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SEC Filings

10-Q
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form 10-Q on 11/03/2016
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On a pro forma basis, assuming the Transactions occurred as of January 1, 2015, increases 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
September 30, 2016
compared to
three months ended
September 30, 2015
Increase / (Decrease)
 
Nine months ended
September 30, 2016
compared to
nine months ended
September 30, 2015
Increase / (Decrease)
 
 
 
 
Programming
$
182

 
$
524

Regulatory, connectivity and produced content
(15
)
 
11

Costs to service customers
(33
)
 
55

Marketing
4

 
86

Transition costs
20

 
28

Other
95

 
241

 
 
 
 
 
$
253

 
$
945


On a pro forma basis, assuming the Transactions occurred as of January 1, 2015, programming costs were approximately $2.4 billion and $2.2 billion, representing 37% and 36% of total operating costs and expenses for the three months ended September 30, 2016 and 2015, respectively, and $7.2 billion and $6.7 billion, representing 37% and 36% of total operating costs and expenses for the nine months ended September 30, 2016 and 2015, respectively.

Programming costs consist primarily of costs paid to programmers for basic, digital, premium, video on demand, and pay-per-view programming. The increase in pro forma programming costs is primarily a result of annual contractual rate adjustments, including increases in amounts paid for retransmission consents and the introduction of new networks offset by synergies as a result of the Transactions and lower pay-per-view programming expenses.  We expect pro forma programming expenses will continue to increase due to a variety of factors, including annual increases imposed by programmers with additional selling power as a result of media consolidation, increased demands by owners of broadcast stations for payment for retransmission consent or linking carriage of other services to retransmission consent, and additional programming, particularly new sports services. We have been unable to fully pass these increases on to our customers nor do we expect to be able to do so in the future without a potential loss of customers.

On a pro forma basis, assuming the Transactions occurred as of January 1, 2015, the increase in other expense is attributable to the following (dollars in millions):

 
Three months ended
September 30, 2016
compared to
three months ended
September 30, 2015
Increase / (Decrease)
 
Nine months ended
September 30, 2016
compared to
nine months ended
September 30, 2015
Increase / (Decrease)
 
 
 
 
Corporate costs
$
25

 
$
94

Advertising sales expense
23

 
57

Stock compensation expense
19

 
35

Enterprise
12

 
33

Property tax and insurance
(5
)
 
16

Other
21

 
6

 
 
 
 
 
$
95

 
$
241


The increases in corporate costs relate primarily to increases in the number of employees. Stock compensation expense increased primarily due to increases in headcount and the value of equity issued.


56