUs.

Enterprise PSUs increased by 16,000 in 2024 compared to 2023.

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 $331 million during the year ended December 31, 2023 as compared to the corresponding period in 2022 primarily due to a decrease in political revenue.

Advertising sales revenues increased $229 million during the year ended December 31, 2024 as compared to the corresponding period in 2023 primarily due to an increase in political ad revenue and advanced advertising partly offset by lower local and national ad revenue.

Other revenues consist of revenue from mobile and video device sales, processing fees, regional sports and news channels (excluding intercompany charges or advertising sales on those channels), subsidy revenue, home shopping, wire maintenance fees and other miscellaneous revenues.

Other revenues increased approximately $623 million during the year ended December 31, 2023 as compared to the corresponding period in 2022 primarily due to higher mobile device sales partially offset by lower processing fees.

Other revenues increased approximately $248 million during the year ended December 31, 2024 as compared to the corresponding period in 2023 primarily due to higher mobile device sales.

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):

The decrease 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):

2024 compared to 2023

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Other costs of revenue 764

Costs to service customers 328

Field and technology operations (30)

Customer operations (81)

Sales and marketing 61

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Programming costs consist primarily of costs paid to programmers for basic, premium, video on demand, and pay-per-view programming.

Programming costs decreased as a

result of a higher mix of lower cost video packages within our video customer base, fewer customers and a $61 million benefit related to the temporary loss of Disney programming during 2023, partly offset by contractual rate adjustments, including renewals and increases in amounts paid for retransmission consent.

Other costs of revenue increased $783 million during the year ended December 31, 2023 compared to the corresponding period in 2022 primarily due to higher mobile device sales and higher other mobile direct costs due to an increase in mobile lines, partially offset by lower regulatory pass-through fees and original content costs.

Costs to service customers increased $328 million during the year ended December 31, 2023 compared to the corresponding period in 2022 primarily due to adjustments to job structure, pay and benefits to build a more skilled and longer tenured workforce resulting in lower frontline employee attrition compared to 2022, and additional activity to support the accelerated growth of Spectrum Mobile.

Sales and marketing costs increased $68 million during the year ended December 31, 2023 compared to the corresponding period in 2022 primarily due to higher staffing across sales channels and the accelerated growth of Spectrum Mobile.

Programming costs decreased as a result of fewer video customers and a higher mix of lower cost video packages within our video customer base as well as costs required by accounting principles to be allocated to seamless entertainment applications and netted within video revenue, partly offset by contractual rate adjustments, including renewals and increases in amounts paid for retransmission consent as well as a $61 million benefit related to the temporary loss of Disney programming during 2023.

Other costs of revenue increased $764 million during the year ended December 31, 2024 compared to the corresponding period in 2023 primarily due to higher mobile service direct costs and mobile device sales due to an increase in mobile lines.

The increase in other expense was attributable to the following (dollars in millions):

2024 compared to 2023

Stock compensation expense $ 222

Corporate costs 84

Costs to sell and service bulk properties 48

Enterprise 24

Property tax and insurance $ 68

Stock compensation expense increased during the year ended December 31, 2023 compared to the corresponding prior period primarily due to an increase in equity awards granted.

Corporate, costs to sell and service bulk properties and enterprise costs increased primarily due to higher labor costs while property tax and insurance expense decreased during the year ended December 31, 2023 compared to the corresponding prior period primarily as a result of adjustments related to favorable development on prior year workers' compensation claims.

Costs to sell and service bulk properties 24

Stock compensation expense (41)

Advertising sales (17)

Property tax and insurance expense increased during the year ended December 31, 2024 compared to the corresponding prior period primarily as a result of an adjustment in 2023 related to favorable development on prior year workers' compensation claims.

Depreciation and amortization.

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Interest expense, net.

Net interest expense increased by $632 million in 2023 from 2022 primarily due to an increase in weighted average interest rates as well as an increase in weighted average debt outstanding of approximately $2.2 billion.

Other income (expense), net.

The change in other income (expense), net is attributable to the following (dollars in millions):

Net interest expense increased by $41 million in 2024 from 2023 primarily due to an increase in weighted average interest rates, partly offset by a decrease in weighted average debt.

Other expense, net.

