Q4 2020 Liberty Broadband Corp and Liberty Tripadvisor Holdings Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Liberty Broadband 2020 year end earnings call.
During the presentation, all participants will be in a listen only mode.
Afterwards, we will conduct a question and answer session.
At that time, if you have a question. Please press star one on your telephone.
Minder. This conference is being recorded February 26.
I would now like to turn the conference over to Courtney Chun Chief portfolio Officer. Please go ahead.
Thank you and good morning, before we begin we'd like to remind everyone that this call includes certain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 actual events or results could differ materially due for a number of risks and uncertainties, including.
Including those mentioned in our most recent form 10-K filed with the.
These forward looking statements speak only as of the data for this fall and Liberty broadband and Liberty Tripadvisor expressly disclaim any obligation or undertaking to disseminate.
Any updates or revisions to any forward looking statements contained herein for.
Like any change in Liberty broadband or Liberty Tripadvisor expectations with regard there too for any.
Change in events conditions or circumstances on which any such statement is based.
On today's call, we will discuss certain non-GAAP financial measures for Liberty broadband.
Adjusted OIBDA and adjusted OIBDA margin for them.
Regarding the comparable GAAP metrics, along with required definitions and reconciliations.
Preliminary note and scheduled for you.
Can be found in the press for me each day, and which is available on Liberty broadband website now I'd like to turn the call over to Greg who day Liberty President and CEO.
Courtney and good morning to all of our listeners.
Today speaking on the call will also have Liberty broadband Chief accounting officer, and for principal financial Officer, Brian Wendling.
During Q&A, we will be available to answer questions related to Liberty Tripadvisor.
Duncan E L T G I N T.
Yes, all of GCI will also be available for questions.
Let me start by talking about Liberty broadband itself.
On December 18th.
Earlier than expected.
Completed the acquisition of GCI Liberty.
During the period November 1st of January 31, we repurchased one 9 million shares of Liberty broadband for $293 million.
One 8 million net of repurchases for completed after the December shareholder vote for the GCI Liberty.
Since then we spent about $272 million in repurchases at an average price of about $155 for sure.
Well you may notice that the average purchase price of over this period as higher than Yesterdays close.
They represent an attractive looks for price to charter.
$528 per share versus yesterday's closing.
No.
And we remain long term bullish.
In the first quarter, we exceeded our 26% ownership cap in charter.
And expect to sell into their buyback beginning in March and do so going forward on a monthly basis.
Based on charters historic buyback cadence.
We expect our share sales.
Charter to generate cash well north of $2 billion for Liberty broadband this year with about a five 5% tax.
Our plan is to use this capital plus the ample liquidity, we have on hand already your broadband to attack the discount at Liberty broadband and take advantage of it with this in mind. Our board has increased the repurchase authorization at Liberty broadband to approximately $2 5 million.
Looking at charter from 2020 broadband affirmed its place as one of the most important consumer and business services and charter added more broadband to start subscribers from the first half from 2020 in any calendar year.
Time Warner merger.
With operational efficiencies from increased self installation and self service platform and online digital sales the combination of these.
With the mix shift from continuing mix shift to broadband resulted in full year 2020 cable EBITDA margin exceeding 40% for the for.
First time in the company's history.
We added a small number of video subscribers 20 day Lonestar in the current M. D D C market.
Mobile is also an exciting growth business for charter with improving economics charter added one 3 million line for 2020.
And is the fastest growing wireless provider, but in fact for several quarters, we were the fastest growing wireless player in the nation.
Free cash flow at charter increased 50% for the year and charter repurchased over $12 billion.
But all in all pretty good.
Finally, let's turn to Liberty Tripadvisor.
Tripadvisor is well positioned for what we believe is the pent up travel demand and continued to growth.
Keep some of our investors stuck in colder climate is thinking about the right thing to check out the best features of 2021 trip announced this week.
By Whitehaven Beach in Australia and debt.
Maria Beach in Cuba, perhaps it shouldn't be there.
Cost growth controlled taken.
In 2020 have enabled operating leverage as revenue returns.
We're also excited about Tripadvisor plus the first of its kind direct to consumer subscription offering in the travel space currently in beta and we expect to roll it out in the U S for first half of 2021.
It provides travelers with compelling value through deal for hotels and experiences as well as getting access for the person benefits and this is just the beginning over time, we envision adding more services more benefits in VIP amenities in destination travel benefit airlines et cetera.
The addressable market for Tripadvisor philosophy is enormous and.
We continue to have over 400 million monthly unique visitors day trip in 2000, and 2019 from your confirming even a small percentage of that traffic implies a meaningful long term growth opportunity and recurring revenue stream for trip.
With that let me turn it over to Brian to talk about the financials. Thanks, Greg.
Quarter end Liberty broadband had consolidated cash and cash equivalents one for bill.
Which includes 32 million of cash at GCI.
After year end GCI received the $174 million in payments from the government.
The RFC funding years, 18 and 19.
And for largest United to pay down the line of credit by $180 million subsequent to year end.
Value for charter investment at Liberty broadband at yesterday's close was $46.
At quarter end Liberty broadband had a total principal amount of debt for <unk>.
