Charter 2013 Annual Report Download - page 47

33
Comparability of the above information from year to year is affected by acquisitions and dispositions completed by us including the
acquisition of Bresnan in July 2013. See “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations — Overview.” In addition, upon our emergence from bankruptcy, we adopted fresh start accounting. This resulted in
us becoming a new entity on December 1, 2009, with a new capital structure, a new accounting basis in the identifiable assets and
liabilities assumed and no retained earnings or accumulated losses. Accordingly, the consolidated financial statements on or after
December 1, 2009 are not comparable to the consolidated financial statements prior to that date. The financial statements for the
periods ended November 30, 2009 do not include the effect of any changes in our capital structure or changes in the fair value of
assets and liabilities as a result of fresh start accounting.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Reference is made to “Part I. Item 1A. Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements,” which
describe important factors that could cause actual results to differ from expectations and non-historical information contained
herein. In addition, the following discussion should be read in conjunction with the audited consolidated financial statements and
accompanying notes thereto of Charter Communications, Inc. and subsidiaries included in “Item 8. Financial Statements and
Supplementary Data.”
Overview
We are a cable operator providing services in the United States with approximately 5.9 million residential and commercial customers
at December 31, 2013. We offer our customers traditional cable video programming, Internet services, and voice services, as well
as advanced video services such as OnDemandTM, HD television and DVR service. We also sell local advertising on cable networks
and provide fiber connectivity to cellular towers. See “Part I. Item 1. Business — Products and Services” for further description
of these services, including “customers.”
Our most significant competitors are DBS providers and certain telephone companies that offer services that provide features and
functions similar to our video, high-speed Internet, and voice services, including in some cases wireless services, and they also
offer these services in bundles similar to ours. See “Business — Competition.” In the recent past, we have grown revenues by
offsetting basic video customer losses with price increases and sales of incremental services such as high-speed Internet, OnDemand,
DVR and HD television. We expect to continue to grow revenues by increasing the number of products in our current customer
homes and obtaining new customers with an improved value offering. In addition, we expect to increase revenues by expanding
the sales of services to our commercial customers. However, we cannot assure you that we will be able to grow revenues or
maintain our margins at recent historical rates.
Our business plans include goals for increasing customers and revenue. To reach our goals, we have actively invested in our
network and operations, and have improved the quality and value of the products and packages that we offer. We have enhanced
our video product by increasing digital and HD-DVR penetration, offering more HD channels, and deemphasizing our analog
service. During the second quarter of 2012, we simplified our offers and pricing and improved our packaging of products to bring
more value to new and existing customers. As part of our effort to create more value for customers, we have focused on driving
penetration of our triple play offering, which includes more than 100 HD channels, video on demand, Internet service, and fully
featured voice service. In addition, we have implemented a number of changes to our organizational structure, selling methods
and operating tactics. We are increasingly insourcing our field operations, call center and direct sales workforces and modifying
the way our sales workforce is compensated, which we believe positions us for better customer service and growth. We expect
that our enhanced product set combined with improved customer service will lead to lower customer churn and longer customer
lifetimes, allowing us to grow our customer base and revenue more quickly and economically. We expect our capital expenditures
to remain elevated as we strive to increase digital and HD-DVR penetration, place higher levels of customer premise equipment
per transaction and progressively move to an all-digital platform.
In July 2013, Charter and Charter Operating acquired Bresnan from a wholly owned subsidiary of Cablevision, for $1.625 billion
in cash, subject to a working capital adjustment and a reduction for certain funded indebtedness of Bresnan (the "Bresnan
Acquisition"). Bresnan manages cable operating systems in Colorado, Montana, Wyoming and Utah that pass approximately
670,000 homes and serve approximately 375,000 residential and commercial customer relationships.
Total revenue growth was 9% for the year ended December 31, 2013 compared to the corresponding period in 2012, and 4% for
the year ended December 31, 2012 compared to the corresponding period in 2011, due to the Bresnan Acquisition and growth in
our video, Internet and commercial businesses. Total revenue growth on a pro forma basis for the Bresnan Acquisition as if it had
occurred on January 1, 2011 was 5% for the year ended December 31, 2013 compared to the corresponding period in 2012, and
4% for the year ended December 31, 2012 compared to the corresponding period in 2011. For the years ended December 31,