The change in other expense, net is attributable to the following (dollars in millions):

2024 compared to 2023

Gain (loss) on financial instruments, net (see Note 11) $ 140

Net periodic pension benefit (cost) (see Note 20) $ 193

Loss on equity investments, net (see Note 5) 12

Gain (loss) on extinguishment of debt, net (see Note 8) 4

Gain (loss) on financial instruments, net (see Note 12) (79)

See Note 14 and the Notes referenced above to the accompanying consolidated financial statements contained in “Item 1.

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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 $1.4 billion for each of the years ended December 31, 2023 and 2022.

Our debt covenants refer to these expenses as management fees, which fees were in the amount of $1.5 billion and $1.4 billion for the years ended December 31, 2024 and 2023, respectively.

A reconciliation of Adjusted EBITDA and free cash flow to net income attributable to Charter shareholders and net cash flows from operating activities, respectively, is as follows (dollars in millions):

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The principal amount of our debt as of December 31, 2024 was $93.8 billion, consisting of $10.3 billion of credit facility debt, $56.2 billion of investment grade senior secured notes and $27.3 billion of high-yield senior unsecured notes.

Our split credit rating allows us to access both the investment grade debt market and the high yield debt market.

Our split credit rating allows us to access both the investment grade debt and the high yield debt markets.

In June 2024, our bankruptcy remote special purpose vehicle entered into a senior secured revolving credit facility to finance the purchase of equipment installment plan receivables with a number of financial institutions (the “EIP Financing Facility”).

As of December 31, 2024, the carrying value of the EIP Financing Facility was $1.1 billion.

For more information on the EIP Financing Facility, see Note 9 to the accompanying consolidated financial statements contained in “Part II.

Financial Statements and Supplementary Data.”

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 market penetration of our mobile product, we will continue to experience negative working capital impacts from the timing of device-related cash flows when we sell devices to customers pursuant to equipment installment plans.

Further, in 2022, Charter became a meaningful federal cash tax payer as the majority of our net operating losses had been utilized.

Free cash flow was $4.3 billion and $3.5 billion for the years ended December 31, 2024 and 2023, respectively.

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As Adjusted EBITDA grows, we expect to increase the total amount of our indebtedness to maintain leverage within Charter's target leverage range.

Excluding purchases from Liberty Broadband discussed below, during the years ended December 31, 2023 and 2022, Charter purchased in the public market approximately 6.9 million and 14.5 million shares, respectively, of Charter Class A common stock for approximately $2.7 billion and $7.1 billion, respectively.

Since the beginning of its buyback program in September 2016 through the year ended December 31, 2023, Charter has purchased in the public market approximately 158.3 million shares of Class A common stock and Charter Holdings common units for approximately $72.0 billion, including purchases from Liberty Broadband and A/N discussed below.

In February 2021, Charter and Liberty Broadband entered into a letter agreement (the “LBB Letter Agreement”).

The LBB Letter Agreement implements Liberty Broadband’s obligations under the Stockholders Agreement to participate in share repurchases by Charter.

Under the LBB Letter Agreement, Liberty Broadband will sell to Charter, generally on a monthly basis, a number of shares of Charter Class A common stock representing an amount sufficient for Liberty Broadband’s ownership of Charter to be reduced such that it does not exceed the ownership cap then applicable to Liberty Broadband under the Stockholders Agreement at a purchase price per share equal to the volume weighted average price per share paid by Charter for shares repurchased during such immediately preceding calendar month other than (i) purchases from A/N, (ii) purchases in privately negotiated transactions or (iii) purchases for the withholding of shares of Charter Class A common stock pursuant to equity compensation programs of Charter.

Charter purchased from Liberty Broadband 1.0 million and 6.2 million shares of Charter Class A common stock for approximately $394 million and $3.0 billion during the years ended December 31, 2023 and 2022, respectively.

Excluding purchases from Liberty Broadband discussed below, during the years ended December 31, 2024 and 2023, Charter purchased in the public market approximately 2.7 million and 6.9 million shares, respectively, of Charter Class A common stock for approximately $822 million and $2.7 billion, respectively.

Since the beginning of its buyback program in September 2016 through the year ended December 31, 2024, Charter has purchased in the public market approximately 162.6 million

shares of Class A common stock and Charter Holdings common units for approximately $73.4 billion, including purchases from Liberty Broadband and A/N discussed below.

In February 2021, Charter and Liberty Broadband entered into a letter agreement (the “Existing LBB Letter Agreement”), as amended by the Stockholders and Letter Agreement Amendment.

