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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 10-Q
______________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From             to             

Commission File Number: 001-33664
a2014charterlogoa01a02a26.jpg
Charter Communications, Inc.
(Exact name of registrant as specified in its charter)
Delaware
84-1496755
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
400 Washington Blvd.
Stamford
Connecticut
06902
(Address of Principal Executive Offices)
(Zip Code)
(203) 905-7801
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock $.001 Par ValueCHTRNASDAQ Global Select Market

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

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

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

Large accelerated filer x    Accelerated filer o    Non-accelerated filer o    Smaller reporting company      Emerging growth company  

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

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

Number of shares of Class A common stock outstanding as of June 30, 2023: 149,670,941

Number of shares of Class B common stock outstanding as of June 30, 2023: 1




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CHARTER COMMUNICATIONS, INC.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 2023

TABLE OF CONTENTS
Page No.

This quarterly report on Form 10-Q is for the three and six months ended June 30, 2023. The United States Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference” information that we file with the SEC, which means that we can disclose important information to you by referring you directly to those documents. In this quarterly report, “Charter,” “we,” “us” and “our” refer to Charter Communications, Inc. and its subsidiaries.

i


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, our plans, strategies and prospects, both business and financial including, without limitation, the forward-looking statements set forth in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this quarterly report. Although we believe that our plans, intentions and expectations as reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions including, without limitation, the factors described under “Risk Factors” in Part I, Item 1A of our most recent Form 10-K filed with the SEC. Many of the forward-looking statements contained in this quarterly report may be identified by the use of forward-looking words such as “believe,” “expect,” “anticipate,” “should,” “planned,” “will,” “may,” “intend,” “estimated,” “aim,” “on track,” “target,” “opportunity,” “tentative,” “positioning,” “designed,” “create,” “predict,” “project,” “initiatives,” “seek,” “would,” “could,” “continue,” “ongoing,” “upside,” “increases,” “grow,” “focused on” and “potential,” among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this quarterly report are set forth in this quarterly report on Form 10-Q, in our annual report on Form 10-K, and in other reports or documents that we file from time to time with the SEC, and include, but are not limited to:

our ability to sustain and grow revenues and cash flow from operations by offering Internet, video, voice, mobile, advertising and other services to residential and commercial customers, to adequately meet the customer experience demands in our service areas and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition, the need for innovation and the related capital expenditures;
the impact of competition from other market participants, including but not limited to incumbent telephone companies, direct broadcast satellite ("DBS") operators, wireless broadband and telephone providers, digital subscriber line (“DSL”) providers, fiber to the home providers and providers of video content over broadband Internet connections;
general business conditions, unemployment levels and the level of activity in the housing sector and economic uncertainty or downturn;
our ability to obtain programming at reasonable prices or to raise prices to offset, in whole or in part, the effects of higher programming costs (including retransmission consents and distribution requirements);
our ability to develop and deploy new products and technologies including consumer services and service platforms;
any events that disrupt our networks, information systems or properties and impair our operating activities or our reputation;
the effects of governmental regulation on our business including subsidies to consumers, subsidies and incentives for competitors, costs, disruptions and possible limitations on operating flexibility related to, and our ability to comply with, regulatory conditions applicable to us;
the ability to hire and retain key personnel;
our ability to procure necessary services and equipment from our vendors in a timely manner and at reasonable costs including in connection with our network evolution and rural construction initiatives;
the availability and access, in general, of funds to meet our debt obligations prior to or when they become due and to fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) free cash flow, or (iii) access to the capital or credit markets; and
our ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a timely manner, could trigger a default of our other obligations under cross-default provisions.

All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We are under no duty or obligation to update any of the forward-looking statements after the date of this quarterly report.

ii


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions, except share data)

June 30,
2023
December 31,
2022
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$478 $645 
Accounts receivable, less allowance for doubtful accounts of $245 and $219, respectively
2,864 2,921 
Prepaid expenses and other current assets587 451 
Total current assets3,929 4,017 
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated depreciation of $36,103 and $36,164, respectively
37,546 36,039 
Customer relationships, net of accumulated amortization of $16,046 and $15,478, respectively
2,222 2,772 
Franchises67,396 67,363 
Goodwill29,672 29,563 
Total investment in cable properties, net136,836 135,737 
OTHER NONCURRENT ASSETS4,850 4,769 
Total assets$145,615 $144,523 
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities$9,976 $10,555 
Current portion of long-term debt1,999 1,510 
Total current liabilities11,975 12,065 
LONG-TERM DEBT95,971 96,093 
DEFERRED INCOME TAXES18,982 19,058 
OTHER LONG-TERM LIABILITIES4,660 4,758 
SHAREHOLDERS’ EQUITY:
Class A common stock; $0.001 par value; 900 million shares authorized;
153,116,296 and 152,651,396 shares issued, respectively
  
Class B common stock; $0.001 par value; 1,000 shares authorized;
1 share issued and outstanding
  
Preferred stock; $0.001 par value; 250 million shares authorized;
no shares issued and outstanding
  
Additional paid-in capital24,287 23,940 
Accumulated deficit(12,577)(14,821)
Treasury stock at cost; 3,445,355 and no shares, respectively
(1,250) 
Total Charter shareholders’ equity 10,460 9,119 
Noncontrolling interests3,567 3,430 
Total shareholders’ equity14,027 12,549 
Total liabilities and shareholders’ equity$145,615 $144,523 

The accompanying notes are an integral part of these consolidated financial statements.
1


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)
Unaudited

Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
REVENUES$13,659 $13,598 $27,312 $26,798 
COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately below)
8,305 8,193 16,816 16,327 
Depreciation and amortization2,172 2,240 4,378 4,534 
Other operating income, net(58)(62)(48)(61)
10,419 10,371 21,146 20,800 
Income from operations3,240 3,227 6,166 5,998 
OTHER INCOME (EXPENSES):
Interest expense, net
(1,298)(1,109)(2,563)(2,169)
Other income (expenses), net(85)79 (189)102 
(1,383)(1,030)(2,752)(2,067)
Income before income taxes1,857 2,197 3,414 3,931 
Income tax expense
(444)(489)(818)(834)
Consolidated net income1,413 1,708 2,596 3,097 
Less: Net income attributable to noncontrolling interests(190)(237)(352)(423)
Net income attributable to Charter shareholders$1,223 $1,471 $2,244 $2,674 
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHARTER SHAREHOLDERS:
Basic$8.15 $8.96 $14.89 $15.98 
Diluted$8.05 $8.80 $14.69 $15.66 
Weighted average common shares outstanding, basic
150,091,880 164,049,619 150,761,406 167,350,535 
Weighted average common shares outstanding, diluted
151,975,698 167,090,925 152,727,540 170,741,462 


