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 other.
Minder. This conference is being recorded February 26th.
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 with 1995 actual events or results could differ materially due for a number of risks and uncertainties.
Including those mentioned in our most recent form 10-K filed with the ease.
These forward looking statements speak only as of the date of this fall in 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 on an adjusted OIBDA margin.
Regarding the comparable GAAP metrics, along with required definitions and reconciliations.
Movement in preliminary note and scheduled for.
Can be found in the earnings press release each day.
It is available on Liberty broadband website now I'd like to turn the call over to Greg Good day, Liberty President and CEO.
Thank you Courtney and good morning to all of our listeners.
Thanks for taking on the call. We will also have on Liberty broadband as Chief Accounting officer and for the principal financial Officer, Brian Wendling.
Also during Q&A, we will be available to answer questions related to Liberty Tripadvisor.
Ron Duncan.
C P. I N P. M D F O on GCI will also be available for questions.
Let me start by talking about Liberty broadband itself.
On December 18th earlier.
Earlier than expected.
Through 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 on repurchases on an average price of about $155 a share.
So as you may know the average purchase price on.
Over this period of higher than Yesterdays close.
They represent an attractive luxury price to charter of $528 per share versus yesterday's closing price.
So two and we remain long term bullish.
In the first quarter, we exceeded our 26% ownership cap in charter and.
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 didnt 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 in broadband to attack.
Broadband and take advantage of it with this in mind, our board has <unk>.
Kris the repurchase authorization at Liberty broadband to approximately two and a half million dollars.
Looking at charter in 2020 broadband affirmed its place as one of the most important consumer and business services and charter added more broadband subscribers in the first half of 2020 in any calendar year.
Time Warner merger.
With operational efficiencies through increased self installation and self service platform and online digital sales the combination of these.
With the mix shift 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 in 2000, and a lone star and the current M. D D C market.
Mobile is also an exciting growth business for charter with improving economics charter added one 3 million lines during 2020.
And is the fastest growing wireless provider in its footprint 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.
So on all on 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 climate is thinking about the right thing to check out the best features of 2021 trip announced this week, it's led by Whitehaven Beach in Australia and debt.
Maria Beach in Cuba, perhaps for it shouldn't be there.
Costco control taken.
At trip in 2020 have enabled operating leverage as revenue return.
We're also excited about trip advisor 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. On the first half of 2021.
It provides travelers with compelling value through deals on hotels and experiences as well as getting access for the person benefits and this is just the beginning over time, we envision for adding more services more benefits in VIP amenities in destination travel benefit airline for et cetera.
The addressable market for Tripadvisor.
And we continue to have over 400 million monthly unique visitors day trip in 2000, and 2019, and we're converting even a small percentage of that traffic implies a meaningful long term growth opportunities and recurring revenue stream for trip.
And with that let me turn it over to Brian to talk about the financials. Thanks, Greg.
And Liberty broadband had consolidated cash cash equivalents, one 4 billion.
Which includes 32 million of cash at GCI.
After year end GCI received the $174 million in payments and government.
The RFC funding years, 18 and 19.
And for lot of GCI to pay down the line of credit by $180 million subsequent to year end.
Value for charter investment on Liberty broadband at yesterday's close was $46.
At quarter end Liberty broadband had a total principal amount of debt for 2008.
Putting the impact of the $180 million Paydown on she's got on credit losses.
On the re broadband had principal on debt.
Gci's.
Gci's leverage the bonds credit agreements for three five times at meaningful Delevering for year end 2019. He keeps you on leverage was five <unk>.
You see I had substantial cushion under its maximum leverage covenants.
Liberty broadband has 300 million of ongoing margin loan capacity on GCI has for us.
But on drawn borrowing capacity on its line of credit following the debt.
These amounts exclude the indemnification obligation and preferred stock.
Now just a quick update on GCI 'twenty.
<unk> was a great year for the company full year revenue grew 9% and adjusted OIBDA was 34.
Platform.
