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Our ability to meet our current and future financial obligations, including to make debt service obligations under the Margin Loan Agreement (defined below) and the Company Debentures (defined below), and other contractual commitments depends upon our ability to access cash.
−Removed: We are a holding company, and our sources of cash include our available cash balances, net cash from the operating activities of our wholly-owned subsidiaries, any dividends and interest we may receive from our investments, available funds under the Margin Loan Agreement (defined below) (which was $300 million as of December 31, 2020) and proceeds from any asset sales or other forms of asset monetization we may undertake in the future.
+Added: We are a holding company, and our sources of cash include our available cash balances, net cash from the operating activities of our wholly-owned subsidiaries, any dividends and interest we may receive from our investments, available funds under the Margin Loan Agreement (defined below) (which was $1.0 billion as of December 31, 2021) and proceeds from any asset sales or other forms of asset monetization we may undertake in the future.
In addition, the ability of our operating subsidiaries to pay dividends or to make other payments or advances to us depends on their operating results and any statutory, regulatory or contractual restrictions to which they may be or may become subject.
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We do not have access to the cash that Charter generates unless Charter declares a dividend on its capital stock payable in cash, engages in stock repurchases for cash or otherwise distributes or makes payments to its stockholders, including us.
−Removed: Historically, Charter has not paid any dividends on its capital stock or, with limited exceptions,
−Removed: otherwise distributed cash to its stockholders and instead has used all of its available cash in the expansion of its business, to service its debt obligations and to repurchase shares of its common stock.
+Added: Historically, Charter has not paid any dividends on its capital stock or, with limited exceptions, otherwise distributed cash to its stockholders and instead has used all of its available cash in the expansion of its business, to service its debt obligations and to repurchase shares of its common stock.
Covenants in Charter’s existing debt instruments also restrict the payment of dividends and cash distributions to stockholders.
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As a result of our spin-off from Liberty in 2014 and other transactions between 2011 and 2014 that resulted in the separate corporate existence of Liberty, Qurate Retail, and TripCo, as well as the initial public offering of Liberty Media Acquisition Corporation (“LMAC”) in January 2021, all of our executive officers also serve as executive officers of Liberty, Qurate Retail, TripCo and LMAC, and there are overlapping directors.
−Removed: Other than Liberty’s ownership of LMAC’s sponsor, which beneficially owns 20% of LMAC’s outstanding common stock as of January 26, 2021, none of these companies has any ownership interest in any of the others.
+Added: Other than Liberty’s ownership of LMAC’s sponsor, which beneficially owns 20% of LMAC’s outstanding common stock as of December 31, 2021, none of these companies has any ownership interest in any of the others.
Our executive officers and members of our company’s board of directors have fiduciary duties to our stockholders.
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Therefore, such persons may have conflicts of interest or the appearance of conflicts of interest with respect to matters involving or affecting more than one of the companies to which they owe fiduciary duties.
−Removed: Each of our company, TripCo and LMAC has renounced its rights to certain business opportunities and their respective restated certificate of incorporation provides that no director or officer of the respective company will breach their fiduciary duty and therefore be liable to the respective company or its stockholders by reason of the fact that any such individual directs a corporate opportunity to another person or entity (including Liberty, Qurate Retail, TripCo and LMAC) instead of the respective company, or does not refer or communicate information regarding such corporate opportunity to our company, unless (x) such
−Removed: opportunity was expressly offered to such person solely in his or her capacity as a director or officer of the respective company or as a director or officer of any of the respective company’s subsidiaries, and (y) such opportunity relates to a line of business in which the respective company or any of its subsidiaries is then directly engaged.
+Added: Each of our company, TripCo and LMAC has renounced its rights to certain business opportunities and their respective restated certificate of incorporation provides that no director or officer of the respective company will breach their fiduciary duty and therefore be liable to the respective company or its stockholders by reason of the fact that any such individual directs a corporate opportunity to another person or entity (including Liberty, Qurate Retail, TripCo and LMAC) instead of the respective company, or does not refer or communicate information regarding such corporate opportunity to our company, unless (x) such opportunity was expressly offered to such person solely in his or her capacity as a director or officer of the respective company or as a director or officer of any of the respective company’s subsidiaries, and (y) such opportunity relates to a line of business in which the respective company or any of its subsidiaries is then directly engaged.
In addition, any potential conflict that qualifies as a “related party transaction” (as defined in Item 404 of Regulation S-K) is subject to review by an independent committee of the applicable issuer’s board of directors in accordance with its corporate governance guidelines.
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We entered into a number of inter-company agreements covering matters such as tax sharing and our responsibility for certain liabilities previously undertaken by Liberty for certain of our businesses.
−Removed: In addition, we entered into a services agreement with Liberty pursuant to which it provides to us certain management, administrative, financial, treasury, accounting, tax, legal and other services, for which we reimburse them on a fixed fee basis, which was amended to provide that components of our President and Chief Executive Officer’s compensation will either be paid directly to him by our company or reimbursed to Liberty, in each case, based on the allocation set forth in the amendment.
+Added: In addition, we entered into a services agreement
+Added: with Liberty pursuant to which it provides to us certain management, administrative, financial, treasury, accounting, tax, legal and other services, for which we reimburse them on a fixed fee basis, which was amended to provide that components of our President and Chief Executive Officer’s compensation will either be paid directly to him by our company or reimbursed to Liberty, in each case, based on the allocation set forth in the amendment.
The terms of all of these agreements (other than the amendment to the services agreement) were established while we were a wholly-owned subsidiary of Liberty, and hence may not be the result of arms’ length negotiations.
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however, conflicts could arise in the interpretation or any extension or renegotiation of the foregoing agreements.
−Removed: Our ability to use net operating loss carryforwards and disallowed business interest carryforwards to reduce future tax payments could be negatively impacted if there is an “ownership change” as defined under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”).
−Removed: At December 31, 2020, we had federal and state net operating losses and disallowed business interest carryforwards of $192.3 million (on a tax effected basis) and, under the Code, we may carry forward our federal net operating losses and disallowed business interest deductions in certain circumstances to offset current and future taxable income and thus reduce our federal income tax liability, subject to certain requirements and restrictions.
−Removed: If we experiences an “ownership change,” as defined in Section 382 of the Code and related Treasury regulations (generally, a cumulative change in ownership that exceeds 50% of the value of a corporation's stock over a rolling three-year period) at a time when its market capitalization is below a certain level or proposed Treasury regulations under Section 382 of the Code issued during 2019 have become final and are applicable (taking into account the delayed effective date of such regulations), our ability to use our federal net operating loss carryforwards and disallowed business interest carryforwards could be substantially limited.
+Added: Our ability to use net operating loss and disallowed business interest carryforwards to reduce future tax payments could be negatively impacted if there is an “ownership change” as defined under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), of our Company.
+Added: At December 31, 2021, we had a deferred tax asset attributable to federal and state net operating losses and disallowed business interest carryforwards of $94 million and under the Code, we may carry forward our federal net operating losses and disallowed business interest deductions in certain circumstances to offset current and future taxable income and reduce our federal income tax liability, subject to certain requirements and restrictions.
+Added: If we experience an “ownership change,” as defined in Section 382 of the Code and related Treasury regulations (generally, a cumulative change in ownership that exceeds 50% of the value of a corporation's stock over a rolling three-year period) at a time when our market capitalization is below a certain level or proposed Treasury regulations under Section 382 of the Code issued during 2019 have become final and are applicable (taking into account the delayed effective date of such regulations), our ability to use our federal net operating loss and disallowed business interest carryforwards could be substantially limited.
This limit could impact the timing of the usage of our net operating loss and disallowed business interest carryforwards, thus accelerating federal cash tax payments or causing certain federal net operating loss carryforwards to expire prior to their use, which could affect the ultimate realization of that deferred tax asset.