The accompanying notes are an integral part of these consolidated financial statements.
2


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(dollars in millions)
Unaudited

Class A Common StockClass B Common StockAdditional Paid-in CapitalAccumulated DeficitTreasury StockTotal Charter Shareholders’ EquityNon-controlling InterestsTotal Shareholders’ Equity
BALANCE, December 31, 2022$ $ $23,940 $(14,821)$ $9,119 $3,430 $12,549 
Consolidated net income   1,021  1,021 162 1,183 
Stock compensation expense  208   208  208 
Exercise of stock options  2   2  2 
Purchases of treasury stock, including excise tax    (920)(920) (920)
Purchase of noncontrolling interest, net of tax  (40)  (40)(68)(108)
Change in noncontrolling interest ownership, net of tax  28   28 (37)(9)
Distributions to noncontrolling interest      (3)(3)
BALANCE, March 31, 2023  24,138 (13,800)(920)9,418 3,484 12,902 
Consolidated net income   1,223  1,223 190 1,413 
Stock compensation expense  168   168  168 
Exercise of stock options  3   3  3 
Purchases of treasury stock, including excise tax    (330)(330) (330)
Purchase of noncontrolling interest, net of tax  (16)  (16)(34)(50)
Change in noncontrolling interest ownership, net of tax  (6)  (6)7 1 
Distributions to noncontrolling interest      (80)(80)
BALANCE, June 30, 2023$ $ $24,287 $(12,577)$(1,250)$10,460 $3,567 $14,027 


Class A Common StockClass B Common StockAdditional Paid-in CapitalAccumulated DeficitTreasury StockTotal Charter Shareholders’ EquityNon-controlling InterestsTotal Shareholders’ Equity
BALANCE, December 31, 2021$ $ $26,725 $(12,675)$ $14,050 $4,106 $18,156 
Consolidated net income   1,203  1,203 186 1,389 
Stock compensation expense  147   147  147 
Exercise of stock options  1   1  1 
Purchases of treasury stock    (3,333)(3,333) (3,333)
Purchase of noncontrolling interest, net of tax  (197)  (197)(156)(353)
Change in noncontrolling interest ownership, net of tax  189   189 (250)(61)
Distributions to noncontrolling interest      (2)(2)
BALANCE, March 31, 2022  26,865 (11,472)(3,333)12,060 3,884 15,944 
Consolidated net income   1,471  1,471 237 1,708 
Stock compensation expense  104   104  104 
Exercise of stock options  4   4  4 
Purchases of treasury stock    (3,687)(3,687) (3,687)
Purchase of noncontrolling interest, net of tax  (256)  (256)(238)(494)
Preferred unit conversion and change in noncontrolling interest ownership, net of tax  183   183 (244)(61)
Distributions to noncontrolling interest      (5)(5)
BALANCE, June 30, 2022$ $ $26,900 $(10,001)$(7,020)$9,879 $3,634 $13,513 

The accompanying notes are an integral part of these consolidated financial statements.
3


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
Unaudited
Six Months Ended June 30,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income $2,596 $3,097 
Adjustments to reconcile consolidated net income to net cash flows from operating activities:
Depreciation and amortization4,378 4,534 
Stock compensation expense376 251 
Noncash interest, net4 (7)
Deferred income taxes(63)115 
Other, net187 (153)
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable57 (200)
Prepaid expenses and other assets(361)(133)
Accounts payable, accrued liabilities and other(540)(123)
Net cash flows from operating activities6,634 7,381 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment(5,298)(4,050)
Change in accrued expenses related to capital expenditures(4)128 
Other, net(287)(160)
Net cash flows from investing activities(5,589)(4,082)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt11,048 16,631 
Repayments of long-term debt(10,735)(11,947)
Payments for debt issuance costs(18)(57)
Purchase of treasury stock(1,238)(7,020)
Proceeds from exercise of stock options5 5 
Purchase of noncontrolling interest(176)(994)
Distributions to noncontrolling interest(83)(7)
Other, net(15)(28)
Net cash flows from financing activities(1,212)(3,417)
NET DECREASE IN CASH AND CASH EQUIVALENTS (167)(118)
CASH AND CASH EQUIVALENTS, beginning of period645 601 
CASH AND CASH EQUIVALENTS, end of period$478 $483 
CASH PAID FOR INTEREST$2,432 $2,150 
CASH PAID FOR TAXES$906 $470 

The accompanying notes are an integral part of these consolidated financial statements.
4


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except per share amounts and where indicated)


1.    Organization and Basis of Presentation

Organization

Charter Communications, Inc. (together with its controlled subsidiaries, “Charter,” or the “Company”) is a leading broadband connectivity company and cable operator. Over an advanced communications network, the Company offers a full range of state-of-the-art residential and business services including Spectrum Internet®, TV, Mobile and Voice. For small and medium-sized companies, Spectrum Business® delivers the same suite of broadband products and services coupled with special features and applications to enhance productivity, while for larger businesses and government entities, Spectrum Enterprise™ provides highly customized, fiber-based solutions. Spectrum Reach® delivers tailored advertising and production for the modern media landscape. The Company also distributes award-winning news coverage and sports programming to its customers through Spectrum Networks.

Charter is a holding company whose principal asset is a controlling equity interest in Charter Communications Holdings, LLC (“Charter Holdings”), an indirect owner of Charter Communications Operating, LLC (“Charter Operating”) under which substantially all of the operations reside. All significant intercompany accounts and transactions among consolidated entities have been eliminated.

The Company’s operations are managed and reported to its Chief Executive Officer (“CEO”), the Company’s chief operating decision maker, on a consolidated basis. The CEO assesses performance and allocates resources based on the consolidated results of operations. Under this organizational and reporting structure, the Company has one reportable segment.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures typically included in the Company's Annual Report on Form 10-K have been condensed or omitted for this quarterly report. The accompanying consolidated financial statements are unaudited and are subject to review by regulatory authorities. However, in the opinion of management, such financial statements include all adjustments, which consist of only normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. Interim results are not necessarily indicative of results for a full year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Areas involving significant judgments and estimates include capitalization of labor and overhead costs, pension benefits and income taxes. Actual results could differ from those estimates. Certain prior period amounts have been reclassified to conform with the 2023 presentation.