Company's highest ever adjusted OIBDA, driven by data demand and lower costs associated with that reduce bad debt and health care expense.
And with previous cost saving initiatives.
We also had $15 million on one time items favorably impacting revenue for the year.
Impact for the quarter was six.
There's additional discussion of GPS results on our 10-K that will be filed later today.
Fourth quarter experienced 12% revenue gross and 20% adjusted OIBDA growth.
<unk> added nearly 14 bad.
Cable modem subscribers and built out Alaska for sponsors.
Thanks.
Basically they for the broadcast business and reduce those items cirrhosis focus on their core competitive advantage that Alaska network.
But a favorable impact on overall margin.
While there was definitely some favorable macro trends impacting on the strength of the 'twenty 'twenty number.
Solid performance on a team from top to bottom that generated those for fall.
A truly Brian Scott.
On our IC matters. We are currently working with the FCC on rates and payments for this on a year.
On.
More positive news, we received a new order from the SEC.
In January to his 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 your telephone keypad. If you are using a speaker phone. Please make sure you're on mute function is turned off for logistics all three 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 assets of Liberty broadband going forward can you often look to price to charter earlier in the discussion can you expect Liberty broadband just Keith Yeah, Hi.
And you can stay fairly simple for you on the 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>.
On capital on our balance sheet, but the capital we will receive for repurchase.
Charter makes on 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 on.
Certain about.
On 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.
On todays price into the market in general are pretty full for other kinds of assets. If the world changes, we might change our view, but that's.
That's where we stand today.
And earlier last year, you talked I believe about being in discussions.
With charter or on how to handle the cash are you approaching it.
Can you share any thoughts of what you learned from that assertion why didn't besides being enforced the cash versus maybe just on you hold on to the shares that you have.
Is this 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 a an independent committee of the board.
Uh huh.
Charter.
Increase in the cap ex.
And frankly, the proposals that were put forward by them to Liberty broadband we didn't find as attractive as the alternative just to purchase per share.
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 on 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.
For the wireline zone discussion you mentioned should we be looking at for Q pretty much normalized when they come.
Oh, I see something for pricing going forward.
Secondly on L trip if.
They're talking about discount that's going on with later on.
So these are thereabouts are those tools available to take advantage of balance.
For the south on the ballpark for culture.
So I'll, let you want to comment on the TCR is on that are here Brian.
[noise] operator, we have seem to have some feedback on the line. Thank you.
Try and do you want to comment on an orange zero or a little less deep ore into Iran add anything.
Just thoughts 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 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.
But now that that's good for ion, particularly nothing unusual with our H C that impacted the income statement there.
Oh on Liberty trip at a discount you know, it's a funny thing it's highly volatile and if you look at the beef price.
And you combine the bees in the a price it's not clear it's as big a discount now.
Much.
Float and liquidity there isn't a b's 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 women.
Great. Thank you.
Moving next to Bentley Cross with TD Securities.
Two minor housekeeping questions one.
What's the right corporate overhead drag doesn't devoting all of the combined company and then secondly can you just flip the other side and in fact was which is going on.
For us.
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 ones that Brian do you want to answer that.
Sure Yeah, you know I would think.
It is 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.
Yeah.
Thank you Brian.
It's low.
Right.
Maybe you repeat the second question is to make sure we all heard as well.
Can you discuss the advertising impact.
For PCI and 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 cable advertising revenue that goes on our 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 minimis revenue streams there.
Thank you.
We'll go next to Matthew Harrigan with benchmark.
Well. Thank you firstly, probably gets lost them on the Liberty Sirius Ernie for leases.
For me, but the FCC just approved 50 dollar are broadly on so to speak for lower income homes in southern for doors and describe all areas that for enough two a week for 21 zone D. C. All up in 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.
On the Comcast and charter where not for winter not.
Not surprising I guess given those prices is that I know you've been asking for more core and for the your answer.
Could there be some indication there.
Might be more amenable charter or Comcast, which is maybe you cant say definitively on asking for it would make more sense.
Work with Verizon in terms of keeping the relationship on the on the small cell side.