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(iv) $600 million outstanding under GCI, LLC’s 4.750% senior notes due 2028 (the “Senior Notes”);
−Removed: and (v) $704 million in outstanding term and revolving loans under GCI, LLC’s senior secured credit facility with a syndicate of banks (the “Senior
−Removed: Credit Facility”).
−Removed: We also had $300 million remaining available to be drawn until August 12, 2021 (the “Delayed Draw”) at December 31, 2020 under the Margin Loan Agreement.
−Removed: Further, as a result of multiple transaction, including the Combination, we have entered into an indemnification agreement pursuant to which, among other things, (1) we will indemnify Liberty Interactive LLC (“Liberty LLC”) with respect to any of Liberty LLC's 1.75% Exchangeable Debentures due 2046 (the “Liberty Charter Exchangeable Debentures”) surrendered for exchange to Liberty LLC on or before October 5, 2023 for the amount by which (i) the exchange value exceeds (ii) the sum of the adjusted principal amount of such Liberty Charter Exchangeable Debentures plus the amount of certain tax benefits attributable to such Liberty Charter Exchangeable Debentures so exchanged, and (2) Qurate Retail, Liberty Broadband and GCI Liberty will indemnify each other with respect to certain potential losses in respect of the 2018 split-off of GCI Liberty by Qurate Retail.
+Added: and (v) $399 million in outstanding term and revolving loans under GCI, LLC’s senior secured credit facility with a syndicate of banks (the “Senior Credit Facility”).
+Added: We also had $1.0 billion remaining available to be drawn until five business days prior to May 12, 2024 at December 31, 2021 under the Margin Loan Agreement.
+Added: Further, as a result of multiple transactions, including the Combination, we have entered into an indemnification agreement pursuant to which, among other things, (1) we will indemnify Liberty Interactive LLC (“Liberty LLC”) with respect to any of Liberty LLC's 1.75% Exchangeable Debentures due 2046 (the “Liberty Charter Exchangeable Debentures”) surrendered for exchange to Liberty LLC on or before October 5, 2023 for the amount by which (i) the exchange value exceeds (ii) the sum of the adjusted principal amount of such Liberty Charter Exchangeable Debentures plus the amount of certain tax benefits attributable to such Liberty Charter Exchangeable Debentures so exchanged, and (2) Qurate Retail, Liberty Broadband and GCI Liberty will indemnify each other with respect to certain potential losses in respect of the 2018 split-off of GCI Liberty by Qurate Retail.
Our and our subsidiaries’ ability to service the respective financial obligations will depend on our and their ability to access cash, and cash flows from operations may be insufficient to satisfy the respective financial obligations under indebtedness outstanding from time to time.
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Such equity interests are held through SPV.
−Removed: The terms of the Margin Loan Agreement limit our company’s ability to secure additional financing on favorable terms.
+Added: The terms of the Margin Loan Agreement limit
+Added: our company’s ability to secure additional financing on favorable terms.
In addition, covenants included in the Senior Notes and Senior Credit Facility will limit the ability of certain subsidiaries to upstream or downstream cash for this purpose.
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Moreover, our and our subsidiaries’ ability to secure additional financing will depend upon the operating performance of our subsidiaries, the value of our investment in Charter, prevailing general economic and credit market conditions, including interest rate levels and the availability of credit generally, the state of competition in our subsidiaries’ respective markets, the outcome of certain legislative and regulatory issues and financial, business and other factors, many of which are beyond our control.
−Removed: There can be no assurance that sufficient financing will be available, or that we will be able to renew (in the case of the Delayed Draw) or refinance existing indebtedness, on desirable terms or at all.
+Added: There can be no assurance that sufficient financing will be available, or that we will be able to renew or refinance existing indebtedness, on desirable terms or at all.
If financing is not available when needed or is not available on favorable terms, we and our subsidiaries may be unable to take advantage of business or market opportunities as they arise, which could have a material adverse effect on our business and financial condition.
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● Be required to dedicate a substantial portion of cash flow from operations to principal and interest payments on its indebtedness, thereby reducing the availability of cash flow to fund working capital, capital expenditures, strategic acquisitions and investments and other general corporate purposes;
−Removed: ● Be handicapped in our and their ability to optimally capitalize and manage cash flows;
+Added: ● Be impeded in our and their ability to optimally capitalize and manage cash flows;
● Be restricted from making strategic acquisitions or required to make non-strategic divestitures;
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In addition, it is possible that we may need to incur additional indebtedness in the future.
−Removed: For example, at December 31, 2020 we had $300 million remaining available to be drawn until August 12, 2021 under the Margin Loan Agreement and we could issue additional exchangeable senior debent ures.
+Added: For example, at December 31, 2021, we had $1.0 billion remaining available to be drawn until five business days prior to May 12, 2024 under the Margin Loan Agreement and we could issue additional exchangeable senior debent ures.
If new debt is added to the current debt levels, the risks described above could intensify.
−Removed: For additional limitations on our company’s ability to potentially service our direct debt obligations, see “ We are a holding company, and we could be unable to obtain cash in amounts sufficient to service our financial obligations or meet our other commitments ” and “ We do not have access to the cash that Charter generates from its operating activities ” above.
+Added: For additional limitations on our company’s ability to potentially service our direct debt obligations, see “ We are a holding company, and we could be unable to obtain cash in amounts sufficient to service our financial obligations or meet our other commitments ” and “ Other than cash generated from our participation in Charter’s stock repurchase program, we do not have access to the cash that Charter generates from its operating activities ” above.
The agreements that govern our and our subsidiaries’ current and future indebtedness may contain various affirmative and restrictive covenants that will limit our discretion in the operation of our business.
−Removed: As discussed above, SPV entered into the Margin Loan Agreement pursuant to which SPV had outstanding borrowings of $2.0 billion, with $300 million remaining available to be drawn until August 12, 2021, at December 31, 2020.
−Removed: The Margin Loan Agreement contains various covenants, including those that limit our ability to, among other things, incur indebtedness by having SPV enter into financing arrangements with respect to the portion of stock of Charter pledged to secure the loans under the Margin Loan Agreement, and cause SPV to enter into unrelated businesses or otherwise conduct business other than owning common stock of Charter and other assets as permitted under the Margin Loan Agreement documents.
+Added: As discussed above, SPV entered into the Margin Loan Agreement pursuant to which SPV had outstanding borrowings of $1.3 billion, with $1.0 billion remaining available to be drawn until five business days prior to May 12, 2024, at December 31, 2021.
+Added: The Margin Loan Agreement contains various covenants, including those that limit our ability to, among other things, incur indebtedness either directly, through another of our subsidiaries, or by having SPV enter into financing arrangements with respect to the stock of Charter, and cause SPV to enter into unrelated businesses or otherwise conduct business other than owning common stock of Charter and other assets as permitted under the Margin Loan Agreement documents.
Further, the agreements governing our and our subsidiaries’ other indebtedness contain various covenants that could materially and adversely affect our and our subsidiaries’ ability to finance future operations or capital needs and to engage in other business activities that may be in our and their best interest.
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In addition, the Company’s variable rate indebtedness uses London Interbank Offering Rate (“LIBOR”) as a benchmark for establishing the rate.
−Removed: The United Kingdom's Financial Conduct Authority, which regulates LIBOR, has announced that it intends to phase out LIBOR by the end of 2021.
−Removed: On November 30, 2020, the administrator of U.S.
−Removed: dollar LIBOR announced a delay in the phase out of a majority of the U.S.
−Removed: dollar LIBOR publications until June 30, 2023, with the remainder of LIBOR publications still being phased out at the end of 2021.
−Removed: There remains uncertainty regarding the future utilization of LIBOR and the nature of any replacement rate.
−Removed: As such, the potential effect of a transition away from LIBOR cannot be entirely predicted, but could include an increase in the cost of the Company’s variable rate indebtedness.
