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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-36713

LIBERTY BROADBAND CORPORATION

(Exact name of Registrant as specified in its charter)

State of Delaware

47-1211994

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

12300 Liberty Boulevard
Englewood, Colorado

80112

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: (720875-5700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Series A common stock

LBRDA

The Nasdaq Stock Market LLC

Series C common stock

LBRDK

The Nasdaq Stock Market LLC

Series A Cumulative Redeemable preferred stock

LBRDP

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer 

Accelerated Filer 

Non-accelerated Filer 

Smaller Reporting Company 

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes  No 

The number of outstanding shares of Liberty Broadband Corporation’s common stock as of October 31, 2024 was:

Series A

Series B

Series C

Liberty Broadband Corporation common stock

18,236,186

2,022,532

122,589,376

Table of Contents

Table of Contents

Part I - Financial Information

f

Page No

Item 1. Financial Statements

LIBERTY BROADBAND CORPORATION Condensed Consolidated Balance Sheets (unaudited)

I-2

LIBERTY BROADBAND CORPORATION Condensed Consolidated Statements of Operations (unaudited)

I-4

LIBERTY BROADBAND CORPORATION Condensed Consolidated Statements of Comprehensive Earnings (Loss) (unaudited)

I-5

LIBERTY BROADBAND CORPORATION Condensed Consolidated Statements of Cash Flows (unaudited)

I-6

LIBERTY BROADBAND CORPORATION Condensed Consolidated Statements of Equity (unaudited)

I-8

LIBERTY BROADBAND CORPORATION Notes to Condensed Consolidated Financial Statements (unaudited)

I-10

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

I-26

Item 3. Quantitative and Qualitative Disclosures about Market Risk

I-37

Item 4. Controls and Procedures

I-37

Part II - Other Information

Item 1. Legal Proceedings

II-1

Item 1A. Risk Factors

II-1

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

II-3

Item 5. Other Information

II-4

Item 6. Exhibits

II-4

SIGNATURES

II-5

I-1

Table of Contents

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Balance Sheets

(unaudited)

September 30,

December 31,

2024

2023

 

amounts in millions

 

Assets

    

    

    

    

Current assets:

Cash and cash equivalents

$

168

 

158

Trade and other receivables, net of allowance for credit losses of $4 and $5, respectively

186

178

Prepaid and other current assets

 

63

 

94

Total current assets

 

417

 

430

Investment in Charter, accounted for using the equity method (note 4)

 

12,760

 

12,116

Property and equipment, net

1,131

1,053

Intangible assets not subject to amortization

Goodwill

755

755

Cable certificates

550

550

Other

41

40

Intangible assets subject to amortization, net (note 5)

423

461

Other assets, net

 

226

 

236

Total assets

$

16,303

 

15,641

See accompanying notes to the condensed consolidated financial statements.

I-2

Table of Contents

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Balance Sheets (Continued)

(unaudited)

September 30,

December 31,

2024

2023

 

amounts in millions,

 

except share amounts

Liabilities and Equity

Current liabilities:

Accounts payable and accrued liabilities

$

112

 

86

Deferred revenue

 

30

 

30

Current portion of debt

3

3

Other current liabilities

56

59

Total current liabilities

 

201

 

178

Long-term debt, net, including $1,876 and $1,255 measured at fair value, respectively (note 6)

3,709

3,733

Obligations under tower obligations and finance leases, excluding current portion

79

83

Long-term deferred revenue

93

65

Deferred income tax liabilities

2,342

2,216

Preferred stock (note 7)

201

202

Other liabilities

140

141

Total liabilities

 

6,765

 

6,618

Equity

Series A common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 18,236,186 and 18,233,573 at September 30, 2024 and December 31, 2023, respectively

Series B common stock, $.01 par value. Authorized 18,750,000 shares; issued and outstanding 2,022,532 and 2,025,232 at September 30, 2024 and December 31, 2023, respectively

Series C common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 122,589,320 and 123,704,814 at September 30, 2024 and December 31, 2023, respectively

1

1

Additional paid-in capital

3,028

3,107

Accumulated other comprehensive earnings (loss), net of taxes

 

70

 

52

Retained earnings

 

6,421

 

5,843

Total stockholders' equity

9,520

9,003

Non-controlling interests

18

20

Total equity

 

9,538

 

9,023

Commitments and contingencies (note 9)

 

 

Total liabilities and equity

$

16,303

 

15,641

See accompanying notes to the condensed consolidated financial statements.