Your parents as far as the I know, it's supposed to you on that before but lots of moving pieces here or.
If the auction results. Thank you.
So Pete or Rod do you guys want to talk about the potential impact on tribal areas of a $75 subsidy.
On the media.
Right.
Of the quick go to debt GCI is already a substantial lifeline provider on the voice side.
Programs set up that we believe will be well positioned to more fairly quickly into the broadband subsidies it's Greg.
They're all of a lost cause you trouble area. So the sort of $75 subsidy was 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 effect for last year.
So the upside is probably limited although it will probably have a positive effect on further driving down to bad debt and supporting income stream.
And as far as the C band and C band auctions and 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 billion. When you include the cost for growing the spectrum.
And some of the amount for each of the larger carriers, particularly by horizon.
It also T paid.
Paid a big numbers.
I look and think a R.
C. B R. S alternative debt, we did participate in it we spend about $500 million of charter ins.
Auction is very attractive with a low cost per pop basis.
That was 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.
But you know our relationship with Verizon, where we're going to get the benefit for whatever spending they have and they do there.
In terms of.
The N B you know, 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, which is.
Where we get owner economics, where we choose and C. B R. S. At a fraction of the price and we get rental economics that go on there.
Our upgraded network.
With a continuing downward stream based on what their retail prices are.
So and probably.
Frankly, stapling as much debt on.
On some of those larger companies, there's probably going to cause them to look at that day.
At certain alternative if they might do to participate in some other markets. We're in so I consider it a pretty good result for charter.
But for specifically as far as the chances that you have on the small cell side.
Worrying about.
Taxes.
And all of that is that still something that's it's a moving target.
I know there's something on it.
Comcast has historically been reluctant for luck ryzen messenger networking PD experience and on some sort of 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 on the future or so it just fell 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.
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 for larger mobile carrier. So I don't know why.
Last mile per passenger as well.
Thanks for that.
We'll go next to Michael Beamer with E L F at all.
Yes, good morning, I have a couple of questions.
Low.
I'm looking at charter.
It looks to me that with 50 people.
Homes passed.
Their penetration roughly it's about <unk> 80 per cent.
And the average monthly Bill was around 11 one.
$111.
What are you thinking in terms of.
Our opportunity for the total penetration.
And also what do you think is the.
Purchasing.
<unk> ability to.
Fund spending on cable relative to the average rent.
Which is approximately $902000 per month across the U S.
How are you thinking about debt and when you discuss that.
Please touch on the price increase that was announced at the end of last year by charter you to 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 going on right. The final chapter of the Bible low we're done here, but it can be.
The look I think if you asked Tom Rutledge she wouldn't believed ultimately we're going to have to.
Two thirds.
On the will grow our share for two thirds of the market over for price.
Perhaps even more of a time, because we have the best network.
And in large parts of our market, where we can provide a better customer service at a relatively low cost of the upgrade.
And so we really are well positioned.
In general, Yes charter has taken some price increases on it really it's hard to say because it is 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 our customers contract is and what kind of plan their under and what do you plan to be offered.
In General if you look at most analysis that I've seen.
Charter has not been a price taker, we had been a share taker and I think the management team at charter and done a great job on 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 a less.
Let's turn to then some of the other kind of market.
As far as where it can go.
We'll see.
Look in a world where people are going to have remote alternatives, whether it 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 on my head it how it never really looked at or thought about it against average rent, particularly because a lot of cases people on their homes on a rental property.
And until we have businesses small businesses. So I don't necessarily think about them against rents are but I do think the product as I started out as shown increasing broadband has shown increasing value for consumers and businesses alike in 2020, and I don't expect that to dissipate much.
Can I just follow up going on with Muslim.
Sure.
The recent the recent.
Except of the Liberty Media acquisition Corp.
Clearly you have access to capital.
Liberty broadband on the free cash flow for them to repurchase.
It's going to create a high class problem for you.
How are you thinking not just liberty Brooklyn, but across your company.
Think about.