−Removed: In preparation for the expected phase out of LIBOR, and to the extent alternate reference rates were not included in existing debt agreements, Liberty Broadband has incorporated alternative reference rates when amending these facilities.
+Added: In 2017, the United Kingdom's Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that it intends to phase out LIBOR.
+Added: On March 5, 2021, the FCA announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative:
+Added: (a) immediately after December 31, 2021, in the case of the one week and two month U.S.
+Added: dollar settings;
+Added: and (b) immediately after June 30, 2023, in the case of the remaining U.S.
+Added: dollar settings.
+Added: The United States Federal Reserve has also advised banks to cease entering into new contracts that use USD LIBOR as a reference rate.
+Added: The Alternative Reference Rate Committee, a committee convened by the Federal Reserve that includes major market participants, has identified the Secured Overnight Financing Rate, or SOFR, a new index calculated by short-term repurchase agreements, backed by Treasury securities, as its preferred alternative rate for LIBOR.
+Added: At this time, it is not possible to predict how markets will respond to SOFR or other alternative reference rates as the transition away from the LIBOR benchmarks is anticipated in coming years.
+Added: Accordingly, the outcome of these reforms is uncertain and any changes in the methods by which LIBOR is determined or regulatory activity related to LIBOR’s phaseout could cause LIBOR to perform differently than in the past or cease to exist.
+Added: The consequences of these developments cannot be entirely predicted, but could include an increase in the cost of borrowings under the aforementioned debt instruments.
+Added: Additionally, our Margin Loan Agreement and Senior Credit Facility provide for a transition to a SOFR based rate or to other alternative reference rates depending on acceptance in the market of these rates.
In order to manage the Company's exposure to interest rate risk, in the future, it may enter into derivative financial instruments, typically interest rate swaps and caps, involving the exchange of floating for fixed rate interest payments.
−Removed: If the Company is unable to enter into interest rate swaps, it may adversely affect its cash flow and may impact its ability to make required principal and interest payments on its indebtedness.
+Added: If the Company is unable to enter into interest rate swaps, it may adversely affect its cash flow and may impact its ability to make required principal and interest payments on its indebtedness and, even if we use these instruments to selectively manage risks, there can be no assurance that we will be fully protected against material interest rate fluctuations.
Factors Relating to COVID-19
−Removed: The ongoing COVID-19 pandemic could materially affect the financial condition and results of operations of Charter, GCI Holdings and Skyhook.
−Removed: The ongoing COVID-19 pandemic has significantly increased economic and demand uncertainty.
−Removed: The current pandemic and continued spread of COVID-19 has caused an economic recession.
−Removed: At this time, we cannot predict the duration of any business disruption and the ultimate impact of COVID-19 on the businesses of Charter, GCI Holdings and Skyhook.
+Added: The ongoing COVID-19 pandemic could materially affect the financial condition and results of operations of Charter and GCI Holdings.
+Added: The ongoing COVID-19 pandemic has significantly increased economic and demand uncertainty and caused economic disruption.
+Added: At this time, we cannot predict the duration of any business disruption and the ultimate impact of COVID-19 on the businesses of Charter and GCI Holdings.
As a general matter, the COVID-19 pandemic has significantly increased economic and demand uncertainty, and a significant global recession may result.
−Removed: With respect to Charter, we cannot predict the depth and duration of the economic impact to Charter’s residential and business customers’ ability to pay for its products and services (including the impact of extended unemployment benefits and other stimulus packages and what assistance Charter may provide to its customers).
−Removed: In addition, there is uncertainty regarding the impact of government emergency declarations, the ability of Charter’s suppliers and vendors to provide products and services to it, the pace of new housing construction, changes in business spend in Charter’s local and national ad sales business, the effects to employees’ health and safety, and resulting reorientation of its work activities and the risk of limitations on the deployment and maintenance of Charter’s services (including by limiting customer support and on-site service repairs and installations).
−Removed: With respect to GCI Holdings, because of the geographic concentration of GCI Holdings’ operations in Alaska, growth of GCI Holdings' business and operations depends upon economic conditions in Alaska, which we expect will continue to be adversely impacted by COVID-19 and the measures taken in Alaska and around the world to address the pandemic.
+Added: With respect to Charter, we cannot predict the depth and duration of the economic impact to Charter’s residential and business customers’ ability to pay for its products and services.
+Added: In addition, there is uncertainty regarding the impact of government emergency declarations, the ability of Charter’s suppliers and vendors to provide products and services to it, the pace of new housing construction, the pace of households moving residences, changes in business spend in Charter’s local and national ad sales business, the effects to employees’ health and safety, and resulting reorientation of its work activities and the risk of limitations on the deployment and maintenance of Charter’s services (including by limiting customer support and on-site service repairs and installations).
+Added: With respect to GCI Holdings, because of the geographic concentration of GCI Holdings’ operations in Alaska, growth of GCI Holdings' business and operations depends upon economic conditions in Alaska, which we expect will continue to be impacted by COVID-19 and the measures taken in Alaska and around the world to address the pandemic.
At the end of 2019, the Alaska economy showed signs of emerging from a recession that started in late 2015.
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GCI Holdings is unable to predict the depth and duration of the economic impact to its customers’ ability to pay for products and services, even after taking into account the impact of extended unemployment benefits and other stimulus packages and governmental assistance provided to its customers.
−Removed: Historically, recessions have had an adverse impact on its business and could continue to adversely affect the affordability of and demand for some of its products and services and cause customers to shift to lower priced products and services or to delay or forgo purchases of its products and services.
+Added: Historically, recessions have had an adverse impact on its business and could adversely affect the affordability of and demand for some of its products and services and cause customers to shift to lower priced products and services or to delay or forgo purchases of its products and services.
GCI Holdings’ customers may not be able to obtain adequate access to credit, which could affect their ability to make timely payments to GCI Holdings.
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The Alaska economy is dependent upon the oil industry, state government spending, United States military spending, investment earnings and tourism.
−Removed: The price of Alaska North Slope Crude oil has decreased significantly and large tourism companies have decided not to operate during 2020 due to the COVID-19 pandemic.
−Removed: It is expected that the decline in oil prices will put significant pressure on the Alaska state government budget.
−Removed: Although Alaska state government has significant reserves that GCI Holdings believes will help fund the state government for the next couple of years, major structural budgetary reforms will be required in order to offset the impact of the COVID-19 pandemic and low oil prices.
+Added: A decline in oil prices could put significant pressure on the Alaska state government budget.
+Added: Although Alaska state government has significant reserves that GCI Holdings believes will help fund the state government for the next couple of years, major structural budgetary reforms will be required in order to offset the impact of the COVID-19 pandemic and a decline in oil prices.
Although GCI Holdings cannot predict the long-term impact COVID-19 will have on these sectors of the Alaska economy, adverse circumstances in these industries may have an adverse impact on the demand for its products and services and on its results of operations and financial condition.
−Removed: With respect to Skyhook, its business may be impacted due to declines in customer renewals, an inability to maintain full functionality of Skyhook’s operations support or customer care, Skyhook’s inability to generate new business and Skyhook’s inability to collect on future payments from existing customers.
−Removed: The degree to which COVID-19 impacts Charter’s, GCI Holdings’ and Skyhook’s respective results will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.
−Removed: Further, the extent of the impact of the COVID-19 pandemic on Charter, GCI Holdings and Skyhook remains fluid and the likelihood of an impact that could be material increases the longer the virus impacts activity levels in the locations in which they operate.
−Removed: In particular, the widespread distribution, acceptance and effectiveness of vaccines is highly uncertain and cannot be predicted at this time.
+Added: Further, the extent of the impact of the COVID-19 pandemic on Charter and GCI Holdings remains fluid and the likelihood of an impact that could be material increases the longer the virus impacts activity levels in the locations in which they operate.
Delays in the widespread distribution of vaccines, or lack of public acceptance, could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time.