Comprehensive income equaled net income attributable to Charter shareholders for the three and six months ended June 30, 2023 and 2022.


5


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except per share amounts and where indicated)

2.    Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following as of June 30, 2023 and December 31, 2022:

June 30, 2023December 31, 2022
Accounts payable – trade$748 $952 
Deferred revenue522 511 
Accrued liabilities:
Programming costs1,865 1,914 
Labor1,067 1,314 
Capital expenditures1,783 1,792 
Interest1,299 1,165 
Taxes and regulatory fees550 667 
Property and casualty470 505 
Operating lease liabilities293 295 
Other1,379 1,440 
$9,976 $10,555 

3.    Long-Term Debt
A summary of our debt as of June 30, 2023 and December 31, 2022 is as follows:

June 30, 2023December 31, 2022
Principal AmountCarrying ValueFair ValuePrincipal AmountCarrying ValueFair Value
Senior unsecured notes$27,250 $27,161 $23,303 $26,650 $26,567 $22,426 
Senior secured notes and debentures(a)
55,919 56,272 46,951 56,841 57,213 46,905 
Credit facilities(b)
14,591 14,537 14,203 13,877 13,823 13,467 
$97,760 $97,970 $84,457 $97,368 $97,603 $82,798 

(a)Includes the Company's £625 million fixed-rate British pound sterling denominated notes (the “Sterling Notes”) (remeasured at $794 million and $755 million as of June 30, 2023 and December 31, 2022, respectively, using the exchange rate at the respective dates) and the Company's £650 million aggregate principal amount of Sterling Notes (remeasured at $825 million and $786 million as of June 30, 2023 and December 31, 2022, respectively, using the exchange rate at the respective dates).
(b)The Company has availability under the Charter Operating credit facilities of approximately $3.2 billion as of June 30, 2023.

The estimated fair value of the Company’s senior unsecured and secured notes and debentures as of June 30, 2023 and December 31, 2022 is based on quoted market prices in active markets and is classified within Level 1 of the valuation hierarchy, while the estimated fair value of the Company’s credit facilities is based on quoted market prices in inactive markets and is classified within Level 2.

In February 2023, CCO Holdings, LLC ("CCO Holdings") and CCO Holdings Capital Corp. jointly issued $1.1 billion of 7.375% senior unsecured notes due March 2031 at par. The net proceeds were used for general corporate purposes, including repaying certain indebtedness, funding buybacks of Charter Class A common stock and Charter Holdings common units and to pay related fees and expenses.

In February 2023, Charter Operating entered into an amendment to its credit agreement to replace London Interbank Offering Rate ("LIBOR") as the benchmark rate applicable to the Term B loans with Secured Overnight Financing Rate ("SOFR") and in

6


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except per share amounts and where indicated)

March 2023, Charter Operating entered into another amendment to its credit agreement to incur a new Term B-3 loan with an aggregate principal amount of $750 million maturing in 2030 concurrently with the cancelation of certain of Charter Operating's existing Term B-1 and B-2 loans, among other amendments. Pricing on the new Term B-3 loan is SOFR plus 2.25%. After giving effect to the amendments, the aggregate principal amount of Term B-1 loans is $2.3 billion with pricing unchanged at SOFR plus 1.75% and the aggregate principal amount of Term B-2 loans is $3.1 billion with pricing unchanged at SOFR plus 1.75%.

As of July 1, 2023, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, ceased publishing remaining U.S. Dollar LIBOR rates. The Charter Operating senior secured floating rate notes due 2024 (the "Floating Rate Notes") used LIBOR as a benchmark for establishing the interest rate of the Floating Rate Notes. As of July 1, 2023, SOFR is being used as the benchmark replacement for calculations of the amount of interest payable on the Floating Rate Notes with respect to interest periods with interest determination dates occurring after June 30, 2023.

Losses on extinguishment of debt are recorded in other income (expenses), net in the consolidated statements of operations and for the three and six months ended June 30, 2022 was $3 million as a result of the Charter Operating credit facility refinancing and Charter Operating notes redemption.

4.    Common Stock

The following represents the Company's purchase of Charter Class A common stock and the effect on the consolidated statements of cash flows during the three and six months ended June 30, 2023 and 2022.

Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Shares$Shares$Shares$Shares$
Share buybacks 954,330 $324 7,264,833 $3,675 3,258,749 $1,187 12,590,427 $6,847 
Income tax withholding4,999 2 24,630 12 132,814 51 289,475 173 
Exercise cost13,111 80,826 53,792 229,483 
972,440 $326 7,370,289 $3,687 3,445,355 $1,238 13,109,385 $7,020 

Share buybacks above include shares of Charter Class A common stock purchased from Liberty Broadband Corporation (“Liberty Broadband”) as follows.

Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Number of shares purchased 2,257,443 120,149 3,227,684 
Amount of shares purchased$ $1,204 $42 $1,806 

As of June 30, 2023, Charter had remaining board authority to purchase an additional $482 million of Charter’s Class A common stock and/or Charter Holdings common units, excluding purchases from Liberty Broadband. The Company also withholds shares of its Class A common stock in payment of income tax withholding owed by employees upon vesting of equity awards as well as exercise costs owed by employees upon exercise of stock options.

In 2022, Charter’s board of directors approved the retirement of the then currently held treasury stock and those shares were retired as of December 31, 2022. The Company accounts for treasury stock using the cost method and includes treasury stock as a component of total shareholders’ equity.

5.    Noncontrolling Interests

Noncontrolling interests represents consolidated subsidiaries of which the Company owns less than 100%. The Company is a holding company whose principal asset is a controlling equity interest in Charter Holdings, the indirect owner of the

7


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except per share amounts and where indicated)

Company’s cable systems. Noncontrolling interests on the Company’s balance sheet consist primarily of Advance/Newhouse Partnership's (“A/N”) equity interests in Charter Holdings, which is comprised of a common ownership interest.

Net income of Charter Holdings attributable to A/N’s common noncontrolling interest for financial reporting purposes is based on the weighted average effective common ownership interest of approximately 11%, and was $189 million and $351 million for the three and six months ended June 30, 2023, respectively, and $236 million and $422 million for the three and six months ended June 30, 2022, respectively.

