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SEC Filings

10-Q
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form 10-Q on 08/09/2016
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CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except per share amounts and where indicated)


17.     Commitments and Contingencies

Commitments

The following table summarizes the Company’s payment obligations as of June 30, 2016 for its contractual obligations.

 
Capital and Operating Lease Obligations (1)
 
Programming Minimum Commitments (2)
 
Other (3)
 
Total
 
 
 
 
 
 
 
 
Six months ended December 31, 2016
$
161

 
$
114

 
$
463

 
$
738

2017
231

 
223

 
692

 
1,146

2018
193

 
35

 
567

 
795

2019
148

 
24

 
500

 
672

2020
110

 
15

 
485

 
610

Thereafter
396

 

 
10,043

 
10,439

 
 
 
 
 
 
 
 
 
$
1,239

 
$
411

 
$
12,750

 
$
14,400


(1) The Company leases certain facilities and equipment under non-cancelable capital and operating leases. Leases and rental costs charged to expense for the three months ended June 30, 2016 and 2015 were $44 million and $12 million, respectively, and for the six months ended June 30, 2016 and 2015 were $57 million and $24 million, respectively.

(2) The Company pays programming fees under multi-year contracts ranging from three to ten years, typically based on a flat fee per customer, which may be fixed for the term, or may in some cases escalate over the term. Programming costs included in the statement of operations were $1.5 billion and $671 million for the three months ended June 30, 2016 and 2015, respectively, and $2.2 billion and $1.3 billion for the six months ended June 30, 2016 and 2015, respectively. Certain of the Company’s programming agreements are based on a flat fee per month or have guaranteed minimum payments. The table sets forth the aggregate guaranteed minimum commitments under the Company’s programming contracts.

(3) “Other” represents other guaranteed minimum commitments, including programming rights negotiated directly with content owners for distribution on Company-owned channels or networks and commitments related to the Company’s role as an advertising and distribution sales agent for third party-owned channels or networks as well as commitments to the Company's customer premise equipment vendors.

The following items are not included in the contractual obligation table due to various factors discussed below. However, the Company incurs these costs as part of its operations:

The Company rents utility poles used in its operations. Generally, pole rentals are cancelable on short notice, but the Company anticipates that such rentals will recur. Rent expense incurred for pole rental attachments for the three months ended June 30, 2016 and 2015 were $25 million and $13 million, respectively, and for the six months ended June 30, 2016 and 2015 were $38 million and $26 million, respectively.

The Company pays franchise fees under multi-year franchise agreements based on a percentage of revenues generated from video service per year. The Company also pays other franchise related costs, such as public education grants, under multi-year agreements. Franchise fees and other franchise-related costs included in the accompanying statement of operations for the three months ended June 30, 2016 and 2015 were $125 million and $53 million, respectively, and for the six months ended June 30, 2016 and 2015 were $179 million and $106 million, respectively.

The Company also has $329 million in letters of credit, of which $224 million is secured under the Charter Operating credit facility, primarily to its various worker’s compensation, property and casualty, and general liability carriers, as collateral for reimbursement of claims.



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