Putting the impact of the $180 million Paydown as these guys on credit losses.
And then the re broadband has principal amount of debt.
Good day.
She has leveraged with the bonds credit agreements for three five times.
Meaningful delevering from year end 2019, EPS leverage was five per month.
You see I had substantial cushion under its maximum leverage covenants.
What are your broadband has $300 million of ongoing margin loan capacity and GCI has for us.
For <unk>.
But undrawn borrowing capacity on the planet credit following the debt.
These amounts exclude the indemnification obligation and preferred stock.
Now just a quick update on GCI.
2020 was a great year for the company full year revenue grew 9% adjusted revenue was 34.
Okay.
Company's highest ever adjusted OIBDA, driven by data demand and lower cost associated with that reduced bad debt from health care expense.
Combined with previous cost saving initiatives.
We also had $15 million of one time items favorably impacting revenue for the year.
The impact for the quarter was six.
There's additional discussion of GPS results in our 10-K that will be filed later today.
For quarter experienced 12% revenue growth and 20% adjusted for their growth.
Operationally they added nearly 14000 cable.
Cable modem subscribers and built out Alaska for sponsors.
Basically they for the broadcast business and reduce those non imperial's business focus on there for competitive advantage.
Alaska Network.
But a favorable impact on overall margin.
Although indefinitely from favorable macro trends impacting the strength of the 'twenty number.
Solid performance by the team from top to bottom that generated those for salt.
A truly Brian Scott.
Alright see matters. We are currently working with the FCC and rates of payments for the coming year.
More positive news, we received a new order.
And January is rate certainty for Alaska providers for funding years, ending in June 'twenty, two 'twenty three.
We expect to have a shorter period between service delivery and cash collections going forward.
With that I'll turn the call back over to Greg.
Thanks, Brian and thank you for to our listening audience for your continued interest in Liberty broadband and Liberty Tripadvisor and operator with that I'd like to open the floor for questions.
Thank you for if you'd like to ask a question. Please signal by pressing star one on the telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off for logistics all true chocolate that again press star one to ask a question for.
Pause for just a moment for a lot of everyone an opportunity to signal for questions.
We'll go first to Michael Collins with Citi.
Hi, Good morning, I'm curious on Liberty broadband.
You think about the offset from Liberty broadband going forward can you often look to price to charter earlier in the discussion can you expect liberty broadband just keep yeah hi.
And you can stay fairly simple or are you on the hunt for other asset for.
For investment.
Into Liberty broadband.
Thank you for the question I I.
Look the easy money here in terms of what to do with the capital we received from <unk>.
Solid capital on our balance sheet, but the capital we will receive purchase.
The charter makes from the payments, we get is to take advantage of the basically and 15%.
The differential between the after tax proceeds we get and the discount to.
Charter that we have that's the obvious place to put our accounts now for the green we'd become more.
Uncertain about.
The charter buyback effectively we can decide at what pace, we want to be a part of the charter buyback by holding the cash and doing something different.
But that's where given our belief in charter and given the discount that's what's attractive.
Today prices in the market in general are pretty full for other kinds of assets.
If the world changes, we might change our view, but.
That's where we stand today.
And earlier last year, you talked I believe about being in discussions.
With charter around how to handle the cash that you are approaching it.
Can you share any thoughts of what you learned from that assertion why they decided to enforce the cash versus maybe just from you hold onto the shares that you have.
And then just a final decision or is it possible debt in the future, but the structure.
The agreement might be revisited.
We did have discussions where they are an independent committee of the board.
Of charter.
Increasing the cap.
And frankly, the proposals that were put forward by them to Liberty broadband, we didn't find as attractive as the alternative debt repurchase our shares.
Can't say that we won't revisit that don't know what will come in the future, but at the moment when we looked at the alternatives of what was presented to us versus as I said the opportunity to.
Net cash back pay a five 5% tax rate and by what's been running about at age to buy the stock back of Liberty broadband and for its been running at about 18, 5% discount to charter and thought that was a pretty attractive alternative.
Thanks very much.
Well go next to James Ratcliffe with Evercore ISI.
Oh Gee for all of them.
For the Whitehall discussion you mentioned should we be looking at for Q pretty much normalized for the company.
<unk> funding for pricing going forward.
And secondly.
They're talking about discount for going out with me there.
Total you said thereabouts or those tools available to take advantage of that.
For example, the biomarker profile.
So I'll, let you want to comment on the TCR in times that are here Brian.
Yes.
Okay.
Okay.
Operator, we have seem to have some feedback on the line. Thank you.
Brian do you want to comment in Orange zero, or a little less deep ore into Iran. At anything.
Yeah, just on the one time items. There was a there was one settlement for $6 million that came through in the fourth quarter otherwise you know.
Solves for the fourth quarter.
<unk> are pretty much normalized I don't know what day. It if there's anything you'd want to add on that.
But now that that's good for I am, particularly nothing unusual with our H C that impacted the income statement there.
I'm Liberty trip at a discount.
Funny thing, it's highly volatile and if you look at the <unk> price.
And you combine the bees in the a price it's not clear it's as big a discount now.
How much.
Float and liquidity there isn't a b's all acknowledge that it's a hard number to look at there.