The following table represents Charter Holdings' purchase of Charter Holdings common units from A/N and the effect on total shareholders' equity during the three and six months ended June 30, 2023 and 2022.

Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Number of units purchased157,075 1,063,333 481,175 1,720,601 
Amount of units purchased$54 $578 $176 $994 
Decrease in noncontrolling interest based on carrying value$(34)$(238)$(102)$(394)
Decrease in additional paid-in-capital, net of tax$(16)$(256)$(56)$(453)

Total shareholders' equity was also adjusted during the three and six months ended June 30, 2023 and 2022 due to the changes in Charter Holdings' ownership as follows.

Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Increase (decrease) in noncontrolling interest $7 $(244)$(30)$(494)
Increase (decrease) in additional paid-in-capital, net of tax$(6)$183 $22 $372 

6.     Accounting for Derivative Instruments and Hedging Activities

Cross-currency derivative instruments are used to manage foreign exchange risk on the Sterling Notes by effectively converting £1.275 billion aggregate principal amount of fixed-rate British pound sterling denominated debt, including annual interest payments and the payment of principal at maturity, to fixed-rate U.S. dollar denominated debt. The fair value of the Company's cross-currency derivatives, which are classified within Level 2 of the valuation hierarchy, was $522 million and $570 million and is included in other long-term liabilities on its consolidated balance sheets as of June 30, 2023 and December 31, 2022, respectively.

The effect of financial instruments are recorded in other income (expenses), net in the consolidated statements of operations and consisted of the following.
Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Change in fair value of cross-currency derivative instruments
$43 $(124)$48 $(160)
Foreign currency remeasurement of Sterling Notes to U.S. dollars
(46)125 (78)175 
Gain (loss) on financial instruments, net$(3)$1 $(30)$15 


8


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except per share amounts and where indicated)

7.    Revenues

The Company’s revenues by product line are as follows:

Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Internet$5,733 $5,562 $11,451 $11,014 
Video4,188 4,484 8,442 8,830 
Voice365 398 738 789 
Mobile service539 415 1,036 802 
Residential revenue10,825 10,859 21,667 21,435 
Small and medium business1,094 1,092 2,185 2,162 
Enterprise690 669 1,372 1,330 
Commercial revenue1,784 1,761 3,557 3,492 
Advertising sales384 460 739 843 
Other666 518 1,349 1,028 
$13,659 $13,598 $27,312 $26,798 

As of June 30, 2023 and December 31, 2022, accounts receivable, net on the consolidated balance sheets includes approximately $650 million and $577 million of current equipment installment plan receivables, respectively, and other noncurrent assets includes approximately $456 million and $261 million of noncurrent equipment installment plan receivables, respectively.

8.     Operating Costs and Expenses

Operating costs and expenses, exclusive of items shown separately in the consolidated statements of operations, consist of the following for the periods presented:

Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Programming$2,740 $2,972 $5,539 $5,949 
Other costs of revenue1,367 1,185 2,695 2,293 
Costs to service customers2,069 1,997 4,164 3,956 
Sales and marketing895 864 1,841 1,744 
Other expense1,234 1,175 2,577 2,385 
$8,305 $8,193 $16,816 $16,327 

Programming costs consist primarily of costs paid to programmers for basic, premium, video on demand and pay-per-view programming. Other costs of revenue include costs directly related to providing Internet, video, voice and mobile services including mobile device costs, payments to franchise and regulatory authorities, payments for sports, local and news content produced by the Company and direct costs associated with selling advertising. Also included in other costs of revenue are content acquisition costs for the Los Angeles Lakers’ basketball games and Los Angeles Dodgers’ baseball games, which are recorded as games are exhibited over the contract period. Costs to service customers include costs related to field operations, network operations and customer operations for the Company’s products, including mobile, sold to non-bulk residential and small and medium business ("SMB") customers including internal and third-party labor for the non-capitalizable portion of installations, service and repairs, maintenance, bad debt expense, billing and collection, occupancy and vehicle costs. Sales and marketing costs represent the costs of selling and marketing our Internet, video, voice and mobile services to current and potential non-bulk residential and SMB customers, including labor cost. Other expense includes indirect costs associated with

9


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except per share amounts and where indicated)

the Company’s Spectrum Enterprise, Spectrum Reach and Spectrum Networks businesses, including sales and marketing and bad debt expenses as well as costs associated with selling to and servicing bulk properties. Other expense also includes corporate overhead and stock compensation expense, among others.

9.     Other Operating Income, Net

Other operating income, net consist of the following for the periods presented:

Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Special charges, net$(52)$(63)$(42)$(64)
(Gain) loss on disposal of assets, net(6)1 (6)3 
$(58)$(62)$(48)$(61)

Special charges, net primarily includes net amounts of litigation settlements and employee termination costs.

10.     Other Income (Expenses), Net

Other income (expenses), net consist of the following for the periods presented:

Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Loss on extinguishment of debt (see Note 3)$ $(3)$ $(3)
Gain (loss) on financial instruments, net (see Note 6)(3)1 (30)15 
Net periodic pension benefits1 17 3 34 
Gain (loss) on equity investments, net(83)64 (162)56 
$(85)$79 $(189)$102 

Loss on equity investments, net for the three and six months ended June 30, 2023 is primarily related to our joint venture in Xumo, a next generation streaming platform jointly owned with Comcast Corporation.

11.     Stock Compensation Plans

Charter’s stock incentive plans provide for grants of nonqualified stock options, incentive stock options, stock appreciation rights, dividend equivalent rights, performance units and performance shares, share awards, phantom stock, restricted stock units and restricted stock.  Directors, officers and other employees of the Company and its subsidiaries, as well as others performing consulting services for the Company, are eligible for grants under the stock incentive plans.

Charter granted the following equity awards for the periods presented.

Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Stock options21,500 32,000 4,257,200 1,404,400 
Restricted stock10,300 6,800 10,300 6,800 
Restricted stock units21,500 19,500 1,535,900 443,100 

Stock options and restricted stock units generally cliff vest three years from the date of grant. Certain stock options and restricted stock units vest based on achievement of stock price hurdles. Stock options generally expire ten years from the grant date and restricted stock units have no voting rights. Restricted stock generally vests one year from the date of grant.


10


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except per share amounts and where indicated)

As of June 30, 2023, total unrecognized compensation remaining to be recognized in future periods totaled $555 million for stock options, $3 million for restricted stock and $610 million for restricted stock units and the weighted average period over which they are expected to be recognized is three years for stock options, ten months for restricted stock and two years for restricted stock units.