The Existing LBB Letter Agreement implemented Liberty Broadband’s obligations under the Existing Stockholders Agreement to participate in share repurchases by Charter.

Under the Existing LBB Letter Agreement, Liberty Broadband sold to Charter, generally on a monthly basis, a number of shares of Charter Class A common stock representing an amount sufficient for Liberty Broadband’s ownership of Charter to be reduced such that it did not exceed the ownership cap then applicable to Liberty Broadband under the Existing Stockholders Agreement at a purchase price per share equal to the volume weighted average price per share paid by Charter for shares repurchased during such immediately preceding calendar month other than (i) purchases from A/N, (ii) purchases in privately negotiated transactions or (iii) purchases for the withholding of shares of Charter Class A common stock pursuant to equity compensation programs of Charter.

The Stockholders and Letter Agreement Amendment sets forth, among other things, the terms of Liberty Broadband’s participation in Charter’s share repurchases during the period between the execution of the merger agreement and the effective time of the merger agreement.

Pursuant to the Stockholders and Letter Agreement Amendment, each month during the pendency of the proposed transaction, Charter will repurchase shares of Charter Class A common stock from Liberty Broadband in an amount equal to the greater of (i) $100 million and (ii) the Liberty Broadband minimum liquidity threshold as set forth in the Stockholders and Letter Agreement Amendment, provided that if any repurchase would reduce Liberty Broadband’s equity interest in Charter below 25.25% after giving effect to such repurchase or if all or a portion of such repurchase is not permitted under applicable law, then Charter shall instead loan to Liberty Broadband an amount equal to the lesser of (x) the repurchase amount that cannot be repurchased and (y) the Liberty Broadband minimum liquidity threshold as set forth in the Stockholders and Letter Agreement Amendment less the repurchase amount that is repurchased, with such loan on the terms set forth in the Stockholders and Letter Agreement Amendment.

From and after the date Liberty Broadband’s exchangeable debentures are no longer outstanding, the amount of monthly repurchases will be the lesser of (i) $100 million and (ii) an amount equal to the sum of (x) the amount needed, in the reasonable judgment of Charter, to maintain an unrestricted cash balance of Liberty Broadband and its subsidiaries (other than GCI, GCI Spinco and their respective subsidiaries) of $50 million plus (y) the aggregate outstanding principal amount of the Liberty Broadband margin loan.

The purchase price payable by Charter to Liberty Broadband in connection with such monthly repurchases will equal (i) the average price paid by Charter for shares of Charter Class A common stock repurchased during the immediately preceding calendar month (excluding shares repurchased from A/N and certain other excluded repurchases) or (ii) if Charter has not engaged in any repurchases of shares of Charter Class A common stock during the immediately preceding calendar month (other than any repurchases from A/N and certain other excluded repurchases), a purchase price based on a Bloomberg volume-weighted average price methodology proposed by Charter and reasonably acceptable to Liberty Broadband.

Liberty Broadband will apply the proceeds from any such repurchases or borrowings from Charter to repay certain of its outstanding indebtedness in accordance with the Stockholders and Letter Agreement Amendment.

The Stockholders and Letter Agreement Amendment provides that Liberty Broadband will be exempt from the standstill restrictions and the ownership cap under the Existing Stockholders Agreement to the extent its ownership in Charter exceeds such ownership cap solely as a result of the repurchase provisions in the Stockholders and Letter Agreement Amendment.

Charter purchased from Liberty Broadband 1.0 million shares of Charter Class A common stock during each of the years ended December 31, 2024 and 2023 for approximately $335 million and $394 million, respectively.

In December 2016, Charter and A/N entered into a letter agreement, as amended in December 2017 (the “A/N 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.

During the years ended December 31, 2023 and 2022, Charter Holdings purchased from A/N 1.1 million and 3.2 million Charter Holdings common units, respectively, for approximately $427 million and $1.6 billion, respectively.

During the years ended December 31, 2024 and 2023, Charter Holdings purchased from A/N 0.6 million and 1.1 million Charter Holdings common units, respectively, for approximately $189 million and $427 million, respectively.

As of December 31, 2024, Charter had remaining board authority to purchase an additional $961 million of Charter’s Class A common stock and/or Charter Holdings common units, excluding purchases from Liberty Broadband.

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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 January and February 2024, Charter Operating and Charter Communications Operating Capital Corp.

redeemed all of their outstanding senior secured floating rate notes due 2024 and paid in full all of their outstanding 4.500% senior secured notes due 2024 at maturity.