The conflict of interest.
Tempting to essentially treat every shareholder properly because low.
For the movie is going on.
Yeah. So a couple of things I think I talked about the first and primary opportunity we're pursuing today at Liberty broadband.
And given price in the market and given the opportunity we see in front of us that looks pretty attractive.
And our belief in the underlying volume charter.
Charter continues to shrink its equity grow its cash flow growing revenue grow inhibitor. So we're pretty enthused about that now.
Each of the companies that has been spun for 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.
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 on to Formula one.
And if we see something around music, that's probably likely to go on to the Liberty Siri and Theres just seem to be natural homes.
Now on the case of its back on.
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 on the Liberty Media acquisition management team and he will be there, but wanted to get to decide whether to be not on the almac management team and hoping to wanted to start whether it goes on Liberty media.
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 very well be in this back so.
You know we've had this conflict in effect for years, we've never really had an issue with shareholders about it because I think for pretty he tried to be transparent explain our motives and in general we try to create pure plays among the entities be habit not happened diversified unless there was a really good reason and in fact, one other reasons, we created this back with low.
So it's diverse alternatives that may not fit for wells the portfolio we have today.
Thank you and thank you for the team in D. C. On you've done an amazing job of long term shareholders for them too.
Continues to come on for sure. Thank you.
Our last question comes from Mike Garen withdrew it.
Hey, Thanks for taking my question I have two quick ones on what it looks like GCI moving some video subs from.
From a business segment for the consumer segment I was just wondering if that is correct on that.
Explain some of the change in revenue.
My second question has to do with the transfer of the <unk>.
On GCI subsidiary that holds the charter shares.
Up to the parents can you give us some more color.
On the reasoning on the implications for that change on the org structure.
I'll take the second one.
Right.
As it often is 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.
Yeah. So when we sold the broadcast T V 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 seemed to follow more with the consumer revenue stream. So that's why Michael It moved from the business to the residential on its 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.
[music].
Yes.
[music].
[music].
[music].
[music].
Ladies and gentlemen, thank you for standing by welcome to the Liberty broadband 2020 year end earnings call.
During the presentation, all participants will be in a listen only mode.
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 this on 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 is calling for a certain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, and actual events or results could differ materially due for a number of risks and uncertainties, including those mentioned in our most recent form 10-K filed with SEC.
These forward looking statements speak only as of the data for this call and Liberty broadband and Liberty Tripadvisor expressly disclaim any obligation or undertaking.
Any updates or revisions to any forward looking statement 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 substitute any day.
On today's call, we will discuss certain non-GAAP financial measures for Liberty broadband.
Adjusted OIBDA on an adjusted OIBDA margin for.
Regarding the comparable GAAP metrics, along with required definitions and reconciliations.
Preliminary notice scheduled appointment.
And the reason frankly.
And this is available on Liberty broadband website now I'd like to turn the call over to Greg The day Liberty President and CEO.
Thank you Courtney and good morning to all of our listeners.
Today speaking on the call will also have Liberty broadband Chief accounting officer, and for net principal financial Officer, Brian Wendling.
Also during Q&A, we will be available to answer questions related to Tripadvisor.
Ron Duncan <unk> CFO of GCI will also be available for questions.
We can start by talking about Liberty broadband itself.
On December 18th.
Earlier than expected.
Completed the acquisition of GCI Liberty.
During the period November one January 31, we repurchased one 9 million shares of Liberty broadband for $293 million.
One 8 million other repurchases for completed after the December shareholder vote for the GCI Liberty merger.
We spent about $272 million on repurchases at an average price for about $155 per share.
While you May note the average purchase price on <unk> over this period with higher than Yesterdays close.
They represent an attractive luxury price to charter.
$528 per share versus yesterday's closing.
Phil.
And we remain long term bullish.
In the first quarter, we exceeded our 26% ownership cap on 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 Sydney 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 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 subscribers in the first half of 2020 nanometer calendar year.
On Warner merger.
With operational efficiencies through increased self installation and self service platform and online digital sales the combination of these.
