Charter Communications, Inc. · NASDAQ:CHTR
Charter Communications — Merger or Acquisition (March 2015)
23 slides from Charter Communications's merger presentation, Mar 31, 2015
Slide 1: Charter to Acquire Bright House Networks: Driving Scale and Strategic Flexibility
Charter to Acquire Bright House Networks: Driving Scale and Strategic Flexibility March 31, 2015
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements This communication includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
Slide 3: Important Information for Investors and Shareholders
Important Information for Investors and Shareholders This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitati on of any vote or approval. Charter Communications, Inc. (“Charter”), expects to file a proxy statement with the Securiti
Slide 4: Thomas M. Rutledge, President and CEO
Thomas M. Rutledge President and CEO 4
Slide 5: Rationale and Benefits
Rationale and Benefits Adds ~2 million video customers to “New Charter” in growing markets that are Scale either complete, or contiguous with the New Charter and GreatLand footprints $10.4 billion purchase price = 7.6x1) 2014 pro forma Bright House Networks Accretive to EBITDA2) multiple and well un
Slide 6: Footprint Pro Forma for Comcast & Bright House Transactions
Footprint Pro Forma for Comcast & Bright House Transactions Video Customers (in Millions)1) Existing Charter 4.3 - Charter Swaps 1.6 + Former TWC Assets 2.9 + Bright House 2.0 = New Charter 7.6 + GreatLand 2.5 = New Charter Owned/Serviced 10.1 With its state-of-the-art, well-operated and clustered a
Slide 7: The Charter Transformation
The Charter Transformation 2011 2014 2014 PF HD Channels <70 200+ % of Systems All-Digital 0% >98% Minimum Internet Speed Offering 1Mbps 60Mbps % of Internet Customers With 60+ Mbps 1% 80%+ Revenue $ 7.2B $ 9.1B $15.2B1) Adjusted EBITDA $ 2.7B $ 3.2B $5.8B1) Residential Video Customers Served 4.1M 4
Slide 8: Transaction Will Deliver Scale and Operating Benefits
Transaction Will Deliver Scale and Operating Benefits 26.4 million passings and 10.1 million owned/serviced video customers 1) Enhances Scale Adds attractive markets including Orlando and Tampa Bay, and fills in existing markets and Footprint Ability to leverage Charter’s operating structure and pla
Slide 9: Bright House Networks – A Flagship Cable Asset
Bright House Networks – A Flagship Cable Asset Largest cable operator in Tampa and Orlando (1.7 million video customers); both top 20 DMAs Florida systems benefit from growing populations, and attractive marketing and advertising dynamics Attractive Markets Florida properties include local news chan
Slide 10: Bright House Networks – A Flagship Cable Asset: Customer Data
Bright House Networks – A Flagship Cable Asset Residential Customer Data1) In Millions 2013 2014 Video 2.0 2.0 Internet 1.9 1.9 Voice 1.1 1.1 Total Primary Service Units 5.0 5.0 Customer Relationships 2.4 2.4 Financials In $ Billions 2013 2014 Revenue 3.6 3.8 Y/Y Growth 5% 6% Pro forma Adj. EBITDA2)
Slide 11: Christopher L. Winfrey, Executive Vice President and CFO
Christopher L. Winfrey Executive Vice President and CFO 11
Slide 12: Consideration Paid to Advance/Newhouse = $10.4 Billion
Consideration Paid to Advance/Newhouse = $10.4 Billion $5.9 Billion of Common Units 34.3 million of Charter partnership common units exchangeable into New Charter common stock = $5.9 billion of value at the Reference Price Represents 20.2% ownership in New Charter, as-if converted (19.9% fully dilut
Slide 13: Transaction Structure