Free Cash Flow

Free cash flow decreased $2.6 billion during the year ended December 31, 2023 compared to the corresponding prior period due to the following (dollars in millions):

Free cash flow increased $767 million during the year ended December 31, 2024 compared to the corresponding prior period due to the following (dollars in millions):

2024 compared to 2023

Increase in capital expenditures $ (1,739)

Changes in working capital, excluding mobile devices $ 1,156

Increase in Adjusted EBITDA 675

Increase in cash paid for interest, net (311)

Increase in capital expenditures (154)

Changes in working capital, mobile devices (144)

Increase in cash paid for taxes, net (138)

Increase in Adjusted EBITDA 278

Other, net (317)

Other, net primarily includes the payment of a litigation settlement during the year ended December 31, 2024 compared to the corresponding period in 2023.

Historical Operating, Investing, and Financing Activities

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We held $459 million and $709 million in cash and cash equivalents as of December 31, 2024 and 2023, respectively.

In addition, we held $47 million in restricted cash included in prepaid and other current assets in our consolidated balance sheets as of December 31, 2024.

Operating Activities.

Net cash provided by operating activities decreased $492 million during the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to a negative change in working capital and an increase in cash paid for interest and taxes, partly offset by an increase in Adjusted EBITDA and the payment of litigation settlements in 2022.

Net cash provided by operating activities decreased $3 million during the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to an increase in cash paid for interest and taxes and the payment of litigation settlements in 2024, partly offset by an increase in Adjusted EBITDA.

Investing Activities.

Net cash used in investing activities for the years ended December 31, 2023 and 2022 was $11.1 billion and $9.1 billion, respectively.

The increase in cash used was primarily due to an increase in capital expenditures and changes in accrued expenses related to capital expenditures.

Net cash used in investing activities was $10.7 billion and $11.1 billion for the years ended December 31, 2024 and 2023, respectively.

The decrease in cash used was primarily due to changes in accrued expenses related to capital expenditures as a result of extended vendor payment terms in connection with our implementation of a supply chain financing program.

Financing Activities.

Net cash used in financing activities decreased $2.5 billion during the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to a decrease in the purchase of treasury stock and noncontrolling interest partly offset by a decrease in the amount by which borrowings of long-term debt exceeded repayments.

Net cash used in financing activities increased $737 million during the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to an increase in the amount by which repayments of long-term debt exceeded borrowings, partly offset by a decrease in the purchase of treasury stock and noncontrolling interest and borrowings under the EIP Financing Facility.

Capital Expenditures

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Capital expenditures were $11.3 billion and $11.1 billion for the years ended December 31, 2024 and 2023, respectively.

The increase was primarily due to an increase in line extensions in connection with our subsidized rural construction initiative and continued residential and commercial network expansion.

The increase in capital expenditures excluding line extensions was primarily driven by higher spend on network evolution, support capital and customer premise equipment, particularly Xumo.

The increase was primarily driven by an increase in line extensions in connection with our subsidized rural construction initiative, partly offset by a decrease in customer premise equipment.

See the table below for more details.

We currently expect full year 2024 capital expenditures to total between $12.2 billion and $12.4 billion, including line extensions of approximately $4.5 billion and network evolution spend of approximately $1.6 billion.

We currently expect full year 2025 capital expenditures to total approximately $12 billion, including line extensions of approximately $4.2 billion and network evolution spend of approximately $1.5 billion.

The actual amount of capital expenditures in 2025 will depend on a number of factors including, but not limited to, the pace of our network evolution and expansion initiatives, supply chain timing and growth rates in 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 $172 million and $553 million for the years ended December 31, 2023 and 2022, respectively.

In addition, our accrued liabilities related to capital expenditures increased $1.1 billion and $172 million for the years ended December 31, 2024 and 2023, 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, 2024 and 2023.

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(b) Scalable infrastructure includes costs, not related to customer premise equipment or our network, to secure growth of new customers or provide service enhancements (e.g., headend equipment).

(c) Upgrade/rebuild includes costs to modify or replace existing fiber/coaxial cable networks, including our network evolution initiative which started in 2022.

(c) Upgrade/rebuild includes costs to modify or replace existing fiber/coaxial cable networks, including our network evolution initiative.

(d) Support capital includes costs associated with the replacement or enhancement of non-network assets (e.g., back-office systems, non-network equipment, land and buildings, vehicles, tools and test equipment).

