Welcome to the Liberty Broadband 2023 Third Quarter Earnings Call. [Operator Instructions] As a reminder, this conference will be recorded, November 3. I would now like to turn the call over to Shane Kleinstein, Vice President, Investor Relations. Please go ahead.

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 the most recent Forms 10-K and 10-Q filed by Liberty Broadband and Liberty TripAdvisor with the SEC. These forward-looking statements speak only as of the date of this call, and Liberty Broadband and Liberty TripAdvisor expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Liberty Broadband or Liberty TripAdvisor's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. On today's call, we will discuss certain non-GAAP financial measures for Liberty Broadband, including adjusted OIBDA. Information regarding the comparable GAAP metrics, along with required definitions and reconciliations, including preliminary note in Schedules 1 and 2, can be found in the earnings press release issued today as well as earnings releases for prior periods, which are available on Liberty Broadband's website. Now I'd like to introduce Greg Maffei, Liberty's President and CEO.

Thank you, Shane, and good morning to all. Today, speaking on the call, we will also have Liberty Broadband's Chief Accounting and Principal Financial Officer, Brian Wendling. GCI management will be available to answer questions. Also during Q&A, we will be available to answer questions related to Liberty TripAdvisor, but please note TripAdvisor has not yet reported their third quarter results. So we will obviously not be able to comment on the current quarter. So beginning with Liberty Broadband. We did resume selling into the Charter buyback in October. We received $48 million of proceeds, and we deployed $13.1 million into Liberty Broadband buyback at an average cost of $88.18 per share. We anticipate that we will continue to buy back LBRDA and K shares with the substantial majority of the after-tax proceeds we received from Charter throughout the rest of the year. And now looking at Charter. Charter did report solid operating and financial results despite a tougher market and the Disney Exchange. Charter added 63 broadband net adds. We continue to benefit from rural expansion with 31,000 subsidized rural net adds in the third quarter, and we are already achieving 50% penetration after 12 months of those net adds into customer cohorts well above the case that those were underwritten upon. We believe this reinforces the rural investment opportunity, which we think is an attractive use of capital allocation. There is high demand for Charter services, both broadband and mobile in those markets. Mobile strength does also continue. We added 594,000 mobile lines during the third quarter. We will begin to see the benefit of those in the fourth quarter as Spectrum One pricing opportunities roll off and we begin to see closer pricing on those. These free lines will begin to convert into paid lines during the…

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 2, the value of our Charter investment was $19.4 billion. And at quarter end, Liberty Broadband had a total principal amount of debt of $3.9 million. 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 Qurate Retail. Looking at GCI. Revenue was down 3% for the quarter and adjusted OIBDA 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 not -- does not significantly impact margins. We also had the impact of a 3-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, with a modest impact on adjusted OIBDA. The fiber break has since been fully repaired, which is good news. GCI has also been successful in moving consumers to its converged GCI+ 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 3x at quarter end, and GCI has $397 million of undrawn capacity on its revolver. And with 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 9, in New York. Additional information is available on our website. John Malone and I will be hosting our annual Q&A, if you would like to submit questions in advance, you can e-mail investorday@libertymedia.com. We appreciate your continued interest in Liberty Broadband and Liberty TripAdvisor. And with that, operator, I would open the line for questions.

[Operator Instructions] Our first question comes from Kutgun Maral with Evercore ISI.

A similar one related 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 for the question. I think the widening the discount while unfortunate actually does make our strategy of share repurchase 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. But we are looking at all those alternatives, and we'll certainly keep them in mind.

Our next question comes from Ben Swinburne with Morgan Stanley.

Greg, how do we -- should we be thinking about Liberty Broadband as a vehicle for sort of cable or fiber asset acquisitions? And I ask that because, obviously, we see the cost of capital has gone up, but there were a lot of businesses funded on cheaper debt to compete with. Cable operators, et cetera, taking advantage of broadband, a lot of fiber that's come 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 like we might think of other sort of private equity vehicles out there that might be looking at picking up fiber assets or telecom assets or cable assets that might come to market even if small? And then I just had a follow-up on the Charter front.

Yes. 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 hurt us, so they don't create these opportunities. But I would note, as we saw in the prior question, we've seen an 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 suddenly, that alternative gets more attractive as well, so you're going to weigh all those various factors. Ad I'm not telling you, we aren't doing it, but I'm not -- I'm also saying the bar got higher.

Yes. That makes sense. And then interestingly, if you look at Charter, one of the things they told us last week is there's maybe more CapEx in the near term, which all else 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 interest...

I'm actually on the board and the finance committee. So I am aware of these factors.

Of course, yes, that was for the broader group. 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, and I'm going overstate it, but spend as much money as you can as quickly as you can for the benefit of the long-term value creation when you have, in your case, a double discount arguably going on with Charter?

Yes. 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 know, 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 off 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 only creating more an 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 3 sets at least of attractive investment opportunities, and we're trying to waive it all those against the long-term growth, the -- and which ones are going to be available when.

And our last question comes from Michael Rollins with Citi.

Two, if I could. First, on GCI, can you share how the business has benefited in -- 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 on your latest thoughts on that? And what would be the catalyst to make that logical in terms of timing and function?

I'll handle the second question first, and then I'll let either Ron or Pete comment on ACP or if they don't 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 taking advantage of things like share repurchase or written growth in the underlying asset. But in many cases, we've also, at some point, merge them in and close the gap between their trading. Examples of that would be -- closed example be Liberty Media 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 Street, 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?

Yes. I think Ron, are you there?

We're going to let him get it pass unless he chooses to step in. So we'll let you go, Pete, unless Ron decides that he wants to preempt.

Yes. I think what the ACP program has 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.

Yes. I would just add, if I can, Ben, on 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. Thank you. Operator, I think that's -- we are done with the questions for the day. To our listening audience, thank you for your interest in Liberty Broadband and Liberty TripAdvisor. 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.