Combined with the mix shift continuing mix shift to broadband resulted in full year 2020 cable EBITDA margin exceeding 40% for.
For the first time in the company's history.
We added a small number of video subscribers 20 day Lone star and the current MVP.
Market.
Mobile is also an exciting growth business for charter with improving economics charter added one 3 million lines during 2020.
And is the fastest growing wireless provider in its footprint 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.
On 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 that continues to grow.
Keep some of our investors stuck in colder climates thinking about the right thing to check out the best speeches on 2021 trip announced this week.
It's led by Whitehaven Beach in Australia, and Santa Maria Beach in Cuba, perhaps still to be there.
Costco control take it.
Revenue in 2020 have enabled operating leverage as revenue per truck.
We're also excited about Tripadvisor plus the first of its kind direct to consumer subscription operating in the travel space currently in beta.
On the roll it out in the U S on the first half of 2021.
It provides travelers with compelling value through deal on hotels and experiences as well as getting access for perks and benefits and this is just the beginning over time, we envision adding more services or benefits VIP amenities.
In destination travel benefit airline.
Federal.
The addressable market for Tripadvisor philosophy deposits.
And we continue to have over 400 million monthly unique visitors that trip in 2000 and 2019 for your converting even a small percentage of that traffic implies a meaningful long term growth opportunity and recurring revenue for free.
For trip.
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 one for bill.
Which includes $32 million of cash at these GAAP.
After year end GCI received 174 million on payments.
Relating to R&D funding years, 18 and 19.
And in July GTI to pay down the line of credit by $190 million subsequent to year end.
Value of our charter investment on Liberty broadband as of yesterday's close was $46 million.
At quarter end Liberty broadband had a total principal amount of debt of $4 eight.
Putting the impact of the $180 million pay down on <unk> guidance on credit losses.
We brought band had principal on debt.
GTI.
Gci's leverage the for bonding this credit agreement for three five times and meaningful Delevering for yearend 2019 for EPS leverage was spot on.
GCI has substantial question under its maximum leverage covenant.
Re broadband has 300 million of on gross margin loan capacity at GCI has approximately 4%.
The undrawn capacity on the planet credit.
All on demand.
These amounts exclude the indemnification obligation and preferred stock.
Now just a quick update on GCI for.
It was a great year for the company full year revenue grew 9% on adjusted OIBDA grew 34.
Platform.
Company ties that for adjusted OIBDA, driven by data demand and lower costs associated with that reduce bad debt and healthcare credit.
Combined with previous cost saving initiatives.
We also had $15 million on onetime items favorably impacting revenue for the year the.
The impact for the quarter was day.
There is additional discussion of EPS results in our 10-K that will be filed later today.
Fourth quarter experienced 12% revenue growth and 20% adjusted for yourselves.
Operationally they added nearly 14 back on cable.
For mobile subscribers and built on Alaska for sponsors.
Basically they for the broadcast business and reduced the non insurance business focus on their core competitive advantage.
Good day network.
We had a favorable impact on overall margin.
Although there is definitely some favorable macro trends impacting on the strength of the 2020 number.
There was solid performance on a team top to bottom that generated loans default.
In the midst of truly Brian Scott.
On Alright, Steve matters. We are currently working on the FTC is rates and payments for the funding year on.
On.
Positive news, we received a new order.
<unk> January to his rate certainty.
Providers for funding years, ending in June two and 'twenty three.
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.
Thanks, Brian and thank you for to our listening audience for your continued interest in Liberty broadband and Liberty trip advisor 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.
You are using speaker phone. Please make sure you're on mute function is turned off for <unk>.
All three chocolate net again press star one to ask a question, we'll pause for just a moment for a lot of everyone an opportunity to signal for a question.
We'll go for Sue Michael Rollins with Citi.
Hi, good morning curious on.
Liberty broadband.
Do you think about Liberty broadband going forward can you often look to price to charter OEM discussion can you expect liberty broadband just Keith yeah.
Hi.