The Company recorded stock compensation expense of $168 million and $376 million for the three and six months ended June 30, 2023, respectively, and $104 million and $251 million for the three and six months ended June 30, 2022, respectively, which is included in operating costs and expenses.

12.    Earnings Per Share

Basic earnings per common share is computed by dividing net income attributable to Charter shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share considers the impact of potentially dilutive securities using the treasury stock and if-converted methods and is based on the weighted average number of shares used for the basic earnings per share calculation, adjusted for the dilutive effect of stock options, restricted stock, restricted stock units, equity awards with market conditions and Charter Holdings common units. Charter Holdings common units of 18 million for the three and six months ended June 30, 2023 and 20 million for the three and six months ended June 30, 2022 were not included in the computation of diluted earnings per share as their effect would have been antidilutive.

The following is the computation of diluted earnings per common share for the three and six months ended June 30, 2023 and 2022.

Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Numerator:
Net income attributable to Charter shareholders$1,223 $1,471 $2,244 $2,674 
Denominator:
Weighted average common shares outstanding, basic150,091,880 164,049,619 150,761,406 167,350,535 
Effect of dilutive securities:
Assumed exercise or issuance of shares relating to stock plans1,883,818 3,041,306 1,966,134 3,390,927 
Weighted average common shares outstanding, diluted151,975,698 167,090,925 152,727,540 170,741,462 
Basic earnings per common share attributable to Charter shareholders$8.15 $8.96 $14.89 $15.98 
Diluted earnings per common share attributable to Charter shareholders$8.05 $8.80 $14.69 $15.66 

13.    Contingencies

In August 2015, a purported stockholder of Charter, Matthew Sciabacucchi, filed a lawsuit in the Delaware Court of Chancery, on behalf of a putative class of Charter stockholders, challenging the transactions involving Charter, Time Warner Cable Inc., A/N, and Liberty Broadband announced by Charter on May 26, 2015. The lawsuit, which named as defendants Charter and its board of directors, alleged that the transactions resulted from breaches of fiduciary duty by Charter’s directors and that Liberty Broadband improperly benefited from the challenged transactions at the expense of other Charter stockholders. On January 12, 2023, the parties reached a tentative agreement to settle the lawsuit. The court approved the settlement at a fairness hearing on June 22, 2023, resulting in a net payment to Charter on June 26, 2023 and the dismissal of the lawsuit.

In the previously disclosed lawsuit of William Goff, as Personal Representative of Betty Jo McClain Thomas, deceased, et al. v. Roy James Holden, Jr. and Charter Communications, LLC, Case No. CC-20-01579-E, in County Court at Law No. 5 for Dallas County, Texas, the settlement was finalized and paid, and the case was dismissed on June 22, 2023.

11


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except per share amounts and where indicated)


The Company is a defendant or co-defendant in several lawsuits involving alleged infringement of various intellectual property relating to various aspects of its businesses. Other industry participants are also defendants in certain of these cases or related cases. In the event that a court ultimately determines that the Company infringes on any intellectual property, the Company may be subject to substantial damages and/or an injunction that could require the Company or its vendors to modify certain products and services the Company offers to its subscribers, as well as negotiate royalty or license agreements with respect to the intellectual property at issue. While the Company believes the lawsuits are without merit and intends to defend the actions vigorously, no assurance can be given that any adverse outcome would not be material to the Company’s consolidated financial condition, results of operations, or liquidity. The Company cannot predict the outcome of any such claims nor can it reasonably estimate a range of possible loss.

The Company is party to other lawsuits, claims and regulatory inquiries that arise in the ordinary course of conducting its business. The ultimate outcome of these other legal matters pending against the Company cannot be predicted, and although such lawsuits and claims are not expected individually to have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity, such lawsuits could have, in the aggregate, a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity. Whether or not the Company ultimately prevails in any particular lawsuit or claim, litigation can be time consuming and costly and injure the Company’s reputation.

12


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

General

Charter Communications, Inc. (together with its controlled subsidiaries, “Charter”) is a leading broadband connectivity company and cable operator serving more than 32 million customers in 41 states through our Spectrum brand. Over an advanced communications network, we offer a full range of state-of-the-art residential and business services including Spectrum Internet, TV, Mobile and Voice. For small and medium-sized companies, Spectrum Business delivers the same suite of broadband products and services coupled with special features and applications to enhance productivity, while for larger businesses and government entities, Spectrum Enterprise provides highly customized, fiber-based solutions. Spectrum Reach delivers tailored advertising and production for the modern media landscape. We also distribute award-winning news coverage and sports programming to our customers through Spectrum Networks.

Charter is a holding company whose principal asset is a controlling equity interest in Charter Communications Holdings, LLC (“Charter Holdings”), an indirect owner of Charter Communications Operating, LLC (“Charter Operating”) under which substantially all of the operations reside. All significant intercompany accounts and transactions among consolidated entities have been eliminated.

Overview

During the second quarter of 2023, we added 648,000 mobile lines, 77,000 Internet customers and 17,000 residential and small and medium business ("SMB") customer relationships, which excludes mobile-only customer relationships. Our mobile line and Internet customer growth in the second quarter were supported by our Spectrum One offering, which brings together Spectrum Internet, Advanced WiFi and Unlimited Spectrum Mobile to offer consumers fast, reliable and secure online connections on their favorite devices at home and on-the-go in a high-value package. We are beginning to see benefits from the targeted investments we are making in employee wages and benefits inside of our operations to build employee skill sets and tenure, as well as the continued investments in digitization of our customer service platforms and proactive maintenance, all with the goal of improving the customer experience, reducing transactions and driving customer growth and retention.

We spent $541 million and $932 million on our subsidized rural construction initiative during the three and six months ended June 30, 2023, respectively. We expect that over time, our subsidized rural construction initiative will support customer growth, and we activated approximately 68,000 and 112,000 subsidized rural passings in the three and six months ended June 30, 2023, respectively. In addition, we continue to evolve and upgrade our network to provide higher Internet speeds and reliability and invest in our products and customer service platforms. We currently offer Spectrum Internet products with speeds up to 1 Gbps across our entire footprint, and over the next three years, we plan to upgrade our network to provide multi-gigabit speeds. Our Advanced WiFi, a managed WiFi service that provides customers an optimized home network while providing greater control of their connected devices with enhanced security and privacy, is available to all Internet customers. We continue to invest in our ability to provide a differentiated Internet connectivity experience for our mobile and fixed Internet customers with increasing availability of out-of-home WiFi access points across our footprint. In addition, we continue to work towards the construction of our own 5G mobile data-only network leveraging our Citizen Broadband Radio Service ("CBRS") Priority Access Licenses. By continually improving our product set and offering consumers the opportunity to save money by switching to our services, we believe we can continue to penetrate our expanding footprint and capture more spend on additional products for our existing customers.