−Removed: Further, even if vaccines are widely distributed and accepted, there can be no assurance that the vaccines will ultimately be successful in limiting or stopping the spread of COVID-19.
+Added: In addition, new variants of the virus may continue to emerge.
Even after the COVID-19 pandemic subsides, the U.S.
−Removed: economy and other major global economies may experience a prolonged recession, and we anticipate Charter, GCI Holdings and Skyhook could be materially adversely affected by a prolonged recession in the U.S.
+Added: economy and other major global economies may experience a prolonged recession, and we anticipate Charter and GCI Holdings could be materially adversely affected by a prolonged recession in the U.S.
and other major markets.
−Removed: To the extent the COVID-19 pandemic adversely affects our or Charter’s, GCI Holdings’ or Skyhook’s respective businesses, financial conditions and results of operations, it may also have the effect of heightening the other risks described in these Risk Factors, such as those relating to fluctuations in our stock price and the market value of our interests in publicly-traded securities, the effect of increases in data usage on GCI Holdings’ wired and wireless networks on network capacity limitations, impairments, our significant level of indebtedness and our ability to generate sufficient cash to service our debt obligations.
+Added: To the extent the COVID-19 pandemic adversely affects our or Charter’s or GCI Holdings’ respective businesses, financial conditions and results of operations, it may also have the effect of heightening the other risks described in these Risk Factors, such as those relating to fluctuations in our stock price and the market value of our interests in publicly-traded securities,
+Added: the effect of increases in data usage on GCI Holdings’ wired and wireless networks on network capacity limitations, impairments, our significant level of indebtedness and our ability to generate sufficient cash to service our debt obligations.
Factors Relating to GCI Holdings
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GCI faces increased wireless services competition from national carriers in the Alaska market and increasing video services competition from DBS providers and over-the-top content providers who are often able to offer more flexible subscription packages and exclusive content.
−Removed: The Company expects competition to increase as a result of the rapid development of new technologies, services and products.
+Added: The Company expects competition to increase as a result of the rapid development of new technologies, services and products, and the availability of increased federal funding of broadband infrastructure.
The Company cannot predict which of many possible future technologies, products or services will be important to maintain GCI’s competitive position or what expenditures will be required to develop and provide these technologies, products or services.
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Competitive pressures also create challenges for its ability to grow new businesses or introduce new services successfully and execute its business plan.
−Removed: GCI also faces the risk of potential price cuts by the Company’s competitors that could materially adversely affect its market share and gross margins.
+Added: GCI also faces the risk of potential price cuts by the Company’s competitors partially driven by federal funding for broadband infrastructure that could materially adversely affect its market share and gross margins.
GCI’s wholesale customers including its major roaming customers may construct facilities in locations where they currently contract with GCI to use its network to provide service on their behalf.
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GCI’s inability to negotiate renewals of such contracts could have a material adverse effect on the Company’s business, financial condition and results of operations.
−Removed: If GCI experiences low or negative rates of subscriber acquisition or high rates of turnover, the Company’s financial performance will be negatively impacted.
+Added: If GCI experiences customer losses, the Company’s financial performance will be negatively impacted.
GCI is in the business of selling communications and entertainment services to subscribers, and its economic success is based on its ability to retain current subscribers and attract new subscribers.
−Removed: In recent years, GCI has seen a general decrease in subscriber metrics.
If GCI is unable to retain and attract subscribers, its and the Company’s financial performance will be impaired.
−Removed: GCI’s rates of subscriber acquisition and turnover are affected by a number of competitive factors including the size of its service areas, network performance and reliability issues, its device and service offerings, subscribers’ perceptions of its services, and customer care quality.
+Added: GCI’s rates of subscriber acquisition and turnover are affected by a number of competitive factors including the size of its service areas, network performance and reliability issues, changing technologies including the transition to internet protocol television, its device and service offerings, subscribers’ perceptions of its services, and customer care quality.
Managing these factors and subscribers’ expectations is essential in attracting and retaining subscribers.
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- Business - Regulatory Matters,” GCI’s business is subject to extensive federal and state governmental legislation and regulation.
−Removed: There can be no assurance that future changes or additions to the regulatory system under which GCI operates will benefit or have no effect on GCI.
−Removed: Similarly, these rules and regulations are subject to interpretation by the applicable agencies, and new interpretations, or those of which GCI is not aware, could impact GCI’s operations and have an adverse effect on GCI’s business, position, results of operations or liquidity.
+Added: There can be no assurance that future changes or additions to the regulatory system under which GCI operates will benefit or have no adverse effect on GCI.
+Added: Similarly, these rules and regulations are subject to interpretation by the applicable agencies, and new interpretations, which could impact GCI’s operations and have an adverse effect on GCI’s business, position, results of operations or liquidity.
There can be no assurance that future regulatory actions taken by Congress, the FCC or other federal, state or local government authorities will not have a similar effect.
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The FCC’s implementing regulations prohibited broadband providers from blocking or throttling most lawful public Internet traffic, from engaging in paid prioritization of that traffic, and from unreasonably interfering with or disadvantaging end users’ and edge providers’ ability to send traffic to, from, and among each other.
−Removed: Although a 2018 FCC order returned to a Title I classification of Internet service and eliminated many of the requirements imposed in its initial 2015 order the change in administration may result in the FCC seeking to re-impose net neutrality requirements or some variation thereof.
+Added: Although a 2018 FCC order returned to a Title I classification of Internet service and eliminated many of the requirements imposed in its initial 2015 order, the FCC may seek to re-impose net neutrality requirements or some variation thereof.
In addition, Congress and state legislatures may undertake similar efforts.
+Added: For example, California and Vermont have undertaken such efforts.
The Company cannot predict whether the FCC or Congress will re-impose the 2015 rules or some variation thereof.
−Removed: The increased regulatory burden if the 2015 rules are re-imposed likely would increase GCI’s costs and could adversely affect the manner and price of providing service, which could have a material adverse effect on GCI’s business, financial position, results of operations, or liquidity.
+Added: The increased regulatory burden if the 2015 rules were re-imposed likely would increase GCI’s costs and could adversely affect the manner and price of providing service, which could have a material adverse effect on GCI’s business, financial position, results of operations, or liquidity.
USF receivables and contributions are subject to change due to regulatory actions taken by the FCC, including the FCC’s interpretations of the USF program rules, or legislative actions that change the rules and regulations governing the USF program.
GCI participates in various USF programs, which provide government subsidies to customers in low income areas, including schools, libraries and other facilities.
−Removed: This support was 29% and 24% of GCI Holding’s revenue for the years ended December 31, 2020 and December 31, 2019, respectively.
+Added: This support was 32% and 29% of GCI Holdings’ revenue for the years ended December 31, 2021 and December 31, 2020, respectively.
GCI had USF net receivables of $148 million and $281 million at December 31, 2021 and 2020, respectively.
9 unchanged sentences
Furthermore, the FCC has adopted changes to the manner in which support issued under the RHC Program will be calculated and approved, and GCI is currently unable to assess the substance, impact on funding or timing of these changes.
+Added: Although, GCI has sought FCC review of certain FCC actions regarding the RHC Program, the outcome is uncertain.
Failure to comply with USF program requirements may have an adverse effect on GCI’s business and the Company’s financial position.
The USF programs in which GCI participates are highly regulated, and, in many cases, require highly technical and nuanced processes and procedures in order to obtain funding and to ensure compliance with the USF programs.
−Removed: For example, telecommunication providers and their customers are subject to regulations that set forth requisite procedures that must be followed by both the provider and the customer, and there are limitations on communications between these parties.
+Added: For example, telecommunication providers and their customers are subject to regulations that set forth procedures that must be followed by both the provider and the customer, and there are limitations on communications between these parties.