There is not a ton of excess liquidity held trips a day, but we continue to think about ways to take advantage of any discounts we see women.
Great. Thank you.
Moving next to Bentley Cross with TD Securities.
For two minor housekeeping question one.
What's the right corporate overhead drag because you can vote now of the combined company and then secondly can you just saw sales, but the advertising impact was could you share in.
For the quarter.
Can you repeat the first question I didn't hear you.
What's the right corporate overhead drag to think about now the combined company.
That gave US answer Brian you want to answer that.
Sure Yeah, I don't think it's it's slightly elevated in Q4 2020, and do you see other leases.
Seven 3 million. So I went back off that a little bit without giving specific guidance, but that could be an approximation to annualize.
We reduced that down a bit.
Yes.
Thank you Brian.
Yes.
Right.
Maybe you repeat the second question just to make sure we all heard as well.
Can you discuss the advertising impact.
For PCI for political advertising for them.
Ron or Pete you guys want to take a cut at that.
Yeah I'll go ahead for them.
Yeah, we are.
After the sale of the broadcast business, we've got relatively de minimus, our cable advertising revenue that goes out or our cable television programming there.
And due to the political advertising, we got about a 3 million dollar bump over and above what I would consider to be relatively de minimus revenue streams there.
Thank you.
Well go next to Matthew Harrigan with benchmark.
Well. Thank you firstly, probably gets lost them on the Liberty Siri attorney for leases this morning, but the S E T.
Disapproved 50 dollar a broadband so to be used for lower income homes in southern for doors and describe all areas that for enough to a week for 21 adult for GCI from Alaska, given the material.
Native population there and then secondly, you know it gets much more prominently in the news.
The C band auction for one of southern zone.
For the Comcast and charter were not from winters not for.
Surprising I guess given those prices.
I know you'd hear from from our core <unk> for the Euro answer for.
Could there be some indication there.
You might be more amenable charter or Comcast.
Maybe you cant say definitively on asking for it will make more sense to work with Verizon in terms of between the relationship on the small cell side you from your tenants as far as the newest post to you on that before but lots of moving pieces here.
Thank you.
So Pete.
Pete or Rob you guys want to talk about the potential impact and tribal areas at a $75 something in that.
Yeah.
Okay quick cut at that GCI is already a substantial lifeline provider on the voice side and we have programs set up that we believe will be.
Well positioned to more fairly quickly into the broadband subsidies.
Greg implied there all of a lost cause you trouble area. So the.
$75 subsidy applause statewide.
So there's some upside to that I believe for D C.
You also have to look at the fact that our broadband penetration was also exceedingly high even more so after the pandemic effects from last year.
So the upside is probably limited it although it will probably have a positive effect on further driving down to bad debt and supporting the income stream.
And as far as the C band and C band auctions in charter I think.
Liberty like many observers were stunned by the prices.
Obviously, you're looking at sort of the mid Ninety's the high $90 million. When you include the cost for growing the spectrum.
And some of the amount for each of the larger carriers, particularly by horizon.
But also T paid.
Hey, you know a big numbers.
I look and think.
P. B R. S alternative debt, we did participate in it's been about $500 million of charter ins.
Auction is very attractive with a cost per pop basis.
So, it's probably like a seventh of the price or something like that the other point I'd make is we are really beneficiaries.
Because of our recently renewed and be in a relationship with Verizon, where we're going to get the benefit from whatever spending they have and they do there.
In terms of the.
The N B now we get we get the latest and greatest at Horizon has built.
I think it's a win all the way around for charter to be perfectly honest switches.
We get owner economics, where we choose and C. P. R. S. At a fraction of the price and we get rental economics per upgraded network with.
With a continuing downward stream based on what the retail prices are so and probably.
<unk> stapling as much debt on some of those larger companies, there's probably going to cause them to look at.
Yes.
Bigger at certain alternative if they might do to participate in some of the markets. We're in so I consider it a pretty good result for charter.
But for specifically as far as the chance that you have in the small cell tower and you both access.
And all day is that still something that's it's a moving target.
I know this is something I know concept from historically would be reluctant for luck rise Messenger network. There has been some share charter sales probably in the same place.
I take it.
With the new agreement that wasn't something that was specifically contemplated or is that something that could work out in the future. So it's just.
Off the table for a while.
I think it's the point you make where we haven't rolled that out yet or C. B R. S. We havent really rolled out our owner economics anywhere yet, but down the road one could imagine.
You know providing access to our network as well as you know we certainly do provide other places where we provide backhaul on the like for plenty of a larger mobile carriers. So I don't know why.
Last mile capacity as well.
Thanks for that.
We'll go next to Michael Femur with E. L C capital.
Yeah. Good morning, I have a couple of questions.
Looking at charter.
It looks to me that with 50 people.
Homes passed.
Their penetration roughly is about 68 per cent.
And the average monthly Bill was around 11 one.
$111.
What are you thinking in terms of from.
Opportunity for the total penetration.
And also what do you think is the.
Purchasing oh.
Ability to.
Fund spending on cable.
Relative to the average rent.
Which is approximately $900000 a month across the U S. How.
How are you thinking about debt and when you discuss that.