Transaction Structure1) Structure and Ownership Pre/Post Conversion Liberty Public Advance/ Broadband Market Newhouse Pro Forma for 23.8% 76.2% Comcast Transactions2) Pro Forma for Comcast 19.4% 54.4% 26.3% and BHN Transactions3) New Charter Charter 73.7% 33%4) + Management Service Agreement 26.3% G
Slide 14: Pro Forma Ownership and Shares
Pro Forma Ownership and Shares Pro Forma Economic Ownership % Common + Preferred1) Fully Diluted Charter Ex. Liberty Broadband 49.0% 49.6% Liberty Broadband 19.4% 19.1% Charter 68.3% 68.7% CMCSA/TWC Shareholders 5.4% 5.4% A/N Common 20.2% 19.9% A/N Preferred 6.1% 6.0% New Charter 100.0% 100.0% Total
Slide 15: Transaction De-levers Charter, Driving Strategic Optionality
Transaction De-levers Charter, Driving Strategic Optionality Pro Forma Debt and Leverage 2014 YE 4.4x1) 4.8x 3.9x5) Leverage 0.1 (0.7) 2.0 22.7 21.3 4) 7.23) 14.2 2) Debt Pre-Comcast Comcast Debt Post-Comcast Bright House Fees/Other Cash from Liberty Pro Forma Net Transactions Transactions Transacti
Slide 16: Tax Assets are Preserved and Enhanced
Tax Assets are Preserved and Enhanced Existing Tax Assets are Preserved and Enhanced NPV of existing NOLs enhanced, as they will be applied to larger base of operating income New Charter will not be subject to additional Section 382 limitations as a result of the transaction Value of existing NOLs b
Slide 17: Governance Structure
Governance Structure Board 13 directors at signing; Advance/Newhouse and Liberty Broadband each designate 3 directors Representation Advance/Newhouse and Liberty Broadband representation tied to ownership/voting position: 3 and Structure designees for 20%, 2 for 15%, 1 for 5% For 5 years after closi
Slide 18: Appendix
Charter bright house ( ) COMMUNICATIONS (WORKS: e Appendix
Slide 19: Use of Non-GAAP Financial Metrics
Use of Non-GAAP Financial Metrics The Company uses certain measures that are not defined by Generally Accepted Accounting Principles (“GAAP”) to evaluate various aspects of its business. Adjusted EBITDA, pro forma adjusted EBITDA, adjusted EBITDA less capital expenditures, and free cash flow are non
Slide 20: GAAP Reconciliations: Charter Communications
GAAP Reconciliations CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES (DOLLARS IN MILLIONS) Last Twelve Months Ended December 31, 2014 2013 2012 2011 Actual Actual Actual Actual Net loss $ (183) $ (169) $ (304) $ (369) Plus: Interest expens
Slide 21: GAAP Reconciliations: Bright House Networks
GAAP Reconciliations BRIGHT HOUSE NETWORKS, LLC. UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES (DOLLARS IN MILLIONS) Last Twelve Months Ended December 31, 2014 2013 Actual Actual Net income per audited financials $ 751 $ 719 Plus: Interest expense, net 38 42 Depreciation and amortiz
Slide 22: Bright House Networks Financial and Customer Information
Bright House Networks Financial and Customer Information In $ Billions 2013 2014 Revenue 3.6 3.8 Y/Y Growth 5% 6% Pro forma EBITDA1) 1.3 1.4 Margin 36% 37% Y/Y Growth n/a 5% Pro forma Capex 0.6 0.7 % of Revenue 17% 18% In Millions, unless otherw ise noted Residential PSUs Video 2.0 2.0 Internet 1.9
Slide 23: Illustrative Pro Forma Charter Debt Structure
Illustrative Pro Forma Charter Debt Structure (in millions) (in millions) As of December 31, 2014 Leverage ratio 1st Lien bank debt due 2018-2021 $3,742 Other CCO debt1) 883 Total CCO Debt 4,625 1.4x 7.25% Senior Notes due 2017 1,000 7.00% Senior Notes due 2019 1,400 8.125% Senior Notes due 2020 700
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