We realized revenue, Adjusted EBITDA and income from operations during the periods presented as follows (in millions; all percentages are calculated using whole numbers; minor differences may exist due to rounding):

Three Months Ended June 30, Six Months Ended June 30,
20232022% Change20232022% Change
Revenues$13,659 $13,598 0.5 %$27,312 $26,798 1.9 %
Adjusted EBITDA$5,522 $5,509 0.2 %$10,872 $10,722 1.4 %
Income from operations$3,240 $3,227 0.4 %$6,166 $5,998 2.8 %

Adjusted EBITDA is defined as net income attributable to Charter shareholders plus net income attributable to noncontrolling interest, interest expense, net, income taxes, depreciation and amortization, stock compensation expense, other income (expenses), net and other operating (income) expenses, net, such as special charges and (gain) loss on sale or retirement of assets. See “Use of Adjusted EBITDA and Free Cash Flow” for further information on Adjusted EBITDA and free cash flow. 

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Growth in total revenue was primarily due to growth in residential Internet customers and residential mobile lines partly offset by lower residential video and advertising sales revenues. Adjusted EBITDA growth and changes in income from operations were impacted by growth in revenue and increases in operating costs and expenses, primarily other costs of revenue and costs to service customers partly offset by a decrease in programming expense.

The following table summarizes our customer statistics for Internet, video, voice and mobile as of June 30, 2023 and 2022 (in thousands except per customer data and footnotes).

Approximate as of
June 30,
2023 (a)
2022 (a)
Customer Relationships (b)
Residential 30,009 29,942 
SMB2,219 2,182 
Total Customer Relationships32,228 32,124 
Monthly Residential Revenue per Residential Customer (c)
$120.25 $120.61 
Monthly SMB Revenue per SMB Customer (d)
$164.56 $167.47 
Internet
Residential28,549 28,259 
SMB2,037 1,994 
Total Internet Customers30,586 30,253 
Video
Residential14,071 14,853 
SMB635 642 
Total Video Customers14,706 15,495 
Voice
Residential7,248 8,200 
SMB1,294 1,287 
Total Voice Customers8,542 9,487 
Mobile Lines (e)
Residential6,410 4,134 
SMB216 147 
Total Mobile Lines6,626 4,281 
Enterprise Primary Service Units ("PSUs") (f)
294277 

(a)We calculate the aging of customer accounts based on the monthly billing cycle for each account. On that basis, as of June 30, 2023 and 2022, customers include approximately 128,600 and 154,500 customers, respectively, whose accounts were over 60 days past due, approximately 47,000 and 45,800 customers, respectively, whose accounts were over 90 days past due and approximately 229,200 and 97,200 customers, respectively, whose accounts were over 120 days past due. Bad debt expense associated with these past due accounts has been reflected in our consolidated statements of operations. The increase in accounts past due more than 120 days is predominately due to pre-existing and incremental unsubsidized amounts of customers’ bills for those customers participating in government assistance programs, including video services. These customers are downgraded to a fully subsidized Internet-only service.
(b)Customer relationships include the number of customers that receive one or more levels of service, encompassing Internet, video, voice and mobile services, without regard to which service(s) such customers receive. Customers who reside in residential multiple dwelling units (“MDUs”) and that are billed under bulk contracts are counted based on the number of billed units within each bulk MDU. Total customer relationships exclude enterprise and mobile-only customer

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relationships.
(c)Monthly residential revenue per residential customer is calculated as total residential quarterly revenue divided by three divided by average residential customer relationships during the respective quarter and excludes mobile-only customers.
(d)Monthly SMB revenue per SMB customer is calculated as total SMB quarterly revenue divided by three divided by average SMB customer relationships during the respective quarter and excludes mobile-only customers.
(e)Mobile lines include phones and tablets which require one of our standard rate plans (e.g., "Unlimited" or "By the Gig"). Mobile lines exclude wearables and other devices that do not require standard phone rate plans.
(f)Enterprise PSUs represent the aggregate number of fiber service offerings counting each separate service offering at each customer location as an individual PSU.

Critical Accounting Policies and Estimates

For a discussion of our critical accounting policies and the means by which we develop estimates therefore, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2022 Annual Report on Form 10-K. There have been no material changes from the critical accounting policies described in our Form 10-K.

Results of Operations

The following table sets forth the consolidated statements of operations for the periods presented (dollars in millions, except per share data):

Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Revenues$13,659 $13,598 $27,312 $26,798 
Costs and Expenses:
Operating costs and expenses (exclusive of items shown separately below)
8,305 8,193 16,816 16,327 
Depreciation and amortization2,172 2,240 4,378 4,534 
Other operating income, net(58)(62)(48)(61)
10,419 10,371 21,146 20,800 
Income from operations3,240 3,227 6,166 5,998 
Other Income (Expenses):
Interest expense, net(1,298)(1,109)(2,563)(2,169)
Other income (expenses), net(85)79 (189)102 
(1,383)(1,030)(2,752)(2,067)
Income before income taxes1,857 2,197 3,414 3,931 
Income tax expense(444)(489)(818)(834)
Consolidated net income 1,413 1,708 2,596 3,097 
Less: Net income attributable to noncontrolling interests(190)(237)(352)(423)
Net income attributable to Charter shareholders$1,223 $1,471 $2,244 $2,674 
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHARTER SHAREHOLDERS:
Basic$8.15 $8.96 $14.89 $15.98 
Diluted$8.05 $8.80 $14.69 $15.66 
Weighted average common shares outstanding, basic
150,091,880 164,049,619 150,761,406 167,350,535 
Weighted average common shares outstanding, diluted
151,975,698 167,090,925 152,727,540 170,741,462 