(e) Line extensions include network costs associated with entering new service areas (e.g., fiber/coaxial cable, amplifiers, electronic equipment, make-ready and design engineering).

(f) The subsidized rural construction initiative subcategory includes projects for which we are receiving subsidies from federal, state and local governments (for which separate reporting was initiated in 2022), excluding customer premise equipment and installation.

(f) The subsidized rural construction initiative subcategory includes projects for which we are receiving subsidies from federal, state and local governments, excluding customer premise equipment and installation.

As of December 31, 2024, the accreted value of our total debt was approximately $93.9 billion, as summarized below (dollars in millions):

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Charter Communications Operating, LLC:

Senior floating rate notes due 2024 900 900 2/1, 5/1, 8/1 & 11/1 2/1/2024

4.908% senior notes due 2025 1,800 1,799 1/23 & 7/23 7/23/2025

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3.950% senior notes due 2062 1,400 1,380 6/30 & 12/30 6/30/2062

5.500% senior notes due 2063 1,000 986 4/1 & 10/1 4/1/2063

Credit facilities 10,334 10,276 Varies

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$ 93,779 $ 93,933

(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 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.

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.

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 had availability under our credit facilities of approximately $6.3 billion as of December 31, 2024.

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(d) Principal amount includes £650 million valued at $813 million as of December 31, 2024 using the exchange rate as of December 31, 2024.

In 2023, CCO Holdings and CCO Holdings Capital Corp.

jointly issued $1.1 billion aggregate principal amount of senior unsecured notes and Charter Operating and Charter Communications Operating Capital Corp.

jointly issued $2.0 billion aggregate principal amount of senior secured notes.

The notes were issued at varying rates, prices and maturity dates and 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 2023, Charter Operating entered into amendments to its credit agreement to (i) replace London Interbank Offering Rate (“LIBOR”) as the benchmark rate applicable to the credit facilities with Secured Overnight Financing Rate (“SOFR”), (ii) incur a new Term B-3 Loan and a new Term B-4 Loan;

and (iii) concurrently cancel certain of Charter Operating's existing Term B-1 Loan (upon assignment to Charter Operating and conversion into Term B-4 Loan) and Term B-2 Loan (upon assignment to Charter Operating), among other amendments.

In May 2024, Charter Operating and Charter Communications Operating Capital Corp.

jointly issued $1.5 billion of 6.100% senior secured notes due June 2029 at a price of 99.944% of the aggregate principal amount and $1.5 billion of 6.550% senior secured notes due June 2034 at a price of 99.755% of the aggregate principal amount.

The net proceeds were used to fund a concurrent tender offer to repurchase $2.7 billion in aggregate principal amount of Charter Operating's 4.908% senior secured notes due July 2025, to prepay Charter Operating's outstanding Term B-1 Loan and to pay related fees and expenses.

In December 2024, Charter Operating entered into an amendment to its credit agreement to (i) establish a new Revolving Loan C (including by converting a portion of the existing Revolving Loan B commitments to Revolving Loan C commitments), (ii) convert a portion of the Term A-5 Loan to Term A-7 Loan and repay any remaining Term A-5 Loan that was not converted to Term A-7 Loan, and (iii) convert or replace a portion of the Term B-2 Loan with a new tranche of Term B-5 Loan and repay any remaining Term B-2 Loan that was not converted to Term B-5 Loan, among other amendments.

After giving effect to the amendment, (i) the aggregate principal amount of Revolving Loan B commitments is approximately $960 million, with pricing unchanged and maturing on August 31, 2027, (ii) the aggregate principal amount of Revolving Loan C commitments is $5.5 billion, with a pricing of SOFR plus 1.25% and maturing on March 15, 2030, (iii) the aggregate principal amount of Term A-7 Loan is approximately $4.5 billion, with a pricing of SOFR plus 1.25% and maturing on March 15, 2030, and (iv) the aggregate principal amount of Term B-5 Loan is approximately $2.5 billion, with a pricing of SOFR plus 2.25% and maturing on December 15, 2031.

See Note 8 to the accompanying consolidated financial statements contained in “Part II.

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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, 2023, Charter Operating had a consolidated leverage ratio of approximately 3.0 to 1.0 and a consolidated first lien leverage ratio of 3.0 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.

What changed 10-K

Item 7. Management’s Discussion and Analysis