Ladies and gentlemen, thank you for standing by. Welcome to the GCI Liberty 2019 Q1 Earnings Call. As a reminder, this conference is being recorded, May 9. I would like to now turn the conference over to Courtnee Chun, Senior Vice President of Investor Relations. Please go ahead, ma'am.

Thank you. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent Forms 10-K and 10-Q filed with the SEC. These forward-looking statements speak only as of the date of this call, and GCI Liberty and Liberty Broadband expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in GCI Liberty or Liberty Broadband's expectations with regard thereto or any change in events conditions or circumstances on which any such statement is based.

Thank you, Courtnee, and welcome to all of you. Good afternoon. Today speaking on the call, we also have GCI Liberty's CFO, Mark Carleton; and GCI's CFO, Pete Pounds. During the Q&A, we will be available to answer questions related not only to GCI Liberty but Liberty Broadband. So beginning with GCI Liberty, the stock has been very strong this quarter. We were only able to purchase $4 million of stock - or repurchase $4 million of stock as the price increased and reduced spending under our grid. We did take advantage of the double discount from the underlying Charter, and we will continue to do so when we can. Turning now to GCI, the operating unit. We are obviously in a challenging - operating in a very tough regulatory environment. The GCI team continues to execute against that, growing their data revenue, and they are also addressing their cost structure, including having taken some job cuts in response to the regulatory setbacks that they have experienced. We are focused on investments that will drive future value here. Looking briefly at Liberty Broadband. Charter posted a strong first quarter. Business is deriving the benefits of the well-executed integration that Tom and the team are leading. They increased their PSUs, their customer relationships primarily through strong Internet adds, and they have continued upside there. We've only penetrated roughly 50% of the crossings that we - passings rather that we have with Internet product today. We also experienced strong residential revenue growth across the residential, commercial and mobile lines. We ended the quarter with 310,000 mobile lines, and we will continue to make progress in that area in the quarters ahead. EBITDA growth combined with falling capital expenditures and intensity yielded strong free cash flow growth. Combine that with having repurchased 3 - $963 million worth of stock in the quarter, led to a dramatic increase in cash flow per share. Charter continues to deliver on the investment thesis of levered free cash flow shrink with the potential for significantly reduced share counts.

Thank you, Greg. At quarter end, GCI Liberty had consolidated cash of $422 million, which includes $96 million of cash at GCI. The value of the public equity securities at GCI Liberty as of today's close was $7.5 billion, which includes our $2 billion interest in Charter, our $4.2 billion interest in Liberty Broadband and our $1.3 billion interest in LendingTree. GCI Liberty has a $900 million margin loan outstanding against its Liberty Broadband shares. At quarter end, GCI Liberty had total principal amount of debt of $3 billion, which includes the aforementioned margin loan, the Charter exchangeable debentures and $1.6 billion of debt including finance leases and tower obligations at GCI. GCI's leverage as defined in its credit agreement was 5.9x compared to a maximum allowable leverage of 6.5x. And as we noted in the 10-Q, GCI exceeded the maximum leverage threshold in the terms of its senior notes, and therefore, we don't have access to additional funding under the revolver. But we continue to be confident we have plenty of cash on hand to operate the business and we're in compliance with our maintenance covenants. So with that, I'll turn it over to Pete.

Thank you, Mark. Let me start out with an update to RHC matters. As described in our press release, we received notices from USAC denying requested funding from one of our RHC customers back in November. The customer filed an appeal, which was denied by USAC on May 6, 2019. We expect that our customer will be appealing the decision to the Wireline Competition Bureau of the FCC within 60 days from the May 6 denial. At this point, we've taken a reserve for $21.3 million to account for the revenues related to this customer from July 1, 2017 through March 31, 2019. This reserve impacted adjusted OIBDA in the quarter. Going forward, we will not be recording revenues of approximately $1 million per month until there is a new bid process that is completed or greater certainty surrounding collectability. With respect to the October 10 letter that we received from the FCC whereby they notified us of their decision to reduce our funding for the year ended June 30, 2018, by $27.8 million, we appealed that on November 9, 2018, and continue to pursue all available options towards resolution. I don't have any other updates on that particular appeal at this point. In other areas, the first quarter of 2019 was a challenging one, but we're starting to see some momentum. The April issue of the Anchorage employment report is showing that, on a preliminary basis, we saw slight job growth during the quarter. This was the positive change in the economy that we had been anticipating.

And with that, operator, I think we're ready to open up for questions.

Our first question will come from Zack Silver with B. Riley FBR.

First one for Greg. Clearly, many of us have been thinking about the potential to combine GCI Liberty and Liberty Broadband. And if you were to combine the 2 entities, how would you think about valuing GCI in that transaction? And then additionally, when you're thinking about the full NAV , are you baking in the Liberty Broadband NAV discount as well?