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Revenues. Total revenues grew $61 million and $514 million for the three and six months ended June 30, 2023, respectively, compared to the corresponding periods in 2022 primarily due to growth in residential Internet customers and residential mobile lines partly offset by lower residential video and advertising sales revenues.
Revenues by service offering were as follows (dollars in millions; all percentages are calculated using whole numbers; minor differences may exist due to rounding):

Three Months Ended June 30, Six Months Ended June 30,
20232022% Change20232022% Change
Internet$5,733 $5,562 3.1 %$11,451 $11,014 4.0 %
Video4,188 4,484 (6.6)%8,442 8,830 (4.4)%
Voice365 398 (8.3)%738 789 (6.4)%
Mobile service539 415 29.8 %1,036 802 29.1 %
Residential revenue10,825 10,859 (0.3)%21,667 21,435 1.1 %
Small and medium business1,094 1,092 0.2 %2,185 2,162 1.1 %
Enterprise690 669 3.2 %1,372 1,330 3.1 %
Commercial revenue1,784 1,761 1.4 %3,557 3,492 1.9 %
Advertising sales384 460 (16.5)%739 843 (12.3)%
Other666 518 28.5 %1,349 1,028 31.2 %
$13,659 $13,598 0.5 %$27,312 $26,798 1.9 %

The increase in Internet revenues from our residential customers is attributable to the following (dollars in millions):

Three months ended
June 30, 2023
compared to
three months ended
June 30, 2022
Increase / (Decrease)
Six months ended
June 30, 2023
compared to
six months ended
June 30, 2022
Increase / (Decrease)
Increase related to rate and product mix changes$128 $353 
Increase in average residential Internet customers43 84 
$171 $437 

The increase related to rate and product mix was primarily due to promotional roll-off and rate adjustments. Residential Internet customers grew by 290,000 customers from June 30, 2022 to June 30, 2023.

Video revenues consist primarily of revenues from video services provided to our residential customers, as well as franchise fees, equipment service fees and video installation revenue. The decrease in video revenues is attributable to the following (dollars in millions):

Three months ended
June 30, 2023
compared to
three months ended
June 30, 2022
Increase / (Decrease)
Six months ended
June 30, 2023
compared to
six months ended
June 30, 2022
Increase / (Decrease)
Decrease in average residential video customers$(247)$(467)
Change related to rate and product mix changes(49)79 
$(296)$(388)

Residential video customers decreased by 782,000 from June 30, 2022 to June 30, 2023. The change related to rate and product mix was affected by a higher mix of lower cost video packages within our video customer base offset by the pass-through of programming cost increases and promotional roll-off.

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The decrease in voice revenues from our residential customers is attributable to the following (dollars in millions):

Three months ended
June 30, 2023
compared to
three months ended
June 30, 2022
Increase / (Decrease)
Six months ended
June 30, 2023
compared to
six months ended
June 30, 2022
Increase / (Decrease)
Decrease in average residential voice customers$(47)$(90)
Increase related to rate14 39 
$(33)$(51)

Residential wireline voice customers decreased by 952,000 customers from June 30, 2022 to June 30, 2023.

The increase in mobile service revenues from our residential customers is attributable to the following (dollars in millions):

Three months ended
June 30, 2023
compared to
three months ended
June 30, 2022
Increase / (Decrease)
Six months ended
June 30, 2023
compared to
six months ended
June 30, 2022
Increase / (Decrease)
Increase in average residential mobile lines$222 $417 
Decrease related to rate(98)(183)
$124 $234 

Residential mobile lines increased by 2,276,000 mobile lines from June 30, 2022 to June 30, 2023.

The increase in SMB revenues is attributable to the following (dollars in millions):

Three months ended
June 30, 2023
compared to
three months ended
June 30, 2022
Increase / (Decrease)
Six months ended
June 30, 2023
compared to
six months ended
June 30, 2022
Increase / (Decrease)
Increase in SMB customers$22 $50 
Decrease related to rate and product mix changes(20)(27)
$$23 

SMB customers grew by 37,000 from June 30, 2022 to June 30, 2023. The decrease related to rate and product mix changes were primarily due to a higher mix of lower priced video packages and a lower number of voice lines per SMB customer relationship.

Enterprise revenues increased $21 million and $42 million during the three and six months ended June 30, 2023, respectively, compared to the corresponding periods in 2022 primarily due to an increase in Internet PSUs partly offset by lower wholesale PSUs. Enterprise PSUs increased 17,000 from June 30, 2022 to June 30, 2023.

Advertising sales revenues consist primarily of revenues from commercial advertising customers, programmers and other vendors, as well as local cable and advertising on regional sports and news channels. Advertising sales revenues decreased $76 million and $104 million during the three and six months ended June 30, 2023, respectively, as compared to the corresponding periods in 2022 primarily due to a decrease in political and local and national ad revenue partly offset by higher advanced advertising.

Other revenues consist of revenue from mobile and video device sales, processing fees, regional sports and news channels (excluding intercompany charges or advertising sales on those channels), subsidy revenue, home shopping, wire maintenance

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fees and other miscellaneous revenues. Other revenues increased $148 million and $321 million during the three and six months ended June 30, 2023, respectively, compared to the corresponding periods in 2022 primarily due to higher mobile device sales.

Operating costs and expenses. The increase in our operating costs and expenses, exclusive of items shown separately in the consolidated statements of operations, are attributable to the following (dollars in millions):

Three months ended
June 30, 2023
compared to
three months ended
June 30, 2022
Increase / (Decrease)
Six months ended
June 30, 2023
compared to
six months ended
June 30, 2022
Increase / (Decrease)
Programming$(232)$(410)
Other costs of revenue182 402 
Costs to service customers72 208 
Sales and marketing31 97 
Other59 192 
$112 $489 

Programming costs were approximately $2.7 billion and $3.0 billion for the three months ended June 30, 2023 and 2022, representing 33% and 36% of total operating costs and expenses, respectively, and $5.5 billion and $5.9 billion for the six months ended June 30, 2023 and 2022, representing 33% and 36% of total operating costs and expenses, respectively. Programming costs consist primarily of costs paid to programmers for basic, premium, video on demand, and pay-per-view programming. Programming costs decreased as a result of fewer customers and a higher mix of lower cost video packages within our video customer base partly offset by contractual rate adjustments, including renewals and increases in amounts paid for retransmission consent.

Other costs of revenue increased $182 million and $402 million during the three and six months ended June 30, 2023, respectively, compared to the corresponding periods in 2022 primarily due to higher mobile device sales and higher other mobile direct costs due to an increase in mobile lines.