I-3

Table of Contents

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Statements of Operations

(unaudited)

Three months ended 

Nine months ended

 

September 30,

September 30,

 

2024

    

2023

    

2024

2023

 

amounts in millions,

except per share amounts

Revenue

$

262

240

753

731

Operating costs and expenses:

Operating expense (exclusive of depreciation and amortization shown separately below)

64

59

188

 

180

Selling, general and administrative, including stock-based compensation (note 8)

113

105

329

 

322

Depreciation and amortization

55

55

157

 

169

232

219

674

 

671

Operating income (loss)

30

21

79

 

60

Other income (expense):

Interest expense (including amortization of deferred loan fees)

(46)

(54)

(149)

(151)

Share of earnings (losses) of affiliate (note 4)

346

326

923

 

892

Gain (loss) on dilution of investment in affiliate (note 4)

(8)

(10)

(40)

 

(42)

Realized and unrealized gains (losses) on financial instruments, net (note 3)

(144)

(81)

(85)

 

(155)

Other, net

3

6

15

 

22

Earnings (loss) before income taxes

181

208

743

 

626

Income tax benefit (expense)

(39)

(46)

(165)

 

(143)

Net earnings (loss)

142

162

578

483

Less net earnings (loss) attributable to the non-controlling interests

Net earnings (loss) attributable to Liberty Broadband shareholders

$

142

162

578

 

483

Basic net earnings (loss) attributable to Series A, Series B and Series C Liberty Broadband shareholders per common share (note 2)

$

0.99

1.11

4.04

3.31

Diluted net earnings (loss) attributable to Series A, Series B and Series C Liberty Broadband shareholders per common share (note 2)

$

0.99

1.10

4.04

3.29

See accompanying notes to the condensed consolidated financial statements.

I-4

Table of Contents

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

(unaudited)

Three months ended

Nine months ended

 

September 30,

September 30,

 

2024

    

2023

    

2024

2023

 

amounts in millions

 

Net earnings (loss)

    

$

142

162

578

    

483

Other comprehensive earnings (loss), net of taxes:

Credit risk on fair value debt instruments gains (loss)

38

(11)

26

 

37

Recognition of previously unrealized losses (gains) on debt, net

(8)

(8)

(1)

Other comprehensive earnings (loss), net of taxes

30

(11)

18

36

Comprehensive earnings (loss)

172

151

596

 

519

Less comprehensive earnings (loss) attributable to the non-controlling interests

Comprehensive earnings (loss) attributable to Liberty Broadband shareholders

$

172

151

596

 

519

See accompanying notes to the condensed consolidated financial statements.

I-5

Table of Contents

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Statements of Cash Flows

(unaudited)

Nine months ended

September 30,

 

2024

2023

 

amounts in millions

 

Cash flows from operating activities:

    

    

    

    

Net earnings (loss)

$

578

 

483

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

Depreciation and amortization

 

157

 

169

Stock-based compensation

 

22

 

25

Share of (earnings) losses of affiliate, net

 

(923)

 

(892)

(Gain) loss on dilution of investment in affiliate

 

40

 

42

Realized and unrealized (gains) losses on financial instruments, net

 

85

 

155

Deferred income tax expense (benefit)

 

124

 

137

Other, net

 

(4)

 

(3)

Changes in operating assets and liabilities:

Current and other assets

 

44

 

(60)

Payables and other liabilities

 

(20)

 

(102)

Net cash provided by (used in) operating activities

 

103

 

(46)

Cash flows from investing activities:

Capital expenditures

(183)

(149)

Grant proceeds received for capital expenditures

40

6

Cash received for Charter shares repurchased by Charter

226

42

Cash released from escrow related to dispositions

 

 

23

Purchases of investments

 

 

(53)

Other investing activities, net

(14)

2

Net cash provided by (used in) investing activities

69

(129)

Cash flows from financing activities:

Borrowings of debt

1,114

1,501

Repayments of debt, tower obligations and finance leases

(1,198)