Please stature in the price increase that was announced at the end of last year by charter did it go through.
And what are your thoughts about inflation.
Sorry, I know, it's a lot, but I really appreciate your thoughts on it.
I'm also going to write the final chapter of the Bible overdone here, but it can be.
Look I think if you asked Tom Rutledge he wouldn't believed ultimately we're gonna have to.
Two thirds of the will grow our share for two thirds of the market or for Brian.
Perhaps even more of a time, because we have the best networks.
And in large parts of our market, where we can provide a better customer service at a relatively low cost of debt.
Great and so we really are well positioned.
In general, Yes charter has taken some price increases and it really is hard to say because of its flight plan, where it rolls out across the nation. It's not a uniform we turned the switch and everything goes up 3%. It really is when the customers contract is and what kind of plan their under and what do you plan we offered.
In General if you look at for most analysis that I've seen.
Yeah.
Charter has not been a price taker, we've been a share taker and I think the management team at charter has done a great job of doing that where we gained share largely faster than anyone else among the big cable players.
And your price is something that perhaps is available down the road, but not something we need to work on today, we've got a better offering at a lower price will continue to take share and leave that volume that volume rather than price style, rather than the volume dial.
Yes.
Let's turn to that some of the others in the market.
As far as where it can go.
We'll see.
As you increasingly look in a world where people are going to have remote alternatives, whether it's businesses or personal use.
You will see increased demand for broadband and the book value of the service is likely to arrive I don't have a number in my head how it never really looked at or thought about it against average rent, particularly because a lot of cases people own their homes total rental property.
And the door, we have businesses small businesses. So I don't necessarily think about them against rents are but I do think the product as I start out as shown increasing broadband has shown increasing value to consumers and businesses alike in 2020, and I don't expect that to dissipate much.
Can I just follow up with most of them.
Sure.
The recent the recent.
Access of the Liberty Media acquisition Corp.
Clearly you have access to capital.
For the people pulling back from the free cash flow from the repurchase.
I'm just going to create a high class problem for you.
How are you thinking not just liberty broadband but across your company.
Think about it.
The conflict of interest.
Tempting to essentially treat every shareholder properly because liberty media.
Yeah.
Yeah. So a couple of things I think I talked about.
First and primary opportunity, we're pursuing today at Liberty broadband.
And given prices in the market and given the opportunity we see in front of us that looks pretty attractive.
And our belief in the underlying value of charter.
You can charter continues to shrink its equity grow its cash flow growth revenue grow inhibitor. So we're pretty enthused about that now.
Each of the companies that has been spun from Liberty media, specifically waive their conflict of interest and in fact, we've been at this a long time and really haven't seen a lot of cases, where that's been an issue.
You know.
If we see something in ecommerce, that's probably likely to go into net curate if we see something around Motorsports, that's probably likely to go to formula one.
And if we see something around music, that's probably likely to go into the Liberty Siri Theres just seem to be natural homes.
Now in the case of the stack.
Liberty media did not waive its conflicts so any opportunities that this vaccine will first be offered to Liberty media.
We created a position where John Malone is effectively not in the Liberty Media acquisition management team and he will be the when it gets to decide whether to be non the almac management team and they'll be the ones to start whether it goes for Liberty media.
But I think it's unlikely, we're really going to see that as a practical matter because.
Again, if we see something in motorsports, unless its two largest scale, it's likely to be formula one if we see something that doesn't fit particularly well it may be.
Barry will be in this back so.
We've had this conflict in effect for years, we've never really had an issue with shareholders about it because I think we're pretty we try to be transparent explain our motives and in general we try to create pure play among the entities. We have it not happen diversified unless there was a really good reason and in fact, one of the reasons we created this backwards.
So it's diverse alternatives that may not fit for wells the portfolio we have today.
Thank you and thank you for your team in D C or you've done an amazing job from shareholders.
For sure. Thank you.
Our last question comes from Mike Darren with for that.
Hey, Thanks for taking my question I have two quick ones on what it looks like the GCI moving from video subs from.
From a business segment for the consumer segment I was just wondering if that is.
Correct.
Explain some of the change in revenue.
And my second question has to do with the transfer of the.
GCI subsidiary that holds the charter shares.
Up to the parents can you give us more color.
On the reasoning.
Issuance for that change for me org structure.
I'll take the second one.
And often it's the case and Liberty It was tax motivated and that was our primary goal and I'll, let Pete do you want to comment on any or Brian you want to comment on any changes in the video sub.
Allocation or positioning.
Yeah I'll go to that.
Yeah. So when we sold the broadcast TV business, we elected to change the the unit that took the revenue what it used to go into the GCI business revenue stream because broadcast we viewed as a bit more of a business play without the broadcast it's just the video advertising.
Revenue and that seem to follow more of what the consumer revenue stream. So that's why Michael It moved from the business to the residential and that's just the advertising revenue.
Okay great.
Yeah. Thank you I think that's our last question. Thanks to our management team thanks to our employees and thanks for all our listeners for their interest in Liberty broadband and Liberty Tripadvisor, We hope to speak with you next quarter if not sooner.
This does conclude today's conference we thank you for your participation.
Okay.