If a customer or a provider is found to have not complied with any aspect of these regulations, regardless of whether such noncompliance was unintentional or accidental, the FCC may deny funding and/or require disgorgement of any amounts received under the affected contracts.
10 unchanged sentences
In 2016, the FCC published the Alaska High Cost Order which requires GCI to submit to the FCC a performance plan with five-year and ten-year commitments.
−Removed: If GCI is unable to meet the final performance plan milestones approved by the FCC it will be required to repay 1.89 times the average amount of support per location received over the ten-year term for the relevant number of locations that GCI failed to deploy to, plus ten percent of its total Alaska High Cost Order support received over the ten-year term.
+Added: If GCI is unable to meet the final performance plan milestones approved by the
+Added: FCC it will be required to repay 1.89 times the average amount of support per location received over the ten-year term for the relevant number of locations that GCI failed to deploy to, plus ten percent of its total Alaska High Cost Order support received over the ten-year term.
Inability to meet GCI’s performance plan milestones could have an adverse effect on its business, financial position, results of operations or liquidity.
21 unchanged sentences
GCI may not successfully complete the rollout of new technology and related features or services in a timely manner, and they may not be widely accepted by GCI’s customers or may not be profitable, in which case GCI could not recover its investment in the technology.
−Removed: There can be no assurance that GCI will be able to compete with advancing technology or introduce new technologies and systems as quickly as it would like or in a cost effective manner.
+Added: There can be no assurance that GCI will be able to compete with advancing technology or introduce new technologies
+Added: and systems as quickly as it would like or in a cost effective manner.
Deployment of technology supporting new service offerings may also adversely affect the performance or reliability of its networks with respect to both the new and existing services.
3 unchanged sentences
GCI’s operations are geographically concentrated in Alaska and are impacted by the economic conditions in Alaska, and GCI may not be able to continue to increase its share of the existing market for its services.
−Removed: As described above in “ The ongoing COVID-19 pandemic could materially affect the financial condition and results of operations of Charter, GCI Holdings and Skyhook ,” GCI offers products and services to customers primarily throughout Alaska.
+Added: As described above in “ The ongoing COVID-19 pandemic could materially affect the financial condition and results of operations of Charter and GCI Holdings ,” GCI offers products and services to customers primarily throughout Alaska.
Because of this geographic concentration, growth of GCI’s business and operations depends upon economic conditions in Alaska, which have been negatively impacted in recent years by a recession and the COVID-19 pandemic.
4 unchanged sentences
Natural or man-made disasters or terrorist attacks could have an adverse effect on GCI’s business.
−Removed: GCI’s technical infrastructure (including the Company’s communications network infrastructure and ancillary functions supporting its network such as service activation, billing and customer care) is vulnerable to damage or interruption from technology failures, power surges or outages, natural disasters, fires, human error, terrorism, intentional wrongdoing or similar events.
+Added: GCI’s technical infrastructure (including its communications network infrastructure and ancillary functions supporting its network such as service activation, billing and customer care) is vulnerable to damage or interruption from technology failures, power surges or outages, natural disasters, fires, human error, terrorism, intentional wrongdoing or similar events.
As a communications provider, there is an increased risk that GCI’s technological infrastructure may be targeted in connection with terrorism or cyberattacks, either as a primary target, or as a means of facilitating additional attacks on other targets.
5 unchanged sentences
Further, any failure in or interruption of systems that GCI or third parties maintain to support ancillary functions, such as billing, point of sale, inventory management, customer care and financial reporting, could materially impact GCI’s ability to timely and accurately record, process and report information important to the Company’s business.
−Removed: If any of the above events were to occur, GCI could experience higher churn,
−Removed: reduced revenue and increased costs, any of which could harm its reputation and have a material adverse effect on the Company’s business, financial condition or results of operations.
+Added: If any of the above events were to occur, GCI could experience higher churn, reduced revenue and increased costs, any of which could harm its reputation and have a material adverse effect on the Company’s business, financial condition or results of operations.
Additionally, the Company’s insurance may not be adequate to cover the costs associated with a natural disaster or terrorist attack.
−Removed: Cyberattacks or other network disruptions could have an adverse effect on GCI’s business.
+Added: Cyberattacks or other network disruptions could have an adverse effect on the Company and GCI’s business.
Through the Company’s operations, sales and marketing activities, it collects and stores certain non-public personal information related to its customers.
2 unchanged sentences
In addition, the Company’s operations depend upon the transmission of information over the Internet.
−Removed: Unauthorized parties may attempt to gain access to the Company or its vendors’ computer systems by, among other things, hacking into its systems or those of third parties, through fraud or other means of deceiving the Company’s employees or its vendors, burglaries, errors by the Company or its vendors’ employees, misappropriation of data by employees, or other irregularities that may result in persons obtaining unauthorized access to its data.
+Added: Unauthorized parties may attempt to gain access to the Company or its vendors’ computer systems by, among other
+Added: things, hacking into its systems or those of third parties, through fraud or other means of deceiving the Company’s employees or its vendors, burglaries, errors by the Company or its vendors’ employees, misappropriation of data by employees, or other irregularities that may result in persons obtaining unauthorized access to its data.
The techniques used to gain such access to the Company’s or its vendors’ technology systems, data or customer information, disable or degrade service, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized until launched against a target.
1 unchanged sentence
Cyberattacks, which include the use of malware, computer viruses, and other means for service disruption or unauthorized access to confidential customer or employee data, have increased in frequency, scope, and potential harm for businesses in recent years.
−Removed: It is possible for such cyberattacks to go undetected for an extended period of time, increasing the potential harm to GCI’s customers, employees, assets, and reputation.
+Added: It is possible for such cyberattacks to go undetected for an extended period of time, increasing the potential harm to GCI’s or the Company’s respective customers, employees, assets, and reputation.
To date, GCI has not been subject to cyberattacks or network disruptions that, individually or in the aggregate, have been material to GCI’s operations or financial condition.
12 unchanged sentences
A network disruption (including one resulting from a cyberattack) could cause an interruption or degradation of service and diversion of management attention, as well as permit access, theft, publishing, deletion, misappropriation, or modification to or of confidential customer data.
−Removed: Due to the evolving techniques used in cyberattacks to
−Removed: disrupt or gain unauthorized access to technology networks, GCI may not be able to anticipate or prevent such disruption or unauthorized access.
−Removed: The costs imposed on the Company as a result of a cyberattack or network disruption could be significant.
−Removed: Among others, such costs could include increased expenditures on cyber security measures, litigation, regulatory actions, fines, sanctions, lost revenue from business interruption, and damage to the public’s perception regarding the Company’s ability to provide a secure service.
+Added: Due to the evolving techniques used in cyberattacks to disrupt or gain unauthorized access to technology networks, GCI may not be able to anticipate or prevent such disruption or unauthorized access.
+Added: The costs imposed on GCI as a result of a cyberattack or network disruption could be significant.
+Added: Among others, such costs could include increased expenditures on cyber security measures, litigation, regulatory actions, fines, sanctions, lost revenue from business interruption, and damage to the public’s perception regarding GCI’s ability to provide a secure service.
As a result, a cyberattack or network disruption could have a material adverse effect on the Company’s business, financial condition, and operating results.
−Removed: The Company also faces similar risks associated with security breaches affecting third parties with which it is affiliated or otherwise conduct business.
−Removed: While the Company maintains cyber liability insurance that provides both third-party liability and first-party insurance coverage, its insurance may not be sufficient to protect against all of its losses from any future disruptions or breaches of its systems or other events as described above.
+Added: GCI also faces similar risks associated with security breaches affecting third parties with which it is affiliated or otherwise conduct business.
+Added: While GCI maintains cyber liability insurance that provides both third-party liability and first-party insurance coverage, its insurance may not be sufficient to protect against all of its losses from any future disruptions or breaches of its systems or other events as described above.