(1,547)

Repurchases of Liberty Broadband common stock

(89)

(40)

Indemnification payment to Qurate Retail

(26)

Other financing activities, net

 

(1)

 

(3)

Net cash provided by (used in) financing activities

 

(174)

 

(115)

Net increase (decrease) in cash, cash equivalents and restricted cash

(2)

 

(290)

Cash, cash equivalents and restricted cash, beginning of period

176

400

Cash, cash equivalents and restricted cash, end of period

$

174

110

I-6

Table of Contents

The following table reconciles cash and cash equivalents and restricted cash reported in the accompanying condensed consolidated balance sheets to the total amount presented in the accompanying condensed consolidated statement of cash flows:

September 30,

December 31,

2024

2023

amounts in millions

Cash and cash equivalents

$

168

158

Restricted cash included in other current assets

5

16

Restricted cash included in other long-term assets

1

2

Total cash and cash equivalents and restricted cash at end of period

$

174

176

See accompanying notes to the condensed consolidated financial statements.

I-7

Table of Contents

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Statements of Equity

(unaudited)

Accumulated

Noncontrolling

Additional

other

interest in

Common stock

paid-in

comprehensive

Retained

equity of

Series A

  

Series B

  

Series C

  

capital

earnings (loss)

earnings

subsidiaries

Total equity

amounts in millions

Balance at January 1, 2024

    

$

1

3,107

    

52

    

5,843

20

    

9,023

Net earnings (loss)

 

 

578

 

578

Other comprehensive earnings (loss), net of taxes

18

18

Stock-based compensation

22

22

Liberty Broadband stock repurchases

(89)

(89)

Noncontrolling interest activity at Charter and other

(12)

(2)

(14)

Balance at September 30, 2024

$

1

3,028

 

70

 

6,421

18

 

9,538

Accumulated

Noncontrolling

 

Additional

other

interest in

 

Common stock

paid-in

comprehensive

Retained

equity of

 

Series A

  

Series B

  

Series C

  

capital

earnings

earnings

subsidiaries

Total equity

 

amounts in millions

 

Balance at June 30, 2024

$

1

3,023

40

6,279

18

9,361

Net earnings (loss)

142

142

Other comprehensive earnings (loss), net of taxes

30

30

Stock-based compensation

8

8

Noncontrolling interest activity at Charter and other

(3)

(3)

Balance at September 30, 2024

$

1

3,028

70

6,421

18

9,538

See accompanying notes to the condensed consolidated financial statements.

I-8

Table of Contents

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Statements of Equity (continued)

(unaudited)

Accumulated

Noncontrolling

Additional

other

interest in

Common stock

paid-in

comprehensive

Retained

equity of

Series A

  

Series B

  

Series C

  

capital

earnings

earnings

subsidiaries

Total equity

amounts in millions

Balance at January 1, 2023

$

1

3,318

9

5,155

18

8,501

Net earnings (loss)

483

483

Other comprehensive earnings (loss), net of taxes

36

36

Stock-based compensation

25

25

Liberty Broadband stock repurchases

(40)

(40)

Noncontrolling interest activity at Charter and other

(10)

2

(8)

Balance at September 30, 2023

$

1

3,293

45

5,638

20

8,997

Accumulated

Noncontrolling

 

Additional

other

interest in

 

Common stock

paid-in

comprehensive

Retained

equity of

 

Series A

  

Series B

  

Series C

  

capital

earnings (loss)

earnings

subsidiaries

Total equity

 

amounts in millions

 

Balance at June 30, 2023

    

$

1

3,286

56

5,476

20

8,839

Net earnings (loss)

 

162

162

Other comprehensive earnings (loss), net of taxes

(11)

(11)

Stock-based compensation

9

9

Noncontrolling interest activity at Charter and other

(2)

(2)

Balance at September 30, 2023

$

1

3,293

45

5,638

20

8,997

See accompanying notes to the condensed consolidated financial statements.

I-9

Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

(1) Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Liberty Broadband Corporation and its controlled subsidiaries (collectively, "Liberty Broadband," the "Company," “us,” “we,” or “our” unless the context otherwise requires). Liberty Broadband Corporation is primarily comprised of GCI Holdings, LLC (“GCI Holdings” or “GCI”), a wholly owned subsidiary, and an equity method investment in Charter Communications, Inc. (“Charter”).