And you can see fairly simple or all of you on the home for other asset for us.
Net income.
Income from broadband.
Thank you for the question.
Well the easy money here in terms of what to do with the capital we received from <unk>.
On the solid capital on our balance sheet, but the capital we will receive the repurchase.
Net charter based on the payments, we get is to take advantage of the basically and.
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.
On certain 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.
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 discussions with.
With charter or on how to handle a bit cash approaching it.
Can you share any thoughts of what you learned for net question why didn't besides being enforced to cap versus maybe just holding you hold on to the shares that you have.
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 a an independent committee of the board.
Of charter.
About 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 just repurchase our shares.
Can't say that we won't revisit that don't know won't come on the future, but at the moment when we looked at the alternatives of what was presented to us versus as I said the opportunity there.
Net cash back pay a five 5% tax rate and by what's been running about an age to buy the stock back Liberty broadband and <unk> been running at about 18, 5% discount to charter and thought that was a pretty attractive alternative.
Thanks very much.
We'll go next to James Ratcliffe with Evercore ISI.
Oh.
<unk>.
For the wireline zone discussion you mentioned should we be looking at for Q pretty much normalized for they come on.
So for them going forward.
And secondly on L trip if.
I'm talking about discounting going on.
Hi.
Are there any tools available to take advantage of zone.
For today's capital to buyback ultra.
So I'll, let you want to comment on the TCR in times that are either Brian or it all over again.
Okay.
Okay.
Operator, we have seem to have some feedback on the line. Thank you.
Brian do you want to comment on an RMT or Oracle deepwater into Iran patents.
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 Pete if there's anything you'd want to add on that.
No that's good Brian, particularly nothing unusual with our HC that impacted the income statement there.
Liberty trip at a discount the funny thing is highly volatile and if you look at the beef price.
And you combine the BS and the a price it's not clear it's as big a discount now how much.
Float and liquidity there is a 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 what the season.
Great. Thank you.
We'll go next to Bentley Cross with TD Securities.
On a two minor housekeeping question.
Glenn.
What's the right corporate overhead drag if you could vote now of the combined company and then secondly can you just saw sales force.
The advertising in fact was reduced revenue.
Total.
Can you repeat the first question I didn't hear you.
What's the right corporate overhead drag do you think about now the combined company.
That gave us one for Brian you want to answer that.
Sure Yes.
It's slightly elevated in Q4 2020, and do you see other leads for that.
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.
Thank you Brian.
Got it.
Yeah.
Yes.
Maybe you repeat the second question is to make sure we all heard on as well.
Can you discuss the advertising impact.
PCI for political advertising for us.
Ron or Pete you guys want to take a cut at that.
Yeah I'll go ahead ma'am.
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.
Firstly, probably gets lots of them on the Liberty Sirius, earning for reasons of.
Warranty, but to USB C.
For $50 broadly on so to speak for lower income homes and stuff from $75 per.
Rival areas is that for now.
Who are we.
For 'twenty one result.
On the Alaska given the.
Material.
Neither population there and then secondly, you know it gets much more prominently in the news.
Moving on to Austin on one of southern zone.
No.
Comcast and charter where not for winter.
Surprising I guess within those.
Is that I know, you're asking for more core and for the euro answer but could there be some indication there.
You might be more venerable starter accounts, yes.
You cant say definitively on.
We will make more sense to work with Verizon in terms of deepening the relationship on the on the small cell side.
No that's true.
Youre on that before but lots of moving pieces to your E auction results. Thank you.
So.
Pete or Rod do you guys want to talk about the potential impact on tribal areas at a $75 subsidy.
The media hub.
Hi.
A quick cut at debt GCI Liberty, 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, that's 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 GCI for the thank you.
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 at a low it will probably have a positive effect on further driving down the bad debt and supporting income strength. Thank you.
And as far as the C band the band auctions and in charter I think.
Yeah.
Liberty like many observers were stunned by the prices.
Obviously, you're looking at sort of the mid Ninety's the high $90 billion. When you include the cost for bringing the 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 take on.