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Ladies and gentlemen, thank you for standing by and welcome to the Liberty Broadband 2020 year end earnings call.
During the presentation, all participants will be in a listen only mode.
Afterwards, we will conduct a question and answer session.
At that time, if you have a question. Please press star one on your telephone.
This conference is being recorded February 26.
I would now like to turn the conference over to important channel.
Portfolio Officer. Please go ahead.
Thank you and good morning, before we begin we'd like to remind everyone that is calling for in certain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 actual events or results could differ materially due for a number of risks and uncertainties.
But he knows my attention our most recent form 10-K filed with him.
These forward looking statements speak only as of the data for this fall and Liberty broadband and the return to buying expressly disclaim any obligation or undertaking to determine.
Any updates or revisions to any forward looking statements contained herein to reflect any change in liberty broadband or liberty tripadvisor expectations with regard thereto or any change in events conditions or circumstances on which any such statement is based.
On today's call, we will discuss certain non-GAAP financial measures for Liberty broadband.
Adjusted OIBDA and adjusted OIBDA margin for.
Regarding the comparable GAAP metrics, along with required definitions and reconciliations.
The preliminary notice scheduled filings can be found in Frankfurt.
This is available on Liberty broadband for website now I'd like to turn the call over to Greg mid day, Liberty President and CEO.
Courtney and good morning to all of our listeners.
Today speaking on the call. We will also have Liberty broadband Chief Accounting Officer, and principal financial Officer, Brian Wendling.
Also during Q&A, we will be available to answer questions related to Liberty Tripadvisor.
Ron Duncan <unk> CFO of GCI will also be available to answer questions from me.
You start by talking about Liberty broadband itself.
On December 18th.
Earlier than expected.
Completed the acquisition of GCI Liberty.
During the period November one to January 31, we repurchased one 9 million shares of Liberty broadband for $293 million.
One 8 million of repurchases for completed after the December shareholder vote for the GCI Liberty merger.
Since then we spent about 272 million on repurchases at an average price of about $135 per share.
While you May note the average purchase price in <unk> over this period as the higher than yesterday flow.
They represent an attractive luxury price to charter up.
$528 per share versus yesterday's closing zone.
Bill.
And we remain long term bullish.
In the first quarter, we exceeded our 26% ownership average charter.
And expect to sell into their buying back beginning in March and do so going forward on a monthly basis.
Based on charters historic buyback cadence.
We expect our share sales.
The charter to generate cash well north of $2 billion for Liberty broadband this year with about five 5% tax.
Our plan is to use this capital plus the ample liquidity, we have on hand already at broadband to attack the discount at Liberty broadband and take advantage of it.
With this in mind, our board has increased the repurchase authorization at Liberty broadband to approximately $2 5 million.
Looking at chart from 2020 broadband affirmed its place as one of the most important consumer and business services and charter added more broadband for scarp subscribers from the first half of 2020 in any calendar year at the time Warner merger.
With the operational efficiencies through increased self installation self service platform and online digital sales the combination of these.
For the mix shift from continuing mix shift to broadband resulted in full year 2020 cable EBITDA margin exceeding 40% for the first time in the company's history.
We added a small number of video subscribers in 2000, and a lone star and the current MBV.
Market.
Mobile is also an exciting growth business for charter with improving economics chartered added one 3 million lines during 2020.
And is the fastest growing wireless provider and it's appropriate in fact for several quarters, we were the fastest growing wireless player in the nation.
Free cash flow at charter increased 50% for the year and charter repurchased over $12 billion.
All in all pretty good.
Finally, let's turn to Liberty Tripadvisor.
Tripadvisor is well positioned for what we believe is the pent up travel demand and continues to grow.
Keep some of our investors stuck in colder climates thinking about the right thing to check out the best speeches from 2021 trip announced this week, it's led by Whitehaven Beach in Australia.
Marie at Beach, and Cuba, perhaps still to be there.
Cost growth control take it.
Revenue in 2020 have enabled operating leverage as revenue return.
Also exciting about Tripadvisor plus the first of its kind of direct to consumer subscription operating in the travel space currently in beta and we expect to roll it out in the U S. In the first half of 'twenty one.
It provides travelers with compelling value from deal about hotels and experiences as well as giving access perks and benefits and this is just the beginning over time, we envision adding more services more benefits VIP amenities in destination travel benefit airlines et cetera.
The addressable market for Tripadvisor philosophies enrollments.
And we continue to have over 400 million monthly unique visitors that trip in 2000 and 2019, we're converting even a small percentage of that traffic and provides a meaningful long term growth opportunity and recurring revenue for free.
<unk> for threat.
With that let me turn it over to Brian to talk about the financials. Thank you Greg.
Quarter end Liberty broadband had consolidated cash and cash equivalents of $1 4 billion.
Which includes 32 million of cash at GCI.
After year end GCI received $174 million in payments.
Relating to the RFC funding years, 18 and 19.
These payments for logic and pay down the line of credit by $190 million subsequent to year end.
Value of our charter investment at Liberty broadband as of yesterday close was $46 million.
At quarter end Liberty broadband had a total principal amount of debt for eight.
Putting the impact of the $180 million Paydown of debt you have on credit for.