On December 18, 2020, GCI Liberty, Inc. (“GCI Liberty”) was merged with Liberty Broadband (the “Combination”) and Liberty Broadband acquired GCI Holdings.

The accompanying (a) condensed consolidated balance sheet as of December 31, 2023, which has been derived from audited financial statements, and (b) interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. The results of operations for any interim period are not necessarily indicative of results for the full year. Additionally, certain prior period amounts have been reclassified for comparability with current period presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in Liberty Broadband's Annual Report on Form 10-K for the year ended December 31, 2023. All significant intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company considers (i) the application of the equity method of accounting for its affiliate, (ii) non-recurring fair value measurements of non-financial instruments and (iii) accounting for income taxes to be its most significant estimates.

Through a number of prior years’ transactions, including the Combination, Liberty Broadband has acquired an interest in Charter. The investment in Charter is accounted for using the equity method. Liberty Broadband does not control the decision making process or business management practices of this affiliate. Accordingly, Liberty Broadband relies on the management of this affiliate to provide it with accurate financial information prepared in accordance with GAAP that the Company uses in the application of the equity method. In addition, Liberty Broadband relies on audit reports that are provided by the affiliate's independent auditor on the financial statements of such affiliate. The Company is not aware, however, of any errors in or possible misstatements of the financial information provided by its equity affiliate that would have a material effect on Liberty Broadband's condensed consolidated financial statements.

As described in note 4, we are participating in Charter’s share buyback program in order to maintain our fully diluted ownership percentage of 26%. The primary use of those proceeds has been to repurchase Liberty Broadband Series A and Series C common stock pursuant to our authorized share repurchase programs. In addition, some of the proceeds were used for debt repayments.

During the nine months ended September 30, 2024, we repurchased an aggregate of 1.1 million shares of Liberty Broadband Series C common stock for a total purchase price of $89 million. During the nine months ended September 30, 2023, we repurchased 459 thousand shares of Liberty Broadband Series A and Series C common stock for a total purchase price of $40 million. As of September 30, 2024, the amount remaining under the authorized repurchase program is approximately $1,685 million.

I-10

Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Exchange Agreement with Chairman

On June 13, 2022, Liberty Broadband entered into an Exchange Agreement with its Chairman of the board of directors, John C. Malone, and a revocable trust of which Mr. Malone is the sole trustee and beneficiary (the “JM Trust”) (the “Exchange Agreement”). Under the Exchange Agreement, the JM Trust has exchanged 481,149 total shares of Liberty Broadband Series B common stock for the same number of Liberty Broadband Series C common stock as of September 30, 2024 under the Exchange Agreement.

Spin-Off Arrangements

During May 2014, the board of directors of Liberty Media Corporation and its subsidiaries (“Liberty”) authorized management to pursue a plan to spin-off to its stockholders common stock of a wholly owned subsidiary, Liberty Broadband, and to distribute subscription rights to acquire shares of Liberty Broadband’s common stock (the “Broadband Spin-Off”). In connection with the Broadband Spin-Off, Liberty and Liberty Broadband entered into certain agreements in order to govern certain of the ongoing relationships between the two companies and to provide for an orderly transition, including a services agreement and a facilities sharing agreement. Additionally, in connection with a prior transaction, GCI Liberty and Qurate Retail, Inc. (“Qurate Retail”) entered into a tax sharing agreement, which was assumed by Liberty Broadband as a result of the Combination. The tax sharing agreement provides for the allocation and indemnification of tax liabilities and benefits between Qurate Retail and Liberty Broadband and other agreements related to tax matters. Under the facilities sharing agreement, Liberty Broadband shares office space with Liberty and related amenities at Liberty’s corporate headquarters.

Pursuant to the services agreement, Liberty provides Liberty Broadband with general and administrative services including legal, tax, accounting, treasury, information technology, cybersecurity and investor relations support. Liberty Broadband reimburses Liberty for direct, out-of-pocket expenses incurred by Liberty in providing these services which are negotiated semi-annually, as necessary. Pursuant to the services agreement, in connection with Liberty’s employment arrangement with Gregory B. Maffei, the Company’s President and Chief Executive Officer, components of Mr. Maffei’s compensation are either paid directly to him or reimbursed to Liberty, based on allocations set forth in the services agreement, currently set at 23% for the Company but subject to adjustment on an annual basis and upon the occurrence of certain events.