Thank you for the questions, Zack. We obviously look at our portfolio from time to time and consider appropriate combinations. We have no plan or intent to merge Liberty Broadband and GCI Liberty at this time and nothing to announce. Anytime we do look at that kind of combination, we would obviously try and look at their NAVs and expect that the independent members of the Board who are responsible into that set of shareholders would come up with a fair estimate what they think they are and recognize both market values and underlying values and try and come to a fair decision. But as I said, we have nothing to announce today.

And then maybe one for Pete. I think that the economy in Alaska has shown signs of improvement, and yet the - some of the subscriber metrics were a bit soft in the quarter. So is this really just that there's kind of a lag in the Alaskan economy improving? Or is there anything else going on, a competitor or potentially something else that we're not thinking about?

Yes, Zack, probably a decent chunk of that would have been just the transition between the billing systems and some of that cleanup that happened there in the first quarter. So I would say most of that was really minor sub count cleanup between systems. I would note that it's not unexpected to see slight delays between improvements in the overall economy and maybe some of the pickup of sub counts though.

Our next question will come from James Ratcliffe with Evercore.

Two if I could, one for Pete and one for Greg. And again, sorry, Mark. For Pete for the - Pete, for the $12 million sort of run rate on the denied appeal RHC revenue, is there material cost associated with that? Or is that sort of a $3 million roughly quarterly hit to EBITDA? And secondly, Greg, coming back to and Liberty Broadband, just procedurally, how would that process be considered? Would it be purely just the directors who are not on both boards involved in that? Or would you and John have any sort of role in that process?

All right. I guess I'll take the first one there. So James, as far as are there material costs, the answer is yes. However, they are mostly fixed costs. So it's a very expensive network to build, and the recovery of those costs will not be forthcoming. But don't look at this as an opportunity where we'll be shedding significant variable costs as a result of this.

James, haven't thought too much about the process as I said because we really have no plan or intent on any of that. But I would expect that any transaction that would occur would be primarily driven by the non-independent directors of the - or to the independent directors, the non-overlapping directors of the 2 companies. I'm sure they might have asked management their opinion on facts and circumstances, but I expect they would have their own independent financial advisers and own independent counsel to ensure that there was no questions about whether they were unduly influenced.

Our next question will come from Matthew Harrigan with Buckingham Research Group.

Clearly, you could recover some of the discount or close the discount if everything was rolled together, Charter, Liberty Broadband and GCI, particularly if the Sprint-T-Mobile deal gets nixed in Washington, which is what people seem to think. Your position could have even more economic value to someone outside of Charter. I know that there are reciprocal blocking rights and strategic things that you and Charter command. But how do you feel about your position and relative value positioning for M&A and maximizing the value of your position if you do get some people hunting around because they're trying to - say, Masayoshi Son is looking for another solution for Sprint.

Well, thank you, Matthew. I think Charter's results were strong. We feel Charter's well positioned not only on the current book of business but on the potential for its network and the potential to add incremental products down the network, including wireless both through carriage on our network but the MVNO relationship we have. If a buyer shows up - and there are buyers, I think you're right, who might find us to have a strategic value - we'll look at the opportunities that they offer as at the time. And we'll consider the potential the network has on its own and the potential the business has on its own weighed against any potential offers.

Is there any sunset on the blocking rights that you and Charter would have on moving that deposition? Or is that something you can't comment on?

I'm sorry, I'm not sure exactly what blocking rights you refer to.

In terms of if you wanted to sell your 20% roughly economic stake in Charter to an outside party, my understanding is that Charter would be able to block that just as you'd be able to block any moves that you thought were undesirable by Charter. Is there any sort of...

No, I think we can - I think if we could - there may be certain rights that we have that might go away in a sale, but I believe we're allowed to - we'd be able to sell our position. And I don't think we have any blocking rights other than we do vote 25% of the stock, and I think our economic interest is almost up to somewhere between 22% and 23%. So we're a substantial shareholder and hopefully with some voice.

Our last question will come from Bentley Cross with TD Securities.

Greg, I wanted to ask a question that follows on with the last one, and it's a question I know you've been asked time and time again. But just wondering your overall thoughts on potential consolidation within the cable space.

I think it's a - it's largely a good thing. It adds a lot of economic value. There are synergies around costs. There are synergies around not only costs on the content side but cost on the operating side, cost on the purchasing side. So I think it's - some of it adds economic value and adds streamlines for the benefit of consumers and shareholders alike. That having been said, there isn't that much left to buy as a practical matter, right? You've got Comcast with 20 - mid-20s on broadband - high 20s on broadband and low 20s on video, us at 16 on video and 25 of broadband. And then there's a substantial drop to people who have maybe 4 and - $3 million and $4 million - 3 and 4 million subs. So there is potential for some more modest consolidation. Cox is a very attractive business, but I don't think the Cox family, the Kennedys and Alex Taylor, they don't - I haven't seen them putting up for sale signs. So we - I think Charter would be very interested in any consolidation that could occur, but it's not obvious where that's going to happen.

Thank you very much to the listening audience. Operator, I believe we're done. We hope - look forward to talking with any of you again at conferences in the near term or, if not, the call next quarter. Thank you very much.

Thank you. That does conclude today's conference. Thank you all for your participation. You may now disconnect.