We brought band headwinds for loans for.
One 6 billion.
Gci's leverage defined as credit agreement was three five times.
<unk> operating from year end 2019, EPS leverage was five <unk>.
<unk> substantial question under its maximum leverage covenants.
Liberty broadband has 300 million of ongoing margin loan capacity at UTI has approximately 14 points of Undrawn borrowing capacity on the planet credit volume demand.
These amounts exclude the indemnification obligation and preferred stock.
Now just a quick update on GCI volume.
Volume was a great year for the company full year revenue grew 9% and adjusted OIBDA grew to 34.
Platform.
Company's highest ever adjusted OIBDA, driven by data demand and lower costs associated with that reduced bad debt and health care expense.
Combined with previous cost saving initiatives.
We also had $15 million of one time items favorably impacting revenue for the year the.
Impacts for the quarter was day.
There is additional discussion of EPS results are fantastic will be filed later today.
Fourth quarter experienced 12% revenue growth and 20% adjusted OIBDA growth.
Operationally they added nearly 14 back from Teva.
Cable modem subscribers and built that Alaska is for slabs from Mexico.
Basically they for the broadcast business and reduced non experiences focus on there for competitive advantage.
Alaska Network.
Net of favorable impact the overall margin.
Although its definitely from favorable macro trends impacting them as frankly for a number.
Solid performance by the team top to bottom that generated funds for fall.
A truly Brian Scott.
Alright, Steve matters. We are currently working with the FCC as rates of payments for the coming year.
More positive news, we received a new order from the FTC in January and to his right certainty you have to providers for funding years ending in June 'twenty two 'twenty three.
We expect to have a shorter period between service delivery and cash collections going forward.
That for the call back over to Greg.
Thanks, Brian and thank you for two our listening audience for your continued interest in Liberty broadband and Liberty Tripadvisor and operator with that I'd like to open the floor for questions.
Thank you for if you'd like to ask a question. Please signal by pressing star one on your telephone keypads.
Or do you think speaker phone. Please make sure your mute function is turned off for logistics, all true scharf with it again.
I want to ask a question we'll pause.
Pause for just a moment for a lot of everyone an opportunity to signal for a question.
We'll go for too Michael Collins with Citi.
Hi, good morning curious.
Liberty broadband.
Think about.
So from Liberty broadband going forward can you often look to price to charter OEM discussion can you expect liberty broadband just keep yeah hi.
And can say early simple or are you on the home for other asset for it.
Yes.
Income.
Liberty broadband.
Thank you for the question I.
Look the easy money here in terms of what to do with the capital we received from <unk>.
Solid capital on our balance sheet, but the capital we will receive for repurchase.
Charter base from the payments, we get in to take advantage of the basically.
For the 15%.
The differential between the after tax proceeds we get and the discount to <unk>.
Charter that we have that's the obvious place to put our accounts now for the grain we become more.
Uncertain about.
The charter buyback effectively we can decide at what pace, we want to be a part of the charter buyback by holding the cash and doing something different.
But that's where given our belief in charter and given the discount that's what the profit.
Today prices in the market in general are pretty full for other kinds of assets.
As the world changes, we might change our view, but.
That's where we stand today.
And earlier last year, you talked I believe about being in discussion.
With charter for and how to handle this cash are you approaching it.
Can you share any thoughts of what you learned from that question why didn't besides being enforced to cap versus maybe just helping you hold onto the shares debt.
And just a final decision or is it possible debt in the future.
But the structure and the agreement might be revisited.
We did have discussions with an independent committee of the board.
Charter.
About increasing the cap.
Frankly, the proposals that were put forward by them to Liberty broadband we didn't find as attractive as the alternative just to purchase our shares.
Can't say that we won't revisit that don't know what will come in the future, but at the moment when we looked at the alternatives of what was presented to us versus as I said the opportunity to.
Net cash back pay a five 5% tax rate and by what's been running about an age to buy the stock back of Liberty broadband and <unk> been running at about 18, 5% discount to charter and thought that was a pretty attractive alternative.
Thank you very much.
We will go next to James Ratcliffe with Evercore ISI.
Oh.
<unk>.
For the wireline discussion you mentioned should we be looking at for Q.
Normalized when it comes to RSP from pricing going forward.
I'll now true I'm talking about discounts as well.
I heard you say thereabouts.
<unk> available to take advantage of that.
For today's capital to ballpark for poker.
So I'll, let you want to comment on the TCR and car T therapy.
Brian Thank you.
Thank you.
Okay.
Okay.
Operator, we have seem to have some feedback on the line. Thank you.
Brian do you want to comment in RMC, our already deep ore into Iran.
Yes, just on the one time items. There was there was one settlement for $6 million that came through in the fourth quarter.
Otherwise.
The results for the fourth quarter.
Or pretty much normalized I don't know if there's anything you'd want to add on that.
No that's it Brian, particularly nothing unusual with our HC that impacted the income statement there.
Liberty trip at a discount it's a funny thing, it's highly volatile and if you look at the beef price.
And you combine the beads in the a price it's not clear it's as big a discount now.
How much.
Float and liquidity there as the Beast all acknowledge that it's a hard number to look at.