Increases in data usage on GCI’s wired and wireless networks may cause network capacity limitations, resulting in service disruptions, reduced capacity or slower transmission speeds for GCI’s customers.
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Any significant impairment of GCI’s indefinite-lived intangible assets would lead to a reduction in its net operating performance and a decrease in its assets.
−Removed: GCI had $1.3 billion of indefinite-lived intangible assets at December 31, 2020, consisting of goodwill of $739.1 million, cable certificates of $560.0 million, wireless licenses of $20.0 million and other intangibles of $1.5 million.
+Added: GCI had $1.3 billion of indefinite-lived intangible assets at December 31, 2021, consisting of goodwill of $762 million, cable certificates of $550 million and other intangibles of $37 million.
Goodwill represents the excess of cost over fair value of net assets acquired in connection with business acquisitions and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition.
4 unchanged sentences
If the testing performed indicates that impairment has occurred, GCI is required to record an impairment charge for the difference between the carrying value and the fair value of the goodwill and/or the indefinite-lived intangible assets, as appropriate, in the period in which the determination is made.
−Removed: The testing of goodwill and indefinite-lived intangible assets for impairment requires GCI to make significant estimates about its future performance and cash flows, as well as other assumptions.
+Added: The testing of goodwill and indefinite-lived intangible assets for impairment requires
+Added: GCI to make significant estimates about its future performance and cash flows, as well as other assumptions.
These estimates can be affected by numerous factors, including changes in economic, industry or market conditions, changes in underlying business operations, future operating performance, changes in competition, or changes in technologies.
Any changes to key assumptions, or actual performance compared with those assumptions, about GCI’s business and its future prospects or other assumptions could affect the fair value, resulting in an impairment charge.
−Removed: The Company has identified a material weakness in GCI Holdings’ internal control over financial reporting, that, if not properly remediated, could adversely affect its business and results of operations.
−Removed: A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
−Removed: As described in "Part II.
−Removed: Controls and Procedures,” although we have concluded that our internal control over financial reporting was effective and have excluded GCI Liberty from our assessment of the effectiveness of our disclosure controls and procedures, in each case as of December 31, 2020, management has identified a material weakness as of December 31, 2020 at our wholly-owned subsidiary, GCI Holdings.
−Removed: Prior to the Combination, material weaknesses were identified by GCI Liberty in GCI Holdings’ internal control over financial reporting in 2018 and 2019.
−Removed: While significant improvements have been made at GCI Holdings and management is continuing to make appropriate changes as deemed necessary, a material weakness continued to exist as of December 31, 2020.
−Removed: The internal controls over financial reporting at GCI Holdings as of December 31, 2020 were not consistently operating effectively to ensure certain components of revenue would be recorded completely and accurately, due to:
−Removed: ● Insufficient staffing and training of certain control operators;
−Removed: ● Inadequate assessment of financial reporting risks, which in turn contributed to reliance on business process controls that were not designed and operating effectively to adequately mitigate existing risks;
−Removed: ● Breakdowns in communication of expectations and prioritization of control execution to certain control operators;
−Removed: ● Lack of accountability for effective control operation
−Removed: The control deficiencies did not result in any identified misstatements, however, a reasonable possibility exists that material misstatements in the Company’s consolidated financial statements will not be prevented or detected on a timely basis.
−Removed: As further described in “Item 9A.
−Removed: Controls and Procedures,” the Company and GCI Holdings are taking the necessary steps to remediate the material weakness.
−Removed: The reliability of the internal control process requires repeatable execution and the successful remediation of this material weakness will require on-going training, monitoring and evidence of effectiveness prior to concluding that the controls are effective.
−Removed: Therefore, we cannot assure you the remediation efforts will be effective in the future or that additional material weaknesses will not develop or be identified.
−Removed: Implementing any further changes to GCI Holdings’ internal controls may distract its officers and employees and entail material costs to implement new processes and/or modify its existing processes.
−Removed: Moreover, these changes do not guarantee that the Company will be effective in maintaining the adequacy of GCI Holdings’ internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could harm our business.
−Removed: In addition, investors’ perceptions that GCI Holdings’ internal controls are inadequate or that the Company is unable to produce accurate financial statements on a timely basis may harm the price of the Company's common stock.
Factors Relating to Charter
3 unchanged sentences
The industry in which Charter operates is highly competitive and has become more so in recent years.
−Removed: In some instances, Charter competes 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.
+Added: In some instances, Charter competes against companies with fewer regulatory burdens, access to better financing and greater and more favorable brand name recognition.
Increasing consolidation in the telecommunications and content industries have provided additional benefits to certain of Charter’s competitors, either through access to financing, resources, or efficiencies of scale including the ability to launch new video services.
10 unchanged sentences
Competition may also reduce its expected growth of future cash flows which may contribute to future impairments of Charter’s franchises and goodwill and Charter’s ability to meet cash flow requirements, including debt service requirements.
−Removed: Programming costs per video customer are rising at a faster rate than wages or inflation, and Charter may not have the ability to reduce or moderate the growth rates of, or pass on to its customers, its increasing programming costs, which would adversely affect its cash flow and operating margins.
+Added: Charter depends on third party service providers, suppliers and licensors;
+Added: thus, if it is unable to procure the necessary services, equipment, software or licenses on reasonable terms and on a timely basis, its ability to offer services could be impaired, and Charter’s growth, operations, business, financial results and financial condition could be materially adversely affected.
+Added: Charter depends 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 its services.
+Added: Some of Charter’s hardware, software and operational support vendors, and service providers represent its sole source of supply or have, either through contract
+Added: or as a result of intellectual property rights, a position of some exclusivity.
+Added: Charter’s 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 interrupt or delay its ability to serve its customers, if any of these parties experience or engage in the following:
+Added: ● breach or terminate or elect not to renew their agreements with Charter or otherwise fail to perform their obligations in a timely manner;
+Added: ● demand exceeds these vendors’ capacity;
+Added: ● tariffs are imposed that impact vendors' ability to perform their obligations or significantly increase the amount Charter pays;
+Added: ● experience operating or financial difficulties;
+Added: ● significantly increase the amount Charter is required to pay (including demands for substantial non-monetary compensation) for necessary products or services;
+Added: ● 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 Charter needs in a timely manner at its specifications and at reasonable prices.
+Added: Charter’s third-party service providers, suppliers and licensors have been disrupted by worker absenteeism, quarantines, restrictions on employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, or other travel or health-related restrictions.
+Added: Furthermore, an extended duration of the COVID-19 pandemic could result in significant disruptions in Charter’s supply chain.
+Added: For example, quarantines, shelter-in-place and similar government orders, travel restrictions and health impacts of the COVID-19 pandemic, could impact the availability or productivity of personnel at third-party supply manufacturers, distributors, freight carriers and other necessary components of Charter’s supply chain.
+Added: In addition, the existence of only a limited number of vendors of key technologies can lead to less product innovation and higher costs.
+Added: These events could materially and adversely affect Charter’s ability to retain and attract customers and its operations, business, financial results and financial condition.
+Added: Programming costs per video customer are rising at a fast rate, and Charter may not have the ability to reduce or moderate the growth rates of, or pass on to its customers, its increasing programming costs, which would adversely affect its cash flow and operating margins.
Video programming has been, and is expected to continue to be, Charter’s largest operating expense item.
2 unchanged sentences
The inability to fully pass programming cost increases on to its customers has had, and is expected in the future to have, an adverse impact on Charter’s cash flow and operating margins associated with the video product.
−Removed: Programming contracts often restrict the structure
−Removed: of the video packages Charter offers which impacts the affordability and competitive positioning of its video service.
+Added: Programming contracts often restrict the structure of the video packages Charter offers which impacts the affordability and competitive positioning of its video service.
The contracts set to expire in any particular year vary.
6 unchanged sentences
Charter’s failure to carry programming that is attractive to its customers could adversely impact Charter’s customer levels, operations and financial results.
