Charter 2015 Annual Report Download - page 131

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CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015, 2014 AND 2013
(dollars in millions, except share or per share data or where indicated)
F- 34
The Company is aware that Dr. Malone may be deemed to have a 36.8% voting interest in Liberty Interactive and is Chairman of
the board of directors, an executive officer position, of Liberty Interactive. Liberty Interactive owns 38.0% of the common stock
of HSN, Inc. (“HSN”) and has the right to elect 20% of the board members of HSN. Liberty Interactive wholly owns QVC, Inc
(“QVC”). The Company has programming relationships with HSN and QVC which pre-date the Liberty Media Transaction. For
the years ended December 31, 2015 and 2014 and nine months ended December 31, 2013, the Company recorded payments in
aggregate of approximately $17 million, $14 million and $10 million, respectively, from HSN and QVC as part of channel carriage
fees and revenue sharing arrangements for home shopping sales made to customers in Charter's footprint.
Dr. Malone also serves on the board of directors of Discovery Communications, Inc., (“Discovery”) and the Company is aware
that Dr. Malone owns 4.8% in the aggregate of the common stock of Discovery and has a 28.7% voting interest in Discovery for
the election of directors. In addition, Dr. Malone owns approximately 10.8% in the aggregate of the common stock of Starz and
has 47.2% of the voting power. Mr. Gregory Maffei, a member of Charter's board of directors, is a non-executive Chairman of
the board of Starz. The Company purchases programming from both Discovery and Starz pursuant to agreements entered into
prior to Dr. Malone and Mr. Maffei joining Charter's board of directors. Based on publicly available information, the Company
does not believe that either Discovery or Starz would currently be considered related parties. The amounts paid in aggregate to
Discovery and Starz represent less than 3% of total operating costs and expenses for the years ended December 31, 2015 and 2014
and nine months ended December 31, 2013.
18. Commitments and Contingencies
Commitments
The following table summarizes the Company’s payment obligations as of December 31, 2015 for its contractual obligations.
Total 2016 2017 2018 2019 2020 Thereafter
Contractual Obligations
Operating Lease Obligations (1) $ 183 $ 51 $ 46 $ 32 $ 23 12 $ 19
Programming Minimum Commitments (2) 545 265 239 13 14 11 3
Other (3) 435 397 19 10 3 2 4
Total $ 1,163 $ 713 $ 304 $ 55 $ 40 $ 25 $ 26
(1) The Company leases certain facilities and equipment under non-cancelable operating leases. Leases and rental costs charged
to expense for the years ended December 31, 2015, 2014 and 2013 were $49 million, $43 million, $34 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 $2.7 billion, $2.5 billion and $2.1 billion for the years ended December 31,
2015, 2014, and 2013 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.
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, 2015, 2014, and 2013 was $53 million, $49 million, and $49 million, respectively.