Q3 2023 Liberty TripAdvisor Holdings Inc Earnings Call
Liberty Trip Advisor. As I noted, Trip Advisor hasn't reported their third quarter's vote, so I'm not going to comment on that, but we do feel good about the business in a strategic direction.
Liberty TripAdvisor did move to OTC trading on October 30th. This was due to compliance, noncompliance with some of the NASDAQ listing requirements.
We did look at the range of alternatives and believe transitioning to OTC was the best course of action. And we do not anticipate this will have an impact or change Liberty Trips business operations or strategy. And with that, let me turn it over to Brian to discuss the financials.
Thank you, Greg. At quarter end, Liberty Broadband had consolidated cash and cash equivalents of 88 million. This includes 38 million of cash at GCI.
as of November 2nd, the value of our charter investment was $19.4 billion.
And at quarter end, Liberty Broadband had total principal amount of debt of $3.9 billion. Note this excludes the preferred stock and the remaining indemnification obligation.
After quarter end, the remaining LI LLC charter exchangeable debentures will be redeemed and a final indemnification payment will be made to Curate Retail.
Looking at GCI, revenue is down 3% for the quarter and adjusted oil but it was relatively flat. Strength in business data revenue was offset by declines in video and voice revenue and lower handset sales year over year, which impacts revenue but does not significantly impact margins.
We also had the impact of a three-month fiber break in June that affected GCI's data, video, and wireless services provided on the North Slope and Western Alaska.
The fiber break impacted both consumer and business revenue and in the aggregate negatively impacted revenue by approximately 5 million dollars with a modest impact on adjusted wipe it up.
The fiber break has since been fully repaired, which is good news.
GCI has also been successful in moving consumers to its Converged GCI Plus product offering, which combines GCI's flagship data product with their wireless offering and provides significant savings to the customers.
This has negatively impacted GCI's ARPU but benefits churn as GPI customers who bundle internet and mobile have nearly 50% lower churn than stand-alone customers.
We expect and GCI expects margins on the products to increase over time as customers upgrade their services.
Over the last year, GCI has added 3,800 revenue-generating wireless subscribers and 2,100 revenue-generating cable modem customers.
Year to date, Liberty Broadband has received $65 million in dividends from GCI.
Leverage, as defined in its credit agreement, was three times at quarter end, and GCI has 397 million of undrawn capacity on its revolver.
And with that, I'll turn the call back over to Greg. Thanks, Brian .
We look forward to seeing many of you next week at our annual Investor Day on Thursday, November 9th in New York. Additional information is available on our website. John Malone and I will be hosting our annual Q&A session. If you would like to submit questions in advance, you can email investorday at libertymedia.com.
We appreciate your continued interest in Liberty Broadband and Liberty Trip Advisor. And with that operator, I would open the line for questions.
Thank you.
We will now conduct our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.
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Our first question comes from Gudgun Mural with Evercore ISI. Please answer your question.
Great, thanks for taking the question. A familiar one relates to charter. The discount seems to have recently widened quite meaningfully to historically high levels. Has that changed your approach or outlook on buybacks at Liberty Broadband and whether it makes sense to maybe pursue opportunities to get more cash to the company to help fund these repurchases, whether it's levering up or exploring some flexibility with GCI? Thank you.
Thank you for the question.
I think the
widening the discount while unfortunate actually does make our strategy of share or purchase that much more attractive.
We are trying to maintain a careful balance.
of
utilizing our
cash received from charter for, as I said, the vast majority for buybacks, but also being prudent on debt levels particularly.
given the increased cost.
While we have very attractive pricing on our margin loans, the reality is underlying rates have gone up.
and so that's more expensive to maintain.
those. So we're trying to play that carefully. That's also made it probably more expensive to look at other alternatives.
for
how to capture that advantage of that discount through third-party debt or something. We are looking at all those alternatives and we'll certainly keep them in mind.
Thank you.
Thank you. Our next question comes from Ben Swinburne with Morgan Stanley . Please state your question.
Thanks.
Greg.
How do we should we be thinking about Liberty Broadman as a vehicle for you know sort of cable or fiber asset? acquisitions and I ask that because you know obviously we see the cost of capital gone up but
There were a lot of businesses funded on cheaper debt to compete with.
cable operators, et cetera, take advantage of broad. There's a lot of fiber that's gone on the ground. Some of that stuff might come to market. And I didn't know if you thought we should be thinking about Liberty, you know, like we might think of other, of sort of private equity vehicles out there that might be looking at picking up fiber assets or telecom assets or cable assets and might come to market even if small. And then I just had a follow up on the charter front.