There is not a ton of excess liquidity held trips a day, but we continue to think about ways to take advantage of any discounts we see weapons season.
Great. Thank you.
We'll go next to Bentley Cross with TD Securities.
Alright, two minor housekeeping question.
Yes.
What's the right corporate overhead garage you can vote now of the combined company and then secondly can you just saw sales, but the advertising in fact was could you share.
During the quarter.
Can you repeat the first question I didn't hear you.
What's the right corporate overhead drag to think about now hope we could buy a company.
So it gave us one for Brian you want to answer that.
Sure Yes.
It's slightly elevated in Q4 2020, and do you see in the release the.
Seven 3 million. So I went back off that a little bit without giving specific guidance, but that could be an approximation.
<unk>.
We reduced that down a bit.
Yes.
Thank you Brian.
It's good.
Yes.
Maybe you repeat the second question is to make sure we all heard it as well.
Can you discuss the advertising impact.
From political advertising for us.
Ron or Pete you guys weren't taken kind of debt.
Yes, yes.
Right.
Yeah, we are.
After the sale of the broadcast business, we've got relatively de minimus cable advertising revenue that goes on our cable television programming there.
And due to the political advertising, we got about a $3 million bump over and above what I would consider to be relatively de minimus revenue streams there.
Thank you.
We'll go next to Matthew Harrigan with benchmark.
Well thank you for.
Firstly, probably gets swapped them on Liberty Sirius Ernie for reasons of warranty, but the FCC.
$50 broadband so to be used for lower income home, Kentucky $74.
Tribal areas does that.
Two a.
For 'twenty one.
No.
From a while given the material.
Neither population there and then secondly, you know it gets much more prominently in the news.
Moving on to Austin, one of southern zone the cause.
Comcast and charter were not for winter.
Not surprising I guess given those.
Right.
Is that I know you have from from our core and for me your answer but could there be some indication there.
He might be more venerable starter accounts, yes.
Maybe you cant say definitively on asking for it will make more sense.
With rising in terms of the relationship on the small cell side.
The slides north poster.
You are not before but lots of moving pieces European E auction results. Thank you.
So Pete.
Pete or Rod do you guys want to talk about the potential impact and tribal areas of a $75 subsidy.
Yeah.
Okay got it debt GCI is already a substantial lifeline provider on the voice side and we have programs set up that we believe will be.
Well positioned to more fairly quickly into the broadband subsidy.
Greg implied there all of a lost cause you trouble area. So.
The $75 subsidy applause statewide.
So there's some upside to that I believe for D C.
You also have to look at the fact that our broadband penetration is also exceedingly high even more so after the pandemic effects from last year.
So the upside is probably limited although it will probably have a positive effect on further driving down the bad debt and supporting income spring. Thank you.
And as far as the C band the band auctions and in charter I think.
Yes.
Liberty like many observers would stand by the prices.
Obviously, you're looking at sort of the mid Ninety's the high $90 billion. When you include the cost for hanging with spectrum.
And some of the amount for each of the larger carriers, particularly by horizon.
But also T paid.
Paid a big numbers.
I look and think.
<unk>.
B R. At alternative debt, we did participate in it's been about $500 million of charter ins.
Auction is very attractive with a cost per pop basis.
Something like a seventh of the price or something like that the other point I'd make is we are really beneficiaries.
Because of our recently renewed.
Our relationship with Verizon, where we're going to get the benefit from whatever spending they have and they do there in.
In terms of the.
The N V. Now we get we get the latest and greatest that Verizon has built.
I think it's a win all the way around for charter to be perfectly honest switches.
We get owner economics, where we choose and <unk> at a fraction of the price and we get rental economics per upgraded network.
With a continuing downward stream based on what their retail prices are.
So and probably.
Frankly, stapling as much debt.
On some of those larger companies is probably going to call. It come to look at that day.
Bigger in certain alternative if they might do to participate in some of the markets. We're in so I consider it a pretty good result for charter.
But specifically as far as the dance that you have on the small cell side.
Our income taxes.
And all day is that still something that's it's a moving target I know this is something I know Comcast and historically, we were lucky for luck ryzen messenger networking.
So it's I'm sure charter sales probably in the same place.
I take it.
With the new agreement that wasn't something that was specifically contemplated or is that something that could work out in the future or is that just fell off the table for a while.
It's the point you make we haven't rolled that out yet or see brs, we haven't really rolled out our owner economics anywhere yet, but down the road one could imagine.
Providing access to our network as well, we certainly do provide other places where we provide backhaul on the line for plenty of for larger mobile carriers. So I don't know why.
Last mile per passenger as well.
Thanks, Nick.
We will go next to Michael <unk> with C. L C capital.
Yeah. Good morning, I have a couple of questions.
Hmm.
Looking at charter.
Looks to me that with 50 people.
Homes passed.
Their penetration roughly is about 68%.
And the average monthly Bill was around 11 one.
$111.
What are you thinking in terms of <unk>.
Opportunity for the total penetration.
And also what do you think is the.
Purchasing one.
Ability to them for.
Fund spending on cable.
<unk> two the average rent.
Which is approximately $900000 per month across the U S. How.
How are you thinking about that and when you discuss that.