Under these various agreements, amounts reimbursable to Liberty were approximately $2 million for both the three months ended September 30, 2024 and 2023 and $5 million for both the nine months ended September 30, 2024, and 2023. Liberty Broadband had a tax sharing receivable with Qurate Retail of approximately $20 million and $16 million as of  September 30, 2024 and December 31, 2023, respectively, included in Other assets in the condensed consolidated balance sheets.

(2) Earnings Attributable to Liberty Broadband Stockholders Per Common Share

Basic earnings (loss) per common share (“EPS”) is computed by dividing net earnings (loss) attributable to Liberty Broadband shareholders by the weighted average number of common shares outstanding (“WASO”) for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares as if they had been converted at the beginning of the periods presented. Excluded from diluted EPS for the three months ended September 30, 2024 and 2023 are 3 million and 2 million potential common shares, respectively, because their inclusion would have been antidilutive. Excluded from

I-11

Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

diluted EPS for the nine months ended September 30, 2024 and 2023 are 3 million and 2 million potential common shares, respectively, because their inclusion would have been antidilutive.

Liberty Broadband Common Stock

Three months

Three months

Nine months

Nine months

 

ended

ended

ended

ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

 

(numbers of shares in millions)

Basic WASO

 

143

 

146

 

143

 

146

Potentially dilutive shares (1)

 

 

1

 

 

1

Diluted WASO

 

143

 

147

 

143

 

147

(1) Potentially dilutive shares are excluded from the computation of diluted EPS during periods in which losses are reported since the result would be antidilutive.

(3) Assets and Liabilities Measured at Fair Value

For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The Company does not have any recurring assets or liabilities measured at fair value that would be considered Level 3.

The Company’s assets and liabilities measured at fair value are as follows:

September 30, 2024

December 31, 2023

 

Quoted prices

Significant

Quoted prices

Significant

 

in active

other

in active

other

 

markets for

observable

markets for

observable

 

identical assets

inputs

identical assets

inputs

 

Description

Total

(Level 1)

(Level 2)

Total

(Level 1)

(Level 2)

 

amounts in millions

 

Cash equivalents

$

121

121

78

78

Exchangeable senior debentures

$

1,876

1,876

1,255

1,255

The Company’s exchangeable senior debentures are debt instruments with quoted market value prices that are not considered to be traded on “active markets”, as defined in GAAP, and are reported in the foregoing table as Level 2 fair value.

Other Financial Instruments

Other financial instruments not measured at fair value on a recurring basis include trade receivables, trade payables, accrued and other current liabilities, equity securities, current portion of debt (with the exception of the 1.25% Debentures prior to their redemption in the third quarter of 2023, and the 2.75% Debentures and the 1.75% Debentures prior to their redemption in the first quarter of 2023 (each as defined in note 6)) and long-term debt (with the exception of the 3.125% Debentures due 2053 and the 3.125% Debentures due 2054 (each as defined in note 6)). With the exception of long-term debt and preferred stock, the carrying amount approximates fair value due to the short maturity of these instruments as reported on our condensed consolidated balance sheets. The carrying value of the Margin Loan Facility, the Senior Credit Facility and

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Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

the Wells Fargo Note Payable (each as defined in note 6) all bear interest at a variable rate and therefore are also considered to approximate fair value.

