Charter 2012 Annual Report Download - page 107

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CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
(dollars in millions, except share or per share data or where indicated)
F- 32
18. Commitments and Contingencies
Commitments
The following table summarizes the Company’s payment obligations as of December 31, 2012 for its contractual obligations.
Total 2013 2014 2015 2016 2017 Thereafter
Contractual Obligations
Capital and Operating Lease Obligations (1) $ 125 $ 32 $ 28 $ 21 $ 17 13 $ 14
Programming Minimum Commitments (2) 521 146 94 98 95 88 —
Other (3) 648 507 118 23 — — —
Total $ 1,294 $ 685 $ 240 $ 142 $ 112 $ 101 $ 14
(1) The Company leases certain facilities and equipment under noncancelable operating leases. Leases and rental costs charged
to expense for the years ended December 31, 2012, 2011 and 2010 were $28 million, $27 million, $28 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 accompanying statement of operations were $2.0 billion, $1.9 billion, and $1.8 billion for the years ended December 31,
2012, 2011, and 2010 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, which consist primarily of commitments to the Company's
customer premise equipment vendors and billing services 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 years ended
December 31, 2012, 2011, and 2010 was $47 million, $49 million, and $50 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 were $176 million, $174 million, and $178 million for the years ended December 31, 2012, 2011, and 2010
respectively.
• The Company also has $67 million in letters of credit, primarily to its various worker’s compensation, property and
casualty, and general liability carriers, as collateral for reimbursement of claims.
Litigation
On March 27, 2009, Charter filed a Chapter 11 petition in the United States Bankruptcy Court for the Southern District of New
York. On November 17, 2009, the Bankruptcy Court issued its Order and Opinion confirming the Plan over the objections of
various objectors. Charter consummated the Plan on November 30, 2009.
Two appeals are pending relating to confirmation of the Plan, the appeals by (i) Law Debenture Trust Company of New York
(“LDT”) (as the Trustee with respect to the $479 million in aggregate principal amount of 6.50% convertible senior notes due
2027 issued by Charter which are no longer outstanding following consummation of the Plan and the holders of which already