Please touch on the price increase that was announced at the end of last year by charter did it go through.
And what are your thoughts about inflation, sorry, I know, it's a lot, but I really appreciate your thoughts on that.
I'm also gonna right. The final chapter of the Bible Overdone here, but.
The look I think if you add Tom Rutledge, she wouldn't believe that ultimately we're going to have.
Two thirds of the local will grow our share for two thirds of the market over for Greg perhaps.
Perhaps even more of a time, because we have the best network.
And in large parts of our market, where we can provide better customer service at a relatively low cost.
Great.
And so we really are well positioned.
In general, Yes charter has taken some price increases that it really is hard to say because it is quite plan, where it rolls out across the nation. It's not a uniform we turned the switch and everything goes up 3%. It really is when the customers contracted and what kind of plan their under and what could your plants we offered.
In General if you look at most analysis that I've seen.
Charter has not been a price taker, we've been a share taker and I think the management team of charter has done a great job of doing that where we gained share largely faster than anyone else among the big cable players.
And your price is something that perhaps is available down the road, but not something we need to work on today, we got a better offering a lower price from continuing to take share and.
Leave that vast.
That volume rather than price style, rather than the volume trials are less.
Less churn and then some of the others in the market.
As far as where it can go.
We'll see.
As you increasingly look in a world where people are going to have remote alternatives, whether it would be for businesses or personal use.
You will see increased demand for broadband and the book value of the service is likely to arrive I don't have a number in my head.
Never really looked at or thought about them against average rent, particularly because a lot of cases people own their homes total rental property.
We have businesses small businesses so.
Not necessarily think about it against rents are but I do think the product as I started out as shown increasing broadband has shown increasing value to consumers and businesses alike. In 2020, and I don't expect that to dissipate much here's ahead.
Can I just follow up with me.
Sure.
The recent the recent.
Success of Liberty Media acquisition Corp.
Clearly you have access to capital.
For the people on the free cash flow from there.
The repurchase.
He is going to create a high class problem for you.
How are you thinking not just.
Liberty broadband, but across your companies how do you.
Think about it.
The conflict of interest.
Empty to essentially treat every shareholder properly because liberty media.
Yeah. So.
Couple of things I think I talked about the <unk>.
First and primary opportunity, we're pursuing today at Liberty broadband.
And given prices in the market and given the opportunity we see in front of us that looks pretty attractive.
And our belief in the underlying value of charter.
Charter continues to shrink its equity grow its cash flow growth revenue grow inhibitor. So we're pretty enthused about that now.
Each of the companies that has been spun from Liberty media, specifically waive their conflict of interest and in fact, we've been at this a long time and really haven't seen a lot of cases, where that's been an issue.
If we see something in ecommerce, that's probably likely to go into new curated if we see something around Motorsports, that's probably likely to go to formula one.
And if we see something around music, that's probably likely to go on to the Liberty Siri Theres just seem to be natural host.
Now in the case of attack.
Liberty media did not waive its conflicts so any opportunities that this vaccine will first be offered to Liberty media.
It created a position where John Malone is effectively not in the Liberty Media acquisition management team and he will be the but wanted to get to decide whether to be not the almac management team and they'll be the wanted to start whether it goes for Liberty media.
But I think it's unlikely, we're really going to see that as a practical matter because.
Yeah.
Again, if we see something in motorsports, unless its two largest scale, it's likely to be formula one if we see something that doesn't fit, particularly well it may very well be and its back so.
We've had this conflict in effect for years, we've never really had an issue with shareholders about it because I think we're pretty we try to be transparent explain our motives and in general we try to create pure plays among the entities. We have not happened diversified unless there was a really good reason and in fact, one of the reasons we created this backwards.
Look at those diverse alternatives that may not fit so well with the portfolio we have today.
Thank you and thank you for a team of Dci you've done an amazing job for group long term shareholders for them.
To continue to gain market share. Thank you.
Our last question comes from Mike Garen, Switzerland.
Hey, Thanks for taking my question I had two quick ones from what it looks like GCI moving from video subs from.
The business segment for the consumer segment I was just wondering if that is.
Correct.
Playing some of the change in revenue.
My second question has to do with the transfer of the GCI.
GCI subsidiary that holds the charter shares.
For the parents can you give us some more color.
On the reasoning and the implications for that change from the org structure.
I'll take the second one.
As often is the case and Liberty it was tax motivated and.
And that was our primary goal and I'll, let Pete do you want to comment on any or Brian you want to comment on any changes in the video sub.
Allocation or positioning.
Yeah I'll go for that.
So when we sold the broadcast TV business, we elected to change the the unit that took the revenue it used to go into the GCI business revenue stream because broadcast we viewed as a bit more of a business play.
Without the broadcast it's just the video advertising revenue and that seemed to follow more what's the consumer revenue stream. So that's why Michael it moved from the business to the residential and it's just the advertising revenue.
Okay great.
Yes. Thank you I think that's our last question. Thanks to our management team, thanks to our employees and paying for all our listeners for their interest in Liberty broadband and Liberty Tripadvisor, We hope to speak with you next quarter if not sooner.
This does conclude today's conference we thank you for your participation.