<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.
That was probably like a seventh at the price or something like that the other point I'd make is we are really beneficiaries.
Because of our recently renewed.
Be it on our relationship with Verizon, where we're going to get the benefit on whatever spending they have and they do there in.
In terms of.
The accounts the M. B 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 unfair upgraded network.
With a continuing downward stream based on what the retail prices are.
So and probably.
Frankly, stapling as much debt on.
On some of those larger companies is probably going to call. It come to look at that day.
Bigger at certain alternative if they might do to participate in some other markets. We're in so I consider it a pretty good result for charter.
But specifically as far as Dan said you have on this volatile.
Our income taxes.
And all of that is that still something that's a moving target I know this is something I know concept for cause.
We're lucky for luck ryzen messenger networking PD experience and on some.
For your 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.
Off the table for a while.
I think it's the point you make where 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 like for plenty of for larger mobile carrier. So I don't know why.
Last mile per passenger as well.
Thanks.
We will go next to Michael BMR with CLC capital.
Yes, good morning, I have a couple of questions.
Looking at charter.
It looks to me that with 60 people.
Homes passed.
Their penetration roughly it's about 68%.
And the average monthly Bill was around 11 one.
$111.
What are you thinking in terms of them for you.
Opportunity for the total penetration.
And also what do you think is the.
Purchasing.
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 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 going on right. The final chapter of the Bible Overdone here, but.
The look I think if you add Tom Rutledge. She would believed ultimately we're going to have.
Two thirds of the.
We'll grow our share for two thirds of the market for price.
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 on it really is hard to say because it is 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 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 at charter has done a great job on doing that where we gained share largely faster than anyone else. Among the big cable players and you price is something that perhaps is available down the road, but not something we need to work on the day, we got a better offering at a lower price and continue to take share and leave that volume that volume rather than.
Price style, rather for volume dial.
Yes.
Let's turn to then some of the others on the market.
As far as where it can go.
We'll see that.
As you increasingly look in a world where people are going to have remote alternatives, whether it be for businesses or a personal use you will see increased demand for broadband and the book value of the service is likely to rise I don't have a number in my head how it never really looked at or thought about it against the average rent, particularly because a lot of cases people on their homes not on rental property.
And we have businesses small businesses, so I don't necessarily think about it against rents.
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.
Can I just follow up going on with Muslim.
Sure.
The recent the recent.
Success of Liberty Media acquisition Corp.
Clearly you have excess capital.
The people on the free cash flow for them.
On the repurchase.
Going to create a high class problem for you how.
How are you thinking not just.
Liberty, Brooklyn, but across your company.
Think about it.
The conflicts of interest.
Tempting to essentially treat every shareholder properly because liberty media with Goldman.
Yeah. So a 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 volume charter is.
Charter continues to shrink its equity grow its cash flow grow its revenue grow inhibitor. So we're pretty enthused about that now.
Each of the companies that has been spun from Liberty media, specifically waived 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 on 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 homes.
Now on 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 on 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 told me. They wanted to start whether it goes on 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 and we see something that doesn't fit, particularly well it may very well be on its back so.
We've had this conflict and attacked 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 haven't not happened diversified unless there was a really good reason and in fact, one other reasons we created this backwards.
Look at those diverse alternatives that may not fit so well at the portfolio we have today.
Thank you and thank you for your team of Dci, you've done an amazing job for long term shareholders for them.
On to continue for your long term shareholders. Thank you.
Our last question comes from Mike Garen withdrew it.
Hey, Thanks for taking my question I have two quick ones on what it looks like GCI moving some video sub on.
The business segment for the consumer segment I was just wondering if that is correct on that.
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.
On the reasoning on the implications for that change on the org structure.
I'll take the second one.
And often it's the case in 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 for that.
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 screened 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 with the consumer revenue stream. So that's why Michael It moved from the business to the residential on its just the advertising revenue.
Okay great.
Yes. Thank you I think that's our last question. Thanks to the management team's 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.