Costs to service customers increased $72 million and $208 million during the three and six months ended June 30, 2023, respectively, compared to the corresponding periods in 2022 primarily due to adjustments to job structure, pay and benefits to build a more skilled and longer tenured workforce resulting in lower frontline employee attrition compared to 2022, and additional activity to support the accelerated growth of Spectrum Mobile.

Sales and marketing costs increased $31 million and $97 million during the three and six months ended June 30, 2023, respectively, compared to the corresponding periods in 2022 primarily due to higher staffing across sales channels and the accelerated growth of Spectrum Mobile.


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The increase in other expense is attributable to the following (dollars in millions):

Three months ended
June 30, 2023
compared to
three months ended
June 30, 2022
Increase / (Decrease)
Six months ended
June 30, 2023
compared to
six months ended
June 30, 2022
Increase / (Decrease)
Stock compensation expense$64 125 
Corporate costs(1)35 
Costs to sell and service bulk properties15 25 
Enterprise10 24 
Property tax and insurance(28)(22)
Other (1)
$59 $192 

Stock compensation expense increased during the three and six months ended June 30, 2023 compared to the corresponding prior periods primarily due to an increase in equity awards granted. Corporate and enterprise costs increased during the six months ended June 30, 2023 compared to the corresponding prior period in 2022 primarily due to higher labor costs. Property tax and insurance expense decreased during the three and six months ended June 30, 2023 compared to the corresponding prior periods primarily as a result of an adjustment related to favorable development on prior year workers' compensation claims.

Depreciation and amortization. Depreciation and amortization expense decreased by $68 million and $156 million during the three and six months ended June 30, 2023, respectively, compared to the corresponding periods in 2022 primarily due to certain assets acquired in acquisitions becoming fully depreciated partly offset by an increase in depreciation as a result of more recent capital expenditures.

Other operating income, net. The change in other operating income, net is attributable to the following (dollars in millions):

Three months ended
June 30, 2023
compared to
three months ended
June 30, 2022
(Increase) / Decrease
Six months ended
June 30, 2023
compared to
six months ended
June 30, 2022
(Increase) / Decrease
Special charges, net$11 $22 
(Gain) loss on disposal of assets, net(7)(9)
$$13 

See Note 9 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements” for more information.

Interest expense, net. Net interest expense increased by $189 million and $394 million for the three and six months ended June 30, 2023, respectively, compared to the corresponding periods in 2022. The increase in net interest expense is the result of an increase in weighted average interest rates as well as an increase in weighted average debt outstanding of approximately $2.3 billion and $3.5 billion during the three and six months ended June 30, 2023, respectively, compared to the corresponding periods in 2022. The increase in weighted average debt outstanding is primarily due to the issuance of notes throughout 2022 and 2023.


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Other income (expenses), net. The change in other income (expenses), net is attributable to the following (dollars in millions):

Three months ended
June 30, 2023
compared to
three months ended
June 30, 2022
Increase / (Decrease)
Six months ended
June 30, 2023
compared to
six months ended
June 30, 2022
Increase / (Decrease)
Loss on extinguishment of debt (see Note 3)$$
Gain (loss) on financial instruments, net (see Note 6)(4)(45)
Net periodic pension benefits(16)(31)
Gain (loss) on equity investments, net(147)(218)
$(164)$(291)

See Note 10 and the Notes referenced above to the accompanying consolidated financial statements contained in “Item 1. Financial Statements” for more information.

Income tax expense. We recognized income tax expense of $444 million and $818 million for the three and six months ended June 30, 2023, respectively, and $489 million and $834 million for the three and six months ended June 30, 2022, respectively. The decrease is primarily a result of lower pretax income partly offset by higher reserve for uncertain tax positions, and for the six months ended June 30, 2023 as compared to the corresponding prior period, decreased recognition of excess tax benefits resulting from share-based compensation.

Net income attributable to noncontrolling interest. Net income attributable to noncontrolling interest for financial reporting purposes represents Advance/Newhouse Partnership's (“A/N”) portion of Charter Holdings’ net income based on its effective common unit ownership interest. For more information, see Note 5 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

Net income attributable to Charter shareholders. Net income attributable to Charter shareholders decreased $248 million and $430 million during the three and six months ended June 30, 2023 compared to the corresponding periods in 2022, respectively, primarily as a result of the factors described above.

Use of Adjusted EBITDA and Free Cash Flow

We use certain measures that are not defined by U.S. generally accepted accounting principles (“GAAP”) to evaluate various aspects of our business. Adjusted EBITDA and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, net income attributable to Charter shareholders and net cash flows from operating activities reported in accordance with GAAP. These terms, as defined by us, may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA and free cash flow are reconciled to net income attributable to Charter shareholders and net cash flows from operating activities, respectively, below.

Adjusted EBITDA eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of our businesses as well as other non-cash or special items, and is unaffected by our capital structure or investment activities. However, this measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and our cash cost of financing. These costs are evaluated through other financial measures.

Free cash flow is defined as net cash flows from operating activities, less capital expenditures and changes in accrued expenses related to capital expenditures.

Management and Charter’s board of directors use Adjusted EBITDA and free cash flow to assess our performance and our ability to service our debt, fund operations and make additional investments with internally generated funds. In addition, Adjusted EBITDA generally correlates to the leverage ratio calculation under our credit facilities or outstanding notes to determine compliance with the covenants contained in the facilities and notes (all such documents have been previously filed with the Securities and Exchange Commission (the “SEC”)). For the purpose of calculating compliance with leverage covenants, we use Adjusted EBITDA, as presented, excluding certain expenses paid by our operating subsidiaries to other Charter entities. Our debt covenants refer to these expenses as management fees, which were $335 million and $709 million for

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the three and six months ended June 30, 2023, respectively, and $348 million and $690 million for the three and six months ended June 30, 2022, respectively.

A reconciliation of Adjusted EBITDA and free cash flow to net income attributable to Charter shareholders and net cash flows from operating activities, respectively, is as follows (dollars in millions):

Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Net income attributable to Charter shareholders$1,223 $1,471 $2,244 $2,674 
Plus: Net income attributable to noncontrolling interest190 237 352 423 
Interest expense, net1,298 1,109 2,563 2,169 
Income tax expense444 489 818 834 
Depreciation and amortization2,172 2,240 4,378 4,534 
Stock compensation expense168 104 376