−Removed: In addition, if Charter’s Internet customers are unable to access desirable content online because content providers block or limit access by its customers as a class, its 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 Charter’s programming costs.
11 unchanged sentences
Charter may not be able to accurately predict technological trends or the success of new products and services.
−Removed: If Charter chooses technologies or equipment that are less effective, cost-efficient or attractive to customers than those chosen by its competitors, if technologies or equipment on which Charter has chosen to rely cease to be available to it on reasonable terms or conditions, if Charter offers services that fail to appeal to consumers, are not available at competitive prices or that do not function as expected, or Charter is not able to fund the expenditures necessary to keep pace with technological developments, or if Charter is no longer able to make its services available to its customers on a third-party devise on which a substantial number of customers have relief to access its services, its competitive position could deteriorate, and its business and financial results could suffer.
+Added: If Charter chooses technologies or equipment that are less effective, cost-efficient or attractive to customers than those chosen by its competitors, if technologies or equipment on which Charter has chosen to rely cease to be available to it on reasonable terms or conditions, if Charter offers services that fail to appeal to consumers, are not available at competitive prices or that do not function as expected, or Charter is not able to fund the expenditures necessary to keep pace with technological developments, or if Charter is no longer able to make its services available to its customers on a third-party device on which a substantial number of customers have relied to access its services, its competitive position could deteriorate, and its business and financial results could suffer.
The ability of some of Charter’s competitors to introduce new technologies, products and services more quickly than Charter does may adversely affect its competitive position.
8 unchanged sentences
If Charter is unable to continue to grow its mobile business and achieve the outcomes it expects from its investments in the mobile business, Charter’s growth, financial condition and results of operations could be adversely affected.
−Removed: Charter depends on third party service providers, suppliers and licensors;
−Removed: thus, if it is unable to procure the necessary services, equipment, software or licenses on reasonable terms and on a timely basis, its ability to offer services could be impaired, and Charter’s growth, operations, business, financial results and financial condition could be materially adversely affected.
−Removed: Charter depends 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 its services.
−Removed: Some of Charter’s hardware, software and operational support vendors, and service providers represent its sole source of supply or have, either through contract or as a result of intellectual property rights, a position of some exclusivity.
−Removed: If any of these parties breach or terminate or elect not to renew their agreements with Charter or otherwise fail to perform their 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 Charter pays, they experience operating or financial difficulties, they significantly increase the amount Charter is required to pay (including demands for substantial non-monetary compensation) 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 Charter needs in a timely manner, at its specifications and at reasonable prices, its 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 interrupt or delay Charter’s ability to serve its customers.
−Removed: In addition, the existence of only a limited number of vendors of key technologies can lead to less product innovation and higher costs.
−Removed: These events could materially and adversely affect Charter’s ability to retain and attract customers and its operations, business, financial results and financial condition.
Charter’s business may be adversely affected if Charter cannot continue to license or enforce the intellectual property rights on which its business depends.
1 unchanged sentence
Also, because of the rapid pace of technological change, Charter both develops its own technologies, products and services and relies on technologies developed or licensed by third parties.
−Removed: However, any of Charter’s intellectual property rights, or the rights of its suppliers, could be challenged or invalidated, or such intellectual property rights may not be sufficient to permit Charter 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.
+Added: any of Charter’s intellectual property rights, or the rights of its suppliers, could be challenged or invalidated, or such intellectual property rights may not be sufficient to permit Charter 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.
Charter may not be able to obtain or continue to obtain licenses from these third parties on reasonable terms, if at all.
4 unchanged sentences
Network and information systems technologies are critical to Charter’s operating activities, both for its internal uses, such as network management and supplying services to Charter’s customers, including customer service operations and programming delivery.
−Removed: 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,”
−Removed: process breakdowns, denial of service attacks and other malicious activity pose increasing risks.
+Added: 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” such as ransomware, 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.
14 unchanged sentences
Charter could be exposed to significant costs if such risks were to materialize, and such events could damage Charter’s reputation, credibility and business and have a negative impact on its revenue.
−Removed: Charter 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.
+Added: Charter could be subject to regulatory actions and claims made by consumers in
+Added: private litigations involving privacy issues related to consumer data collection and use practices.
Charter also could be required to expend significant capital and other resources to remedy any such security breach.
7 unchanged sentences
In addition, Charter is susceptible to risks associated with the potential financial instability of the vendors and third parties on which Charter relies to provide products and services or to which it outsources certain functions.
−Removed: The same economic conditions that may affect Charter’s customers, as well as volatility and disruption in the capital and credit markets, also could
−Removed: adversely affect vendors and third parties and lead to significant increases in prices, reduction in output or the bankruptcy of Charter’s vendors or third parties upon which Charter relies.
+Added: The same economic conditions that may affect Charter’s 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 Charter’s vendors or third parties upon which Charter relies.
Any interruption in the services provided by Charter’s vendors or by third parties could adversely affect Charter’s cash flow, results of operation and financial condition.
−Removed: For tax purposes, Charter could experience a deemed ownership change in the future that could limit its ability to use its tax loss carryforwards.
−Removed: Charter had approximately $5.3 billion of federal tax net operating loss carryforwards resulting in a gross deferred tax asset of approximately $1.1 billion as of December 31, 2020.
−Removed: 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.
−Removed: Federal tax net operating loss carryforwards expire in the years 2022 through 2035.
−Removed: In addition, Charter had state tax net operating loss carryforwards resulting in a gross deferred tax asset (net of federal tax benefit) of approximately $223 million as of December 31, 2020.
−Removed: State tax net operating loss carryforwards generally expire in the years 2021 through 2040.
−Removed: In the past, Charter has experienced “ownership changes” as defined in Section 382 of the Code.
−Removed: 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.
−Removed: 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."
−Removed: The limitation on Charter’s ability to use its loss carryforwards, in conjunction with the loss carryforward expiration provisions, could reduce its 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.
−Removed: 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.
−Removed: 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 its stock, certain acquisitions of its stock and issuances, redemptions, sales or other dispositions or acquisitions of interests in Charter’s “5-percent stockholders”), its ability to use its loss carryforwards could become subject to further limitations.
If Charter is unable to retain key employees, its ability to manage its business could be adversely affected.
Charter’s operational results have depended, and its future results will depend, upon the retention and continued performance of its management team.
−Removed: Charter’s 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.
+Added: Charter’s 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 and technology industries.
The loss of the services of key members of management and the inability or delay in hiring new key employees could adversely affect Charter’s ability to manage its business and its future operational and financial results.
12 unchanged sentences
In addition, Charter’s variable rate indebtedness may use LIBOR as a benchmark for establishing the rate.
−Removed: The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announced that it intends to stop one week and 2 month U.S.
+Added: The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, stopped publishing one week and 2 month U.S.
Dollar (“USD”) LIBOR rates after 2021 with remaining USD LIBOR rates ceasing to be published on June 30, 2023 (the “FCA Announcement”).
23 unchanged sentences
● cable franchise renewals and transfers;
−Removed: ● the provisioning and marketing of cable and Internet equipment;
+Added: ● the provisioning, marketing and billing of cable and Internet equipment;
● customer and employee privacy and data security;
● copyright royalties for retransmitting broadcast signals;
−Removed: ● when a cable system must carry a particular broadcast station and when it must first obtain retransmission consent to carry a broadcast station;
+Added: ● the circumstances when a cable system must carry a broadcast station and the circumstances when it first must obtain retransmission consent to carry a broadcast station;
● limitations on Charter’s ability to enter into exclusive agreements with multiple dwelling unit complexes and control Charter’s inside wiring;
● equal employment opportunity;
+Added: ● the resiliency of Charter’s networks to maintain service during and after disasters and power outages;
● emergency alert systems, disability access, pole attachments, commercial leased access and technical standards;
3 unchanged sentences
Any future legislative, judicial, regulatory or administrative actions may increase Charter’s costs or impose additional restrictions on Charter’s businesses.