Yeah, so Ben, thanks for the question. I think, look, we're...
look at charter as our primary vehicle for an investment in cable. Obviously there are special situations like GCI where we thought it was attractive, it could achieve something, and there may be other special situations that come up that we would look at. We are looking all the time but I guess I should say we would execute on.
Your point about the cost of capital going up is correct, and that's hurt others probably more than even it's hurt us So they do create these opportunities, but I would note as we saw in the prior question We've also seen a expansion of the discount which means that we're
We have a very attractive opportunity to buy what we think is a very attractive Asset in Charter at a discount so with you know suddenly that alternative gets more attractive as well So you're going to weigh all those various factors Mm-hmm. Yeah, thanks, and I'm not telling you we ain't doing it, but I'm not telling I'm also saying the bar got higher
Yeah.
That makes sense.
And then interestingly, if you look at charter…
One of the things they told us last week is there's going to be more catbacks, you know, in the near term.
which All Us Equal lowers their buyback capacity, which lowers the cash you get to buy back your stock. I know you know all this already. I guess as an interest to… Michael I'm actually on the board and the finance committee, so I am aware of these facts. Thank you.
I guess the question is why are you so comfortable, because you sound more than comfortable, that this is the right strategy, that to put your foot on the gas, spend as kind of, I'm gonna overstate it, but spend as much money as you can as quickly as you can, or the benefit of the long-term value creation when you have, in your case, a double discount, arguably going on with Charter.
Yeah, and I agree there's tension there because...
The buyback has gotten more attractive. Charter is cheaper than it has been at many historical levels, and as you note, Liberty Broadband further cheaper. I think we look at the longer strategic value and the longer economic opportunity that's there, and we probably were not, we can continue to play all of these, but we do look at the opportunity that may be done with these rural programs, particularly how they're subsidized, that that opportunity is now, and that is worthwhile. And we are also, I think, with high split, not leave.
not only creating more economic opportunity, but also putting a further moat around the business. So those are important and those yield attractive economic opportunities and we will continue to try and also take advantage of the discount. So there are, you know, three sets at least of attractive investment opportunities and we're trying to weigh all those against the long-term growth, and which ones are going to be available when.
Okay, fair enough. Thank you.
Yeah
Thank you and our last question comes from Michael Rollins with Citi. Please state your question.
Thanks and good morning, two if I could. First on GCI, can you share how the customers of the business have benefited from ACP and how you see that playing out over time in terms of whether that gets incremental funding from Congress? And then just on the broader strategic front, last quarter Greg, you made a comment that it could be logical at some point to combine Liberty, Broadband and Charter. Just curious in your latest thoughts on that and what would be the catalyst to make that logical in terms of timing and function. Thanks
I'll handle the second question first and then I'll let either Ron or Pete.
comment on ACT or if they want Brian and I can take a shot but on Liberty broadband combining with charter.
I think you look, we've had these holding companies.
that we think have done very well and been very beneficial in some cases taking advantage of things like share or purchase.
or written growth in the underlying asset, but in many cases, we've also at some point merged them in and closed the gap between their trading. Examples of that would be, close example would be Lomidia and DirecTV, Liberty Expedia and Expedia, certainly cases we've gone that along the way, what's been proposed between LSXM and SiriusXM. We do that when we think the logical path is pursued on why we should be independent, and it would be more beneficial to merge these entities. That day could clearly come somewhere down the road for charter, probably will come based on our history, but we don't think that day is today.
On GCI and on ACP to Pete or Ron, do you want to take a shot?
Yeah, Ron, are you there?
Yeah, I'll go ahead. Ron had knee surgery, so we're going to let him get a pass unless he chooses to step in. So we'll let you go, Pete, unless Ron decides he wants to preempt.
Yeah, I think what the ACP program's been a good program, helping lower income people get good broadband connectivity. It has been helpful for us as far as bad debt reduction as it's eliminated that aspect of revenue coming in. The longevity, we'll have to see. There's kind of some upheaval that is very, very difficult to predict how that will all pan out as far as this program going forward. But it's been a relatively small program, but very beneficial to several thousand of our customers.
Yeah, I would just add if I could then on that, that as far as going forward, clearly there's a lot of popularity in this program in Washington as far as we can tell. But there also is obviously a lot of dysfunction of what will get funded and what time frame in Washington. So hard to guess how that plays out. you
Thanks.
Thank you. Operator, I think that we are done with the questions for the day. To our listening audience, thank you for your interest in Liberty Broadband and Liberty Trip Advisor. We look forward to speaking with you next quarter if we don't see you in New York.
And with that, operator, I think we're done.
Thank you and that concludes today's call. All parties may disconnect. Have a good day.