Realized and Unrealized Gains (Losses) on Financial Instruments

Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following:

Three months ended

Nine months ended

 

September 30,

September 30,

 

2024

2023

2024

2023

 

amounts in millions

 

Exchangeable senior debentures (1)

$

(144)

(69)

(85)

(158)

Other

(12)

3

$

(144)

(81)

(85)

 

(155)

(1)The Company has elected to account for its exchangeable senior debentures using the fair value option. Changes in the fair value of the exchangeable senior debentures recognized in the condensed consolidated statements of operations are primarily due to market factors driven by changes in the fair value of the underlying shares into which the debt is exchangeable. The Company isolates the portion of the unrealized gain (loss) attributable to the change in the instrument specific credit risk and recognizes such amount in other comprehensive income. The change in the fair value of the exchangeable senior debentures attributable to changes in the instrument specific credit risk before tax was a gain of $38 million and a loss of $14 million for the three months ended September 30, 2024 and 2023, respectively, net of the recognition of previously unrecognized gains and losses, and gains of $23 million and $47 million for the nine months ended September 30, 2024 and 2023, respectively, net of the recognition of previously unrecognized gains and losses. During the quarter ended September 30, 2024, the Company recognized $9 million of previously unrecognized gains related to the retirement of a portion of the 3.125% Debentures due 2053. The cumulative change was a gain of $79 million as of September 30, 2024, net of the recognition of previously unrecognized gains and losses.

(4) Investment in Charter Accounted for Using the Equity Method

Through a number of prior years’ transactions and the Combination, Liberty Broadband has acquired an interest in Charter. The investment in Charter is accounted for as an equity method affiliate based on our voting and ownership interest and the board seats held by individuals designated by Liberty Broadband. As of September 30, 2024, the carrying and market value of Liberty Broadband’s ownership in Charter was approximately $12.8 billion and $14.8 billion, respectively. We own an approximate 32.0% economic ownership interest in Charter, based on shares of Charter’s Class A common stock issued and outstanding as of September 30, 2024.

Upon the closing of the Time Warner Cable, LLC merger, the Second Amended and Restated Stockholders Agreement, dated as of May 23, 2015, by and among Charter, Liberty Broadband and Advance/Newhouse Partnership, as amended (the “Stockholders Agreement”), became fully effective. Pursuant to the Stockholders Agreement, Liberty Broadband’s equity ownership in Charter (on a fully diluted basis) is capped at the greater of 26% or the voting cap (“Equity Cap”). As of September 30, 2024, due to Liberty Broadband’s voting interest exceeding the current voting cap of 25.01%, our voting control of the aggregate voting power of Charter is 25.01%. Under the Stockholders Agreement, Liberty Broadband has agreed to vote (subject to certain exceptions) all voting securities beneficially owned by it, or over which it has voting discretion or control that are in excess of the voting cap, in the same proportion as all other votes cast by public stockholders of Charter with respect to the applicable matter.

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LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

In February 2021, Liberty Broadband was notified that its ownership interest, on a fully diluted basis, had exceeded the Equity Cap set forth in the Stockholders Agreement. On February 23, 2021, Charter and Liberty Broadband entered into a letter agreement in order to implement, facilitate and satisfy the terms of the Stockholders Agreement with respect to the Equity Cap. Pursuant to this letter agreement, following any month during which Charter purchases, redeems or buys back shares of its Class A common stock, and prior to certain meetings of Charter’s stockholders, Liberty Broadband will be obligated to sell to Charter, and Charter will be obligated to purchase, such number of shares of Class A common stock as is necessary (if any) to reduce Liberty Broadband’s percentage equity interest, on a fully diluted basis, to the Equity Cap (such transaction, a “Charter Repurchase”). The per share sale price for each share of Charter will be equal to the volume weighted average price paid by Charter in its repurchases, redemptions and buybacks of its common stock (subject to certain exceptions) during the month prior to the Charter Repurchase (or, if applicable, during the relevant period prior to the relevant meeting of Charter stockholders). Under the terms of the letter agreement, Liberty Broadband sold 698,011 and 120,149 shares of Charter Class A common stock to Charter for $226 million and $42 million during the nine months ended September 30, 2024 and 2023, respectively, to maintain our fully diluted ownership percentage at 26%. Subsequent to September 30, 2024, Liberty Broadband sold 10,400 shares of Charter Class A common stock to Charter for $3 million in October 2024.

Investment in Charter

The excess basis in our investment in Charter is allocated within memo accounts used for equity method accounting purposes as follows (amounts in millions):

September 30,

December 31,

2024

2023

Property and equipment, net

    

$

307

403

Customer relationships, net

 

1,827

2,049

Franchise fees

 

3,843

3,843

Trademarks

 

29

29

Goodwill

 

3,934

4,049

Debt

 

(