−Removed: Changes to existing statutes, rules, regulations, or interpretations thereof, or adoption of new ones, could have an adverse effect on Charter’s business.
−Removed: There are ongoing efforts to amend or expand the federal, state, and local regulation of some of the services offered over Charter’s cable systems, which may compound the regulatory risks Charter already faces.
−Removed: For example, with respect to Internet services provided by Charter, Charter would be adversely impacted by the reclassification of Internet service as a telecommunications service under Title II of the Communications Act.
−Removed: In 2015, the FCC classified Internet service as a telecommunication service.
−Removed: The FCC’s implementing regulations prohibited broadband providers from blocking or throttling most lawful public Internet traffic, from engaging in paid prioritization of that traffic, and from unreasonably interfering with or disadvantaging end users’ and edge providers’ ability to send traffic to, from, and among each other.
−Removed: Although a 2018 FCC order returned to a Title I classification of Internet service and eliminated many of the requirements imposed in its initial 2015 order the change in administration may result in the FCC seeking to re-impose net neutrality requirements or some variation thereof.
−Removed: In addition, Congress and state legislatures may undertake similar efforts.
−Removed: The Company cannot predict whether the FCC or Congress will re-impose the 2015 rules or some variation thereof.
−Removed: The increased regulatory burden if the 2015 rules are reimposed likely would increase Charter’s costs and could adversely affect the manner and price of providing service, which could have a material adverse effect on Charter.
−Removed: Other potential legislative and regulatory changes could adversely impact Charter’s business by increasing its costs and competition and limiting its ability to offer services in a manner that would maximize its revenue potential.
−Removed: These changes could include, for example, the adoption of new privacy restrictions on Charter’s 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 Charter’s business, new restraints on its discretion over programming decisions, new restrictions on the rates Charter charges 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
−Removed: the availability of navigation devices (such as digital receivers) from third party providers, new Universal Service Fund obligations on Charter’s provision of Internet service that would add to the cost of that service;
−Removed: increases in government-administered broadband subsidies to rural areas that could result in subsidized overbuilding of Charter’s 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 Charter’s VoIP service and Charter’s ability to interconnect its VoIP service with incumbent providers of traditional telecommunications service.
−Removed: If any of these such laws or regulations are enacted, they could affect Charter’s operations and require significant expenditures.
−Removed: Charter cannot predict future developments in these areas, and any changes to the regulatory framework for Charter’s Internet, video or VoIP services could have a negative impact on its business and results of operations.
+Added: Changes to existing statutes, rules, regulations, or interpretations thereof, or adoption of new ones, or participation in new regulatory programs, could have an adverse effect on Charter’s business.
+Added: There are ongoing efforts to amend or expand the federal, state, and local regulation of some of the services offered over Charter’s cable systems, particularly its retail broadband Internet access service.
+Added: Potential legislative and regulatory changes could adversely impact its business by increasing costs and competition and limiting Charter’s ability to offer services in a manner that that would maximize its revenue potential.
+Added: These changes could include, for example, the reclassification of Internet services as regulated telecommunications services;
+Added: restrictions on how Charter manages its Internet access services and networks;
+Added: the adoption of new privacy restrictions on its collection, use and disclosure of certain customer information;
+Added: new data security and cybersecurity mandates that could result in additional network and information security requirements for Charter’s business;
+Added: new restraints on Charter’s discretion over programming decisions;
+Added: new restrictions on the rates Charter charges to consumers for one or more of the services it offers;
+Added: changes to the cable industry’s compulsory copyright license to carry broadcast signals;
+Added: new requirements to assure the availability of navigation devices from third-party providers;
+Added: new Universal Service Fund obligations on Charter’s provision of Internet service that would add to the cost of that service;
+Added: increases in government-administered broadband subsidies to rural areas that could result in subsidized overbuilding of its more rural facilities;
+Added: changes to the FCC's administration of spectrum;
+Added: and changes in the regulatory framework for VoIP telephone service, including the scope of regulatory obligations associated with Charter’s VoIP telephone service and its ability to interconnect its VoIP telephone service with incumbent providers of traditional telecommunications service.
+Added: As a winning bidder in the FCC’s RDOF auction in 2020, Charter must comply with numerous FCC and state requirements prior to and after receiving such funding.
+Added: To comply with these RDOF program requirements, Charter has chosen in the RDOF areas to offer certain of its VoIP telephone services, such as its federal or state Lifeline services, subject to traditional federal and state common carrier regulations.
+Added: Additionally, in the RDOF areas, Charter will offer certain of its broadband Internet access services subject to required discounts and other marketing-related terms.
+Added: If Charter fails to comply with those requirements, the FCC could consider Charter in default of the RDOF program rules, and Charter could incur substantial penalties or forfeitures.
+Added: For example, if Charter fails to attain certain specified infrastructure build-out requirements under the RDOF program, the FCC could withhold future support payments until those shortcomings are corrected.
+Added: Charter’s failure to comply with the rules and requirements for the RDOF program could result in being suspended or disbarred from future governmental programs or contracts for a significant period of time, which could adversely affect its results of operations and financial condition.
+Added: If any laws or regulations are enacted that would expand the regulation of Charter’s services, they could affect Charter’s operations and require significant expenditures.
+Added: Charter cannot predict future developments in these areas, and any changes to the regulatory framework for Charter’s Internet, video, mobile or VoIP services could have a negative impact on its 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 Charter, including on its programming agreements, customer privacy and the user experience.
−Removed: 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.
+Added: In addition, the FCC, the FTC, and various state agencies and attorney general actively investigate industry practices and could impose substantial forfeitures for alleged regulatory violations.
Tax legislation and administrative initiatives or challenges to Charter’s tax and fee positions could adversely affect its results of operations and financial condition.
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From time to time, legislative and administrative bodies change laws and regulations that change Charter’s effective tax rate or tax payments.
−Removed: For instance, there are initiatives at the federal level to reverse the corporate tax cuts in the favorable Tax Cuts and Jobs Act of 2017.
Certain states and localities have imposed or are considering imposing new or additional taxes or fees on Charter’s services or changing the methodologies or base on which certain fees and taxes are computed.
Potential changes include additional taxes or fees on Charter’s services which could impact its 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 Charter’s income, franchise, sales, use and/or property tax liabilities.
−Removed: For example, some local franchising authorities are seeking to impose franchise fee assessments on our broadband Internet access service (in addition to Charter’s video service), and more may do so in the future.
−Removed: If they do so, and challenges to such assessments are unsuccessful, it could adversely impact Charter’s costs.
+Added: For example, some local franchising authorities have imposed franchise fee assessments on Charter’s broadband Internet access service (in addition to Charter’s video service), and more may do so in the future.
+Added: If challenges to such assessments are unsuccessful, it could adversely impact Charter’s costs.
Although the FCC issued a decision precluding the imposition of such duplicative fees, that favorable decision is currently subject to judicial review.
48 unchanged sentences
Principles of Delaware law established in cases involving differing treatment of multiple classes or series of stock provide that a board of directors owes an equal duty to all common stockholders regardless of class or series and does not have separate or additional duties to any group of stockholders.
−Removed: As a result, in some circumstances, our directors may be required to make a decision that is viewed as adverse to the holders of one series of our common stock.
+Added: As a result, in some circumstances, our directors may be required
+Added: to make a decision that is viewed as adverse to the holders of one series of our common stock.
Under the principles of Delaware law and the business judgment rule, holders may not be able to successfully challenge decisions that they believe have a disparate impact upon the holders of one series of our stock if our board of directors is disinterested and independent with respect to the action taken, is adequately informed with respect to the action taken and acts in good faith and in the honest belief that the board is acting in the best interest of all of our stockholders.
1 unchanged sentence
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.